This is a guest post from Jerrold Mundis, author of the classic How to Get Out of Debt, Stay Out of Debt, and Live Prosperously [here's my review]. Mundis is a writer and financial therapist. The final book in his trilogy on personal money is Making Peace with Money. His website is Mundis Money.
You can have more money. And you can have it — get it — without turning your life upside down or driving yourself nuts. Seriously.
I got it that way, quietly, simply, and still am. You can, too. Maybe only a modest amount more, maybe a lot more. I don’t know. But I do know that you can have more. I’m not doing anything so far as concept and technique go that you can’t either. I just work the simple little four-point program that follows. You’re welcome to it.
Here’s what I do — and don’t do.
Never incur new unsecured debt
I don’t debt and haven’t for 28 years now.
I know: using debt as a verb is unlovely. But it helps to distinguish that act from other uses of money, to be clear about what is actually being done — not spending, buying, enjoying, but: going into debt.
Readers of Get Rich Slowly and other personal finance blogs almost certainly know that using unsecured credit is a bad idea. But I’ll tell you: It’s more than a bad idea. It’s a catastrophe. If any single thing can crush, break, and poison a life, kill anything of value or pleasure in it, it’s unsecured debt, the sustained and mounting pressure of it over months, years, and even decades.
In his play A Doll’s House, Henrik Ibsen wrote more than 130 years ago, “There can be no freedom or beauty about a home life that depends on borrowing or debt.”
True. I’ve never seen anyone for whom it isn’t.
By the time I bottomed out on debt myself, way back in 1984, my marriage was over, my books were out of print, and my life shattered. I was waking up every morning with ground-glass in my stomach thinking, “Oh God, there’s another bill coming in!” without any idea how I would ever be able to pay it. I was living in near constant pain and despair.
I was $113,000 in unsecured debt then (in today’s dollars), had expenses of $3,000 a month and a guaranteed income of only $350 a month. It was clear, finally — made brutally clear to me by the misery, the anguish even — that this could not go on. So I stopped debting, cold turkey. Because I had to. Because I knew there was no other hope for me.
From that day in March of 1984 on, I did everything and anything I had to in order not to go one single dollar deeper into unsecured debt:
- I sold things I owned.
- I gave up my apartment and moved in with a friend.
- I cut expenses to the bone, then cut into the bone.
- I said yes not only to whatever kind of new literary or teaching work I could find, no matter how little it paid, but to any work.
Slowly, slowly, things began to get better.
It was out of that bottom and my recovery from it, out of not-debting, eventually paying off all that unsecured debt, and becoming free that I wrote my first book on personal money, How to Get Out of Debt, Stay Out of Debt, and Live Prosperously. It was the first book ever on that subject, to my best knowledge, and it’s been in continuous print since 1988 (updated and expanded in 2003).
Now your circumstances may not be anywhere near as dire as mine were (at least I hope they aren’t), but the fact remains: You cannot get out of debt by going deeper into it. Nor will you be able to bring more money into your life — at least permanently, steadily — until you stop incurring any new unsecured debt. At best, that kind of debt will just continue to siphon money out of your life, relentlessly, and will be a nearly impenetrable barrier toward bringing more of it in. More that’s yours to keep
So unless you can claim that you genuinely live free of any amount — any amount — for, say, at least 40 weeks out of every year (an only partly arbitrary number) . . . stop debting. Right now.
Understand that all economies are personal
Everyone — you, I, and everyone else — has his or her own personal economy, which is separate and apart from the national economy. In fact, so far as bringing more money into your life goes, the larger economy is mostly irrelevant.
Some people have a hard time wrapping their minds around this. I certainly did.
During most of the booming 1980s, when money was washing back and forth through the economy in great tidal waves and Americans were prospering as they rarely had before, I was making very little money. This wasn’t because of any technological, social, or other kind of upheaval that had disoriented me. I could argue for that (in my own case the rise of video and cable TV, computers, changes in the publishing industry, a shrinking literacy rate, a blow to my personal life), but it would be a specious argument, mostly a function of denial.
