2687: I Used To Be Afraid Of Money, But Things Have Changed by Liz of Frugalwoods

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[00:00:54] This is Optimal Finance Daily, Episode 2687.

[00:00:58] I used to be afraid of money, but things have changed by Liz Davidson of frugalwoods.com.

[00:01:04] And I'm your host and personal finance enthusiast, Diana Merriam.

[00:01:08] We're going to get right to it as we optimize your life.

[00:01:15] I used to be afraid of money, but things have changed by Liz Davidson of frugalwoods.com.

[00:01:23] I used to be afraid of money, not in the sense that I thought it was going to jump out of a dark alley at me,

[00:01:28] more in the vein of fearing the unknown.

[00:01:31] Debt terrified me to such an extent that I didn't even have a credit card until I was 23.

[00:01:37] Everything related to finance seemed cryptic and complicated to me,

[00:01:41] and I wasn't sure what to do with money.

[00:01:44] And so I saved it.

[00:01:46] Saving money isn't the worst default position, and I suppose it was smart to an extent.

[00:01:51] The problem is that I was saving from a place of fear, not a place of strength.

[00:01:56] I couldn't spend money.

[00:01:58] I felt as though I couldn't ever spend anything, and I dreaded parting with even the least of my funds.

[00:02:05] I'd go to notorious lengths in order not to drop a dime,

[00:02:09] such as sleeping on a yoga mat on the floor of my first post-college department in New York City

[00:02:14] for a month before I finally caved and bought a bed.

[00:02:18] And even then, I bought the dirt cheapest bed I could find.

[00:02:22] Naturally it wore out within a year, which is pretty atrocious considering I was the only person sleeping on it

[00:02:28] and I'm a rather small person.

[00:02:30] Hence, I'm forced to confess that I was cheap, stupidly cheap,

[00:02:34] and a far cry from strategically frugal.

[00:02:38] As I got older, as in I turned 23,

[00:02:41] I finally accepted the fact that I needed to become more adept with my financial activities.

[00:02:46] While eating beans and tuna from cans every day works for a while, especially when you're 22,

[00:02:52] I acknowledged it probably wasn't a totally sustainable mode of operations.

[00:02:57] Don't laugh, but what I did was read Personal Finance for Dummies,

[00:03:01] and I honestly felt a whole lot better after I did.

[00:03:04] The first portion of that book is devoted to paying off your debt,

[00:03:08] and since I didn't have any debt, I skipped ahead and started to feel a bit of relief creepin'.

[00:03:13] I learned that I'd unintentionally done a very smart money move.

[00:03:17] I hadn't inflated my lifestyle one bit after college.

[00:03:21] In fact, I probably downgraded it a step.

[00:03:24] Hello, yoga mat bed.

[00:03:26] In doing so, I'd saved $2,000 of my $10,000 salary while living in New York City.

[00:03:32] And I'd circumvented all debt.

[00:03:35] I'd even paid the $300 in cash for my sad little bed.

[00:03:39] Gaining Confidence

[00:03:42] Reading that simple straightforward book gave me the awareness that I wasn't a total idiot with money,

[00:03:48] and that managing my money didn't have to be a complicated fraught affair.

[00:03:52] Now, I come to my decision to save from a confident enlightened position,

[00:03:57] not one mired in constant anxiety that I'll be broke.

[00:04:01] I think I labored under the delusion that my money was just going to march right out of my savings account one day,

[00:04:07] and so I checked it obsessively.

[00:04:09] Not something I'd recommend, by the way.

[00:04:12] The choices that Mr. Frugalwoods and I make regarding our plan to retire at 33

[00:04:17] and live a life of extreme frugality are made with an open and informed mind.

[00:04:22] I know exactly what I can afford, and I just chose not to buy it.

[00:04:27] I realize that my buying power is far above what I spend,

[00:04:31] and I'm content in that determination.

[00:04:33] I finally understand compounding interest, the rudiments of investing,

[00:04:38] and the wisdom of maxing out my 403B.

[00:04:41] Similar to how many people inadvertently spend their way into excruciating debt

[00:04:46] by fearing and misunderstanding money, I was saving in a painful way.

[00:04:51] Either scenario connotes a lack of knowledge,

[00:04:55] and both are born of an inability to face reality.

[00:04:58] I had to own up to my ignorance about money and come to a place where spending isn't stressful or scary.

[00:05:05] It's a measured, thought-out declaration that I make on my own.

[00:05:09] Why is money taboo?

[00:05:12] Money is one of those things our culture has decided we shouldn't talk about openly,

[00:05:16] which I think is ludicrous.

[00:05:18] It's the lifeblood of how we all survive, more or less.

[00:05:22] And yet, we can't discuss it with each other.

[00:05:25] I cry folly.

[00:05:27] What personal finance for dummies made me grasp is that money isn't shrouded in mystery

[00:05:32] and it's not really all that complicated.

