Lynnette Khalfani - The Money Coach™ Newsletter
9-1-2006
Hi All:
As we head into the long Labor Day weekend, I want to ask you two critical questions about your finances:
1) Are you being paid what you are worth from your job? If not, my Labor Day message to you is simple: fire your boss!
2) Are you allowing the people in your life to drive you in debt, or to keep you from prospering financially? If so, you may be involved in what I call a “financially abusive” relationship. Before you say “not me” click here to learn about this common problem.
Labor Day Message to American Workers: Fire Your Boss
While new figures released today from the U.S. Labor Department reveal that employers added 128,000 new jobs to the economy in August, an astounding 775,000 people became millionaires last month, and 550,000 launched new businesses.
Most people do not realize that every day, 25,000 people in America become newly-minted millionaires. As I explain in my new book, The Money Coach’s Guide to Your First Million (McGraw Hill; Sept. 2006), for many millionaires, the pathway to wealth is by owning their own businesses, not working for someone else. In fact, 70% of all millionaires in the U.S. are entrepreneurs.
So
as workers nationwide enjoy a day off for Labor Day, I suggest that if you are
an unhappy employee, you should consider quitting your jobs to escape the
downside of working in Corporate America – and to enrich yourself financially.
In every sector of the workforce, employers are eliminating a host of employee benefits, or reneging on their promises to provide certain perks that were previously touted to attract workers. Pension programs are closing. Retirement sweeteners, such as 401(k) plans with matching employer contributions, are being scaled back. Health care benefits are dwindling. Employed-sponsored educational assistance is on the decline. Moreover, workers are being asked to pay ever-increasing premiums for their medical benefits, disability coverage, and life insurance.
If layoffs and decreasing job benefits were not bad enough, over-worked men and women in the U.S. must now contend with smaller paychecks as well. The Labor Department reports that average hourly earnings rose a scant 0.1% in August compared with the 0.3% increase economists were expecting. Meanwhile, pay and benefits rose by a paltry 3.1% in 2005 – the lowest rate since 1996 and not enough to outpace a 3.4% rise in inflation. In 2005, for the first year since the Great Depression, the personal savings rate in the U.S. went negative, and an unprecedented two million households filed for bankruptcy protection.
Lower wages are hampering Americans’ ability to save money, weather financial setbacks, and pay off record levels of personal debt. When you consider all these factors, it is clear that this Labor Day, what millions of workers should be doing is thinking about becoming their own bosses in order to safeguard their financial futures. Come Labor Day, you may choose to not just fire up that gas grill, you may also decide to fire your boss!
Are You In A Financially Abusive Relationship?
Simply put, you are in a financially abusive relationship anytime someone you know, trust or love takes economic advantage of you.
I estimate that tens of millions of Americans – as many as 3 out of 4 adults in the U.S. – are battling various forms of financial abuse. Unfortunately, this kind of mistreatment keeps people from reaching their personal goals and achieving financial freedom in their lives. It can also prevent you from becoming a millionaire.
In my new book, The Money Coach’s Guide to Your First Million, I discuss in detail financial abuse among couples – especially where one party disenfranchises the other, by taking actions like removing the other spouse from the mortgage, an insurance policy, or the 401(k) plan.
But financial abuse doesn’t just occur among married people.
There are several classic types of financial abuse victims,
including:
If any of these situations sound familiar (or if they describe your own behavior toward others!) you could be in a financially abusive relationship.
Financial abuse is at epidemic proportions in the U.S. It’s time we started teaching people how to fight it – just like we do for victims of physical and emotional abuse.
To avoid financial abuse, establish boundaries in your relationships as early as possible. For instance, the first time a friend asks for money to get out of a jam, it’s OK to help him or her out. But if they come back for a “loan” a third or fourth time, especially in a relatively short period of time, clearly a pattern is being established. That’s the time to express that you’d prefer not to mix friendship and finances, in order to avoid potential problems later.
We all know that money is frequently a touchy subject to discuss, particularly when it comes to talking abut sensitive financial issues with spouses, family members and friends.
So what should you say to a loved one when you find yourself in a financially abusive relationship?
Here are four smart ways to end financial abuse:
Avoiding the problem or silently brooding about the situation only prolongs it. Sometimes you can end the cycle of financial abuse just by pointing it out to the other party. Anyone who truly has your best interests at heart – whether a family member, friend or someone else – will not want you to feel exploited. The trick, though, is to be direct, but not accusatory or confrontational or in this initial conversation. Don’t say: “You always freeload off of me, and it’s not fair!” Instead, try: “I want to talk to you about our relationship as it pertains to finances. I’ve started to feel uncomfortable with …” and then fill in the blank with whatever is appropriate (i.e. “loaning you money so frequently,” or “having to pay for everything when we go out,” etc.). Then add: “I know it’s not your intention to take advantage of me, but sometimes I do feel like I’m in an awkward position in these situations.”
For instance, parents should let teenage
children know that just because their friends may walk around with cell phones,
iPods, and designer clothes doesn’t mean that all
teens get the
same luxury goods. Say “In our household, we’ll take
care of all your needs, but not all your wants.”
Let’s say financial abuse occurs among two friends, who frequently go out together on the weekends. You can head off the inevitable financial dilemma by suggesting alternative activities that are either a) less expensive, or b) free. For instance, among two women who typically go to the movies and a club on Friday night, the one who always has to “treat” her friend might suggest: “Let’s pick up a bottle of wine and rent a video to watch at my place.” Another option might be to say: “I know your funds are tight, so let’s go to that free jazz concert in the park, or someplace else that doesn’t cost a lot of money.”
Once you’ve been entangled in a financial abusive relationship, it’s hard for both parties to end the bad habits that have defined the relationship. So you should expect the other person to “test” you, by continuing to ask you for money or financial help – even after you’ve clearly communicated that you don’t want to do that anymore. Be firm in reiterating your position until it “sinks in” for the person that your relationship has forever changed, and that you’re not going to tolerate financial exploitation, even if it’s unintentional on their part. Say: “I’m really sorry about the predicament that you’re in. But as I explained to you before, unfortunately, I won’t be able to keep giving you money.”
It may take time, but financial abuse can be ended in all relationships – even as the relationships themselves survive and thrive.
So many people who are in debt attribute their financial woes to their spending on products – things like clothes, shoes or gifts for the kids. But we also need to consider how the people in our lives either help us financially, or hold us back.
If you have ever been in a financially abusive relationship, or still are, please tell me about it. Drop me a note at mystory@themoneycoach.net. I would especially like to hear from those of you who were able to end the financial abuse. In a future newsletter, I will offer tips based on reader feedback. And don’t worry, if I use your story, I’ll leave off your name and keep you anonymous.
Here’s wishing you health, wealth and financial freedom for life!
Lynnette
Lynnette Khalfani, a former Wall Street Journal reporter for CNBC, is the author of The Money Coach’s Guide to Your First Million and the New York Times bestseller Zero Debt: The Ultimate Guide to Financial Freedom. She has appeared on “Dr. Phil,” “Tavis Smiley,” and the Emmy-award winning reality program “Starting Over.” She has also been featured in The New York Times, USA Today, Redbook, and Essence.
Feel free to email this
newsletter to anyone you think needs to improve their personal finances. For
more information about Lynnette, visit her website at
http://www.themoneycoach.net.