Episode 2: What causes financial struggles

This episode discusses the basic issues behind what causes people to get into and continute to experience financial struggles.

Transcript

SPEAKER_01 0:20

When it comes to money, there is no limit to the advice you get from family. Whether you're just starting your financial journey or you've been around the blood. Welcome to money, finance, and investment with Mr. Will.

SPEAKER_00 1:33

Welcome back to our second episode of Money, Finance, and Investments with Mr. Will. And hope everybody is doing great. Today, we're going to talk about the subject of what causes people to experience financial struggles. Have you ever thought about that? Because most people, when they encounter financial difficulties, they don't really think about how they got there or what impact the decisions that they made actually had on them experiencing the difficulties that they're having. So I thought today, this episode, I'd spend a little time just having a discussion about what causes people to experience financial struggles. You know, most people, when they run into difficulties with their finances, the first thing that they say is, I need more money, I need to make more money, I need a better job, or something of that nature. And actually, that's really one of the things that prompted the title of my book. For those of you all who tuned in last week, I shared a little bit of information uh regarding that, but this idea that when we experience financial difficulties or financial struggles, or you know, there's a sustained period of time where we don't feel like we have enough money. The common thought process is my problems are byproduct of not having enough money. In other words, there's a lack of finances that are causing me to be in the situation that I'm in. Which is why my book is titled Money Ain't the Problem. What we do with it is, but there are some other underlying things that come into play that cause people to experience financial struggles, and so I'm going to talk about a number of those things, not necessarily in any specific order per se, although there is some rationale behind the way that I'm going to list them to you, but this isn't an official order, so to speak, of why people get into financial difficulties. So the first thing that I want to talk about is impatience. Most people are impatient because we have been taught in the society that we live in to be impatient. We have been taught to not want to wait on things, but to get what we want and to get it now. So we have things like payday loans, we have services that will allow you to get your income tax return, the money from your income tax return immediately without having to wait on it in the mail. And any other number of things, pawn shops, again are a way to get quick money. And so all of these different things are a part of the society that we live in that promotes impatience. When you look at commercials, commercials are promoting for you to satisfy yourself right now, don't wait, don't delay gratification. And all of this contributes to that whole mentality that I'm talking about of impatience. So it's not just for themselves, because it's a mindset, right? Give you an example. Let's say a student graduates college and they go into the workforce and they're earning good money. Now, many times this student who's graduated has student loans that they need to pay back. And on occasion, and all situations are different, so I'm just giving an example. This example does not mean that this applies to everybody or every situation, of course. But you may have a situation with that student where they're now ready to get off into the workforce, they move back home for a temporary period of time, and they get off into the corporate world of working, get a couple of paychecks, and immediately they start identifying things that they want: apartment or a house, a car, furniture. Now they haven't saved a dime. They got a couple of paychecks, they earned good money, they haven't saved a dime. Yet they've already started putting themselves in a position to struggle financially. It doesn't happen right away, it's not immediate, but again, they still have student loans that haven't been addressed or paid for. They may be in some kind of deferment or what have you, but they haven't been paid for, and they haven't even thought about laying out a plan to pay for them. And they're going out and creating debt by purchasing things or committing to things because they don't want to wait and because they're not patient, and haven't thought about saying, Well, you know, hey, mom, dad, grandmama, uncle, whoever they're staying with, can I lay out a plan to stay here for a certain period of time to save up some money so that I can, you know, do this and do that, and not start off right out of the bat, off the bat in the hole. Right? That's called impatience. And whether we like to consider it that or not, that's what it is. So then, after impatience, another thing that causes people to get into financial struggles is being disorganized, disorganization. You know, once upon a time, way back when, before technology took over the way we live life, people used to have something called a checkbook, where they needed to record their transactions so that they could have a way of knowing how much money they had left to spend from the money that was in their account because you couldn't log online on your smartphone or tablet or you know, device, uh, didn't have debit cards accessible to you and all that stuff. So you needed to have a way to be able to know within reason, if not to the penny, at least very very very close, how much money you had to work with after you paid your bills and after you took care of your responsibilities and you know extracted whatever cash you needed for the things that you needed to do for that week or whatever the time period was that you established as your uh budget period, meaning if you you know lived off of a hundred dollars a week, because again, we're talking about in a time period when people had checkbooks and all this stuff, so we're talking, you know, years 70s, 60s, maybe early 80s, or things of that nature, right? So $100 could take you, you know, quite a ways over the period of a week or even a couple of weeks, depending on what kind of lifestyle you live, but you still needed to know how much money you had left when it was time for you to go get more money. And the way you did that was through the ledger of the checkbook. Well, people don't use those anymore, and while there are all kinds of tools and resources that people can use, most people don't use them, so they're disorganized, so they don't really keep an accurate assessment of how much money they have left in their account as they're swiping their card on a regular basis for everything from Starbucks to whatever fast foods to pilot a pair of shoes to going to the movies, etc. Okay, and that often causes people to end up in a situation where now they got to put money or use their credit card to buy something because they don't have enough money in their bank account to use their debit card, or in some cases, people just use their credit card and then they pay on the credit card, not necessarily paying it off for the expenses that they incurred, but they pay on the credit card to you know pay down the amount that they owe, and they live off of using their credit card and don't keep track of that and don't you know uh exercise some kind of a system to be organized in that process. So, again, ultimately it contributes to people accumulating more and more debt, having less and less money available to them, and ultimately getting into a crunch. And this is a very, very common thing. Uh, in fact, even people that use uh debt consolidation programs, once they get a certain amount of cash flow freed up, they end up ultimately getting back in the debt and even more debt because they're not organized, and so it becomes a vicious