Reading Reality

Reading reality is a foundational skill. Without getting too meta about it, reading reality is being able to say, “Here’s the truth of a matter, and here’s the data to back it up”. Data usually entail hard, measurable numbers (although insights and experiences can provide a lot of information too). For instance, how much debt do you have? You might answer “A LOT!” which is supremely relative, perhaps a bit depressing, and not very helpful. The act of then of correctly reading the reality of your debt situation entails pulling out the most recent account statement of every debt owed showing the precise amount, as of today, down to the penny. You owe $4,238.34… to the penny. That’s the reality. How do you feel about that debt? Was it the result of a bad relationship that left you feeling icky or is it the final amount of a student loan that helped launch your amazing career? We can see now precisely how large this monster is, it’s shape, color, what it likes to eat, how long we might let it go before it starts to get angry and bite us, and so forth. The point here is that the truth of the matter is you owe $4,238.34 which might be a lot, but now knowing how much it actually is, you might find other ways of describing and feeling about it. If it’s broken down into 12 equal payments, then you could have this thing completely out of your hair by paying $353.20 each month for a year (not including interest here). Depending on your income, that may not actually be a lot. But now that we’ve correctly read reality, we’re ready to start taking action. Before, when it was simply “A LOT”, you really had no idea what you were dealing with, how to deal with it, were scared of it, and filled with such feelings of overwhelm that you were paralyzed into doing nothing. But with a correct understanding, you can move forward with your plans, with life, and with the weight of uncertainty lifted off your shoulders. (If you didn’t realize this weight was there, you’ll know it for sure once it’s lifted. You were just so used to its presence you’d forgotten what it felt like to be without it.)

There’s a number of ways we need to be reading the reality in our financial lives. Knowing exactly how much income we’re receiving, where it’s going, what it’s doing for us, if its generation or use are aligned with what’s most important to us in life. When we don’t read reality, then we are just floating (or sinking) along, being mindless about the whole thing, telling ourselves we’re just bad with money and hiding behind that excuse rather than addressing whatever emotional or behavioral need or hurt exists in our subconscious.

When I was in my early adulthood, I lived fairly simply and made more money than I needed to meet my expenses. As a result, the amount of money in my account grew. That was the extent of my reading reality. (Nice, but not very specific, is it?) I then went to grad school, took out $18,000 of student loans, got married, and started working a volunteer job that paid a living stipend. I was happy to let my wife pay the bills, while I did the cooking and grocery shopping. Each of us enjoyed our respective tasks, and managed to complete them satisfactorily. However, when it came to developing habits and spending money, neither of us were particularly mindful about our money – as long as there was enough in the account, that was sufficient. Right?

It wasn’t until a series of events occurred in my career trajectory, that I found myself with a second master’s degree, and doing financial coaching at a non-profit that I decided I needed to try budgeting for myself. After all, if I was going to ask others to a budget, I figured I needed to really know how to do it myself. One financial guru’s book I read taught to look back over 3 year’s worth of expenses and come up with a budget based on those totals. It was tedious, albeit an interesting trip down memory lane, but ultimately not very useful. Cash transactions weren’t included in the credit card or checking account statements, so a significant portion of the picture was missing (and I used quite a bit of cash taking my year-old daughter to farmer’s markets three times a week). And since life moving forward never looks the same as it did prior, your budget will necessarily look different. (So please, don’t use this method of budgeting!)

I then did a comparison trial of two forms of budgeting software. One was really a spending tracker, within which you could set goals. I like to say this was similar to being in the back seat of a car, watching money pass by, and saying “Sure, I drive!” in terms of budgeting my money. The other software had me manually determine every spending and saving category I would use, allocate money into each of them, and then log each expense once it was made. (Additional automatic bill-payments were tracked and logged on a weekly basis.) This process was like being in the driver’s seat of a stick-shift car, fully conscious and in control of where the money went and how it got there. Oh yes, this was driving.

The awareness (awakening?) that came from the experience was actually quite unexpected. (Wait, we spent HOW much on takeout dinners?) Logging in every transaction is like when you’re meditating and now suddenly attempting to be aware of each breath you inhale and then exhale. Breathing and spending always happened in the background, but now that we’re conscious of it we see how it flows. Becoming aware and assessing if our spending habits are actually in alignment with those values and goals that we say are most important to us is the key to this exercise.

We’ve now entered a Golden Age in personal data collection. Never before has it been easier to track whatever it is that you want to track – your sleep, your money, your cycles, physical activity, glasses of water, number of times you sneeze, whatever. While having all this data is great, at the end of the day, it’s just numbers and is meaningless. Once you attach meaning and values and interpretation to the data, then you can reconcile the significance of it for your life and that then unveils the truth of the situation. The truth is in the data. The data is in the record of transactions staring back at you. There’s no hiding from the record of transactions – after all, you entered every one in. You can try to justify this or that expense, or you can accept that you paid for it and determine if it’s something worth repeating in the future. Is that 3-a-day latte worth every penny? How about that gym or mail-order knitting-yarn-of-the-month membership? Are you living out daily who you want to be? Or are you spending to tell yourself “this is who I am”, while falling short of taking the daily steps to be that actualized person? It’s tough work to see yourself for who you really are. Before then, you were probably either oblivious, or telling yourself lies. In some areas you very well may have been living out your goals, but with how much intention and not just when you felt like it and what suffered as a result? (Did you still have enough to pay the mechanic that $1,000 car repair after going on that yoga retreat?) But once you see that truth and assess what’s to be learned from it, then you’ll be able to start taking steps toward the life of contentment, fulfillment, and control. In the context of your personal activity, this is what it means to read reality.

This book is a work in progress and we’ll all benefit from your input and collaboration. In the “Leave a Reply” below, please post examples, comments, questions, and needed edits. By posting, you grant permission for inclusion of any content to become part of the book, now or in the future, in whatever form it may take. I’ll give attributions to the extent possible. I know sharing about our financial lives can be sensitive, so if you want to share anonymously, please use the contact form instead and I’ll honor your request.

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