When people
assume that my passion for financial wellness is the result of a lifetime of
good money habits, I tell them the story of The $19,000 Haircut.
I come from a
family with solid financial values: work hard, spend less than you earn, save
scrupulously and invest wisely. Yet somehow I couldn’t quite reconcile this
excellent advice with the very different message I got from credit card
companies strategically
stationed inside my university bookstore, or with the
dilemma of moving to New York City right out of college (read: no savings) and
living on an entry-entry-level Marketing salary. Still, debt that began
innocently enough spiraled over time into a “what’s $50 more on the Visa?”
attitude, accompanied by anxious night sweats about when a deposit would clear,
and using convenience checks from one credit card to pay the minimum on the
others. A few years into this cycle I was getting farther away from the
entry-entry-level pay excuse, yet no matter how much money I made it was never
enough to right my course. My money (lack of it) and debt (too much of it) made
me feel like I was living a lie, and that anything else I achieved in life
meant little in the face of such monumental secret failure.
Enter my dear
mother, who came to visit me one spring at my apartment in New York. I asked
her to give my hair a trim, something she hadn’t done since I was a child.
Perhaps it was my new metropolitan tastes or her lack of recent experience in
hair styling, but I ended up with what can only be described as a lopsided
mullet. I took one look in the mirror and burst into tears.
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| My haircut wasn't even this good. And ScarJo: this is not good. |
“I can’t!” I
wailed. “I can’t go back there. I bounced a check” —this
scenario occurred in 1999, a time when there was such a thing as paying by
check instead of the ubiquitous debit card— “I bounced
a check there four months ago and I can’t go back.”
My mother was
dumbfounded. Bounced a check? Her
daughter, who had received the best lessons in financial responsibility that the Midwest
could offer? It was true. What’s more, as it became clear over the course of
the next three hours, I was late on several bills and had amassed more than
$19,000 in credit card debt.
Shockingly, she
didn’t pour down any of the blame or censure that I had feared would come if I
disclosed the truth. She simply asked, “Don’t you have a budget?”
“A budget?”
(Not that I was unclear as to what a budget was, you understand. It was
just that I didn’t know how a budget was relevant to me, in all of the
unique snowflake-ness of my individual challenges and circumstances.)
“A budget,” she
continued. “You make a decent income. How can you not have a plan for where
your money goes?”
A-ha, that was
the crux of it. I had no budget because I had no plan. No plan for my money, no
plan for my career. I reveled in throwing myself at the world with just my
talent and my ambition and treating the whole experience like one amazing
adventure. Planning? Bleah. I wanted to be fearless and live a big life. I
didn’t want to live on a budget.
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| MacGuyver says, "OMG, girl, your hair is terrible. You need to get your life together." |
And yet... did
I want to live a life so financially compromised that I couldn’t undo a
lopsided mullet? Was that the life of intrepid adventurer, or was that a deluded
young woman with bad hair?
I wiped away my
tears and decided to come totally clean. I pulled out the tattered bag in which
I kept a stack of old mail. I held back no secrets. I didn’t pretend that I had
this under control in any way, shape, or form. My mom dove right in.
“There!” she
said, after 30 minutes of rapid-fire questioning and sorting through my bills.
She held up a lined notepad that didn’t have more than ten items on it. “Here is your
monthly budget.”
This was a monthly
budget? It didn’t even take up half of a page: rent; cell phone; cable;
electric; credit cards one, two, three, and four (organized by highest to
lowest interest rates); and a weekly allotment of cash to use for everything
else. The follow-up instruction: when you run out of money, stop spending. I
took a deep breath and accepted the notepad.
Oscar Wilde
once wrote that “the only thing that can console one for being poor is
extravagance.” This had definitely been true
for me. I had resisted being on a budget because I was afraid that it would
deprive me of freedom, and when gripped by that fear I would try to soothe
myself by (paradoxically) going out and spending more
money. But in the first weeks and months of
following my spending plan, instead of feeling restricted I was shocked to
discover that I felt liberated. If I chose carefully, I had enough money in my
weekly cash allotment to meet my obligations and even allow a little breathing
room after the basics were covered. Being
able to take care of my needs safely, without worrying that checks would
bounce or that I would regret the purchase later, was a kind of emotional
freedom I’d never before experienced. Also, I felt much more attached to the
items I did decide were worth parting with money for. Instead of associating
purchases with failure and fear, I associated them with confidence and value.
Once I made the
“my money choices = me” connection, I felt a flood of meaning in my financial
life. It was like I could see clearly for the first time. I went from utterly
unconscious to fascinated with everything about the financial
process. Thus when I looked at my debt, what I saw was a $19,000 reflection of
all of those years of pain, frustration, and shame. Talk about motivating! I
wanted that debt gone.
That same
spirit of attacking life made me attack my debt and just want to pummel it into
the ground. Every freelance job, tax refund, or gift from Grandma went toward
my debt. And what’s more, I paid it joyfully. It took me just over a year to
pay off the entire amount, and I remember that year as one of the happiest
periods in my life. I hosted “clothing swap parties” with friends instead of
going shopping (frankly, my friends were thrilled I’d 'fessed up about my money
problems because they were all secretly in debt, too). I planned my life
better, cutting back on taxis and convenience food, which made me feel calmer
since I wasn’t so harried all the time. I learned to cook and lost weight. I even
negotiated—successfully—with a retailer or two in order to make a purchase fit
within my spending allotment. What was “another $50 of debt” and the resulting
dread and shame when compared to the actual freedom that came from financial
security and working toward my goals?
The gift of
this period was that I learned how to pay attention to money. The debt was the painful
wake-up call that I tried to ignore until it was impossible. The budget was the
framework for engaging with my own decision-making process and discovering my
own values. And the money itself? Money became a language that I learned to
speak.
Now I want to
be clear that my experience with The $19,000 Haircut and paying off my debt is
just that: my experience. After working as a financial therapist and coach for
the last decade, I understand that there are several parts of my situation that
were extremely lucky. I had a good, steady job and could take on extra
freelance work. I received encouragement and support from my family. And just as importantly, this all happened in
1999-2000, the years when credit card companies were tripping over themselves
to offer huge credit lines with 0% 12-month introductory rates and no balance
transfer fees. It was cheaper for me to get out of debt then than at another
time in history.
But the greatest lesson of The $19,000 Haircut was not about financial
tactics. The gift of The $19,000 Haircut was the discovery that money can take
us on a journey where we learn to do something different (financially) and it
makes our lives better (non-financially).
The $19,000 Haircut put me on path whereby I became financially sane, personally empowered,
and I found my life’s passion. That’s my story.
