Saturday, May 31, 2008

Is There a Doctor in the House?

In my financial counseling practice sometimes I have to deliver bad news. Whether it’s showing a client how his income doesn’t support his already modest lifestyle or helping a family understand the terms of their unmanageable debt, I am there when painful economic realities are revealed, often for the first time.

My role in these scenarios is not unlike a doctor sitting down with a patient to give him a poor test result. Given this parallel I watched with interest a lecture by Elly Hann D.O. on How Best to Deliver Bad News to Patients and Family. Dr. Hann, a hospice physician specializing in palliative care and pain management, emphasized the importance of communicating bad news clearly and compassionately so that the patient is able to begin organizing his thoughts around the diagnosis and treatment plan.

Without the doctor’s effective communication, patients remain stuck in a state of anxious confusion. These feelings compromise the patient’s ability to trust his doctor and follow through with necessary treatment.

While this all seems obvious in a medical model, it really made me think about our socio-financial model and how we meet consumers’ needs for assessment (diagnosis), communication, and support.

In the medical model the doctor is the expert, the one with the information. The doctor is required to be the patient’s advocate without any conflicting loyalty. Thus the patient can trust the doctor to decide and to act in his best interest.

In the financial world, one can retain similar unbiased expertise in the form of a fee-only financial planner or accounting professional. These services are excellent but can be prohibitively expensive for all but the most affluent. Some professionals offer pro bono or reduced-fee services through local non-profits or public agencies but these programs are spotty and not scalable to the population at large.

In the absence of expert guidance what has happened is that we’ve made “doctors” out of lenders. We assume that because lenders incur risk the market drives them to become experts on how to extend credit, at what competitive terms, and to whom.

This is not a patient- or consumer-based model. This would be like a person going into a hospital with pain in his shoulder and being told by the radiologist, “Hey, what you need is an x-ray,” and then the orthopedist countering with, “But if you sign up with me now I will give you an excellent deal on this cast!” How is the patient supposed to determine what to do with something as complicated as his health?

Our financial world has become similarly complex. Many consumers feel lost, anxiously confused about how to diagnose their own needs, identify the right course of action, and organize themselves around a plan.

Anxious confusion poisons the whole system. We can see the erosion of trust in the lending establishment. Whereas once consumers put too much faith in the promise of credit, now you see people suspicious of lenders’ motives to the point where they feel the system is out to get them.

I definitely see a need for a more widespread combination of consumer advocacy, information, and support. Right now all of those functions are operating somewhat disjointedly. For example, I can provide expert communication and support in my counseling practice, but I must partner with financial services professionals to get clients the information and analysis they need. The financial services industry has the information, but is mostly geared at helping already stable people protect their security and not at being a consumer sounding-board. Consumer advocates exist, but they often take an adversarial, system-focused position that is not necessarily based on the needs of the individual consumer.

I’m writing this post as a real thought-in-progress. Our socio-financial set-up seems inadequate but I don’t know what the right answer is. It’s hard to point to the state of the health care industry as any sort of positive example, but I think that the doctor metaphor is helpful in illustrating the vacuum that currently exists. This is not generally a comment-heavy blog, but if any readers have an opinion on this I would be glad to read it.

Monday, May 5, 2008

My Future's So Bright, I Gotta Buy Shades

In The Secret Life of Money, Tad Crawford offers this revolutionary concept:
Keeping the symbolic value of money in mind....we can gain a new view of debt, seeing it not as merely an obligation to be paid but also as a statement about how our inner richness will be expressed in the future (italics added).
That is actually completely brilliant. Until I read that I had not heard the phenomenon articulated so clearly.

When it comes to understanding how money doesn't work in a person's life, debt is often where the narrative begins. Debt is the manifestation of some sort of imbalance, either internal or external (or sometimes both).

An external imbalance may be quite difficult but it's usually pretty straightforward. Perhaps a major life crisis affected a person's finances, or their resources are simply not adequate for their needs.

An internal imbalance, on the other hand, can be many things. It may be around self-concept, such as when you buy things to try to feel like a new person or to correct for some felt deficit. It may be around impulse, when the desire to buy something rises up and cannot be deferred. There are a million ways we might be slightly skewed in perception, judgment, mood, etc. and all of these can affect how we use money.

What I love about the Crawford quote is how artfully it captures a distortion of both self and time. It shows how debt is a way of not fully living life in the present, but rather projecting oneself forward into some fantasy future where money is more abundant (along with approval, achievement, and sex, most likely).

This more affluent future-self is perceived as the true manifestation, and the debt is simply the price we pay to express our confidence in that belief.

