What? Yeah, that was my reaction too. And guess where I heard this? At a homeless shelter. Indeed.

This morning, I gave a talk at a homeless shelter in Santa Monica. A really cool place called Turning Point which helps homeless people get into permanent housing and jobs in  two to nine months. They require that their clients save 80% of their income, given that food and housing is being provided free of charge. I joked that if I could get the average American to save one quarter of that amount, we’d be in a whole lot less trouble than we are now.

Of course, I talked about the eight financial archetypes. And I had them raise their hands for which was most dominant. And guess what, more of them were Savers than any other type. One gentleman told me that he used to own 7 electronics stores, and saved up close to a million dollars before he retired. But post-retirement life left him feeling aimless, and he made a series of financial mistakes which wiped him out within 6 years. “How did I manage to do that?” he asked, plaintively.

It’s all a matter of your attitude towards money, said another of Turning Point’s clients. And that’s what we talked about most of all – what attitude adjustment did each of them need to stay on their feet once they were out of the shelter. It was a moving hour, because I could feel the yearning to be free, and to make lasting changes coming from each of them. We don’t need to save 80% of our income. But if you find yourself with no savings, you do want to start somewhere. Because once you’re saving, no matter how little, you’re re-programming your unconscious mind from “I’ll never have enough.” to “I have more than enough.” And that kind of thinking begets more abundance.

Some friends of mine recently made a pledge to cut out all discretionary spending. We sat in their living room together, and their conviction was palpable. “Nothing. Not another purchase in 2008 unless we can’t live without it.” The week before, they had had to scramble to come up with enough for their mortgage payment, which precipitated this newfound frugality.

But now ten days have passed. The mortgage company gave them a bit of leeway, and just yesterday, I heard that they’re planning to buy a dog. Now don’t get me wrong. Our boxer/lab mix, Inanna, is one of the loves of my life. I love her, and have never regretted the money she costs.

But after seeing clients spend anywhere from $2,000 – 7,000 a year on their pets, I decided to do a few minutes of internet research. I found that the average new dog costs between $730 and $1,500 per year, These were nationwide averages, and we live in California, where everything is 5-10% more costly. But, give them the benefit of the doubt, and call it $1,000 per year. Even assuming this doesn’t cause a missed mortgage payment and its late fees, being able to invest $1,000 per year over the dog’s fifteen year life leads to $27,000 more for retirement or college tuition for the kids.

Again, if we can afford it, having a dog is one of the best things money can buy. But when we’ve made a pledge to cut spending, and then go back on it so quickly, it’s a sign that our old habits and desires are still in control. Perhaps I should rent Inanna out by the hour in this economy! 

It was January 1980. I was 12 years old, and about to be bar-mitzvah’d (the coming-of-age ceremony in the Jewish tradition). My stepfather convinced me to put all of the money I’d received in gifts into Krugerrands, the South African 1 oz. gold coins. I vividly recall him saying “Gold’s a great investment. It’s got nowhere to go but up.” So I put $2,000 into the beautiful coins, which got me about 2.5 ounces. By the time I needed to spend the money, to pay for my tuition at UCLA, gold was down to about $300/oz. My $2,000 had become $750.

I was young, but this was my first, and most impactful lesson about how asset classes go in and out of favor. It taught me to always spread the risk around to many different categories of assets. And above all, to avoid thinking the recent past will repeat itself, whether positive or negative. Remember this as you consider bailing out of your 401k or other investments which have just lost most of their value.

When experiencing financial distress, our natural inclination is to want to DO SOMETHING. With investing, this usually backfires.  Here are three things we recommend to help cope with these turbulent times:

1.   Consider decreasing your discretionary spending in the short run, and then re-evaluate the need to reduce longer-term spending in January. While the dollars may not seem like a lot, shifting the momentum from “Yes” to “Not right now” has a tremendous psychological effect, and over time, a very positive financial impact as well. Furthermore, if you can afford to trim back your monthly distributions from your Abacus account, now is a great time to do so.

