Challenges and CoastFire: My Story

Headshot of Holly Donaldson

My story: The following is an updated excerpt from the introduction to my book, The Mindful Money Mentality: How To Find Balance in Your Financial Future (Porchview Publishing, $20).

As a behavioral economist (in a field that studies the psychology of personal economic decisions), I have a keen interest in our relationships with money. I care about maximizing its usefulness as a tool rather than elevating its status as an end.

But for much of my life, I had those two reversed.

I did my own financial planning backwards. I put the pursuit of money first, life second, and myself last. In other words, I floated in a fog about my attachment to money, swept along by society’s encouragement and my own beliefs. My money mentality was not aware, awake, or intentional. It was unconscious. It was anything but mindful. 

Ironically, I was one of those successful savers. Starting when I was a teenager, I kept track of every penny I spent. I could not wait until my 21st birthday so I could start contributing to the 401(k) at work. 

Money as the Main Goal

In my 20s and 30s, I focused on money as an end, determined to define my success as a person by the amount of money I made. As a result, I made some choices that caused me, and those around me, to suffer unnecessarily. I fretted over how much essential things cost. It hurt me to spend on myself for anything nice, much less on anybody else. I now realize that having money was a way to feel good about myself. In my mind, my earnings defined my success as a person. This is the area where I was most imbalanced, and I regret some of the decisions I made then. 

After college, I joined a Miami bank training program. I saw that most of the trainees chose to live in a new suburban complex requiring a Metro commute. I chose to live in cheaper North Miami, only ten minutes from downtown, proud that I was saving on rent, gas, and Metro fares. The building was newly renovated but occupied mostly by taxi drivers who kept odd hours, and the crime rate was higher in my neighborhood. My car was broken into in the parking garage. I did not get much exercise because, as a 5-foot-3-inch 20-year-old, I didn’t feel safe going outside. 

Further, while my coworkers were discussing the fun evenings they had had at south Miami neighborhood restaurants, I thought, “Bah, humbug!” I was proud not to “waste” my money on frivolities. I ate mostly sauteed vegetables and microwave popcorn in my apartment. Over the seven-month training program, I not only did not exercise enough, I unconsciously distanced myself from the camaraderie of the other trainees. While I eventually fixed the exercise deficiency later in life, the friendships I might have made and enjoyed today are absent. 

A Vicious Cycle

It was not easy for me to accept that what you have is not who you are. I didn’t understand that if you looked to your net worth to find your self-worth, your net worth would never be high enough. It was a vicious cycle: I never felt good enough, so clearly I didn’t have enough; when I had more, I still didn’t feel good enough, so clearly I still didn’t have enough, and so on. 

The Turning Point

When I was 39 in 2005, my then-employer, a regional bank, merged with another one. The new bank had very different priorities. A startup division of a brokerage company had been trying to recruit me, so as part of the decision to make a jump, I ran a financial analysis to see how much risk my then-husband and I could take on.

I told him, “I have done these calculations six ways to Sunday. It appears that right now, if we do not save another dime, when we are 60 we are guaranteed a double-wide mobile home and early-bird specials at Denny’s.” I was being facetious, but it was clear to me that this was not good enough. We would need to keep working and saving for more. 

To my surprise, he said, “Sounds good!” 

I had always assumed that I would have to maximize my earnings as much as possible until age 60 because that was what everyone was supposed to do. Suddenly I had the space to step back and think: what do we really need? I thought: “I guess it’s not too bad to be nearly 40 and know I have at least what I have now. In fact, if I had to, I could definitely live with that.” Nowadays my story would be called “reaching CoastFIRE.”

I felt liberated. Suddenly I had a world of choices before me. 

New Choices

When I began to understand the meaning of “enough,” the pursuit of money ceased to control me. As a result of changing my money mentality, within a few years I was able to:

  • start my own business
  • write a book about money and mindfulness
  • realize I would rather be debt-free than live in a big house in the city
  • build a small house in the country
  • spend more time on my new porch.

From that point on, I made more decisions from a position of security and confidence, rather than pursuing the vague goal of achieving another dollar without knowing why. 

