01/04/09 | Comments (0)

The law of Holes is brilliantly elegant in it’s simplicity.

If you find yourself in a hole, stop digging.

A friend of mine called and asked me for advice. He was comfortable asking me, because he knew I had learned from my own financial mistakes a long time ago, and he also knew he could trust me. Not just the quality of my advice, but my ability to respect his privacy and confidentiality.

Let’s call him Paul. He has great income, but abused his debt, and it has gotten out of control. Worse, he has hidden this from his wife and family.

First, I said buy some flowers (pay cash!), bring them to your wife and beg her for forgiveness. Promise her you will NEVER do it again, and mean it.

He is guilt-ridden not only for running up huge unsecured debt, but also because he has betrayed his family’s trust. He needs to forgive himself, as he is human, but he also has to move beyond his demons, as we all do.

I suggested he read Sway to help learn more about our ability to sabotage our best interests. Reading is not enough however; we need concrete, actionable steps like blocking our ears or tying ourselves up so we don’t hear the siren’s song.

Establishing firewalls like Crew Resource Management (CRM) is an important component of preventing our irrational behavior. Learn more about it.

A simple solution seems to be having his wife manage the finances, while he creates the income: something he is quite good at. Take away his credit cards, or give him one with a modest limit. Take away his checkbook, and monitor his credit quarterly (to make sure he doesn’t apply for a “secret” credit card.) 

Families are teams, and we help one other. Each of us can focus on doing what we do best. Come up with a plan, decide what needs to be done, and then just do it.

Obviously, consulting a good attorney is in order, to determine legally, what, if anything needs to be done. Home equity, cash reserves, credit issues all need to be considered.

All of life’s experiences should serve us, as long as we are willing to seek out the seeds of wisdom that are always found within.

The Holidays are now behind us, but collectively, I am afraid the Holy Days are not.

Here seems to be more predictions that 2008 was a slippery slope that has the snowball rolling in the wrong direction. 2009 is here, and with it we are in uncharted territory. Pretending is not a rational approach to the challenges we face, and better to be prepared than to hide our head in the sand.

If Gerald Celente is right, we need some hedges to protect our hard-earned, rapidly devaluing dollars.

And if Kevin Depew is right, we had better duck before we see the deer.

If only our government would read the first two paragraphs of this blog and “get it”.

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