Not long ago, I was reflecting back about the first time my wife Angie and I were scheduled to make announcements and greet visitors from the platform at our Sunday church service.
I’m an introvert, so I was pretty nervous. I wanted to make sure and do it right, make people feel welcome, and keep from screwing it up.
So with Angie by my side we made it through the greeting and announcements just fine. At that point I realized that no one had told me who to hand the mic off to next.
I froze like a gallon of Rocky Road ice cream… at the North Pole.
Someone pointed to the pastors.
But at that point I was so distracted and freaked out, that the phrase “Please welcome our pastors Joseph and Yolanda Morgan to the platform” turned into “Uh… here’s our pastors next…Uh… Pastor, uh… MORGAN!!!
I was so nervous and distracted that I completely forgot their first names!
Not a good showing when you realize that at that point we had been members for about 5 years.
I’ve found after reading a ton of books on personal finance and counseling people about their finances, that a lot of people have the same kind of reaction when they get themselves into a financial situation that causes them to panic.
When you wind up in panic mode it’s easy to not think logically. Common sense takes a leave of absence, and you end up making decisions you never thought you’d make. Like buying a pair expensive high heels to make yourself feel better because your financial situation has you down in the dumps.
Huh?
Makes perfect sense, right?
So many people are living from paycheck to paycheck that even a little financial disruption can have you seriously considering running up the credit cards, taking out car title loans, payday loans, pawning your possessions (think Pawn Stars tv show), or signing up for a home equity loan to pay off your debt (all bad ideas by the way).
Nobody completely avoids the occasional financial bump in the road. So how do you prevent panic, and the bad decisions that can come with it, from taking over and making your situation even worse?
You take steps to put yourself in a good position before those bumps happen. When you do that, you never get into panic mode. The result is that you then allow yourself to make solid, rational decisions.
Unlike me with a mic in my hand.
How Do You Prevent Financial Panic?
You prevent financial panic by making a plan for your finances.
That means:
- Putting together and implementing a get out of debt plan,
- Building an emergency fund to prevent panic from setting in,
- Spending wisely.
Yes, you can do these things, even if you’re living paycheck to paycheck.
It will take some work and it doesn’t come overnight. But it does work if you just take solid, consistent action.
It Gets Better
We’ve made announcements and greeted visitors many times since that first big screwup.
I’m much more at ease and prepared than I was that first time, and it tends to go much more smoothly now. Just like your financial situation will get better with a little action and practice.
Have you ever made a stupid decision because you panicked? How did it work out for you in the end?
I can’t wait to read your comments.
Many people have exactly the same reaction when the time arrives that they send the last payment on a debt, like a car loan. Suddenly, they have $500 a month they don’t know what to do with. Their logic says they have to invest it, but then they panic: what do I invest it in? How can I invest a measly amount like $500? You mean I have to do this every month??
I think I’ll just buy another car. I know how to make car payments. And that new car smell….
And twenty years later they wake up to a bare retirement cupboard.
I’m not even sure that retirement enters the mind of a lot of people after paying off a debt. I think that once a debt is paid, a large number of people just see it as found money they can use to get into debt for something else or to up their lifestyle.
I think you’re right people stick with what they know, it’s easy and comfortable.
Thanks William!
Great post, Jason. Screwing up is taking on a whole new meaning for us now that we’re actually working to get out of debt. Before, screwing up was pretty much a way of life, and we’d come to accept the cycle of screwing and dealing with the impending guilt. Now that we’ve “straightened out” a bit, screwing up seems to come with a real need to make sure we get back in line quickly, and at the same time, cut ourselves some slack, b/c we’re screwing up SO much less than we used to. 🙂
Screwing up should be a wakeup call that says “You should avoid doing that again” instead of just repeating the same old cycle. It’s ok to screw up every once in a while, but it’s not ok to continually repeat the same stupid things, never making any progress in your situation.
Glad that you’re screwing up less.
Thanks Laurie!
I love this post… when my husband and I started dating there were a few things that he put off that put us in difficult positions. I began to tell him and myself “make decisions before they are made for you.” I think that when you don’t set yourself up with a plan and end up in a panic, decisions are definitely made for you, whether you like them or not. That’s the best thing about saving money, that I have recently found out. The garage door spring broke and instead of having a panic moment like having to choose between a necessity and fixing the spring, I was able to use our “oh no” fund. Savings = No panic, no stress = with peace of mind. 🙂
Yep, that’s why I always recommend an emergency fund. It eliminates a lot of stress from your life. When something bad or unexpected happens, you are already prepared instead of having to scramble and end up using credit cards or loans that will follow you around for months or years.
Saving is about preparedness and peace of mind.
Thanks for the comment Martha!
You sound like me when I have to get up in front of a lot of people. I would forget even my own name. I agree that having a plan is probably the #1 way to avoid financial panic. However, a plan on its own may also not be enough. The person needs to be flexible as well. Sometimes plans get you only so far or prepare you for the unexpected, but what happens when that some unexpected just dumps your initial plan on its butt. You need to be able to set new paths in place to reach your goals.
When the unexpected happens, you should have an emergency fund in place so you don’t have alter your plans too much. When you’re prepared, things go much easier.
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