I was standing on the hilltop, sweating, having just run up 1200 vertical feet in under 10 minutes. The loose gravel shifted underfoot and tears stained my face. I was upset and afraid, and wanted to crawl out of my own skin. The reason: I was in credit card debt.
That was an afternoon ten years ago.
As a kid, I’d internalized that debt was bad, and credit card debt was a cardinal sin. Of course, I didn’t know how credit cards actually work. Monthly statements? Statement balances versus minimum payments? The tactics of money, and credit cards in particular, were unknown to me.
That day on the hill, I wanted to die with the shame of the financial debt I had accumulated, but in the decade since I’ve built a lot of financial habits towards greater ease and more resilience. (I went on to pay that credit card debt off over the next two months.)
A handful of years later: I was in debt again. I had borrowed $40,000 from family and friends to open up Robin’s Cafe – my restaurant and events venue in the heart of the Mission District, San Francisco.
What’s funny is that the credit card debt that I couldn’t bear was about $6,500. By contrast, I carried $40,000 in debt from Robin’s Cafe with pride.
Building the cafe was my personal MBA, and even if I lost it all, $40,000 was cheap for an MBA. (Unforgivable student loans, notwithstanding.) But, within a couple of months of opening, I was able to build a cash-positive business, and began paying down that debt each month.
The psychology of money is perhaps the most important thing I know about money, and something I wish I had learned much earlier. It has taken me until 36 years old to begin to get a grasp of this topic, but now that I have begun to think about money, and the behaviors that shape our finances, I couldn’t be more excited.
Money is psychological. In the same way that light is both a particle and wave (don’t ask me. I don’t understand physics.), money is a habit, energy, time, and a social agreement that allows us to enact our will in the world. People who handle money effectively know these things intuitively. But when I was 26, with tears staining my face, I didn’t believe it.
Here are three simple money habits I practice today:
- Checking bank and credit card balances every day. Most of us avoid the issues when we are uncertain or afraid – or in debt. It feels easier to not open mail or look at a bank balance, in case it might be a bill or an overdraft fee. For me, checking on a bank balance every day helps me to break any potential cycle of avoidance.
- Depositing into long term savings each week. As someone who’s never had a single day job or salary, it has sometimes been difficult to automate my savings. I’ve handled this over the last few years by automatically transferring a small amount of money from my checking account to long term savings every week. Out of sight; out of mind.
- Asking people questions about money! I ask people all sorts of uncomfortable questions about money (though usually with the caveat “feel free not to answer”). I find that talking about money is the fastest way to learn about my own and other’s insecurities and build better habits.
I’ll be writing about money habits more soon, but for now I’ll leave you with a question: what’s one of your money habits? Leave a comment and let me know.
Until next time,
Robin