Synopsis: How to cut through financial fog to get control of your finances

As northern Californians most of us can relate to and appreciate fog.  Here in our own community we enjoy fabulous views of Mt. Diablo.  Mt Diablo can go from being an awesome, majestic and beautiful mountain one day to invisible the next if a thick fog rolls in.   How about driving to the top of Mt. Diablo?  In the fog it would be stressful and potentially dangerous going around turns hoping not to run into wildlife, traffic or off a cliff.   It would be difficult to know where you are, where you have been or where you are going.  The fog would prevent you from enjoying breathtaking views that create a sense of peace and tranquility from experiencing nature at its best on a crystal clear day.

Money fog causes similar hazards as the fog in nature.  When you are stuck in money fog the constant uncertainty and worry about money is stressful and potentially dangerous to health and relationships. There are no devices such as a GPS to guide you through money fog.  Money fog keeps people in denial.  It creates illusions that there is enough or there will be enough money.   Natural fog will lift in a day or two, but money fog lasts forever unless you do something about it.   Here are some examples:

Nicole stashes her mail in a drawer with the intention of opening it later.  Weeks come and go and Nicole is now 6 weeks behind.  She knew she would not be able to pay some of her bills so piling them up keeps her in a money fog.  It was easier for her to be in denial and not deal with paying her bills.

Derrick took a trip and put all the charges on one of several credit cards.  He fully intends to pay it off.  When he returns from his trip a few unexpected expenses come up and he wants to purchase season tickets.  His credit cards now are maxed out.  A low interest rate credit card shows up in the mail so he decides to pay off the balance of one of his higher rate cards with the new low interest card. At the same time he decides to borrow some extra cash from the new card to pay for a weekend get-a-way.  Juggling balances on credit cards is magical thinking.

Will and Diana want to get rid of the high interest they were paying on credit card debt.  They decide to refinance their home to payoff their credit card debt.   It was a great sense of relief to finally have their credit cards balances paid off.   Now, when they use a credit card they intend to pay off the balances every month.  This worked for Will and Diana for a period up time.  Unfortunately, the credit card balances start to creep up again.

These examples may not seem to be too serious but over time the lack of clarity and denial of living in a money fog leads to serious consequences such as lawsuits, repossession of items, foreclosure proceedings and bankruptcy.  The emotional strain from these consequences can be devastating. 

There are solutions to lifting the money fog and keeping a clear path to financial peace of mind.  It starts with small steps.  The first step is to acknowledge the problem.  The next step is to be willing to look at your habits, attitudes and beliefs that need to be addressed to break out of the fog.   This is a process that may require asking for help.   The money fog will lift entirely when answers to the following questions are crystal clear:

1. How much money is coming in?
2. How much money is going out?
3. Does my balance in the checkbook register agree with my bank balance?
4. How much debt do I have?
5. How much does it cost to service my debt?
6. How much am I saving for periodic expenses?
7. How much am I saving for retirement?

With this clarity you can enjoy the same peace and tranquility with your finances as you can enjoy the breathtaking views from Mt. Diablo on a crystal clear day.