[00:05:34] The problem was actually with me and my unwillingness to ask for help,

[00:05:39] not with the money itself.

[00:05:41] My money was cheerfully sitting in the bank, oblivious to my personal turmoil over what to do with it.

[00:05:47] This widely held belief that it's crass or rude to discuss money

[00:05:51] only serves to hinder our own education on the topic.

[00:05:55] People suffer alone and silently with debt, overspending habits

[00:05:59] or a lack of comprehension over their finances

[00:06:02] just because our culture thinks it's impolite to discuss.

[00:06:06] Sure, it's rude to boast about how wealthy you are

[00:06:09] to someone who's struggling to make ends meet.

[00:06:11] But is it really rude to share a great deal you found at a thrift store

[00:06:15] or discuss sage investing strategies

[00:06:17] or the beauty of your company's 401k match?

[00:06:21] I think not.

[00:06:22] In the same way that we share recipes with our friends,

[00:06:25] why don't we start sharing our money stories?

[00:06:28] Money is emotional, but it's just math.

[00:06:31] In talking with people about money,

[00:06:33] something I get to do on a regular basis thanks to Frugal Woods,

[00:06:37] I find that just about everyone has or had a hang-up with regard to money.

[00:06:42] We spend and we save emotionally.

[00:06:45] For the most part, we don't see money merely as numbers on a spreadsheet.

[00:06:49] We conflate it with our self-worth, our self-esteem,

[00:06:52] our happiness and our very perception of ourselves.

[00:06:55] And indeed, money is pretty darn critical to how we operate in the world,

[00:06:59] but it's not everything and it doesn't need to define us.

[00:07:03] When we peel away the emotional elements that we often couch our money in,

[00:07:07] it's just boring old numbers.

[00:07:09] As far as I know, there's nothing intimidating, mysterious, embarrassing

[00:07:13] or socially taboo about math.

[00:07:16] I want you to know that I write this as a person who is certifiably terrible at math,

[00:07:21] but with spreadsheets and calculators, that doesn't matter.

[00:07:25] Funny story, my math score on the ACT was so low

[00:07:28] and my reading and writing score was so high

[00:07:31] that my advisor asked me if I'd fallen asleep during the math section.

[00:07:35] And when going to grad school,

[00:07:37] I nearly panicked when I found out the GRE had a math section,

[00:07:41] but I'd managed to live through the test and not go into shock.

[00:07:45] And here I am now talking about money. See, it's not so bad.

[00:07:49] And that's what money truly is or truly should be, math.

[00:07:54] Think about it, if we approach money as a math problem on a spreadsheet

[00:07:57] and one that we could ask other people advice about,

[00:08:00] how much cleaner and simpler would our lives be?

[00:08:03] When money stops serving as an analog for self-worth

[00:08:07] or an antidote to our pain, it starts to actually work for us.

[00:08:11] Thanks to this belief, I'm now in control of my money

[00:08:14] as opposed to the other way around.

[00:08:20] You just listened to the post titled,

[00:08:22] I used to be afraid of money, but things have changed

[00:08:25] by Liz Davidson of FrugalWoods.com

[00:08:28] and I'll be right back with my commentary.

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[00:10:39] This post reminds me of one of my favorite quotes

[00:10:41] about money from Ayan Rand.

[00:10:43] She says, quote,

[00:10:45] Money is only a tool.

[00:10:47] It will take you wherever you wish,

[00:10:49] but it won't replace you as the driver.

[00:10:51] End quote.

[00:10:53] It makes me think of money

[00:10:55] as a tool like a hammer.

[00:10:57] Acquiring the hammer and deciding

[00:10:59] on which features you want the hammer to have,

[00:11:01] how heavy it is, where you'll store it, et cetera

[00:11:04] is far less interesting

[00:11:06] than deciding on what you're going to build

[00:11:08] with that hammer.

[00:11:10] Even if it's the fanciest hammer in the world,

[00:11:12] it's not worth much

[00:11:13] if it's just sitting in a toolbox

[00:11:15] not creating anything.

[00:11:17] On this show, we talk so much about

[00:11:19] how to make money, where to put it,

[00:11:21] and how to manage it.

[00:11:23] But let's not lose sight of the fact

[00:11:25] that this incredible tool of money

[00:11:27] is worthless unless you use it

[00:11:29] for something.

[00:11:31] I've come to learn that money is only as valuable

[00:11:33] as your clarity on how you'll use it

[00:11:35] and your comfort level of how much is enough.

[00:11:37] But that'll do it for today

[00:11:39] and another installment of Optimal Finance Daily.

[00:11:41] Have a happy Thursday.

[00:11:43] Thank you for being here every day and listening,

[00:11:45] and I'll see you on the Friday show tomorrow,

[00:11:47] where your Optimal Life awaits.