2.   Refinance your mortgage if you have less than two years to go in your fixed rate period (assuming you plan to stay in the home long-term), or if your rate is above today’s rates. Call or email your advisor for a good mortgage broker recommendation if you don’t have one.

3.   If you have more than $100,000 in any one bank, wire the excess into your Abacus account so that we can invest it. As famed investor Sir John Templeton said, “To buy when others are despondently selling and to sell when others are avidly buying takes the greatest fortitude and pays the greatest reward.”  Now is such a time. Even if you’d prefer to have your extra cash in money markets, they will be more secure at TDAmeritrade than in a non FDIC-insured account at your bank.

In summary, this too shall pass. We believe that owning a diversified global mix of over 11,000 equities, along with a healthy dose of real estate, bonds and commodities, is the best way to ensure your financial freedom in the future.
Please feel free to call Abacus with any questions or concerns. We can be your lighthouse, here to help you navigate this storm

I will be leading a Yoga of Money workshop at Yogaphoria, in New Hope, PA the weekend of October 24-26, 2008, and a Business of Yoga session there on Sunday, October 26th at 10:30am. Come join me to learn how to survive this economic crisis and crash-proof your finances.

I recently had to fly to Boston to speak at the Yoga journal conference and do some TV and radio interviews. I hadn’t booked the flights as of a week before, and when I checked on fares, they were over $800! In addition to that, the conference organizers had held me a $240 room in the Boston Marriott hotel, and I was expected to spend about $150 on tax rides. With LAX parking and gas costs, this was easily going to be a one-day $1,300 trip.

Well, the Saver in me lost his cool a bit. No way was he going to sit around and let me spend $1,300 in one day, no matter what the upside might be to our business or my book’s sales. So my frugal side came out, and we managed to get the air for $105 and some frequent flier miles, cancelled the hotel (which I only could’ve used for a 30 minute nap anyway), rented a car for – get this, $29 – in lieu of the taxis, and got a ride to the airport. All in, the trip ended up costing about $150 instead of $1,300.

This has jumpstarted a new round of Saver archetypal energy in me. Perhaps it’s the economy as a whole. Everywhere I turn, it seems people are tightening their belts, feeling pressured. Cutting back on spending feels really good in times like this, especially when I realize that I’m enjoying life just as much. We’ve been eating more home-cooked meals, and when we do go out, it’s for burritos or cheap Indian food instead of to the $100 per person Italian place. On our recent Hawaiian vacation, we stayed at the Hapuna Prince Hotel on the Big Island, and between a daily rebate due to construction they were doing, and a group rate for my wife’s high school reunion class (part of the reason we were there), we paid $140 a night for a hotel which often goes for $4-500.

Now, it’s hard to say that flying to Boston for a day and having a weeklong Hawaiian vacation are exactly “roughing it”, but nevertheless, trimming my expenditures while still buying the things and experiences I most enjoy in life is filling me with spaciousness and freedom. What can you trim with no loss of enjoyment today?

On a side note, I’m planning to start a series of conference calls and webinars. A maximum of ten people will be on each call for two hours, and the cost will be $99. Each person will get approximately ten minutes of dedicated focus on their question(s), after a ten minute introduction by me. Please email us at info@brentkessel.com if you’re interested in participating. Please subscribe to this blog to stay informed about future workshops and media appearances, and to reflect on your inner relationship to money in the weeks to come.

Brent Kessel is the author of It’s Not About the Money (HarperOne, April 2008) and the co-founder of Abacus, a nationwide financial planning firm with a focus on sustainable investing.

Have you gotten your IRS “economic stimulus payment” yet? Depending on whether you’re married or not, have qualifying children or not and how much money you make, you may have gotten anywhere from $300 - $1,200.

I recently saw this email, meant to show us that in all likelihood, our use of the rebate won’t actually benefit the U.S. economy:

“If we spend that money at Wal-Mart, the money will go to China.

