Tuesday, September 30, 2014

What Do You Say About Money?

I know that I am not the only one walking around with voices in my head. No, I am not crazy, and neither are you. We all have these different voices playing back messages to us about who we are and how we should live our life. Many sound like the messages our parents told us. In psychological terms, these voices are called scripts. They are messages that replay over and over again in our head and guide the way that we make decisions and live our life. 

In Mind Over Money: Overcoming The Money Disorders That Threaten Our Financial Health by Dr. Brad Klontz and Dr. Ted Klontz, the authors talk extensively about scripts and how they are formed and influence our financial decision-making. The book highlights nine common relational money scripts, several of which I recognized as my own, and others as ones I have heard from people with whom I work. 

Take a few minutes to review this list of common relational money scripts and see which ones resonate with you. Think about why that may be the case and where you learned them. 

- Take care of your children now and they’ll take care of you later.

- You can tell how much someone loves you by how much they spend on you.

- If you hold others financially responsible, they will reject you.

- Spending money on others gives my life meaning.

- One of the ways to keep friends and family close it to give them gifts and loan them money.

- There will always be someone I can turn to for money.

- I’m not competent enough to take care of myself financially.

- I don’t need to learn how to manage money.

- It’s my duty to take care of less fortunate family members.

Each of these scripts has elements of truth but often gets distorted and misguides the way that we make financial decisions. The challenge is that, when we live out these scripts, they usually end up having both practical and emotional consequences on the way that we view and use money. 

Let’s take one script for example: "Spending money on others gives my life meaning." While this is one of the greatest truths of our culture and spiritual lives and grows out of a teaching that is it is better to give than receive, when taken too far, we rob ourselves of financial security and deny the receiving party the opportunity to learn how to support themselves. When we give too much to one person or group of people, they become dependent upon us, and they lose the opportunity to learn how to support themselves. 

Continually taking time to evaluate your scripts for their truths and distortions can start to set you free in the way that you handle your finances. To start identifying other scripts you may replay in your head, ask this simple question: “What do I believe to be true about money and relationships?”


Feel free to give me a call to talk more at 980-275-1627.
Ed Coambs


Edited by Reena Arora of Arora Media, connect on Facebook
For all your communication needs, she is all you need.


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Tuesday, September 23, 2014

Building Your City Sky Scrapers


How is a sky scraper built? If you have been in a major city during a project of this nature, you have probably walked by a huge hole in the ground. In order for a sky scraper to rise up, the builders must first start by going deep into the ground. Why is that? The depth they dig allows the builders to lay the strongest of foundations. Does it take time to dig deep? Yes. Does it cost lots of money? Yes. Would the builder rather see the finished product sooner than later? Yes. But the smart builder knows that they must take the discipline of digging deep with no noticeable gain before having a marvelous sky scraper.

The same is true of our lives; the deeper we dig in, the higher we can go. We do not have the luxury of starting with a fresh piece of ground to build from, but neither does the sky scraper developer. In a crowded major city, the builder often has to dismantle what was previously there before they can even start to dig. This, too, is true of ourselves. Often we have to clear some things out of the way before we are ready to dig deeper into our lives.

After the ground has been dug out and the foundation laid, the first elements of structural support are put into place. Slowly but surely, with a plan and constant attention, a structure begins to emerge from below the surface and rise high into the sky. Anyone who lives in a city and has watched sky scrapers be built knows that, once the ground has been dug out and the foundation has been set, the structure begins to rise quickly. In those beginning phases, has it reached it beauty yet? No. Is it building toward something to behold? Absolutely.

The beauty of the sky scraper begins to emerge a year, two years, and sometimes longer after the initial work is started. In the final phase, the sky scraper starts to receive its exterior, or what the world will see of it. That exterior cannot come before the interior of the building is developed and completed. It is after years of hard work, thought, planning, revision  and effort have been put into place that the passerby begins to take notice of the beautiful building. When it’s done, there is something to marvel at and acknowledge. Did we see beauty in the hole? Likely not. Did we see beauty in the foundation? Doubtful. Did we see beauty in the structure? Probably not. Did we finally recognize the beauty with the skin of the building placed upon it? Definitely.

