When people assume that my passion for financial wellness is the result of a lifetime of good money habits, I tell them the story of The $19,000 Haircut.
I come from a family with solid financial values: work hard, spend less than you earn, save scrupulously and invest wisely. Yet somehow I couldn’t quite reconcile this excellent advice with the very different message I got from credit card companies strategically stationed inside my university bookstore, or with the dilemma of moving to New York City right out of college (read: no savings) and living on an entry-entry-level Marketing salary. Still, debt that began innocently enough spiraled over time into a “what’s $50 more on the Visa?” attitude, accompanied by anxious night sweats about when a deposit would clear, and using convenience checks from one credit card to pay the minimum on the others. A few years into this cycle I was getting farther away from the entry-entry-level pay excuse, yet no matter how much money I made it was never enough to right my course. My money (lack of it) and debt (too much of it) made me feel like I was living a lie, and that anything else I achieved in life meant little in the face of such monumental secret failure.
Enter my dear mother, who came to visit me one spring at my apartment in New York. I asked her to give my hair a trim, something she hadn’t done since I was a child. Perhaps it was my new metropolitan tastes or her lack of recent experience in hair styling, but I ended up with what can only be described as a lopsided mullet. I took one look in the mirror and burst into tears.
“Don’t cry!” She pleaded, horrified at my reaction. “We’ll call your hairdresser and tell her it’s an emergency. I’m sure she’ll see you right away!”
“I can’t!” I wailed. “I can’t go back there. I bounced a check” —this scenario occurred in 1999, a time when there was such a thing as paying by check instead of the ubiquitous debit card— “I bounced a check there four months ago and I can’t go back.”
My mother was dumbfounded. Bounced a check? Her daughter, who had received the best lessons in financial responsibility that the Midwest could offer? It was true. What’s more, as it became clear over the course of the next three hours, I was late on several bills and had amassed more than $19,000 in credit card debt.
Shockingly, she didn’t pour down any of the blame or censure that I had feared would come if I disclosed the truth. She simply asked, “Don’t you have a budget?”
“A budget?” (Not that I was unclear as to what a budget was, you understand. It was just that I didn’t know how a budget was relevant to me, in all of the unique snowflake-ness of my individual challenges and circumstances.)
“A budget,” she continued. “You make a decent income. How can you not have a plan for where your money goes?”
A-ha, that was the crux of it. I had no budget because I had no plan. No plan for my money, no plan for my career. I reveled in throwing myself at the world with just my talent and my ambition and treating the whole experience like one amazing adventure. Planning? Bleah. I wanted to be fearless and live a big life. I didn’t want to live on a budget.
And yet... did I want to live a life so financially compromised that I couldn’t undo a lopsided mullet? Was that the life of intrepid adventurer, or was that a deluded young woman with bad hair?
I wiped away my tears and decided to come totally clean. I pulled out the tattered bag in which I kept a stack of old mail. I held back no secrets. I didn’t pretend that I had this under control in any way, shape, or form. My mom dove right in.
“There!” she said, after 30 minutes of rapid-fire questioning and sorting through my bills. She held up a lined notepad that didn’t have more than ten items on it. “Here is your monthly budget.”
This was a monthly budget? It didn’t even take up half of a page: rent; cell phone; cable; electric; credit cards one, two, three, and four (organized by highest to lowest interest rates); and a weekly allotment of cash to use for everything else. The follow-up instruction: when you run out of money, stop spending. I took a deep breath and accepted the notepad.
Oscar Wilde once wrote that “the only thing that can console one for being poor is extravagance.” This had definitely been true for me. I had resisted being on a budget because I was afraid that it would deprive me of freedom, and when gripped by that fear I would try to soothe myself by (paradoxically) going out and spending more money. But in the first weeks and months of following my spending plan, instead of feeling restricted I was shocked to discover that I felt liberated. If I chose carefully, I had enough money in my weekly cash allotment to meet my obligations and even allow a little breathing room after the basics were covered. Being able to take care of my needs safely, without worrying that checks would bounce or that I would regret the purchase later, was a kind of emotional freedom I’d never before experienced. Also, I felt much more attached to the items I did decide were worth parting with money for. Instead of associating purchases with failure and fear, I associated them with confidence and value.
Once I made the “my money choices = me” connection, I felt a flood of meaning in my financial life. It was like I could see clearly for the first time. I went from utterly unconscious to fascinated with everything about the financial process. Thus when I looked at my debt, what I saw was a $19,000 reflection of all of those years of pain, frustration, and shame. Talk about motivating! I wanted that debt gone.
That same spirit of attacking life made me attack my debt and just want to pummel it into the ground. Every freelance job, tax refund, or gift from Grandma went toward my debt. And what’s more, I paid it joyfully. It took me just over a year to pay off the entire amount, and I remember that year as one of the happiest periods in my life. I hosted “clothing swap parties” with friends instead of going shopping (frankly, my friends were thrilled I’d 'fessed up about my money problems because they were all secretly in debt, too). I planned my life better, cutting back on taxis and convenience food, which made me feel calmer since I wasn’t so harried all the time. I learned to cook and lost weight. I even negotiated—successfully—with a retailer or two in order to make a purchase fit within my spending allotment. What was “another $50 of debt” and the resulting dread and shame when compared to the actual freedom that came from financial security and working toward my goals?
The gift of this period was that I learned how to pay attention to money. The debt was the painful wake-up call that I tried to ignore until it was impossible. The budget was the framework for engaging with my own decision-making process and discovering my own values. And the money itself? Money became a language that I learned to speak.
Now I want to be clear that my experience with The $19,000 Haircut and paying off my debt is just that: my experience. After working as a financial therapist and coach for the last decade, I understand that there are several parts of my situation that were extremely lucky. I had a good, steady job and could take on extra freelance work. I received encouragement and support from my family. And just as importantly, this all happened in 1999-2000, the years when credit card companies were tripping over themselves to offer huge credit lines with 0% 12-month introductory rates and no balance transfer fees. It was cheaper for me to get out of debt then than at another time in history.
But the greatest lesson of The $19,000 Haircut was not about financial tactics. The gift of The $19,000 Haircut was the discovery that money can take us on a journey where we learn to do something different (financially) and it makes our lives better (non-financially).
The $19,000 Haircut put me on path whereby I became financially sane, personally empowered, and I found my life’s passion. That’s my story.