How long do you think you
can keep all that debt in the air before it crashes down on you?!
As a life coach, I work
with thousands of people who want to put themselves on the path to prosperity in
every part of their lives. When it comes to helping them get on track
financially, my first step is to identify their goals, assess their current
situation and review the strategies they've used to create their current
reality. One of the most common problems I see is what I call "The Juggler."
The Juggler is someone who
has become quite skilled at keeping a lot of balls in the air such as credit
debt, consumer debt, and sometimes even multiple incomes and/or savings plans.
Beneath the circus act, though, is a person whose knees are knocking with the
fear of dropping just one of the balls and sending the whole façade crashing to
They say that experience is
the best teacher. I can attest to that fact. I know what I'm talking about
because a decade ago, I was that fearful Juggler!
The Problem: I was making
great money for the first time in my life. I had achieved and even exceeded my
income goal. I had the convertible with the 6-figure price tag, the Southern
California beach pad, and the Rolex. I was living the dream. However, like many
entrepreneurs, I focused only on "cash flow creation" and neglected what I call
"cash flow management". (Cash flow management is the art and skill of knowing
how to manage your income and expenses so you end up on the + side of the game
each month. (income-expenses=net cash) I will fully address "The 3 C's of Money:
cash flow creation, cash flow management & cash flow investing in a future
article.) Here's the crazy part. My credit rating was awesome because I kept
making payments, so the credit card companies kept sending me credit cards with
high limits and next thing you know I ended up with $96,000 in credit card debt
on 11 credit cards and a total of $1700/month in minimum monthly credit card
payments. The interest on the credit cards alone was over $700/month!
The Implication: My dream
life became a nightmare. I was so frustrated, confused and angry with myself for
getting into this position that all I wanted to do was be "an ostrich" and
ignore it. My financial environment had become so complicated that even my
personal banker, who I had hired to pay all my bills and do my bookkeeping,
threw up her hands and walked away. And I don't blame her!
The more complex we allow
things to get, the easier it is to lose ourselves in the complexity. In
coaching, we call this chaotic lifestyle, "Patterns of Complexity." Some people
end up juggling mortgages, savings plans, car payments, and even jobs. Look at
your life for areas of complexity and ask yourself if there is something you're
hiding. For me, the complexity and the juggling had to end. I couldn't take it
mentally or emotionally.
Here's how I became a
juggler: I started off with a credit card with 0-interest for a set time period.
You tell yourself you'll just use it and pay it off. Hey, it's like free money,
right? You get another card and another. The credit limits keep going up. When
you exceed the 0-interest period and haven't paid off the card's, you transfer
the balance's to one-or several-of those shiny new cards! I ingeniously created
a spreadsheet with columns for creditor, APR, balance, available credit, and the
insidious minimum monthly payment.
You see, for the Juggler,
it's all about that minimum payment. You think, "Sure, I can handle that!" What
you don't realize is that even if, like me, you never miss a payment, you are
not the one in control; those minimums are intentionally calculated to keep you
in debt for 32 years. Beyond that brutal fact, once the credit card companies
learn what your debt to income ratio is, they adjust the interest rates
upward…and they can escalate to over 20%. I don't care how agile you are, even
if you could keep up a juggling act for that long, why would you want to?
Here's the biggest
implication for the Juggler. The Law of Attraction states that whatever you
focus most of your energy on with the greatest emotion, you will attract. So, if
you are spending your time every month focusing on juggling debt, you will
simply attract more debt. You will never create wealth by focusing on debt!!!
If you haven't seen or read
The Secret, I highly recommend it. Many of my friends and colleagues from The
Transformational Leadership council were featured in the movie and it
brilliantly explains The Laws of Focus and Attraction and how to apply it to
your life as a whole. Another great movie called Pass It On is about to be
released and it focuses on W.I.S.H., which stands for Wealth, Inspiration,
Success & Happiness…and yours truly has a small appearance in that film.
The Solution: To make the
change, you must consciously make the shift from focusing on debt to managing
your cash flow and creating wealth.
The first step is to Know
the Numbers. Get all of the numbers out of your head and put it on paper in
black and white, it will do wonders for your sanity. Create a spreadsheet; if
you can't do this yourself, find an accountant or visit
http://www.JimBunch.com/creditcard.html and download the one I created.
Update your spreadsheet on a regular monthly basis, print it out and put it in a
3 ring binder to keep track of your progress. When possible, consolidate the
debt into one manageable lump sum.
Second, Stop the Bleeding
by Creating Environments of Accountability. If you've been in juggling debt for
years…it means you're in the habit of "being in debt." Left to our own, we will
continue to repeat those patterns until we raise our awareness, take new actions
and design environments that force us to have new behaviors. In other words,
spill the beans. Work with a coach and/or a mastermind group that can help you
to stay honest and stay focused. I got honest with my Mastermind Group and it
was the best thing I could do for accountability. Watch for future articles and
see my website for more information on how to form a Wealth Mastermind of your
own. Here are a couple other strategies to stop the bleeding:
Eliminate the possibility
of going deeper in debt by cutting up the credit cards or freeze them in a block
of ice in your freezer and toss the offers for new credit cards in the trash!
Cut expenses-like gym
memberships, cable TV bills, magazine subscriptions-cut anything that isn't
creating you wealth or putting food on the table. Quit telling yourself you need
that stuff, the truth is, you'll be happier without all those distractions in
your life and you will create wealth much faster without them.
Third step, Focus on
Creating Wealth and Make It Fun: I also had an "a-ha" moment in the process of
playing the Cash Flow Board Game by Robert Kyosaki. In the game, I saw myself
repeating my real-life spending patterns. That is, I was spending all my time
managing debt rather than managing cash flow and focusing on investing. You will
never get wealthy by focusing on debt…you must focus on creating wealth!!!
The Result: As a result of
my Cash Flow Board Game realization, I decided to eliminate the option of using
credit cards all together by cutting them up and cancelling all of them. Then I
cut my expenses to the bone, ramped up my cash flow, improved my credit score
and invested all the extra time I had in studying the local real estate market.
We barely qualified to get into our first real estate deal, but thanks to all
the research we did, we bought a property that appreciated over the next 2
years, sold it and paid off all my credit card debts and left me enough money to
get into more real estate deals.
The important thing is that
raising your financial awareness, taking new actions and designing environments
of accountability allows you to untangle the Patterns of Complexity that you've
set up for yourself. As I did, you'll probably feel vulnerable and a bit
frightened as you step aside from your juggling act and into a new routine. But
think of all the time and energy you'll have to focus on creating and managing
wealth! Once you begin managing your finances wisely, you'll have more money
available to surround yourself with your "Ultimate Wealth Team" to help you take
your financial game to the next level.
About the Author:
Jim Bunch is considered by many leaders to be "The Ultimate Life Coach."
His company and team of
coaches inspire thousands of leaders and their teams to Play and Win "The
Ultimate Game of Life."
Their mission is to inspire
Happiness, Health, and Wealth worldwide through transformational coaching
programs, seminars, and products, such as books, CD’s, and online courses.
Call 888-335-3880 or visit
www.jimbunch.com to learn about transformational programs.