Excerpt: 'Enough Already'

March 12, 2009 — -- With his new book, "Enough Already!," Peter Walsh hopes to bring the craziness and unbalance in your life to an end. By focusing on six key areas of your life— family, relationships, work, health, money and spirituality — Walsh discusses how parts of your life are interrelated.

Read an excerpt of the book below and click here to hear an introduction to the book.

If a home I am working in has a clutter problem, there is a money problem not far behind. This is true without exception. We live in a culture that sends very clear messages about what we have and what we should have. The more successful we are, the more we should acquire—that's a sign of success, right? More is better—heck, if one is good, then two must be great, right? Don't pass up a bargain—if it's on sale, it has to be a fantastic deal, right? It's the ultimate irony to me that every year, especially around the holidays, we get media reports on the "health" of the American economy. The way that "health" is measured is by the rate of consumer spending. That's correct, the economy is only "healthy" if we're all out spending money on more stuff. By implication, if we happen not to be spending, then clearly we're not too well.

We are confronted daily with many conflicting messages: Buy, buy, buy. Save, save, save. Spend your tax rebate. Put money away for the future. The problem is compounded by the amount of "stuff" we see around us. Things are cheap, credit is easy to get, and we feel we deserve to have whatever we want, whenever we want it. But, and you know this, individually and as a nation we are spending more than we are earning, and sooner or later we'll have to pay the price of having whatever we want whenever we want it. It's easy to pull out the plastic, but not so easy to make the payments when gas, groceries, and the price of most other commodities is rising daily. If you have credit card debt and no idea how to get rid of it, you're not alone. But the fact that many of your fellow Americans are equally trapped in financial quicksand is no excuse, and it doesn't mean you're going to be okay. The stuff that chokes your home may well also be choking any chance you have for financial health. If this sounds like you, read on!

Clutter takes us out of the present. The homes that I work in are usually filled with either "memory clutter"—the stuff that holds us strongly to an important person, an achievement, or an event in the past, or "I might need it one day clutter"—that's the stuff that we're keeping for that "just in case" moment sometime down the track. It's a wonderful thing to have important objects to remind us of beloved people or events from our past. It's useful to plan for an unpredictable future. However, people become so preoccupied with what they have that they can't focus on what's most important—the here and now. Without a balance between these "past and future items," combined with a keen awareness of what is needed now, there cannot be peace and harmony in a home.

As with the stuff we own, so with the money we have. It's exactly the same.

Our culture urges us to become financially irresponsible the day we leave home or even before we fly the family nest. Credit card applications clutter your mailbox, promising that you can acquire all the trappings of adult life—cars! furniture! trips! dinners at fancy restaurants!—before you even have your first job. So we buy things. We buy whatever we want. Even before we start earning money, we've been so barraged with attractive advertising that we feel we have to go right out and spend. According to Nellie Mae, graduate students carry an average outstanding balance of over $8,000 on their credit cards. With employment comes easier access to money—either from an income or from one of the 1.3 billion credit cards burning a hole in our collective pockets. So our houses fill up—first with what we need, and then with stuff we don't need and, in fact, never use. If only we were able to save as well as we are able to spend.

Not so long ago I worked on a home that was floor-to-ceiling clutter. I estimated that there was more than $500,000 worth of purchases in the home, most still sitting untouched in the original shopping bags. When the unused items were sold—online and at a yard sale—the family made less than $20,000. The worst part of this story, however, is that the couple is in their sixties, in deep credit card debt, living off their home equity line, and with little savings or investments. Quite literally, the clutter is stealing this couple's financial security.

No matter how little or how much money you earn, managing your money is simple. Yes, emergencies happen. Yes, jobs are lost. Yes, health insurance in this country is a real problem. Yes, living is expensive. I'm not saying you'll never end up in the hole. But there is a way out. There is a way to recover and there is a way to save. It all starts with cleaning up the mess you've made. Do you hide financial records from yourself or your partner? Do you leave mail unopened and bills unpaid for longer than you know you should? Do you feel guilty when you think about what you spend or what you owe? Do you feel scared when you think about your financial future? Do you buy on impulse and later regret the purchases? Do you spend with no idea of how much you have or what you owe? Do you have something as basic as a budget in place? Let's see just how much financial clutter you've got to clear away.

Bills and paperwork can be overwhelming, especially if you're hiding bad spending habits behind disorganization. The first step to clearing your financial clutter is to set some goals. You work to earn money to live your life. Finance is about how you spend and save that money. Spending is about enjoying life today. Saving is for the future. Your financial goals should accommodate both. Let's get some organization into this by thinking about what you need and want today and in the future.

