Have you ever hit rock bottom? Do you even understand what it means to hit rock bottom? If you google the term "rock bottom", one of the first links you'll find is for Eminem's song Rock Bottom. I couldn't post those lyrics on MoneyBible.org (we're a family-friendly site). If you're an adult person who has other people counting on you, today's interview with Parkey Thompson might be a good listen. Or, if you're more on the rebellious side of life, you might want to google Eminem's song, take a listen, and then come back and listen to me and Parkey talk about financial coaching. What it is, how it works, and who its for.

If you need a financial coach, I strongly recommend Parkey. Before you even think about hiring a financial coach, listen to The Money Bible Radio Show.

Until next time - Make Your Money Count!

Jim

Seven years ago, November 15, 2003, Parkey Thompson and his wife committed to getting their financial life in order. Parkey shared his story with me on today's episode of The Money Bible Radio Show. Here's what Parkey said...

I can remember a few things about that day, but one thing I recall is our level of commitment. I recall that because I see clients who are partially committed, just like my wife and I. You make a decision, but too many things influence your ability to discipline yourselves and you wind up right back in the same mess you started in. Lisa and I, I am quite sure, were no different. However, the greatest day in our financial lives came less than 48 hours after our Saturday decision."

Many might not understand but what happened that day, November 17, 2003, changed our lives forever. It was that day that I was laid off. Honestly, that day was not one that I look back and say I would like to experience regularly nor that I would want anyone else to experience, but it is the day that turned our future around.

Two things happened that day. First, I recognized for the first time in my life I did not have a plan B. Secondly, and equally important was that my loss that day was what made us change our level of committment that we made just two days earlier.

Not knowing what we would do next made us significantly reduce our commitment to getting out of the debt mess we created, getting on a solid plan, and being financially positioned to do what we would be required to do in the future.

Do not misundertand, I did not sit down and say, “this is great, it is wonderful to be unemployed”. In fact, it was a tough few weeks of uncertainty that many today are going through. However, what it did was make us look at everything and cut back drastically where we needed to.

Today, so many people do not cut all that they can. As I mentioned in my earlier blog, The Misconception, too many people feel that they can get things on track without some wholesale changes in their financial lives. It does not work that way and, fortunately, we found that out.

Looking back today, seven years later, it was a great day. Today, I am married to my wonderful debt free wife, with three debt free children, living in a debt free house and helping others become just like us – debt free.

What was, or will be, the most important day in your financial life? Jack Welch used to teach us at General Electric, “Control your own destiny, or someone else will”. Who is controlling yours?

This is the final episode with Joe Roher and Morgan Burke sharing their experience and hope in a conversation about money, life, and relationships.

On 9/11/12, I met with Gary Williams, CFP, to talk about a few financial planning issues related to the road ahead. We covered a lot of ground including a little personal reflection about our own 911 experiences. We talked about trust, investment risk and the importance of determining your “tolerance” for risk before you set up your investment plan. We also talked about the benefits of having a clear financial plan for the uncertain times ahead.

Here’s some of what Gary said in our interview: As we look at the trajectory of the U.S. economic recovery, once again this year we see a light at the end of the tunnel and wonder if it is an oncoming train. Although improvements in 2010 and 2011 did indeed end up derailing, it looks, at this point, as if 2012 may bring the start of sustainable growth. The end result remains vulnerable to outside influences, though, so the real question is, How will we know?

The bright spots: employment and housing

When it comes to sustainable growth, economists focus on a number of key indicators, including:

• Employment. Employment generates wage income, which is the base of consumption. Consumption accounts for more than two-thirds of our economy, so without growing employment, we can’t grow anything else with any lasting momentum. The 2012 employment picture has been encouraging, despite some recent weakness. Although unemployment currently stands at 8.3 percent, the economy continues to add jobs, albeit at a sometimes anemic rate. These increases in employment have been accompanied by growth in incomes, which has helped to support an increase in consumer spending. While there has also been some drawdown in the savings rate, it is not yet at a problematic level. This may suggest that continued income growth will allow continued spending growth, while saving continues.

• Housing. Housing is a foundational component of any recovery, and we’re starting to see rising prices in some markets, as well as an uptick in housing starts. Combine that with current record-high affordability levels, record-low mortgage rates, and rising rents, and you’ve got a recipe for a continued recovery.

