Section XVI: Financial Difficulties

Money Management Skills

Goals of the Exercise

1. Establish a realistic budget that effectively balances income and expenses.

2. Consistently apply effective money management techniques.

3. Keep weekly spreadsheets of all expenditures and income.

4. Explore means of decreasing debt and expenditures.

5. Explore means of increasing level of income.

Additional Problems for which this Exercise may be Useful

Suggestions for Processing this Exercise with Veterans/Service Members

The “Money Management Skills” activity is designed for work with veterans/service members experiencing stress, relationship challenges, and/or legal problems related to poor financial management. This activity takes a skill-building approach aimed at helping the veteran/service member gain control of his/her personal finances and achieve financial stability. Follow-up activities could include bibliotherapy using one or more of the books listed for this issue in Appendix A of The Veterans and Active Duty Military Psychotherapy Treatment Planner.

EXERCISE XVI.A Money Management Skills

We all have to manage money, but many of us have little or no training or knowledge in this when we enter adult life. It doesn't help that entire industries are built on exploiting people's lack of that knowledge, or that our society is oriented toward getting what we want right away. Luckily, the skills aren't complicated and the information is available if you know where to look. This exercise will guide you in getting started on taking control of this important part of your life.

1. The first thing to look at is budgeting. This means having your income and your expenses in balance, or having more income than expenses. Many people believe the key to financial peace is more income, but it's often more about reducing expenses. What did you learn about this growing up, either from your family, at school, or from other sources?

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2. A budget is just a matter of simple arithmetic. A spreadsheet program like Microsoft Excel can be handy to track it but isn't necessary. To create one, we need to capture as complete a picture as we can of our income, and of where and how we spend it. Sources of income include whatever we are paid for work plus what we get from any other source. What sources of income do you have right now?

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3. The other half of the budget is what we spend. Our expenses vary widely depending on our situations—usually there are some we can reduce or eliminate, and others we can't. What kinds of expenses do you have right now?

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4. For many, it's hard to find complete answers. When we add up our incomes and subtract our expenses, we find we should have more left than we do. This means we're spending money in ways that we're forgetting. We need a complete picture of our finances. We can do two things to get a clearer picture of where our money goes: first, pay for things with a checking account or debit card instead of cash, because that gives us a record of all those expenses. Notice we said debit card, not credit card. They look the same, but every use of a credit card is a loan, often at a high interest rate. A debit card is tied to a checking account and purchases with the card are immediately deducted from that account—no borrowing, no increase of debt. Some people keep credit cards for emergencies or pay the balances in full every month; used those ways, credit cards don't make the financial situation worse. To use checking or either kind of card, we need to know how to manage them. You can probably find classes on this fairly easily—a bank or credit union may offer a free class, or you may be able to find one through an agency on or off base. If you need training on how to use these tools and a budget, where will you look for it?

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5. The second thing we can do is track our cash spending by getting receipts when we pay cash for anything, or writing down what we spent if a receipt is unavailable (from a vending machine, for example). If you get a notebook and record your daily cash spending and then add it up, you may be surprised at the end of the month by how much you spend on small items—vending machine snacks, fast food, and so on. You may decide it's worth the bother to pack a lunch instead of grabbing a burger combo (and probably healthier, too!). What kinds of small items do you think you spend a fair amount of cash on and how much do you estimate that is?

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6. There may not be much you can do to increase your income, but depending on your situation and income, you may qualify for food stamps or other financial assistance. This can make a big difference, paying for hundreds of dollars in groceries every month. Please talk with your therapist about how you can look into this. Also, you or someone in your family may qualify for grants or loans for education. Is anyone in your family taking college classes?_____ You may also be able to add a part-time job to your schedule. If this is an option, where could you get a job, what would it pay, and how much time would you put into it every month? A look at the numbers will tell you whether this option is worth pursuing.

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7. Look at other ways to cut costs: Try buying generic products instead of brand names, buying simpler versions of products like electronics, and spending less on holiday gifts. What other ways can you think of to spend less without sacrificing too much quality of life?

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8. There's no way to cover this topic in one exercise, but there's one more area to look at as a start—managing credit. We touched on it with credit cards, but it also includes “rent to own” deals on furniture, car loans, home loans, and so on. Anytime you're thinking of buying something on credit, there are two main questions: do I need/want this too badly to wait while I save up to get it, and how much will this really cost? Part of a class on managing money may be figuring out what a loan will really cost to pay off, and you may be surprised; the rule of thumb is to get the lowest interest rate (fixed, not variable) and shortest payoff time you can. What loans do you have or are you considering? Can you save by skipping, refinancing, or speeding up the final payoff on any of them?

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Be sure to bring this handout with you to your next therapy session, and be prepared to discuss your thoughts and feelings about the exercise.

Spending as a Drug

Goals of the Exercise

1. Regain sense of self-worth independent of material goods owned.

2. Gain insight into dynamics related to impulsive and irresponsible spending (e.g., family modeling, low self-esteem), leading to termination of poor money management.