Weren’t there some real reasons? Of course, but they came and went and I was still engaged in what I have since come to call underearning. And at the same time, there were other people whose backgrounds and experiences were similar to mine — who got divorced, for example, or were writers — who weren’t underearning.
These days, the Banking and Real Estate Collapse of 2008/2009 remains the great ogre: the bogeyman, scapegoat, and whipping boy of the moment, blamed by many for the fact that they’re in debt or can’t get ahead much. (Before the Collapse of 2008/2009 it was the Dot.com Crash of 2000/2002; before that, the Recession of the 1990s; before that . . . .) In some cases, it’s true; those events and their aftermaths did preclude some people, some few, from any chance of bringing in more money. But consider: In the very midst of those booming 1980s, more than 20 million Americans, from all classes, backgrounds, and walks of life found themselves overwhelmed by personal debt. And this: Personal bankruptcy climbed by 300 percent during those prosperous years to nearly 1 million people a year by the end of the decade.
On the other hand, at the height of Recession of the 1990s, and during the first full twelve-month period in which I practiced this simple system, along with a few supporting concepts and techniques, I brought in more money than I ever had in any other year of my life, significantly more. And that same thing is true — at the very least, some kind of increase — of everyone I have ever worked with or known who has employed this system. What I and they have had in common, in addition to the other three parts of this system, is that we recognize (or, some might argue, choose to see) that all economies are personal, even when the macro economy is struggling or in a serious downturn.
There is no denying that the larger economy does have an impact, but the most it can generally dictate, barring complete collapse, is the manner in which you earn your living and otherwise bring in money, not whether you can. Your economy is personal.
To diversify means to spread over several areas, to introduce variety. It’s a time-honored financial principle. Corporations do it by entering multiple arenas of activity or making different kinds of products. Investors do it by buying several stocks instead of just one. The primary advantage of diversifying is that it minimizes the risk of loss. Basically it’s a practical application of the old saw, “Don’t put all your eggs in one basket.”
Diversifying in your life — your earning life, your money-getting life — can give you the same advantage: minimize the damage you might otherwise sustain in a setback such as being laid off or losing a client, generate new opportunities for you and maximize your ability to take advantage of them.
If one definition of insanity is to keep doing the same thing over and over and expect different results, another is to keep doing over and over again something that used to work, after the context has changed, and expect it still to work.
That’s what I had been doing. My first step in stopping this was to admit to myself that what I had been doing — writing novels, and in a particular way (selling them before I wrote them, in proposal form) — was no longer working, wasn’t bringing in enough to meet my needs. Once it had, but now it wasn’t. What follows is a distilled version of how I initially diversified, back in the late 1980s and early 1990s.
First, I asked: “Where does the problem lie — me, my agent, or the changes that have taken place in publishing?”
The answer, I decided, was in all three.
The solution: change agents, alter my own activities. (There was nothing I could do about publishing, which is a monolith.)
I changed agents.
It was in changing my activities that I diversified.
I began to write for magazines again. (Which I hadn’t done in nearly a dozen years.) The money wasn’t such that it offered a long-term solution, but the cash was helpful in the short run.
In books, I turned to nonfiction, drawing upon my work, research, and experience in psychology, personal transformation, and debt recovery over the past several years.
I searched myself for other marketable skills I might have. (My resume said: “Mr. Mundis has been a novelist for 20 years.” I looked in the paper; there wasn’t much corporate call for novelists.)
Editing, I decided. That was a skill I possessed. So I became willing to go into an office for a while. (Here I discovered that I had an ego-investment in never having worked for anyone else, and had to overcome that). But though I was now willing, who would hire me? I had never worked as an editor in my life. In fact, except for a few months right out of college, I had never worked for anyone in any capacity. But I went ahead anyway, made phone calls, sent letters — and ended up as a feature editor at The New York Times, where I stayed for a year and a half.
I also knew more about overcoming writer’s block than anyone I’d ever met or whose work I’d ever read. Because of my own difficulties with block, I’d had to develop and employ a variety of means over the years to render it harmless. So I put together a consultation session that would break writer’s block for anyone, forever, in a single afternoon, and establish for them a productive and reliable working schedule. The first year, that consulting brought in 15 percent of my gross income.