• Durable goods demand. Improvement in this area is due, in part, to deferred demand. You may not need a new car every year, but you will eventually, and it seems that many Americans are digging into their pockets to fund big-ticket purchases again.

Are the above improvements sustainable? They could be. The current level of employment growth seems to be sustainable around a trend line that would promote continued recovery. Continued growth in spending would follow as a result. The housing recovery and growth in durable goods demand should also be able to continue their forward trajectory. Factor in a gradual recovery in local and state government spending and slow growth in business investment—both of which are occurring—and the recovery appears to be on track.

The obstacles: political vs. economic

Major obstacles to the ongoing economic recovery would likely be external events:

• A war in the Middle East
• A European economic collapse
• A significant political event in the U.S.

Of the three, the most probable seems to be the last (although ongoing debt concerns in Europe have certainly added to market volatility). Notably, however, all three examples are political, not economic, events. That political events now trump economic ones is a reflection of the new world order. In some sense, though, this is just a reversion to the origins of the economics discipline, when it was known aspolitical economy. Events in the real world are once again dominating those in the financial world.

We can also examine this situation by considering the effects of nationalism and geography on recent economic developments. The Middle East and the oil price, the European financial crisis and the Greek and French elections, turmoil in Russia and its effect on natural gas prices across Europe . . . all show that the return of the real is not limited to the U.S. To begin to understand where we as a country now are economically, we must take a wider perspective than we have done during the past few decades.

There are two dimensions we need to look at in this analysis:

1. Whether a country is a consumer or a producer of key items, such as capital, raw materials, and manufactured goods

2. Key dependencies of a country, such as capital, energy, market access, or other factors

The first dimension looks at how a country operates, the second at its vulnerabilities.

Compare Germany with Greece. Both are European countries, but the similarities end there. Germany produces capital; Greece consumes it. Germany manufactures goods; Greece imports them. Both consume raw materials, but Germany uses them more efficiently. Overall, Germany depends on market access and raw materials, while Greece depends on access to capital, imports, raw materials, and other factors. Unsurprisingly, Greece has been more economically vulnerable.

Running this analysis on the U.S., we find that, overall—and with one big exception—we are in a strong position. The big exception, of course, is capital. The U.S. has been running large deficits for some time, depending on foreign capital for continued operation. In other areas, including manufacturing, demographics, geography, and even energy, the U.S. remains relatively strong. Because our capital dependency stands out in a generally healthy picture, it has, unsurprisingly, become a focus of national concern and policy debate under the name of the deficit.

The U.S. capital dependency means that this year’s presidential election will determine the government that will have to make long-term decisions about how to deal with the country’s budget problems. To understand the basis of the decisions they will make, we must first understand the underlying facts:

• The so-called fiscal cliff. The expiration of the Bush tax cuts and the sequestration of government spending will both hit at the end of 2012. Worse, the debt ceiling debate will fire up again, quite possibly before the election. Any one of these would have significant political and economic effects, but if they all come at the same time—with a presidential election mixed in—we could be facing some extreme uncertainty and the possible derailment of the economic improvements we’ve seen thus far.

• Spending and taxes. We currently spend about 50 percent more than we raise in taxes; taxes cover about two-thirds of spending and borrowing accounts for about one-third. Approximately 37 percent of the spending is discretionary (defense and other government programs), about 57 percent is mandatory (Social Security, Medicare and Medicaid, etc.), and about 7 percent is net interest on accrued debt.

o Should we just raise taxes? The numbers above mean that if we raised taxes without cutting spending, taxes would have to go up by about 50 percent. Everyone in the country would be paying half again as much as they do now.

o What about cutting spending alone? We would either have to substantially eliminate the discretionary spending—all of defense and everything else we typically associate with the federal government—or, for example, cut discretionary spending by half and Social Security and Medicare by about one-third. The details can vary, but this is broadly what it would take. Neither “solution” would sit well with U.S. citizens; just look at what happened in Greece.

The Light at the End of a Long Tunnel

Despite how uncertain our economic picture may be, especially when you consider the political obstacles that could derail the recovery, there are positive developments at work. Keeping your personal financial plan up to date is one of the best ways to stay on track, regardless of what the future brings.

What's Your Story? The stories we tell each other - and the stories we tell ourselves - are generally based on what we truly believe. Our worldview allows us to see things through our own rose-colored glasses, especially when it comes to money. Schema is a term in psychology that describes any of several concepts including:

• An organized pattern of thought or behavior.
• A structured cluster of pre-conceived ideas.
• A mental structure that represents some aspect of the world.
• A specific knowledge structure or cognitive representation of my self.
• A mental framework centering on a specific theme
• Structures that organize our knowledge and assumptions about something.