If we spend it on gasoline it will go to the Arabs.

If we purchase a computer it will go to India.

If we purchase fruit and vegetables it will go to Mexico, Honduras, and Guatemala.

If we purchase a good car it will go to Japan.

If we purchase useless crap it will go to Taiwan and none of it will help the American economy.”

Personally, I don’t feel that much more affinity for a tobacco-chewing auto assembly worker in Georgetown, Kentucky than a gum-chewing semiconductor assembly worker in Mumbai, India. We’re all one, as the loose definition of yoga tells us. Indeed, in my discussions with spiritual teachers like the Dalai Lama, Ram Dass, Rabbi Harold Kushner, and Thich Nhat Hanh for my book, all of them said that interconnectedness among all beings is at the root of all the world’s spiritual traditions. So why not use our money to benefit those beings?

But perhaps consumption isn’t the best way to help. Personally, I’m much more interested in benefiting victims of the earthquake in China and refugees in Darfur than the owners of consumer electronics companies. So use your rebate to help others, if you can afford to spend it at all, and I predict you’ll get much longer-lasting good vibes from it.

On a side note, I’m planning to start a series of conference calls and webinars. A maximum of ten people will be on each call for two hours, and the cost will be $99. Each person will get approximately ten minutes of dedicated focus on their question(s), after a ten minute introduction by me. Please email us at info@brentkessel.com if you’re interested in participating. Please subscribe to this blog to stay informed about future workshops and media appearances, and to reflect on your inner relationship to money in the weeks to come.

Brent Kessel is the author of It’s Not About the Money (HarperOne, April 2008) and the co-founder of Abacus, a nationwide financial planning firm with a focus on sustainable investing.

What interested me most, however, was the juxtaposition of the immense wealth and splendor which surrounded us, and the abject poverty of those we were there to help. Specifically, the different money archetypes which I write about in my book, It’s Not About the Money, all had different things to say about and contribute to the affair.

The Caretaker in me was thrilled that we were there to help those less fortunate by using our money generously and compassionately, while the Saver and Empire Builder were pleased that there are people with enough abundance that they could in fact help those in need without jeopardizing their own financial security. The Pleasure Seeker enjoyed the magnificent food, views, warm Spring-time breeze and elegant attire which all were pleasant on my senses, while the Idealist bristled at the thought that if only we were willing to live on less, there could be so much more to help those hungry and suffering beings. The Innocent, however, felt a great deal of optimism that with brilliant minds like those employed by Unitus, the Gates Foundation, and Omidyar Network all working on the issue of global poverty, we are sure to solve it in the next ten years. The Star in me really enjoyed standing on the stage and helping the auction along by reminding all the bidders just how much of an impact their generosity could make in others’ lives. But the Guardian had a pang of worry and anxiety as I wrote out our check for $2,500 that I hadn’t really looked at our overall financial situation in a while to see how our spending and giving was doing relative to income.

It was also interesting to see how different bidders were motivated. There was the ex-hippy in the back row who threw out a $4,300 bid for some front-row seats not because he had any interest in seeing the Police, but because he felt that $4,000 was too low a price for four tickets. There were the three wealthy, well-dressed business owners (Stars & Empire Builders) who were enjoying the attention they got as they bid each other up in $500 increments for the grand package. And there were the Innocents, Stars and Pleasure Seekers in the crowd who enjoyed being at the event, but due to their avoidance of money, or their spending in excess of income, just didn’t have enough to be able to bid.

If you’d like to explore your relationship to money more fully, please sign up for my Friday evening/Saturday afternoon workshop at Yoga Works in Santa Monica, June 6-7, or my workshop at Yogaphoria in New Hope, PA, October 24-26, or any of my upcoming events. Please subscribe to this blog to stay informed about future workshops and media appearances, and to reflect on your inner relationship to money in the weeks to come.