Our life, marriage and finances are not just like the process of one sky scraper being built, but rather an entire metropolitan city that is under constant construction. Living and visiting big cities, we all know that development is never done. The timeline of projects ebbs and flows, but there is always at least one (if not many) projects in different phases of completion. This, too, is how our life operates. We have our own sky scrapers that are in different phases of development.

Take some time now to name the buildings that you are working on. What phase are they in? Clearing, digging, foundation, structure, finishing… What purpose will each building serve in your city of life? Recognize that many of your sky scrapers will come down one day, only to make space for a new one. 


Feel free to give me a call to talk more at 980-275-1627.
Ed Coambs

Edited by Reena Arora of Arora Media, connect on FacebookFor all your communication needs, she is all you need.

Tuesday, September 16, 2014

The Dreamer and The Practical's Dilemma

“Help - I married a visionary! They have all these great dreams and ideas for what they want in the future, but I have no idea how it will ever happen. All I can think about is how much it’s going to cost and how we are never going to be able to afford bringing all of those visions to reality.” 

Does this sound like a problem in your marriage? In many relationships, there is often a dreamer and a more practical person. It does not always start out this way, but there is an inherent need in life to dream about the future while managing the demands of the present. Over time and throughout marriage, we unofficially decide who gets permission to dream and who gets to be practical. Why does this happen? Because each person has a history that they want to fulfill; part of it is their personality, and another component is station and place in which they live now.

Let’s start with history. Each of us draws heavily from our childhood experiences and its influences. Our parents and our position in the family (like it or not) heavily influence the way that we see the world. Perhaps your parents told you to dream and shoot for the moon, which naturally lays the foundation for a visionary. If not, maybe your parents expected perfection and high marks in school, and for you, that meant hard work and discipline. No time for dreaming there. While most of us probably had a blend of both attitudes, it is these early years of our childhood, and our family values that shape our orientation toward dreams and dealing with the practical matters of living. 

From our early influences, we start to see the world in a certain way. That is the nurture component of who we are. The nature component, on the other hand, leaves us with predispositions toward dreaming or practicality. The formation of our personality is semi-fixed by the coding that we are born with. Personality profile tests have shown the consistence with which certain characteristics remain constant over time. A common example is our preference for extroversion or introversion. Please note that I said “preference,” which means most of the time that is the way that we experience the world. We inevitably all experience to varying degrees the other end of the continuum, too. 

Combining our early childhood experiences with our given personality type, we end up in the adult world ready to forge our path. Whether we are aware of it or not, our history and personality shape the decisions we make about where we live, who we spend time with, the type of work we engage in and ultimately who we marry. It is in marriage that we find two worlds of history and personality colliding over what we think is love, which in reality is a deep need to be connected with another human and to have unfulfilled needs met. 

While in our culture we are infatuated with romantic love, we must come to see that it is far more complex and dynamic. A quick Google search of "types of love" will produce loads of interesting results. Yet what is important to keep in mind is that there are various types of love and needs we are trying to fulfill. The question is why? Often, opposites attract to meet unconscious and unspoken needs. Fulfilling the need to dream and to be practical is a major part of living and an inherent part of the person that we marry. Every person has the capacity to dream and be practical, but it is because of each person’s unique path in life that they tend toward one direction or the other on the continuum. As one partner moves in direction A, there is a natural need for the other partner to move in direction B to keep things in balance. 

Here is where it gets tricky: most couples are dynamic. One person is not fully responsible for dreaming while the other is fully responsible for practicality. The roles often shift given different areas of living, such as parrenting, saving for the future, or careers. It is as if couples dance through life trying to manage their unfilled dreams while meeting the demands we all face. They are constantly calling their partner back into balance, as their relationship can only handle so much tension.

Remember that when you are getting frustrated, angry or overwhelmed with your partner’s preference for dreaming or practicality, it is often their reaction to your opposite response. Spend time coming to the other end of the continuum, it will change your dynamic. 

Feel free to give me a call to talk more at 980-275-1627.
Ed Coambs

Edited by Reena Arora of Arora Media, connect on FacebookFor all your communication needs, she is all you need.