Your story, and mine, is the starting point for interpreting and processing information. Our stories influence everything we think, feel, and do. When I meet with people, I often ask them a couple of questions: "What are some of your early memories about money?" and "What are some ways those experiences affect your attitudes and choices about money today?" I've been amazed at some of the stories people have told me, and I've also been amazed at their insights about the life-changing impact of these experiences.

A Beautiful Ballerina Story

Kim told me that when she was about five years old, her aunt suggested that she save some of her 25-cent allowance each week to buy something she really wanted. Instantly, she knew exactly what that would be: a ballerina watch! She had seen it at a store for $3.25. Kim saved her money every week, and in exactly thirteen weeks, she and her aunt marched into the store to buy the watch. Kim reflected, "To this day, I've always realized that to get something I really want, I have to be disciplined to save for it. That's a lesson I learned from my aunt and a pretty pink ballerina watch."

Financial Child Abuse

Janice told me about a friend who was repeatedly abused sexually by her father. The day after each encounter, her father bought her something nice to buy her silence. Today, years later, whenever she's anxious, Janice's friend spends money on herself so she'll feel better. The connection between the pain of abuse and gifts from her dad is still riveted on her soul and her spending habits. The trail of her maxed-out credit cards leads directly back to those days when her father tried to put salve on her pain and his guilt by buying her nice things.

Some of us can easily think of our "first memories" when we were very young, but others more easily recall the delight of getting their first paycheck from their first job in high school or the finances related to some other important event in their lives. Most of us can remember several events pertaining to money that shaped our lives. The important issue is to reflect on events that are important enough for us to remember them. Each of these is significant in more ways than we first imagine.

The questions I ask my clients are helpful to everybody, but they may be especially helpful to those who want to understand why they experience certain emotions and behaviors in the money department. Sometimes when I talk about finances (and specifically spending habits) to people, some of them shake their heads and tell me, "I don't know why in the world I do some of the things I do. Sometimes I buy things even though I know I can't afford them. It just doesn't make sense." But actually, if we connect the dots of our present attitudes and behaviors to important moments in our past, it might make perfect sense! With those insights, we more clearly see our choices so we can make better decisions.

It takes a little time and effort to think, reflect, and write out your story but the benefits can be very rewarding when it comes to your finances. I hope this article will make a difference in your life. Based on the hundreds of stories people have shared with me over the years, I'm convinced that it does make a difference when you take time to write it out. So, What's Your Story? And, how does your story impact the way you manage money?

Jim Munchbach is a financial coach in Houston, Texas, where he offers financial workshops for people in Houston area churches. His extensive experience with clients following disasters like the Northridge Earthquake, Hurricanes Andrew, Katrina, Ike and dozens of other catastrophes has taught Jim the tremendous value of planning-before the unexpected happens. Jim offers Make Your Money Count workshops because he believes good money management is a discipline that builds financial, emotional, as well as spiritual muscle.

With gripping and heart-warming stories, Jim highlights powerful principles that provide clarity and a strong sense of direction in the journey to success, significance, and satisfaction.

Please contact Jim at his website if your church is interested in offering Make Your Money Count workshops. The workshop is offered in 8 one hour sessions or as a weekend retreat.

In today’s interview, Joe and Morgan talk about money, forgiveness, and other spiritual principles that relate to financial planning. Their stories are very different but the truth they share relates to all of us.

We live in the wealthiest society the world has ever known. Even those at the bottom of the economic ladder in America enjoy technology (televisions and iPhones) and transportation (cars or mass transit) that was unthinkable even to the super rich a few generations ago. Why, then, are so many people unhappy with what they have? Why do we have such a powerful desire to have more?

In an interview with Luci Shaw for Radix magazine, Dallas Willard, author of The Divine Conspiracy, reflected on the impact of rampant consumption in our culture: “We are designed to be creators, initiators, not just receivers. Yet the whole model, the consumerist model of the human being, is to make us passive, and to make us complainers and whiners, because we're not being given what we need. We cook up a ‘right’ to that and then we say we've been deprived of our rights. We see this in our churches, which pander to consumers. They say, ‘Come and consume the services we offer, and we guarantee you a wonderful time. You'll go out of the church door feeling good.’ ” *[“Spiritual Disciplines in a Postmodern World,” Luci Shaw with Dallas Willard, Radix, Vol. 27, No. 2.

