Michelle Rupp: Hello and welcome to this week’s edition of AFMC TV. We’re so glad that you’re joining us today. We’re talking all things money. We’re talking about financial stress and how that might impact your health. We’re also going to talk a little bit about if you are experiencing financial stress, what you can do to minimize some of that stress. Joining me right off the bat this morning is Ken Clark from Chenal Family Therapy. Ken, it’s always great. You’re a friend of the show. It’s always great to have you on. Thanks for joining us this morning.
Ken Clark: Super fun to be here. It’s one of my favorite topics to talk about.
MR: Awesome. Well, so I’ll just jump right in and talk. My first question would be what do you say to someone who comes to your office and says, “Ken, I’m so stressed out about money.”?
KC: Yeah. The first comment is you and everybody else, right? We normalize the daylights out of it. We as a country are notorious for the amount of debt we carry personally. We live right up against our budgets. We as a nation are really bad with money, as individuals and households. So just normalizing it and removing that shame piece is really important because it’s hard to be proactive when you feel ashamed when you just want to hide and avoid things. So that’s the first thing. Number two, because this is an area that is so emotional and involves technical aspects, things that we don’t fully understand, taxes, whatever. It’s one of those things that we have to ask for outside help from maybe both from a therapist to help manage the emotional issues around it. And then an accountant or a financial planner or somebody who understands that stuff that can help us plot a course out of it and see the stair steps. You do this next, you do this next and then a year from now will be in this place. Finances are like the Titanic, right? It’s going to take a while to turn around, I think as the song goes, but we really need somebody who can help us plot a course and somebody who can keep us calm during that course. And that’s where we try and point people.
MR: What do you think it is about that magic number of 40 years old when panic starts to set in? And you think to your point, I’m in debt. I’m living paycheck to paycheck. I don’t know how the household is staying together. Oh, and by the way, there’s this little thing called retirement that I may be interested in doing in the next 25 years or so and I have not even begun to really put back for retirement. I mean, even just saying it out loud there’s a level of stress that comes with it. What do you say to folks?
KC: Um, and by the way, for some other folks, you also have college and/or weddings and honeymoons thrown in there right at the point where you should be saving the most for retirement, right? Like that’s, that’s a common deal to raid the 401k for a wedding or college. Once again, we normalize it. It’s super normal, right? At 25 to 30, 35, there’s still time, right? Like we do that human thing of, there’s still time. We always joke right? The most popular day to start a diet is tomorrow, right?
MR: It’s down the road, right?
KC: Right. And, so I do think, you know, we overestimate what we can accomplish at a later date. And so, 40 is this space where people realize, I’m in the home stretch, right? I’ve got 20 years, that’s not a whole lot of time. They begin seeing their parents, their slightly older friends, and coworkers now bumping up against those realities. So, it makes things very real. Whereas at 25 or 30 it’s not. So that’s number one. It usually also means that there are some hard choices that need to be made about the ski boat or how we spend money or how much we go out to eat, and it requires a lifestyle pivot that doesn’t just affect one person, but it often affects the household, the family, things that people have come to expect. So, a lot of people get paralyzed, right? Analysis paralysis. They get paralyzed in place. I need to make these changes now, but my 15-year-old is talking about the car that they think they’re going to get when I can’t even afford the car that I have. So, it really all comes to a head. And again, it’s one of those things … At my core, I’m probably a reality therapist. Somebody who, it doesn’t matter what is fair or not. In the end, if you don’t change these things, bad things are going to happen. At that point, we have to have some really tough discussions where we have to have some accountability and own some things. And again, that’s where a therapist or an accountant or a certified financial planner fits into that. They can take some of those discussions off you and they can look at your household with you and say we don’t have a choice. That’s where that expert opinion from the outside is really valuable.
MR: Is one of the first steps to just tell individuals that find themselves in that situation, “Just take a second and just breathe.”?
KC: Yeah, I mean really it is. There’s some fun statistics out there, you know, my former life, I was a financial planner before I became a therapist. So, over the years I’ve had to wrestle with a lot of these concepts. I think the Wall Street Journal a few years ago pegged financial happiness at $72,000 a year in household income. Which is still a lot for some folks. But you know, a lot of folks are making six figures and spending more than six figures. The reality is we can be happy with a lot less. In fact, a lot of households, when I talked to them, they were happiest when they were poor, and they were making food with the rice cooker and clipping coupons. Leftovers from your in-law’s house were like winning the lottery. So, to your point, Michelle that that breathing and remember that happiness was achieved at a lower cost of living and with less money and more constraints and realizing that we haven’t missed our opportunity to be happy in life for the rest of it. We just need to change and adjust some of our expectations and behaviors and we can find that happiness again, minus the stress. And so that breathing is the beginning of it. The world is not ending.
MR: Some of my favorite memories growing up isn’t when we went to the mall or to the movies. It was when we were sitting, or even out to dinner, but it’s when we were sitting around the dinner table, you know having hamburgers. Then we’d all go into the living room and watch, you know, the Friday night movie that was on television and that’s what I remember. It’s not the expensive dinners and the expensive movies.
KC: We migrated here from California. For the first few years, we had to drive back to California. We couldn’t afford airline tickets. And so, my now college kid and high school kid, the first time we were able to fly to California, we didn’t inform them. They were like seven and nine. And so we load up the car and we leave and we pull into the airport in Little Rock and the other one says, “What are we doing?” I said, “We’re going to California, we’re going to go get on a plane.” And he literally said, “Wait we’re not driving?” It turns out that drive and staying in these fleabag motels and by roadside beef jerky and stopping at the meteor crater in Arizona. Those are these iconic things that they lived for. Yeah. That to me represented shame, like, I can’t afford to fly my family, and yet for my kids, they still talk about those road trips.