Sacrifices Without Regrets

As I near 60, I have no regrets about the decision to leave corporate life. Financially, I have made sacrifices. I have had to pay (a lot) more for health and disability insurance. I won’t have as big of a pension as if I had stayed for seven more years. (But oh, how long those seven years would have been.) I haven’t had an employer match to my retirement plan. On paper, becoming self-employed vs. staying as a corporate executive is not a move many financial advisors would recommend making.

But even with a divorce and remarriage in my story in the meantime, I’ll still be okay. Looking back, the best investment over the past nearly 20 years has been the freedom of time to work how I wanted, doing what I love to do in the way that suits me best. It’s also meant plenty of time for important people in my life, as well as for my physical and mental health. 

It’s Never Too Late

Money is not the destination; it is merely the vehicle. The hardest work for me has been to figure out what life I wanted to live to be happy. Once that became clear, the tough decisions fell into place. 

If I had figured out what I wanted first, I might have saved myself a couple of decades of unnecessary work and worry about not having enough. The irony is, those years probably shortened my life, which is one way to avoid running out of money!

CoastFire isn’t for everyone. But the principle of mindfully paying attention to the pursuit of money is. It’s a joy for me when a successful saver discovers that they might actually have a choice to hop off the savings hamster wheel and start enjoying what they’ve got.

Got a similar story? Share your thoughts below.

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Mind Your 4 Digital Asset Types

An attorney I met had a father-in-law who ran 3 businesses from his Blackberry. When he died suddenly, she was shocked at how difficult it was to access his emails, accounts, and online life. Every online provider had different requirements. This was her introduction to the concept of the “digital asset.”

Digital Assets

Have you ever given thought to your digital assets and how someone else would step in your shoes? It’s estimated the average American has between 30 and 80 online accounts with passwords. Keeping track can be overwhelming, but we can begin by naming 4 main types – personal, financial, business, and social:

1) Personal assets:

Photos, Movies, Books, E-books, Music, and Podcasts. Unlike your Simon and Garfunkel records, Michael Jackson CD’s, or Rocky DVDs that the kids will get whether they want them or not, there are some e-libraries you can’t leave to anyone. For example, access to Kindle and iTunes libraries die with their owners.  For all your photos and videos stored in the cloud, make sure you have a backup, especially if it’s iCloud. Upon proof of death, all content in an iCloud account is deleted.

2) Financial assets:

Bank, Brokerage, PayPal, Frequent Flyer, Bitcoin, etc. Did you sign up for paperless statements? Good for you, but make sure you have documented somewhere that the accounts exist. If no one can get into your email, and you haven’t kept good notes or a plan somewhere, they may not know you opened a new Treasury Direct account. 

Additionally, once the bank or brokerage company learns of your demise, they may lock out the online account, preventing anyone from accessing statements. Statements are essential for understanding how much was in the account at date of death, but primarily, how your assets are titled.

3) Business assets:

Blogs, E-books, Books, E-commerce sites. Intellectual property is often housed digitally. Have you inventoried any copyrighted works and addressed them in your estate planning documents? Can someone get to them in a way that will continue to produce revenue or royalties? 

4) Social accounts:

Email, Text messages, Facebook, Twitter, Instagram, Pinterest, LinkedIn, etc..  An elderly friend of mine passed away 6 years ago but his face and profile still pop up occasionally as someone “I might know” on my Facebook and LinkedIn. I am guessing his family either aren’t involved with social media, or simply were not able to log in and post a nice memorial tribute to a wonderful man. What do you want your online presence to look like, if at all, and for how long, once you’re gone? 

With all of these different, it seems like you might need a digital asset will and executor. It turns out there are such things now, and 10 states, including Florida, have ratified them through passage of the Revised Uniform Fiduciary Access to Digital Asset Act (RUFADAA). (You can more about it here: https://www.onefpa.org/journal/Pages/APR18-Estate-Planning-for-Digital-Assets-Understanding-the-Revised-Uniform-Fiduciary-Access-to-Digital-Assets-Act-and.aspx. In the act, you can name a digital asset executor – someone to access your email, text messages, and social media accounts, in your will or trust.