Wednesday, September 10, 2014

How Facebook Can Help You Understand Compound Interest


Compound interest is one of those financial terms that gets thrown around a lot but is seldom understood. It’s like the sharpest knife in the kitchen block. When used to your benefit, it can carve the most beautiful masterpieces of food, but when mishandled, you can quickly cut your hand off while trying to prepare a delectable meal. 

The impact of compound interest works in two ways. 
1.) Compound interest works for you when you are saving and investing.
   
2.) Compound interest works against you when you are borrowing. (Not all borrowing is bad.)

So, what is compound interest? How can you better understand it?

Let’s use Facebook as an analogy. Do you remember when you first registered for an account? Let’s say on day one, you find  30 friends. The next day, Facebook recommends 10 other friends you could add. Why is that? Because there was a base connection amongst your first 30 friends, and so Facebook could go out and find who else you might know. After two days, you have your 30 original friends, plus 10 from the next day, which brings your friend count up to 40.  You take a few days off, and by day five, Facebook finds another 13 friends for you to connect with. Now you are up to 53 friends. By the end of the week, you start to realize how many people you are connected to and have met in the past. A year has now gone by, and your Facebook friend count is in the hundreds. Why is this? Because you made a small investment of your time and told Facebook who your friends are. Facebook then started to help you connect with others from your past. This is the job of Facebook, to continually help you try and find ways to grow and add to your initial investment of connecting with friends. 

While Facebook’s job is to grow your social network, the financial market’s job is to grow your financial network and net worth. The more connected you are to the financial markets, the greater the value they create for you. 

The expectation is that, when you put money into the financial network, it will grow over time and at an ever-increasing rate. 

Important Words to Know
·      Principle = Money you initially invested
·      Interest = Money you earned on the principle
·      Compound Interest = Money you earned on both the principle and previous interest earned

Short example:

You make a $100 investment. For investing that $100, you expect a 10% rate of return.  (The rate of return simply represents the level of risk the investor is taking on.) 

At the end of one year, assuming you get the 10% rate of return, you will have $110. This is your original investment plus $10 of interest earned. You are happy that things worked out this way and so you decide to stick with your investment. You leave all $110 invested. Again, your investment earns 10%. This year, the 10% was earned on not just your principal $100, but also on the $10 of interest from the previous year. So you earn $11 dollars of interest, which is 10% of $110. Add that $11 to the account, and you have a balance of $121. If you keep up with this pattern, by year three, you would earn $12.10 in interest, bringing your account balance to $133.10.

To recap:
·      In year one, you earned $10 in interest and have an ending balance of $110.
·      In year two, you earned $11 in interest and have an ending balance of $121.
·      In year three, you earned $12.10 in interest and have an ending balance of $133.10.

As you can see, every year you earn a bit more interest than you did in the previous year. While it initially happens in small increments, the magic happens when you stay with this process over decades. Let me jump to the 10, 20, 30 and 40-year marks.

·      Year 10: You earned $23.59 in interest and have an ending balance of $259.37.
·      Year 20: You earned $61.16 in interest and have an ending balance of $672.75.
·      Year 30: You earned $158.63 in interest and have an ending balance of $1,744.94.
·      Year 40: You earned $411.44 in interest and have an ending balance of $4,525.93.

Okay, so by now, you are thinking one of two things: “Wow, this is amazing! How do I get a piece of the action?” or,  “This sounds great, but this is not what happens in reality. This is too good to be true.” It is natural to feel skeptical about what is really possible in the financial markets, yet I would encourage you to know that this is how it works mathematically and in reality. I have seen the impact personally and through the accounts of clients with whom I have worked. 

However, I do have one short warning for you to consider: there are few, if any, investments that will consistently give you a high rate of return. What you should be thinking about as an investor is, “Over the long run, what will my average return be?”

Two Key Assumptions of Compound Interest
1.) When you investment money, you should get a financial increase for the risk that you are taking.

      2.) Over time, the financial markets will continue to grow and become more valuable.

Best of luck in continuing to grow both your social and financial network. Give it time and some attention, and in the long run, you will be impressed with the return on your investment.


Feel free to give me a call to talk more at 980-275-1627.

Ed Coambs


Edited by Reena Arora of Arora Media, connect on Facebook
For all your communication needs, she is all you need.


Grow your marriage by getting all the latest blog posts.
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