I see this again and again in my counseling practice. When people arrive at a point whereby they can no longer afford to sustain their debt, they experience an accompanying personal crisis. It is not that they are so attached to the things that they bought on credit. It is that their coveted future self -- who is much more real to them than the life they live in the day to day -- must be sacrificed to come to terms with the reality of their financial position.

The good news is that most people who get appropriate support through this crisis come out healthier on the other side. It's true one can amass huge amounts of debt but there is pretty much always a limit. Being forced to a financial reckoning brings many activities that are effective in re-aligning the temporal distortion and the imbalance in self-concept. Tracking spending, for example, reinforces connection to the present and helps a person to remain grounded in their life as they actually experience it.

Unless there is true mental illness, a derealized existence actually gets pretty uncomfortable after awhile. You only get one life. Spending all that "future richness" wastes so much more than just money.

Sunday, May 4, 2008

Explanatory Styles and Financial Baby Steps

This morning as my daughter was learning to pull herself up in her crib, I became aware of how I kept my hand on her back, supporting her. Without thinking about it I maintained a presence that was close enough to mitigate a swift fall that might injure, but not so close that she couldn't experiment on her own (and perhaps get a minor bonk or two to the head as she went along). It occurred to me that even this small activity of learning a new skill was a template for her in how she would see the world.

Our experiences shape our beliefs, and experiences are quite subjective things. My daughter's experience of her new activity might be "I am so strong!" or "The room looks different from here." Should she fall, her experience would indicate "Well, that was unpleasant but I sure liked standing while I was up -- maybe I'll try again." Or if the fall was enough to hurt or scare, she might believe that standing is a dangerous activity that should be avoided.

This is a small example (and one that probably only occurs to a caffeine-deprived therapist whose baby wakes up at a quarter to 6:00), but the idea behind it is well-established.

The beliefs that we use to give meaning to our experiences are generally organized into patterns, or Explanatory Styles. Dr. Martin E.P. Seligman is the clinician who is most often associated with the concept of Explanatory Styles through his work in the field of Positive Psychology.

Awhile back I developed a simple quiz to demonstrate how people bring their Explanatory Style into their experiences with money. The quiz asked respondents to identify the thought or belief that would occur in the following situations:

1) You overdraw your bank account and are charged a $39 fee.
Option A: "I never have enough money."
Option B: "This month I didn't account for some extra expenses that I had."

2) You find $20 in a jacket pocket.
Option A: "This is my lucky day!"
Option B: "I'm so lucky!"

3) Even though you've always paid your bill on time, your creditor mysteriously raises your APR.
Option A: "Maybe a temporary dip in my credit score caused this creditor to try to raise my rate."
Option B: "Creditors are unfeeling beasts."

4) Someone with your creditor's fraud department calls to alert you to suspicious activity on your account.
Option A: "Here is one instance when this creditor actually did something right."
Option B: "Creditors do their best to provide good customer service."

5) Your investment portfolio grew significantly in value over the last couple years.
Option A: "The market did well."
Option B: "I did a good job choosing investments."

6) When bringing some items to the register for purchase, the total price is higher than you'd anticipated.
Option A: "I must have miscalculated how much these things cost all together."
Option B: "Some of these items must have been mis-marked."

The six items are organized into three sets of one positive scenario and one negative scenario. The positive/negative dyads correspond to the three dimensions of interpretation that constitute one's Explanatory Style.

The first two scenarios have to do with the value of Permanence, or how we perceive time. When something bad happens, do we think that such a result is to be expected always? What about when something good happens? Is that a result of something that is permanent (such as a character trait) or is it something that just happened randomly?

The second set of scenarios relate to the value of Pervasiveness, whether something is seen as specific or something that is true across all situations. A jump in APR could thus be experienced as a particular event relating to the one account or it can take on the specter of everything that is terrible about the credit industry. A helpful customer service agent could be seen as either an anomaly or as an accurate representative of overall good business.

The final two scenarios demonstrate the value of Personalization, whether we see the event as due to our own actions or whether it occurred because of outside forces. Personalization is the most important dimension when it comes to determining how we feel about our ability to change. A person who sees negative events as universal and always true might still find the will to alter his behavior, but only if he believes that doing so might make a difference. If he believes that he himself is the source of his misfortune then what motivation is there to change?

I posed these six scenarios to a group taking the Seven Weeks to Financial Sanity teleconference organized by Galia Gichon and M.P. Dunleavey. What we discovered was that even people who were familiar with Explanatory Styles and Learned Optimism were surprised how often they identified with the pessimistic/negative statement when it came to money. It seems that we can view the world as generally good and believe in our own positive self-agency, and money can still be an area of our lives where we struggle with destructive frames.

Why is this true? Well, perhaps we grew up in a home where money was treated as a great evil or a cause of conflict. Perhaps the consequences we experienced around our earliest financial decisions were too punitive or hard to bear. Perhaps issues of money separated us from others and caused us to feel isolated.