If you have been reading or watching for a while, you know I am a fan of having a Notebook. But if you aren’t the paper Notebook type, or just ready to reduce paper, check out www.everplans.com. For $75, you can have a plan and inventory of your digital estate, easily accessible to those you trust. If you give it a try, let me know how it works out, and I’ll post feedback here for future readers. 

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Dig Those Digital Assets

Shortly before a relative of mine died in 2008, he showed me where and how he kept his financial life organized. He had accounts in more places than I could keep track of in my head. So we wrote them all down. Between the visit to his home office and our written instructions, I thought I was all clear on what he had and how to get to it. But when it came time, I still nearly missed one. It was the only account for which no statement came in the mail – a “digital asset” at Treasury Direct.  I uncovered it 11 months later as I was clearing out the file cabinet, in a manila folder with a scribbled label. The folder was empty, but a userid and several crossed-out passwords were written on the inside flap. It turned out to be a five-figure account. 

Nowadays, it’s estimated the average American has between 30 and 80 online accounts with passwords. Of course, not all of them have money in them, but they still might be “assets.” Paypal accounts, frequent flyer accounts, Amazon accounts, eBay accounts, and any kind of points-earning sites might be worth a little, or a lot. Membership sites – AAA, AARP, fraternities, sororities, national professional associations, etc. might hold some kind of group life or accidental death policies. A blog or YouTube channel might bring in a little advertising revenue. Even if the site or account has no potential for ever producing money, most people have some kind of online presence, even if it’s simply their Facebook page, that they might not want hanging out there if they’re no longer around. There are 4 categories that our digital assets can fall into. Next week I’ll go into more detail and how to plan for them.

But while it’s tax time and you might have all of your financial life pulled together, give it some thought: how could someone easily take over my digital life if necessary? One app I am using is Dashlane – it sits on my hard drive and remembers all my sites and passwords. All someone needs to do is enter my Dashlane password, and they can see what I’ve got and how to get to it. Scary? Perhaps. To play it a little safer, I chose not to use the “cloud ” version of Dashlane to share among all my devices.  I’ll be providing lots of other resources in an upcoming e-book on end-of-life planning and digital assets (Porchview Publishing, $7.99). If you would like to be on the pre-order list for a coupon, become a subscriber to the free monthly e-letter, “The View From The Porch,” at https://www.hollydonaldsonfinancialplanner.com

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When Does Financial Advice Become Couples Therapy?

I had just finished giving a talk on the psychology of money to a group of professionals, and a participant waited in line to speak to me afterwards. The person before him took quite a while, so I figured whatever he had to tell me must be pretty important to him. With a passionate look in his eye, he approached me and said, “I don’t think any of this emotional stuff about money is my job. I am not a psychology professional, and I don’t want to pretend to be one. In fact, I think I am asking for liability problems if I start bringing up things I don’t know about. I am bound to get myself in trouble, and maybe make it worse for them. Clients come to me for investment and financial advice. That’s what I’m good at, and that’s what I’ll give them. End of story.”

If you work with financial advice, and especially couples, long enough, emotional issues come up. Many financial advisors tread lightly with​​, or even avoid,​ confronting emotions behind clients’​ spending, investing, and sharing decisions. What if a​ couple brings up something the advisor doesn’t know how to handle? What if it produces a big ugly argument? What if somehow they get blamed for starting it?

How does a quantitatively-skilled financial professional understand when they are being helpful, and when they might be causing harm? The best thing I have learned to do is simply help with awareness. There are two possible outcomes from it: 1) the awareness and talking out loud with a third party helps the couple come to their own compromise and resolution; or 2) the awareness and talking out loud helps the three of us realize that resolving it might require more help than I am able to give. In other words, I never presume I have an​ argument’s answer, but I

​am willing to explore whether they have the answer within themselves. The worst that happens is that I’m wrong, but at least then we all know it and own it, rather than ignore it.

How do we​ get to this place of awareness? Trying these questions:

1. Is this normally how the conversation goes when you talk about this issue?

2. How does it normally end up?

3. What have you considered doing about it?

4 (If necessary). It sounds like this is a place where you might be stuck, and could use some outside help to work through. How would you feel about doing more work on it with a counselor?

