Money Trouble

Money is one of the two things couples battle about more than just about anything else, the other being sex. The US is now officially in stagflation — with a shrinking economy AND above-average inflation, This is the first time we’ve been in stagflation since Jimmy Carter. I remember the late 1970’s and early 1980’s when Carter was run out of office ushering the Reagan era because of stagflation.

Stagflation means things might get tight at home, so this is a primer on how to have honest, unemotional conversations about money during a tough time in your financial lives.

First of all, hold onto your job for dear life. With high inflation and rising unemployment, that usually means more layoff’s are coming. We are rapidly approaching the state where there are more unemployed people than jobs available. At that point, the unemployment rate sharply begins to increase as there are simply no jobs available to fill. Unemployment duration also increases. Like I said, hold onto your job for dear life right now.

One of the things that happens during times like this, is that interest also rates rise. That means that your credit card payment is not going as far to reduce the principle. Make sure you monitor that so that you do not end up in default. If you have an adjustable rate mortgage, you may see your house payment go up too. So, be on top of all of that. This is especially true now that banks and CC companies are now allowed to jack up your overdraft fees and late payment fees thanks to Trump.

The trade war Trump started means that things will generally be more expensive, so budget wisely. It’s best not to consume things that put you in financial difficulty.

I say all this to give you the lay of the land, so that when you and your partner do confront your financial reality, you have some real information about the current state of affairs that are out of your control.

Make an agreement to find a workable solution and agree to work to make it through this period stronger together.

Begin by taking stock of your situation. Cash on hand, credit available, other assets like stocks and bonds, assess the risks you face as a couple or family. Document it so it’s on paper and you can both see what the reality of the situation is.

Make a budget. Food, rent, phone etc, car/transportation. Agree to stick to it.

Make a list of needed items, and a plan to search for the best value given that a. prices are generally going to be higher and b. scarcity means that a lot of things you are used to finding will be tougher to find. Set a budget for these items and make an agreement to not exceed it.

Understand that recessions last between one and two years. It’s also the case that Trump might end up caving since he is in a no win situation. Even if he does, the lag in getting trade up and running again means you along with the rest of America will be stuck in the same boat till the state of things returns to normal. Remember, it took 4 years to unwind the supply chain issues after Covid.

I think the main thing to think about is that this is not an animal of your creation, try not to stress about things out of your control.

If none of this applies to you because you are well off enough to weather the storm, do something to help out. Support a food bank, donate to meals on wheels, that sort of thing. Everything is possible in community. Be a contribution.

Back to defusing rising temperatures, here are a few tools to apply.

1. Sit face to face about 3 feet apart.
2. Use facial congruence, which means match the speakers facial expression.
3. Suspend your frame of reference, which is to say, listen intentionally.
4. If things get heated, hold up your hand, and say calmly, “Please stop”. Make an agreement with each other to do this when the volume is rising, or if you are not feeling heard. Make an agreement to honor the gesture and the request.
5. Use “I” statements. For example, I feel frustrated when you talk over me, I do not feel heard.”
6. Use reflective listening, “What I hear you say is….”
7. Seek clarification.Say, “I’m confused, on the one hand…..X and on the other hand….y, help me out?”
8. Be sure to say what you need and want, and speak to the impact of not getting agreement, for example, “I need X, because of Y and if you are not willing to do it, then this is the tangible natural consequence to that choice.”
9. Take a time out when you are finding yourself in an escalating cycle of communication.
10. Be kind to each other and assume you are both trying to solve the problem.

I am happy to help coach you through a conversation, feel free to reach out.