Are you “just getting by” financially or struggling to pay your bills? Are you buried in debt or careening over a financial edge? If you are lying awake at night counting your fears about money, instead of sheep, you will want to know about the work of Karen McCall.
She is the author of Financial Recovery: Developing A Healthy Relationship with Money, (New World Library). Karen helps people understand the underlying causes of chronic overspending, credit card debt, under-earning, and low or no savings.
Karen is the founder of the Financial Recovery Institute, which trains financial counselors to help individuals, couples, and businesses identify, understand and eliminate their self-defeating money patterns once and for all. She also provides money-planning tools that empower people to create spending and savings plans that meet their unique needs and support their dreams and goals.
Her program enables people to understand where they are, how they got there, how to change their financial circumstances, and how to maintain a healthy relationship with money for the rest of their lives.
In her new book, Financial Recovery, Karen offers practical and holistic tools that address the sources of financial pain and shame. In addition to uncovering your attitudes about money, Karen provides simple, step-by-step tools for healing the physical, emotional, and spiritual forms of deprivation that are related to your money issues. She also shares skills and strategies for experiencing financial fulfillment — even in the midst of economic challenges. www.FinancialRecovery.com
In this interview, we discuss what you can do to begin turning a negative financial situation around.
Randy Peyser: There are many people within the Mind, Body, Spirit community who struggle financially, so where do we begin?
Karen McCall: A lot of people struggle with what I call, “noble poverty.” They are confused about whether or not it’s alright to have money. Money is actually a great vehicle for healing the mind, body and spirit. You can use money as a means of noticing how you take care of yourself, and you can approach your issues around money in a mindful way by using your mental, emotional, physical and spiritual faculties. It can be a very spiritual endeavor to explore your relationship to earning, spending, and saving money.
Randy: I guess being mindful begins with one’s underlying belief systems.
Karen: Yes. In the beginning of my book, I talk about the “Money/Life Drain” where many people get caught in an “undertow” and they can’t seem to get out from under their money problems. They get to the point where they are emotionally, spiritually and financially depleted.
The truth is that people will create their outsides to match their insides. If you grew up believing that you were useless or worthless, or that you didn’t deserve something, you will internalize this message. And that’s what you create from.
Randy: So, what can you do?
Karen: Look back at how you developed your belief systems and attitudes — your mindset — around money. If you can bring what is unconsciously driving your behaviors around money into your awareness and become mindful, you can re-parent yourself and develop a new mindset around money.
Within the Financial Recovery process, you discover what your true needs are, and look at how you spend your resources — your time, energy and money. This is how we heal ourselves.
Once we can identify those needs, we also begin to look at the ways you are depriving yourself. For example, you may be driving a car with bad tires. That is a form of deprivation. Or you have clothes you don’t feel good about, so you sit at home. These are also forms of deprivation.
To identify signs of deprivation, here are three questions to ask yourself:
All three forms of deprivation can leave you feeling drained. Try to spend your time, energy, and money doing things that nurture you and feed your soul.
- What are you doing without? In other words, what are you depriving yourself of?
- Where are you making do? When you are “making do” you are never giving yourself the quality of what would really feel good to you. You are making substitutions while trying to satisfy your real needs.
- Where are you overdoing? Overdoing is not only about overspending. Overdoing could also be about how you spend your time.
Randy: How can we get in touch with some of our underlying belief systems around money?
Karen: I offer a free ebook on my website called, The MoneyMinder® Personal Autobiography.” It’s a 95-page ebook that will take you from your earliest memories of money to your present day. The process of writing your money autobiography can be a great tool to gain insight into your old beliefs. It’s a fantastic tool and I feel great about giving it away.
Randy: Can you talk about some simple steps people can do to create their own financial recovery?
Karen: Yes. Many people who are caught in the Money/Life Drain are in denial. They could be in a light “financial fog” or a in a full-blown “financial coma” where they refuse to acknowledge the reality of their financial situation. Whatever level of denial a person is in, the first step is to state: “I want to be mindful. I want to be conscious of, and connected to, my money.” Rather than running away, we are going to get our arms around all aspects of our money. So, the first step is really to make the decision and the commitment that you want to do this.
On a very practical level, I’m also a firm believer in tracking, although most people will resist this practice.
Randy: What is tracking?
Karen: Tracking is a way of getting conscious and connected to your money. It’s important to track all money in and all money out. Every time you use a credit card, take a check register and write down every charge. Also think about how many times you’ve pulled money out of an ATM, and a week later, had no idea where it went.
If you make a commitment to track all cash in and all cash out — as well as your credit card expenditures — and you keep a running balance, you will become more conscious of how you are spending your money, and there will be no surprises. Tracking is one of the best ways to become mindful.
Randy: Doesn’t tracking take up a lot of time?
Karen: That’s what people think. So they resist doing it. If you do your tracking every day, it doesn’t take much time at all. It’s only when you build up a whole pile of receipts that it feels like it’s going to take up too much time. Whatever amount of time it takes to track, I would ask you: Is your money, and the potential of having a healthy relationship with your money, worth your time? It takes time to exercise or to cook good meals and eat in a healthy way. Is your money a priority for you? Is this something you feel is worth making a commitment to do?