With two clients in the room, the importance of bringing up these issues is more than doubled. If a couple is handling money disagreements in an unhealthy way, studies show the relationship itself is at great risk. And breakups and divorces cause way bigger money problems than the typical argument subject. Keeping this fact in mind means financial advisors ​might ​have a vested interest in helping couples face difficult money issues. Focusing only on the numbers may seem easier, but in the long run, the story for all three people ​may not​ end nearly as well.

See this post on YouTube here: Advice vs. Therapy – Holly P. Thomas, CFP

Continue ReadingWhen Does Financial Advice Become Couples Therapy?

Scared of Financial Success?

At one point in my banking career I was in line for a big promotion that involved a panel interview, and I blew it. People who served on the panel couldn’t believe the same person showed up for the interview who showed up for work every day. Instead of feeling pride and confidence when I first heard about the opportunity, I remember feeling discomfort and anxiety with the new title and bonus potential. It made no sense. Because I thought I might be given the opportunity again, I spent the following year working on the internal and external sources of my fear of success. I improved my inner confidence by joining Toastmasters (see that story here); and I improved my external messages by consciously surrounding myself with people who gave me joy and support. It worked: the next year, I aced it, and got the promotion.

Research on our messages about money has uncovered that some people may have an inner upper limit they have set on financial success. Past that limit, they become uncomfortable. Unknowingly, they will begin to sabotage themselves.  According to Ken Donaldson, LMHC, an emotional intelligence expert in Seminole Florida and author of Marry Yourself First , the upper limit is set by “history, events, programming, parents, institutions and cultural messages.”

Financial professionals often see this with windfalls. When someone has been handed a great deal more money than they have had before, and are uncomfortable with their new position, they may spend it or give it away until they are back in the financial position where they first started. Still others allow the windfall to sit in an account, untouched, unwilling to acknowledge its presence. For some people, the windfall can represent a real or imagined radical change in lifestyle and in relationships. It may give them a new self-identity, and they need time to grieve their old one. Meanwhile, some in their circles will accept them as they are, while others try to drag them down.

To address fear of success, self-made or not, work needs to be done on both inside and outside factors. Two steps in this direction: First, write your feelings about your new position today, then imagine how you would like to be spending your life three years from now. Second, surround yourself only with people who bring you joy and support. This may mean saying “no” to people whom you previously said “yes” to, detaching from them in a loving way.

Keep the messages of confidence flowing – from the inside and out – to embrace success, rather than ruin it.

Continue ReadingScared of Financial Success?

Scared of Financial Success?

At one point in my banking career I was in line for a big promotion that involved a panel interview, and I blew it. People who served on the panel couldn’t believe the same person showed up for the interview who showed up for work every day. Instead of feeling pride and confidence when I first heard about the opportunity, I remember feeling discomfort and anxiety with the new title and bonus potential. It made no sense. Because I thought I might be given the opportunity again, I spent the following year working on the internal and external sources of my fear of success. I improved my inner confidence by joining Toastmasters (see that story here); and I improved my external messages by consciously surrounding myself with people who gave me joy and support. It worked: the next year, I aced it, and got the promotion.

Research on our messages about money has uncovered that some people may have an inner upper limit they have set on financial success. Past that limit, they become uncomfortable. Unknowingly, they will begin to sabotage themselves.  According to Ken Donaldson, LMHC, an emotional intelligence expert in Seminole Florida and author of Marry Yourself First , the upper limit is set by “history, events, programming, parents, institutions and cultural messages.”

Financial professionals often see this with windfalls. When someone has been handed a great deal more money than they have had before, and are uncomfortable with their new position, they may spend it or give it away until they are back in the financial position where they first started. Still others allow the windfall to sit in an account, untouched, unwilling to acknowledge its presence. For some people, the windfall can represent a real or imagined radical change in lifestyle and in relationships. It may give them a new self-identity, and they need time to grieve their old one. Meanwhile, some in their circles will accept them as they are, while others try to drag them down.