cycle, so to speak, uh, until things get so catastrophic that a person now has to go on a really, really tight financial situation to just be able to manage and maintain and try to get by from you know paycheck or uh week to week or pay period to pay period. Um not able to uh use credit cards anymore because those are maxed out, credit scores go down and are impacted because they're late on payments, and you know, all these different things happen. And again, there's a progression. Yeah, people are impatient, that impatience is often complemented, supplemented by disorganization, and a lot of these things are a byproduct of a lack of discipline. So that's the third thing. People just aren't disciplined, and so because people aren't disciplined, they don't exercise a process of doing things that would promote financial success, and so that lack of discipline is contributing to that impatience because I don't want to wait, and I don't want to save money, and I don't want to do the things that would help me to avoid having financial struggles. So I get into these financial binds, and now I think I need more money to get me out of it because I don't have the discipline to be patient, I don't have the discipline to get organized, I don't have the discipline to plan, which is another reason why people have financial struggles. They don't plan. So all of these things are connected, they're interrelated. And so if a person isn't disciplined, they're not willing to wait, so they don't plan. Because you may need to save up for six, seven, eight months before you go out and try to buy a car, or you may need to save up for a year and a half to have enough money to be able to afford to put down the first and last month's deposit. Some places want a security deposit and first and last month's rent. Then you need to buy furniture, you know, all of the different um items that you need when you purchase a home, and you know that could cost a pretty little penny. Well, a lot of people don't want to do that, so they just put everything on credit card and they again start accumulating debt, and it just continues because oh, now you know, I have this wedding that I'm going to, my friend's wedding that I'm going to, and I need to get me some new outfits, new shoes, new this, or whatever the reason is. And again, not saving for that, even though I knew about the wedding nine months ago. I ain't saved anything for these additional things that I want to get. I waited to the last minute and decided, oh, I'm gonna put it on the credit card. Well, that's a lack of planning, and that's again because of a lack of discipline, not being organized, and being impatient. And you know, all of these things are interrelated, therefore, it collectively leads to the scenario where people having financial struggles, right? So there is one other element. I intentionally made it the last thing because many people like to make this the main reason outside of not making enough money. A lot of people like to make this the main reason for why they end up in financial struggles, but it's really not the main reason, and that is the unfortunate events of life. Yes, people do experience financial struggles because of unfortunate events of life, but those are the exceptions, not the rule, because many of these unfortunate events in life are byproduct of decisions that people made that caused them to be in a situation where an unfortunate event happened. For example, if a person got into an automobile accident because they were impatient, that's not an unfortunate event of life. That's a bad decision that caused you to end up in an accident that that's considered an unfortunate event of life. Right? A foreclosure is not necessarily an unfortunate event of life. A foreclosure oftentimes can be the byproduct, and most of the time is the byproduct of these other things that I talked about: impatience, disorganization, lack of discipline, lack of planning, ultimately leading to a scenario that is an unfortunate event of life, but it's more a circumstance that was brought about by a series, usually, of decisions that were made that weren't good decisions, that often included being impatient, not being organized, not being willing to plan, not having discipline, etc. And so while I don't want to dismiss the unfortunate events of life, sometimes people have medical events. Now, there are two types of scenarios that this applies to. There are situations, and I know because I'm in the industry, there are situations where I know personally people who refuse to pay for health insurance because in their mind it wasn't that they couldn't afford it, in their mind, it cost more than what they thought it should cost. So they chose not to have health insurance. And I know personally people who, because they chose not to have health insurance because they felt that it cost more than what it should cost, ended up having a medical situation that cost thousands of dollars that depleted a considerable amount of their savings. That's not an unfortunate event of life that caused them to have financial struggles. That's a bad decision, and that bad decision came back to bite them because they had a medical event, that was costly. Now, on the other hand, there are situations where people who have medical insurance, and because of the nature of their medical situations, those costs just happen to have, excuse me, a significant uh impact on their financial situation, thus you know, creating a scenario where they have financial struggles. Okay, so as I say this, I'm not dismissing these unfortunate events of life that occur, and there are others you know that come into play, but at the end of the day, that's more the exception than the rule. Most financial struggles are a byproduct of the Initial things in patients being disorganized, lack of discipline, lack of planning. And we know these things are relevant because when you look at celebrities, when you look at entertainers, you look at athletes, and you hear about all of the stories of people who earn millions and millions of dollars and they end up bankrupt or they end up in some type of financial distress. It's not because they didn't have enough money. And it's certainly not because of the unfortunate events of life, it's because of those other things. And what I'm going to communicate in this whole scenario is financial success has to be intentional. And avoiding financial struggles also have to be intentional. There has to be a deliberate intentional structured process that's implemented to help people position themselves to avoid getting into financial struggles and financial difficulties. We're going to talk more about this over time, but I thought today that would be a good topic of conversation, and I wanted to put some specific scenarios out there to support what I'm talking about in terms of the uh situations where people get into financial difficulties and so forth. And so next time we're going to embark upon a different topic, different conversation. Not exactly sure what it's going to be yet, but I'm leaning towards answering the question. How much money is enough money for you to live a comfortable retirement if you're between the ages of, let's say, 40 and 50? How much money are you going to need when you retire to live comfortably for the duration of your life? So that's a little bit of a preview. Not 100% sure that that's going to be the topic, but there's a pretty good chance that that's what it's going to be. So until the next time, hope you all have a fantastic week, and I'll see you the next time on Money, Finance, and Investments with Mr. Will. Peace.

SPEAKER_01 25:03

This has been another episode of Money, Finance, and Investments with Mr. Will. For more information, check out his book, Money Ain't the Problem. What we do with it is so that you can learn how to live your best financial life. In the meantime, be sure to check out our next episode of Money, Finance, and Investment with Mr. Will.