MR: Yeah, we’ve all got memories like that. I’m curious. Someone who, and I want to tap into the financial planner side of your brain, but the person who is working to get out of debt and wanting to contribute more to their 401k … How are they able to achieve that?
KC: Yeah. So, it’s so simple but that’s what makes it hard, right? 401k’s are great because it’s an automatic behavior that the money disappears before it hits our bank account, right? So that makes some of the choices for us. In the same way that if I don’t want to eat a lot of potato chips, maybe you just shouldn’t keep them in my house, that might make the choice for spending, right? Most people don’t get themselves in trouble because they decided to have a wild month double pay their car payment. That’s not how they blow off steam, right? It’s that upstairs, this is the psychology of it. They decide, you know, it’s been a rough month. I deserve it, my kids deserve it, or I just can’t live without it, and that credit card comes out and allows them to spend money they don’t have, and then they’re playing catch up. The very simple, painful answer is the credit cards need to come out of the wallets. Bank accounts won’t let you spend below zero very easily, but credit cards will let you spend money you don’t have. When the credit cards come out of the wallet, they remove some of the impulsivity that exists psychologically. Way back in the day, I wrote a book about getting out of debt. And what I’ve reflected on, there was my wife and I’s own experience, which is we canceled all the credit cards except for one because you need one to buy airline tickets or whatever. We took it and we put in a foam cup of water, and we stuck it in the freezer. Neither of us had it in the wallet and if we needed the credit card. We actually had to get out the hammer and break the ice. There was this barrier to use, which is often enough to keep our impulsivity from driving up those variable expenses. So, make things automatic and remove impulsivity and you’re 95% of the way at home.
MR: What’s your feeling about cash? I use cash and my friends tease me all the time because I use it, but I tell them, you know when the cash is gone, it either better be payday or I’m in trouble.
KC: Aside from the fact that my teenagers will find cash if I have it anywhere in the house, but I think you can replicate the same thing with bank accounts, essentially the envelope system, if you will, that’s how I run my business. I’ve got different accounts that money goes into and when that money is gone, you’ve done spending in that area. It probably saved our marriage. Money is one of the two gigantic fights in marriage, money and physical intimacy are in relationships in general. And there was a moment where we decided my wife and I each had a spending account, we decided what went in there based on who was in charge of what. So, you get the boys’ haircuts. I’m in charge of a family night out or whatever, but we decided in advance what those amounts were, and they went into that bank account on a regular basis. Nobody was allowed to touch the main account that the mortgage got paid out of, which was inviolable. Those accounts acted as cash essentially. And the easy answer to your point Michelle is when you hit zero, you’re done. And by the way, when there’s $18 left in there, you also look at it and you begin to pace yourself, right? When, you know, you’ve only got $18 in the wallet, you don’t spend eight of it on Starbucks. And so, using a multiple account system was really important. Also, very important from a relational dynamic, right? Because then one of us wasn’t in charge of the money. You know, my spouse wasn’t getting in trouble for buying a burrito, but I can justify buying a chainsaw or something. So, we have these spending accounts with agreed-upon amounts and neither one of us spent out of the main account without that, it’s the same as cash it cut down on so many fights. So much stress, so much resentment, all gone. So, big fan of a system that works you down to zero every month.
MR: What would be a takeaway that you would share if someone is experiencing, whether it’s an individual or a couple if they are experiencing financial stress and maybe not knowing which way is up.
KC: Well, I’d say the not knowing is the biggest piece. There’s so much more anxiety and fear that comes around that and comes from not knowing, from having that thing out there, that envelope that we haven’t opened. Always amazing for me, Michelle as a financial planner when I would get in the middle of people’s finances. A lot of times they would come in with bags of unopened credit card statements. They just couldn’t bring themselves to look at how bad it was, right? And in not doing that, things got worse exponentially quicker. I used to joke, you know, the best way to not have cavities is to not go to the dentist. Nobody tells you you have a problem until you have to get a root canal. So, the biggest thing is to get real with the data, to start looking and stop guessing. You may not have a plan, but that which we ignore is very hard to change. And the anxiety is always going to be worse because we’re pessimists in our heads. We all are catastrophizing much better than we, you know, act like an optimist. So, getting a handle on the numbers, even though it’s painful is the first step because now we can stop guessing and we can start acting. So, you’ve got to get your head around the numbers
MR: And then you can put a plan in place and work your way out.
KC: Absolutely. That’s the biggest single thing.
MR: Ken anything else on the topic of finances that you’d like to address or mention?
KC: Hey, the internet is amazing, right? One of the things that changed the landscape for a lot of us as professionals is the amount of information that’s out there for the public to consume without spending money. I’m not saying you should go watch Bitcoin videos and figure out how to double the $2 that you have or something, but there’s so much good stuff online where people share their own journeys and how they did it. And it’s not, somebody just trying to make a buck by selling you a book or something. Head to the Internet and look for real-life stories, blogs, and TikTok channels, or whatever, of how people did this in their own life and there you’ll find the inspiration. In the same way, we love following people in their weight loss journeys or remodeling a house. There are all kinds of content out there that will inspire you when it comes to making some of the hard decisions and seeing that it’s not going to kill you and that it actually makes your life better in the long run. So, lean on the stories of everybody else.
MR: Ken Clark, Chenal Family Therapy, great advice as always. Thanks so much for joining us today.
KC: Thank you.