The Breathing Prosperity blog

How many credit card offers have you received in the mail lately, despite the ‘financial crisis’ we are undergoing in North America? Just this year alone, I’ve had my various credit card limits increased by almost $15,000 without ever asking for it. This is tightening credit?…

With all the talk about errant companies lending money in excess to innocent people, how many individuals have you seen or heard of who stand up and say ‘Hey, our finances are OUR responsibility! Just because someone OFFERS us something doesn’t mean we have to take it!’… ? Not many, if my experiences are any indication of the norm. Like offering candy to a baby, what seems yummy at the time could be the worst thing for us, and we need to become much more discerning.

I’d like to talk about taking personal responsibility for your financial decisions, and about learning to make wise choices. It’s not going to be painful, except in initial phase of accepting past misalignments. Once you fully face and own how you’ve been behaving when it comes to money, it is liberating! It will restore hope to your weary soul, and allow your future to be as bright as you once hoped it would be.

So many people have been caught in this current credit crunch, and much of the blame does indeed fall on the shoulders of the banks and lending institutions who knew exactly what they were doing. However, what happened to personal responsibility? What happened to people making informed and intelligent decisions with their money and deciding, consciously, not to get in over their heads? Most people at banks are just salespeople, and many, many customers fall prey to their sales tactics every day – it’s true. Perhaps the best thing we can do for ourselves is to wise up and start thinking more for ourselves.

The challenge is especially difficult because the financial industry has traditionally thrived on the ignorance of its customers, and on subtle intimidation. Haven’t you noticed how you sometimes feel as if you know less than the ‘professional’ to whom you are speaking, so you are not always comfortable asking for clarification? Just trust me, I know what’s best for you, seems to be their message. Well, look at the mess this trust en masse has created!

When I was in Real Estate, I would tell every purchaser client that they may be wise not to take the highest mortgage offer their lender/s put forth. I noticed that lenders had the tendency to encourage people to spend the maximum amount they could qualify for, and this in turn put stars in people’s eyes when they saw the type of housing this could buy them. I’d take them to see properties in the ‘reasonable’ price range, and they would insist on seeing those at the very limit of what they’d pre-qualified for. Somehow there always seemed to be a noticeable difference, and they’d end up feeling that the lower-priced properties were horrible and convince themselves they ‘deserved’ the higher-priced ones. This is a deadly and subtle game of mental seduction, and instead of fulfilling dreams, as it first seems, it most often creates nightmares.

Almost invariably, I’d see people maxing out their mortgage capacity and becoming what I call ‘mortgage poor.’  Instead of wisely spending only what would be affordable for them on a monthly basis, they stretched as far as they could and put every last penny into the biggest, best property they could. Often the banks would not be forthcoming about the true closing costs, so luckily they’d have me to remind them about the lawyer’s fees, transfer taxes, etc.. What if I hadn’t? Even so, they’d leave no wiggle room for future surprises such as car trouble, extra groceries, kids’ braces or other contingencies. Can’t afford a vacation – got to pay the mortgage! Can’t afford to give to that charity – got to make the mortgage payment! This is no way to live, feeling the crunch all the time. It’s stressful and energy-sapping.

Here is an appalling example of how messed up our financial systems are: Recently we met a young woman who was visiting Canada from Australia. Before she even found a job, she went into the local branch of a national bank to open an account. While meeting with the representative, she was offered a credit card(!). As it turns out, this woman was head of a bank’s finance department back home in Australia and had taken a leave to travel…she had her priorities straight. She said to the rep, “I don’t even have a job! What are you doing offering me credit?”to which she was told that this was noooo problem – they were sure she would get one (based on what? How easy it is to get jobs these days?), and the credit could be used for anything she needed in the meantime. This from an absolute stranger to someone who just landed on our soil! As this woman related this story to us, I thought of several things. First, she was clever enough to question the offer and to decline it. She knew better and was not tempted by the lure of ‘free’ money, which credit is often sold as but definitely isn’t – it’s anything but, as people in debt will tell you. Secondly, she told us that in Australia this would NEVER have happened, and she was shocked at this lack of care in our system, and said she wasn’t at all surprised at the economic crisis if this was how easily money and credit are thrown around here. It’s good to know there are some countries with better systems and more foresight. Perhaps they will be the leaders of the future.

At the end of the day, we are all responsible for our individual decisions, and cannot place blame for circumstances outside of ourselves. Remember this: you are smart, and you’ve worked damn hard for your money. NO ONE cares more about it than you do (unless that care is directed toward putting some of it in their own pockets). This is not cynical but a reflection of how things work…your money is most precious to YOU, so learn how to keep it and stop giving it away. Be humble enough to ask questions until you are SURE you understand where your money will go in a potential investment. Be a willing student, always learning and never afraid to admit not knowing. Watch your bottom line grow as you proudly begin keeping your money in YOUR pocket!