Next, I adapted the block-breaking material into a day-long seminar designed to reinvigorate corporate staff writers who were burned out, and took that seminar into corporations and professional associations.
Then, staying with nonfiction, I wrote a book which presented step-by-step the program I used in breaking writer’s block.
Shortly after, one of my block-breaking clients, a writer and television producer, became involved with a project for cable television and asked me to join him as a writer. I did, for six months.
I also developed a series of workshops on debt-recovery and other aspects of handling money in a positive way, which I presented for corporations, private institutions, and community groups in various parts of the country. . . . .
Now, at this writing, I’m busy scanning some dozen and a half of my out-of-print novels and nonfiction books, converting them into Word documents and formatting them for self-publication as eBooks for Kindle and Nook, and on Smashwords for iPad and other readers.
After that, well, I don’t yet. There’ll be something.
Diversification, then, is a process in which you identify the skills and abilities you possess in addition to those you use in your main occupation — or further ways to apply those you already do use there — and then find avenues through which to turn them into income-producing activities.
Craig, for example, a high-school teacher in Minnesota, an avid fisherman and outdoorsman, diversified by guiding parties of vacationers on fishing trips, later by creating a small business out of repairing and reconditioning antique fishing tackle and boats, and still later by making custom bamboo fly rods to order. My friend Judy Collins, the Grammy winning singer, songwriter, and author, created her own recording company, Wildflower Records, and has signed several artists to it in addition to maintaining her own demanding concert schedule.
If you’re already working fulltime, you can undertake diversification as something you do an evening or two a week or on a Saturday morning or afternoon, whatever fits your life. I’m not suggesting that you simply work more hours each week: the key is to be sure that your diversifying activities are high-paying — in the sense that they bring you, ideally, at least twenty-five percent more per hour than you make at your job or normal work.
It was out of my desire — and in my case, need — to bring in more, that I ended up writing my second book on personal money, Earn What You Deserve: How to Stop Underearning and Start Thriving.
Finally . . .
Conduct a brief nightly review
I did this each night for several months when I first started to work this system. I have done it again at different intervals over the following years. And I have recently undertaken it anew. Here is how I do it.
In bed, just before going to sleep, I review the day in this manner:
- What two or three actions did I take with money or around money that were the most helpful to me in handling it well and bringing more of it in? These might be anything from having put in a solid day’s writing to promoting a workshop, answering business email, or just simply checking my account balances and transactions online.
- Then I look for the two or three actions I took (or failed to take) that were the weakest with money or maybe even damaging to me in handling it well and bringing more of it in. Maybe I quoted too low a price for doing a piece of work, put off responding to a voicemail from someone inquiring about coaching, or simply didn’t clear my desktop at the end of the day so it would be clean and efficient for me the next morning.
With the latter, the weakest actions, I don’t criticize myself for them but simply recognize them for what they were and use the recognition to inform and help myself in making choice and taking action in the days to come. With the former, the things I did well, I just note them, acknowledge them, then file them away someplace in in my mind where at one level or another they remain useful to me as future referents.
Few other practices will make you as quickly and vividly aware of your blind spots, oversights, and weaknesses around money as this one, of the impediments you create to bringing more of it in, and maybe even of your underearning if you have a touch or more of that.
The first month I employed it was a revelation to me. I found myself nearly on a daily basis negotiating doggedly for less than I needed, turning down money, spending time on projects and busy-work that would bring in little or no income, and underearning in other ways. Today, all these years later, while my life with money has improved profoundly and continues to, I am still amazed on occasion, when I return to this practice after a period of neglect, to discover that I have been drifting back unawares toward some of the same places again.
The bottom line
You can, as I said in the very beginning, have more money in your life. You can have it — get it — quietly and simply, without turning your life upside down or driving yourself nuts. No matter who you are or what the circumstances of your life. You can have it by practicing this system.
To review, simply:
- Don’t incur any new unsecured debt, ever — in way, in any amount, for any reason.
- Understand that all economies are personal.
- Conduct a brief nightly review.
Doubtless there are other effective ways to go about this. There have to be. But this is one that I know works, and it’s simple and easy to execute.
I wish you every happiness and success in doing so.
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