Perhaps we did not have that supportive parental hand guiding us, preventing the worst spills but still allowing for experimentation and learning. Not to blame parents here -- it's much more straightforward to help a child learn to walk than to navigate the complexities of financial self-care.

Whatever the particular cause (or more likely accumulation and reinforcement of causes), it behooves us to think about how we view ourselves as agents in a money world. The benefit of being an adult is that you can bring events from the past forward into consciousness and apply adult maturity and cognition to understanding them. This new understanding can, with applied practice, become a new cognitive frame that supports healthy financial self-care.

Friday, May 2, 2008

ING Direct "Funny Money?!" Event on May 21st, 2008

I'm going to be participating in an event on May 21st in conjunction with ING Direct NY Cafe. The event is geared toward engaging artists and performers to think about the ways they use money to take care of themselves. Below is the press release. If you are interested in the event and are in the New York area I encourage you to RSVP to and stop by. All attendees are eligible to sign up for a savings account that starts with a $25 balance, and there are raffles for other financial prizes.

For Immediate Release
Contact: Katie Northlich, ING DIRECT NY Café,, 302-255- 3394; Diana Santana, ING DIRECT NY Café,, 302-255-3407.

New York, NY (5/01/2008)–ING DIRECT NY Café, The Actors Fund, and comedians Rick Younger, Keith Alberstadt, and Mike Siscoe team up to present FUNNY MONEY?!, a night of entertaining and informative dialogue on financial challenges artists and performers face in New York City. On Wednesday, May 21, 2008 at 6:30PM at the ING DIRECT NY Café (45 E. 49 Street, between Park and Madison Avenues), these hilarious comedians lighten up the crowd for the financial solutions provided by Amanda Clayman of The Actors Fund and the savings solutions of ING DIRECT. Entry is free. Food, beverage, and door prizes are provided. Please RSVP to by May 19, 2008.

Rick Younger has made audiences around the nation roll in laughter. From television to the Broadway stage, Rick’s performances have shined on BET's Comic View, It's Showtime at the Apollo, NBC's Last Comic Standing, NBC’s The Today Show, the Broadway musical RENT and popular national commercials for Verizon, Staples, and McDonald’s. His current status as star of The Rick Younger Show, featuring Dean Edwards (SNL) and Todd Lynn (My Wife and Kids), allows Rick to give the audience what they need most – the joy of laughter and the comedic energy of Rick Younger.

Keith Alberstadt has entertained audiences nationwide with his easy-going sense of humor and approachable personality. Appearing on the nationally syndicated Bob and Tom Show, The John Boy and Billy Show (radio), and the Boston Comedy and Film Festival, Keith delivers consistently entertaining performances. He has traveled the globe entertaining U.S. troops in Kuwait, Iraq, and beyond, and has been featured on Country Music Television's "Funniest Video Countdown" and "Greatest Redneck Moments." Keith is a contributing writer for National Lampoon's syndicated "Sports Minute" and for The Complete Sheet, a nationally broadcasted radio show.

Mike Siscoe’s quick-witted, high energy shows keep audiences laughing for hours. Voted funniest comic in San Diego by The Reader (1999), Mike began his stand-up career in 1997 at the world-famous Comedy Store in La Jolla, CA and was soon opening for Tommy Davidson, Jeff Altman, Mitch Hedberg, Margaret Cho and Richard Jeni. Now based in NYC, Mike performs at marquee clubs including Gotham, The Laugh Factory, The Improv, Dangerfield’s, and The Laugh Lounge. He has also been featured in national television commercials.

ING DIRECT, fsb is best known as the revolutionary on-line savings bank whose mission is to “Lead Americans back to Savings.” Operating in the US for 8 years, ING DIRECT has stayed ahead of competitors by providing exceptional customer service, high yielding savings products with no minimum requirements and no monthly fees, and through its innovative Cafés, the face-to-face interaction with the internet bank. ING DIRECT NY Café is the only one of its kind in the NY region and is a focal point for customer interaction and outreach.

The Actors Fund is a nationwide human services organization that helps professionals in performing arts and entertainment by providing programs and services such as supportive and affordable housing, emergency financial assistance, employment and training services, and skilled nursing and assisted living care for those in need, crisis, or transition.
Amanda Clayman, a pioneer in the field of Financial Wellness, counsels individuals and couples on the topic and has developed a number of workshops that support the unique financial challenges facing entertainment industry and performing arts professionals.

Media: For information, press inquires, or interviews, please contact Katie Northlich, ING DIRECT,, 302-255- 3394, or Diana Santana,, 302-255-3407. For more information on the comedians or institutions, please visit;;;; or