3. Identify personal traits that make irresponsible spending possible.

4. Use cognitive-behavioral methods in controlling spending.

Additional Problems for which this Exercise may be Useful

Suggestions for Processing this Exercise with Veterans/Service Members

The “Spending as a Drug” activity is designed for work with veterans/service members who are experiencing legal, disciplinary, and/or marital problems due to compulsive spending. This may also be useful with veterans/service members who are newly clean and sober from substance dependence or abuse, due to the risk of switching their addictive patterns from ingesting substances to reckless spending or gambling. Follow-up activities could include bibliotherapy using one or more of the books listed for this issue in Appendix A of The Veterans and Active Duty Military Psychotherapy Treatment Planner.

EXERCISE XVI.B Spending as a Drug

What is a drug? In one sense, it's a substance that people eat, drink, smoke, inject, and so on, and that affects their moods, senses, or thinking. However, we can also think of a drug as anything else that has that effect, that changes how we feel or think, especially if it does so quickly and with little or no effort on our part. If it makes us feel better by reducing pain and discomfort or by increasing pleasure, we're more likely to get in the habit of turning to it. If it becomes something we rely on to feel okay, we can get psychologically dependent on it. And if it has long-term costs that eventually outweigh the short-term benefit, but we feel we can't give it up because we need that short-term benefit—at that point it has become an addiction. There are a lot of people who never take so much as an aspirin who are still seriously addicted to things that can wreck their lives. Those addictions can include gambling, unsafe sex, overexercising, workaholism, and of course, overspending. Spending money can make us feel happy, excited, and content; if it's at a level we can afford and doesn't create problems for us, it isn't a problem. But when we spend at a level we can't afford it can quickly get out of control. The purpose of this activity is to guide you in deciding for yourself whether you use spending as a drug, and if you do and want to change that, what you can do about it. We'll start by looking for addictive spending patterns. An easy way to do this is by looking at the same factors used to diagnose chemical dependence, except that we'll translate them into terms of spending. There are seven of them and here they are trans- lated from chemical to financial:

1. Tolerance: With chemicals, this means that it takes a larger dose to get the same effect, or that the same dose gives less effect. For example, many people find that the first time they try alcohol, one drink leaves their heads spinning; for a person who's never tried caffeine before, one cup of coffee is super-energizing. With more use, tolerance develops and it may take several drinks or a pot of coffee to get the same effect. If you use spending to lift your mood or distract you from problems, does it take spending more to improve your mood by the same amount as was once the case? If so, can you give an example?

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2. Withdrawal: When a person is dependent on a chemical, he or she may experience unpleasant physical consequences after suddenly stopping its use. The most familiar examples for most people are probably the migraine-like headache a constant coffee drinker gets if he or she goes too long with no caffeine, or the craving a smoker feels after a few hours (or less) without any tobacco. In terms of spending, this would take the form of a restless feeling and a growing urge to go somewhere (or get online) and buy something. Have you experienced this? If you have, briefly describe that situation:

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3. Loss of control: With substances this is defined as taking it in larger amounts or over a longer period than was intended. To turn to alcohol again as an example of this, we might see someone who stops at a bar planning to have one drink and chat with friends for 20 minutes, and ends up getting drunk and passing out or staying for hours. It's easy to guess what loss of control of spending looks like: spending more than we planned or can afford. Do examples come to mind in your life? If so, describe one:

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4. Failed attempts to quit or cut back: Most who are addicted, whether to chemicals or behaviors, know they have problems and have tried again and again to control those problems. A lot of problem drinkers have tried making different rules about drinking, or tried to quit, but found that those strategies didn't work for long. In terms of spending, this might take the form of failed budgets, staying away from places where spending has caused problems, avoiding buying certain kinds of things, only buying them at certain times, and so on. As with other symptoms, give an example if this has happened to you:

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5. Time spent: With alcohol or another chemical, this means spending a lot of time getting the drug, using it, or recovering from the effects of use. Time thinking and talking about use counts, too. With spending, we wouldn't count all work time as spent getting the “substance,” but we'd count work time that went to earn money spent compulsively. Do you find that spending absorbs a lot of your time, attention, and energy? If so, give an example here:

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6. Other important activities sacrificed: Giving up or reducing an important activity because it conflicts with drinking is a sign of a drinking problem. If you find yourself sacrificing an important social, work, or recreational activity due to spending, please describe that here:

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7. Continued use despite resulting problems: A person who has emphysema and keeps smoking has a nicotine addiction; a drinker who doesn't quit despite liver damage has a drinking problem. Have you had problems due to reckless spending but continued anyway? If so, briefly describe that problem and how it has affected your life:

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One incident of any of these doesn't make it a pattern. Still, with a chemical, if three or more of the seven are patterns for a year or longer, it qualifies as an addiction. If you do have a spending addiction, you don't have to fight it alone. Talk with your therapist about the resources available.

Be sure to bring this handout with you to your next therapy session, and be prepared to discuss your thoughts and feelings about the exercise.