Someday Soon We'll Stop to Ponder

The same truth is stated by a very different source. In their hit song, “The Grand Illusion,” the rock group Styx observes that our culture has an insatiable appetite for more and more stuff without every stopping to reflect on the purpose of life. They sing, “Someday soon we'll stop to ponder what on Earth's this spell we're under. We made the grade and still we wonder who the hell we are.” (“The Grand Illusion,” The Greatest Hits, Styx, 1995.)

Why Financial Freedom is Beyond Our Reach

These observations are an indictment of our entire western culture. These characteristics are pervasive, to some degree affecting every one of us. The deceptive messages that we need—and, in fact, deserve—more and more possessions and pleasure are the air we breathe each day. And the impact is devastating to our values, dreams, and purposes. Based on these characteristics, financial freedom is always beyond our reach. Daniel Yankelovich, author of the insightful book New Rules, observes that in only the past 50 years, our culture has shifted from self-sacrifice to self-indulgence. The generation that willingly gave their lives to defeat totalitarianism in Germany and Japan would hardly recognize us today. It’s been a quick slide.

What Matters More Than Money

You and I live all day, every day in the culture of self-indulgence. If we’re aware of it, we can do something about it. From my own experience, I’ve learned that living a life without a transcendent purpose is a dead end street. Santa Claus (or the next POTUS) isn’t going to bail us out, and there’s much more to life than barely making it each month or living in fear that no amount of money is enough. For most of us, a life of financial freedom will require some adjustments. The question is: Is it worth it? For me, the answer is emphatically “yes!” I’m still tempted by those messages that I deserve the newest this or the best that, but I’m far more aware of those messages today, so I can more clearly see the choices. Over the past decade, I’ve been reorienting my life according to the purposes that challenge me and fill my heart with gratitude. As I’ve looked beyond my own selfish needs and tried to meet some of the needs of those around me, I’ve seen God use me to touch a few lives—and that both humbles me and thrills me. Sure, I could work harder and make more money, but I’ve gradually become deeply convinced that there are things more important than a little more money.

A Powerful Gyroscope to Freedom

In his book, The Call, author Os Guinness described the powerful, clear sense of purpose in the lives of the Puritans as an internal gyroscope that kept them on track no matter what was going on around them. They seem to have discovered a kind of financial freedom that goes way beyond the next new toy. Someday, each of us will receive a report card of our attitudes and behaviors. You and I have been given great wealth in time, resources, and abilities. Jesus once remarked, “Great gifts mean great responsibilities; greater gifts, greater responsibilities!” (Luke12:48) If we squander those great gifts on meaningless things, we’ll regret it now, and we’ll regret it even more when the report card comes out. Financial freedom is a simple and beautiful idea that has been high-jacked in our culture of consumerism. Join me today in the spiritual battle for financial freedom – the battle begins in our mind where each of us makes the choice. Financial freedom is your choice.

As a Certified Financial Planner Practitioner, one of my favorite questions to ask prospective clients was “What’s important about money to you?” My real goal was always to know as possible about each person’s purpose in life so that I could design a financial plan that connected their money with their purpose. I make no assumptions about what your purpose in life is or should be. The self-discovery you’ll experience in these interviews with my two dear friends can help you clarify your life’s purpose so you can connect your financial decisions to what matters most to you. (Stay tuned, there are four or five episodes ahead featuring Joe and Morgan.)

As I explained how this works to a friend of mine, he gave a half smile and shook his head. He told me, “Yeah, but most of the financial planning people I know who are Christians have the subtle—or not so subtle—intention of getting people to donate their money to the church’s building fund. Is that your angle, too?” No, I told him, that’s not even on my radar. I hope people will think, dream, and plan so they accomplish something that gives them personal fulfillment. That “something” certainly involves their family’s security, but it may also involve serving people in need through a host of organizations: Amnesty International, their church, Habitat for Humanity, or any of dozens of other groups that are trying to make a difference in people’s lives.