To address fear of success, self-made or not, work needs to be done on both inside and outside factors. Two steps in this direction: First, write your feelings about your new position today, then imagine how you would like to be spending your life three years from now. Second, surround yourself only with people who bring you joy and support. This may mean saying “no” to people whom you previously said “yes” to, detaching from them in a loving way.

Keep the messages of confidence flowing – from the inside and out – to embrace success, rather than ruin it.

Continue ReadingScared of Financial Success?

How To Be a Gracious Gift Exchanger

(If you prefer video to text, click here to see this post in a 3-minute video.)
“Oh, thank you…but I didn’t get you anything!” How often has that awkward response ruined a nice giving moment? Sometimes it’s hard to accept a gift without feeling the need to give one back. For a long time it was difficult for me to accept that. Sometimes I didn’t give gifts that I wanted to, because I was afraid of imposing an obligation with my gift! How silly. It took time for me to realize not everyone thought the same way – some people can accept a gift graciously. I learned that when someone has the desire to say Thank You, Happy Birthday, Merry Christmas, or Happy Arbor Day with a gift, my gratitude is usually all that’s needed to make the kind gesture complete.
 
The best gifts, in fact, might not even arrive in a package. Last week for a special occasion, I wanted to give my Toastmasters group a gift, a final thank-you speech, to express in 10 minutes how the program, and its members, changed my life.
 
(Click here to view.)
 
The response to my going-away speech was overwhelming – appreciative tears all around. I gave a gift; and immediately, unexpectedly got 30 gifts back. In my past, I would have said, “Thanks, but I wasn’t THAT good,” or found a way to deflect the praise to a mentor, colleague, or family member. Not very gracious.
Perhaps because I am 15 years older than when I joined, or perhaps because of the work I have done on my own emotional intelligence, or perhaps because I’ve been hanging out with the right people or it was the right day, I soaked it up with as much grace, courage, and humility as I could muster. Because I allowed that to happen, the exchange felt complete. I left the meeting on an emotional high, and I hope everyone else did, as well.
 
This season, if you find yourself moved to be the generous gift-giver, are you doing so without expectations (as my Tennessee grandmother used to say, “out of the goodness of your heart”?)
 
Conversely, if you find yourself overwhelmed with someone else’s generosity – intangible, tangible, or financial – how will you handle it? Will you graciously accept, honor the giver’s gesture, and allow the exchange to be complete? With so many messages about self-determination, independence, and not “needing” others in our lives to get by, it can be easy to forget how exchanges of gifts, if handled well on both sides, weave the fabric of our support networks tighter, and make it more beautiful. When not handled so well, we begin to take that fabric apart.
 
I invite you to think about what your giving and receiving this season will do for you and for those around you. Whether there is money involved or not, you have the potential to enter 2016 feeling a whole lot richer because of it.
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Having “The Visit” At the Holidays

For many families, the holidays are one of the few times when adult kids, parents, grandkids, and grandparents get to see each other. That time together might be the best time to have a planned “Visit.” There are two common topics for the Visit: 1) finances; and 2) health and home. Today’s post will deal with finances. Next week I will have a guest post from Monica Stynchula, LCSW and CEO of ReunionCare, about health and home.

Members of the Greatest Generation are notorious for keeping quiet about money. Yet, as they reach old age, their Baby Boomer kids begin to wonder, “Do Mom and Dad have enough money to live on?” “What if they need in-home care?” “What if they need to make modifications to their home?” “Did they really need those $5000 new windows, or are they being scammed and not know it?” “If I had to pay bills for them, where do they keep their money?” “What if they have money or accounts stashed somewhere and they forget about it?”

Some parents may discourage the money topic by cutting conversations about it short. Perhaps they do not want to acknowledge their own mortality. Perhaps they are embarrassed about falling victim to a scam already. Perhaps they see all of their kids as spendthrifts who will not be responsible (regardless of their age, education, and career status). Perhaps they are afraid of having the keys to their car, or their home, taken away. And it’s not always the parents that don’t want to talk about it. Sometimes the adult kids are uncomfortable talking about their parents’ mortality, and they are the ones cutting off the communication.

