Beyond Paycheck to Paycheck

After a week in Hawaii and a couple of days in Los Angeles, I am glad to be home in NH, even though the temperature is about 55 degrees colder here.

You: Tired?

Exhausted. Two red-eyes in three days is quite enough.  Nonetheless, I have some sleep-deprived observations from my trip to share.

I’ll start with LA.

“Los Angeles,” when translated from Spanish means “The land of heavenly traffic if heaven were one million degrees.”  Seriously, the traffic there is simply ridiculous.  Many southern Californians realize this, although, I have found, not all.  More and more residents simply deny that traffic is as bad as it is and/or simply have gotten so used to it that they don’t realize how much worse it is in southern California than anywhere else.

Partially, that attitude is healthy because there isn’t much one can do about the traffic anyway.  But it’s also partially nuts because there are people spending hours a day in their car - and many of them aren’t actually moving - I have observed this. The opening scene from “Office Space” is not pure fiction.

I was in my rental car before 6AM (there’s that red-eye reference again) for the drive from LAX to Santa Monica and I hit heavy traffic.  I visit a radio station for an interview 10 miles away and leave at noon for a 1PM meeting - cutting it very close thanks to . . . traffic.  I could go on and on about how it took me 10 minutes to make a left turn at 7:30 PM, but I won’t.

You: What’s this got to do with personal finance?

Plenty. I see many people get in the same rut of traffic with their spending.  Denial is a powerful force, but so is acceptance.  Denial that they are part of the problem and acceptance that they, therefore, must struggle.

For example, one of the people who attended my seminar the first night at the LA ING DIRECT cafe came up to me privately and explained that her income was about 40% of what it was several years ago. In the interim, she had basically depleted her lifetime of savings. She didn’t want to touch her retirement account, but was afraid she might.  “What should I do?” she asked.

I knew she knew the answer. But she didn’t want to say it, because knowing and not doing is plain stubborn.  No one likes to consider themselves stubborn.  Feeling powerless to change the situation, in a way, is perversely more tolerable - we don’t have to look inward.  But that is the wrong answer.

“You know the answer,” I told her. You have a firm handle on your finances and you are aware of what you are doing.  You can’t live on a $100,000 salary if you are confident you are going to make $40,000 for the next part of your career.

She disclosed she had until very recently two cars in her one-person family.

[Now I am thinking this is part of aforementioned traffic problem, but I don't say this to her.]

The necessity of reducing her spending was hard for her to accept, but short of increasing her income, which she was confident she was unable to do, this is her new reality. People have grown to accept that they must leave early enough to get around the traffic in order make it to work on time, why is it that they won’t accept that they must spend little enough to be able to save?  Unless you have a helicopter, you’re not going to get around the traffic. And if you have a helicopter, you’re hopefully got a lot saved already.  But even you could be living paycheck to paycheck.

How do we get people past denial faster?  And is traffic really lighter in LA at 4AM?

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