As you’ve probably guessed, I’m a follower of Christ, so my own purpose in life is shaped to a large degree by my understanding of God’s desires for me and every other person who follows him. The most powerful motivation I’ve known is the deep sense of gratitude that comes from experiencing the unconditional love and acceptance of Jesus Christ. Knowing his love and acceptance is by far the most incredible experience of my life. But in my work as a financial planner, I meet with Hindus, Buddhists, Muslims, agnostics, atheists, Jewish people, and others from every kind of religious stripe. Most of the principles of spending, saving, investing, and giving transcend all religions. We can apply them no matter what we believe about God. My faith, though, directs me to look beyond my own needs and try to help others.

My hope is that The Money Bible Radio Show (and these personal interviews) will give you a few “Aha!” moments when a light comes on and you realize a truth or an opportunity you’d missed before. Those moments inevitably lead to choices to move in a new direction (or go back to a previously beaten path). As you clarify your purpose and connect your resources to what you really value, I believe you’ll feel relief and contentment, and you’ll celebrate knowing your life counts for something much bigger than yourself.

The process of connecting our resources to what matters most is exhilarating, but sometimes, it’s not easy. The Money Bible Radio Show is intended to help you look at some aspects of your life—your heart and your money—as if you’d never seen them before. Have courage. It’s worth the trouble!

Grandparents sometimes have the opportunity to share life’s experiences with kids because they have a whole lifetime to reflect and clarify what has been most meaningful to them, and children sometimes listen more intently to grandparents than to parents. Nevertheless, it’s important for parents to play that role, too, and take initiative to share what matters most to them, even if it’s not as clear as they’d like it to be.

Share Your Purpose and Vision with Your Grandkids

Do your kids (or Grandkids) know what matters most to you? Could they articulate your purpose and values? In most families, parents and/or grandparents either don’t have clearly defined purposes or they don’t find opportunities to talk about them. The kids then grow up without a clear model (or with a wrong model) to guide them to find their own purpose in life.

Most of us wrestle with our purpose from time to time, but that’s not a problem. Our children learn a lot from hearing how we wrestle with doubts and difficulties, and how changing circumstances cause us to reassess what matters most to us.Talking about the process is just as important as sharing the end result.

Talk About Your Money

In an age-appropriate way, talk to your kids about the family finances. Give them perspective and understanding, but without putting the burden on them to right your wrongs and pay for debts you’ve incurred. You may not want talk about specific amounts of money, but from the time kids are in middle school, they can begin to grasp the seven elements of a financial plan. For instance, they’ll need to know about car insurance as they anticipate learning to drive, and they’d like to know your plans for funding their college education. Depending on their age, interests, and personality, they’ll grasp a little or a lot from your conversations, but it opens the door for more conversations later. One dad suggested that he and his family talk about one of the elements each night at dinner for a week. He planned to spend only a few minutes on each one, but in a few cases, the kids asked a lot of questions so the conversation lasted long after dinner.

Give Your Grandkids a Vision for Financial Freedom

If your family is buried in debt, share your new vision with your kids and explain why you are making changes—some of which will be painful. Ask them to support you as you dig out and pay off the bills. If your family is barely above water, talk to the kids about making some changes in spending so you can funnel more of your resources into what matters most: security for the future and causes you believe in. If your family has lots of money but lacks peace and purpose, talk about the things you’re learning about the importance of having a clear mission for your life. And if your family is full of purpose and contentment, your kids undoubtedly know it. Celebrate together the privilege of connecting your resources to things that are really important.

Tension and Struggle Grow Muscle

Many families experience conflicts about money. Tension is inevitable, but we can funnel that tension into wonderful, healthy, productive conversations about vision, goals, and choices about finances. Healthy families don’t shy away from taking about important things, and money is very important. Struggling families can use these conversations as steppingstones to build trust and understanding. In the end, your role as a parent or grandparent can make a profound difference in the life of the little people who look to you as a role model.

Children are sponges. They soak up the attitudes, values, and behaviors they experience in their environment. As a dad, one of the most fulfilling things in my life is to watch my children gain wisdom and responsibility in every area of their lives, including how they handle money. I hope they’re learning some of those lessons from me. If they are, it’s one of the biggest gifts I can give them. Raising Capable, Competent Kids With Money highlights important principles every parent must know. Please share this episode with a friend in your family or community.

When life throws you a curve ball, what is your first response? Listen as Mountain Climber Justin Lukasavige and his friend Josh Gordon encourage one another in one of life's most common challenges - financial uncertainty. Learn more at MoneyBible.org and stay tuned for Financial Yoga and Other Extereme Sports with Jim Munchbach and Justin Lukasavige - coming soon!