We -aren't born knowing how to handle money. Our parents, peers, culture, and life experience guide us. Every household teaches different lessons, large and small, about the role of money in life. I know two families who lived next door to each other. In one house the children were taught to turn out every light in the house when they left home. If they left a light on, they had to put ten cents in a jar toward the wasted electricity. In the house next door, the children were taught to turn on all the lights before they left the house to ward off intruders, electric bill be damned! This may seem like a small difference in philosophy, but imagine what life would be like if the children from these two houses married.

My acquaintance Jon is a very successful investment banker. I can only imagine how much money he has socked away, but what I do know is that he has three lovely vacation homes in different parts of the country. He wears custom-made suits, owns several luxury cars, and eats at the finest restaurants in Manhattan. But join him on a trip to the grocery store and you'll see a different man. He agonizes over each purchase—should he really buy the yellow pepper that the recipe calls for when green peppers are half the price? Why purchase the fresh orange juice his wife has put on the shopping list when the frozen juice he grew up with is half the price? The Jon who emerges in the grocery store is fully defined by the financial upbringing his Depression-era parents gave him.

What are the lessons your parents taught you about money? Were they careful with how they spent money? Did they cut coupons and count pennies, but spend lavishly when it came to vacations? Are you imitating your parents' spending patterns or reacting against them? Were you taught to handle money? Did your parents give you an allowance and ask you to take responsibility for certain expenses? How old were you when you became aware that there were certain things your parents could and couldn't afford? Did your parents keep you completely in the dark about how much money they had, how they decided to spend it, and what role it might play in your life as an independent adult? What effect have your peers had on your attitude toward money and spending? Do you spend more to keep up with them or do you see your friends making smart spending choices?

What is the emotional tenor of your relationship with money? Do you think of yourself as "bad at math" and leave the bill paying to someone else? Are you intimidated by investing? Do you feel entitled to certain material goods, regardless of how much they cost? Do you spend money impulsively and regret it later? When did you start doing this? Why?

How does your relationship with money have to change? Do you need to overcome fear? Do you need to educate yourself by reading a book or taking a class? Do you need to explore your sense of entitlement—where it came from and whether it is realistic—in order to bring your spending under control? You can't lose weight without eating fewer calories, and you -can't save money without spending less. If you -aren't happy with your financial situation, you'll have to remove emotion from the equation when it comes to your spending decisions. If you earn $100 and spend $90—no problem. If you earn $100 and spend $110—there's a problem. It's that simple!

How much of your income do you need to survive? Are you able to take care of those needs? Remember, you're just talking daily sustenance here. How much do you currently spend on food, clothing, and shelter? How much debt do you have? Is it "good" debt or "bad" debt? Good debt is money that you borrow toward something that will produce cash flow, like taking out a mortgage to purchase a home, which gives you a place to live, a tax advantage, and an asset that grows in value over time. Student loans also fall under this category—school increases your earning power. Bad debt is money that you borrow to purchase disposable items, often with a credit card. If you don't make monthly payments in full, you're effectively paying more for the items you purchased. What seemed a bargain the day you purchased it isn't such a deal when you're barely touching the principle and paying 25 percent interest on your credit card balance three months later.

Often when I am looking at the clutter in someone's home, the homeowner will exclaim with a lot of pride: "I'm a great shopper! I can find a bargain better than anyone else!" If you ever go shopping "just for fun," then every single thing you buy on one of those expeditions falls into this category—the stuff you want but don't need. You usually know when you're splurging. But in today's world, some of your luxuries have started to feel like necessities. If you're not successfully managing your money, spending responsibly, and saving for a rainy day or your retirement, then you're not entitled to a high-tech TV with cable service. That is a luxury. If you're not managing your money, then you're not entitled to expensive restaurants and prepared foods. Those are luxuries. If you're not managing your money, designer clothes, fancy cars, jewelry, and vacations are luxuries. If you have credit card debt and/or you're not managing your money, these are the areas you're going to have to examine for costs to cut. Notice some repetition here? If you're in a financial hole or struggling with your money and are serious about turning things around, these luxuries are the first things that have to go—no discussion!

Think about the major expenses that you know -you'll have in the future, and imagine those that might take you by surprise. Will you need money to pay for a wedding—yours or your -child's? Is there a chance you'll want to go back to school? Do you have children you hope will go to a private college? Do you own a home? How long will you be making payments on it? What maintenance is due? Will you need or want to move to a more expensive place?