Regardless, every time the topic, and its underlying emotion, is avoided, it feeds an elephant in the living room. If not acknowledged, it stays there, and gets bigger, until a crisis erupts, and everyone is forced to talk about it under duress.

How do you bring up the money topic before a crisis? Try owning your discomfort about it up front. “There’s something I am struggling with talking to you about,” might be a good beginning, for example. Then let them know what you want to talk about: “There are two main concerns that keep coming up for me, and I need your help.” However, if they still shut down, keep your cool, and ​be empathetic: “I​f I were in your shoes, I would find this hard to talk about, too. Perhaps this wasn’t the best time to bring it up.” ​Try writing them a letter instead to keep the conversation going.

​​But, ​if you find the discussion goes even better than you thought, let them know how relieved you are: “Wow, I was so worried about talking to you about this, but I feel better now.” You may find you have paved the way for more open conversation, and even happier holidays with the family, in the future.

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To Be Or Not To Be….A Halloween Scrooge

Retailers want to know – Are you ready? Got enough candy? Bought your pre-carved pumpkin? How about costumes for Lucky and Whiskers? When it comes to Halloween spending, it seems they’ve thought of a million different ways to get Americans to celebrate.
And what’s wrong with it? Compared to the other big consumer holidays, Halloween comes with the least sense of duty and obligation. It’s, more simply, pure discretionary fun. Add to the mix that this year it falls on a Saturday, and retailers will likely get even more of our wallets.
So what if we spend money on corn-syrup candy and pet costumes? Which is it – unnecessary, irresponsible spending (as a Halloween Scrooge might say) or necessary, letting-off-steam, fun?
To answer for yourself, think about these 3 questions:
1) Do you have a play-money account or amount set aside in your cash flow plan to spend however you like?
2) Have you ever tracked your discretionary spending?
3) Do you ever have spending “hangovers,” and suspect you may spend too much on spontaneity?
Financial planners ourselves may be the most guilty bunch of failing to appreciate money as a tool for bringing spontaneous fun to our lives. We don’t want to be the unwitting Scrooge to anyone – not our clients, nor our families, yet our analytical nature can sometimes come across that way. Spending with healthy enjoyment is one of the greatest balancing acts we can all learn.
Whether you plan it all out ahead of time, or see who comes knocking on October 31, make your Halloween hangover-free. Enjoy the holiday in the way that seems right for you. And if you’re still not sure, you could call your financial planner….or just ask Lucky and Whiskers.
Holly’s Video: Halloween Scrooge
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Letting Indecision Delay Your Estate Plan

The best reason I ever heard for not seeing an estate planning attorney came from a late client who, upon learning that over half of his estate might be taxed, said, “I don’t mind. The government has a lot of good programs.”  (I responded, “Ok. How can you be sure your money will go to the programs you like?”) I don’t believe, despite his political views, that he really wanted to leave half of his money to the government. I do believe it seemed better than addressing his mortality, though.
Talking and thinking about our own death is stressful, so it’s no wonder many people avoid it, deny it, and don’t want to deal with it.
But what if your reason is simply, “It’s too hard to decide”? No doubt about it, estate planning can involve gut-wrenching decisions, like choosing a potential guardian for your minor children. (Ugh.) Or figuring out what’s “equal” vs. what’s “fair.” Who to include and who to exclude? Which charities will handle a bequest most responsibly? Leave money in a lump sum, or spread it out over time? In-laws, multiple marriages, step-relatives, girlfriends, boyfriends….today’s families are complicated. Perhaps you and your spouse or partner disagree. Or you and your children do. The more you delay, the more the questions, and their unknown answers, multiply. You might want to brush it off, like my client, since you “won’t be around anyway to worry about it.” But until then, it can still eat at you.
A lot of people think they must make all the decisions before they go see the attorney. But when you think about it, estate planning attorneys deal with such decisions all the time. Many of them are actually pretty good at suggesting alternatives you might not have considered. Attorneys are more than just note-takers; they are advisers and advocates. The good ones are smart people who love to come up with creative solutions to legal questions. So when I hear someone can’t decide, I encourage them to make the appointment anyway. Addressing our mortality may not be pleasant, but it’s better than being eaten alive by indecision.
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