Making the time to track can become a habit, just like flossing your teeth or showering every day. Take care of yourself. You’re worth it! Tracking will also give you data to help you create a spending plan, which is the next step. Most people do what I call, “Rearview Mirror Accounting,” which means that they look at what they did after the fact.
When people manage their money this way, they don’t have the opportunity to plan for what their real needs are or to know ahead of time what the consequences of their choices are going to be. Then the third week of the month comes and they have to pull out their credit cards.
Randy: Is a spending plan the same as a budget?
Karen: The idea of a budget conjures up a negative connotation for people who have a preconceived idea that a budget is like a diet. It feels restrictive. There are no goodies, and it’s something that is imposed upon you. The diet mentality of losing weight, only to gain it back again, is what many people think of when they hear the word, “budget.”
With a spending plan, we’re just not just putting down the amount of money we need to cover our bills and food, we’re going to get more detailed and create smaller subcategories. For example, you might want to look at where you get your greatest “return on investment” when eating at a restaurant. You would categorize a pleasant luncheon with a friend or client as a better spending option than a lunch with someone who you didn’t have a great time with.
A spending plan is a forward plan, rather than the rearview mirror. It’s a livable plan that allows you to feel fulfilled while simultaneously meeting your goals. A spending plan is not about getting more stuff; it’s about getting the “right” stuff. How do we nourish ourselves on all levels? How do we bring joy and satisfaction into our lives? How do we design the life that’s going to give us the sense that our lives are worth living? We do this in small steps.
We also want to identify what our real needs are, as well as notice where we are living in deprivation. We’ve got to meet our needs first. That’s why I recommend that people create a “Wants and Needs” list.
Randy: What’s the difference between wants and needs?
Karen: As I say in Financial Recovery: “A need when filled sustains us, a want when filled entertains us, and attempting to substitute wants for needs eventually drains us.” A want is something we could do without. A need is something that is deeply important to us. A need will give us a sense that we matter.
Once a person creates their plan, it can be easy to get discouraged because people find they don’t have enough money. So we go back through the plan, and rather than erasing what we said was important to us, we ask ourselves if we can meet some of these needs in a less expensive way or in a way that requires no money.
When people are stressed about money, they can’t tap into their creativity. But when people get curious, they come up with the most magnificent ways to get their needs met. They get creative and feel empowered because they are in charge. So now they are conscious, curious and creative. This starts a real shift.
Randy: Let’s talk about debt.
Karen: I believe in “saving your way out of debt.”
One of the ways people stay in denial about debt is by saying that they always pay more than the minimum or they pay it off every month. But the statistics show that people pay 23-30% more when they use credit or debit cards. All of the money paid on interest makes banks rich, instead of going to creating more opportunities for you.
The only way to stop the debt cycle is by exploring your relationship to saving money. Many people have had a negative experience with saving money. They’ve been taught that saving is a good thing, as in “save for a rainy day.” But all of a sudden, they need that money for a car repair. If you are going to get out of debt, here are some steps you need to take:
The first thing to do is stabilize your debt. This means that if you’re in a hole, stop digging. Life happens. Cars break down and people get sick. Create an exclusive savings account for your non-monthly “life happens” moments, and stop using your credit cards to pay for these kinds of events.
I call this a periodic savings account. It’s a “revolving door” savings just for those events. If you have money in this account and it’s only for these kinds of events, you don’t have to use your credit cards to create more debt that way. You can also use this account for fun things, like going to concerts or for other things you wouldn’t necessarily do on a regular basis.
You can pay the minimum on your credit card while building this periodic savings account. It might feel painful or you might feel resistant at first, but this is one of the ways to eventually get yourself beyond debt. You will probably think about the percentage of interest that you are paying on your credit cards. On the surface, it won’t make sense, but we’re talking about building a foundation to stay out of debt, build up savings and keep it.
For starters, pick just one or two categories, and start funding those categories. For people who are self-employed, have seasonal work, or who have a career that feels unstable, it’s important to build up even larger savings. That way if “life happens” and it will take a while before your next check arrives, you have some income protection.
In addition to understanding the dollars and cents part of getting out of debt, I also want you to understand what your belief systems are around debt. I used to help people get out of debt, but they’d wind up back in debt. I realized it was important to create a level of support to change that pattern. A lack of worthiness, a lack of education around credit cards, or a feeling related to the use of credit could be causing you to repeatedly be in debt.
Once we understand the underlying beliefs that contributed to your debt, we can create a plan to get you out of debt. This may involve targeting your lowest balances or your highest interest rate. But now you will have a foundation and you can target your debt and pay it off.
You deserve to be debt-free! When you are debt-free and can get out of survival mode, you will have a more expansive life and can contemplate doing something different. When you are in survival mode, you can’t entertain the thought of your relationship with work and earning money. Exploring your fantasy of right livelihood is a natural outgrowth of the financial recovery process.
Randy: Can you explain your Financial Recovery Certification Program?
Karen: I offer a certified training program that teaches people how to become a financial recovery counselor or a money coach. It’s very rewarding to help people create a healthy relationship with money, and you will get the satisfaction of making a significant difference in the lives of many.
For more information about The Financial Recovery book and The Financial Recovery Institute, please visit www.FinancialRecovery.com
Randy Peyser is the author of The Power of Miracle Thinking, www.MiracleThinking.com. She also edits books and helps people find agents and publishers. www.AuthorOneStop.com