As you think about your needs in the future, you must anticipate unpredictable circumstances. What if you have a serious car accident? You'll need insurance and money set aside to deal with medical expenses and lost income. What if something happens to your spouse? A parent? What responsibilities might you have and will you be able to afford them?

At some point, you will want to stop working, and at some point, whether you like it or not, you will have to stop working. Think about it. You won't want to move to a shack at age 67. You don't want to subsist on food stamps. You'll need to pay for health insurance, which is all the more expensive in your twilight years. You will still have monthly expenses, but your income will drop significantly. You'll want to have life insurance at rates that are locked in when you are young and healthy. You have to have savings if you want to sustain or improve your standard of living.

Are you living your dream, or do you fantasize about a future lifestyle with a higher pricetag? Do you wish you could afford more exotic vacations? Where would you like to live? Are you hoping to move to somewhere warm and sunny or to settle into a lush suburb? Would you like to leave your job for one that earns less money but is more fulfilling? Can you afford to do so? Do you anticipate retiring one day? How will you live? Will you take cruises? See a movie every day? Will you finally become a wine expert? What kind of car will you drive? Will you take some long--postponed vacations and pursue long-delayed hobbies? Well, guess what—you can't pay for your fantasies with play money.

I'm asking you to contemplate your needs, wants, hopes, and dreams and to translate those desires into dollars and cents. At the same time, I want you to make reasonable preparations for worst-case scenarios, when accidents, illness, job loss, family troubles, or (don't get me started) global warming wreak havoc on your finances. Money in the bank isn't just security, it's options. If you want a better lifestyle with a decrease in salary, if you want a better life for your family, if you want to be prepared for changes that crop up unexpectedly, your best bet is socking away the money that can open doors for you. The best way to feel safe and hopeful about now and the future is to create a comfortable nest egg.

Before you lock the vision you just defined into place, I want you to think again. This will sound harsh, but most of us today have inherited an outrageous sense of entitlement. We have come to accept our high standard of living as normal, another of the many "rights" we assume as a citizen of this country. We think we deserve a big house just because we were born in or moved to this country. If we want it, we should be able to have it. This "self--first" mentality is relatively new and, I believe, inherently destructive. Think back just a generation ago. We don't carpool—we think each family member is entitled to a car. Did our grandparents have two cars? Did they pay for cable and multiple cell phones and the Internet and movie rentals? Did they have computers and digital cameras and printers? Did your grandmother get manicures, massages, and highlights in her hair? How many pairs of shoes did your grandfather own? The mindless consumption that I see day after day in the homes I work in is staggering. Consumption is perceived as our right, seemingly regardless of the consequences. Our country is experiencing an explosion of luxurious living that transcends economic class and it simply cannot last. We -can't spend with abandon, rack up debt buying whatever we want, and not expect the bill to come due someday. Someday soon!

So go ahead, envision your ideal financial life, but try to focus on living your life, not filling it with objects. Remember that extra stuff always comes at a cost. When you make a decision to spend money today, you are responsible for that decision. If you spend all your income on luxury goods when you are young, -you'll pay the price later. Try to appreciate what you have. -It's not about depriving yourself, -it's about striking a balance that enables you to spend responsibly and live without the stress and anxiety that come with financial problems. Curb the urge to acquire, and -you'll have more time and means to take pleasure in life.

I am sorry, but if you are serious about saving money, you just -don't need a flat--screen TV. Nor does your thirteen--year--old son need the latest iPod, laptop, or cell phone. Yes, these luxuries improve your quality of life, but I question whether they improve it significantly. Put differently, is the sticker price worth the cost to you and your family? You can watch the same programming on a lesser TV. You can listen to the same music on a less--expensive MP3 player. -Don't be an early adopter. Wait until the digital camera you want is cheaper. TVs get less expensive every year. All of these items come with a cost to you and your -family's financial stability.

Home improvements can be necessary, like a new roof, or optional, like landscaping or renovating. Renovating costs add up fast, so keep in mind a basic rule of renovation. Take what the contractor tells you, then assume it will take double the time and double the budget—it's a law of the universe. Stick to necessary changes, avoid financing any renovation through your credit cards, and stay within your budget. In the excitement of improving your home, -it's easy to overcapitalize. Get some solid advice and -don't lose your head. Set a budget, look your contractor in the eye, tell him the figure, and—come hell or high water—stick to it. Even if it means some part of your initial project has to wait till next year.

When it comes to grocery bills, you -can't just buy cheap bulk foods. Healthy choices (which -we'll explore in the next chapter) are sometimes more expensive, but they have cost benefits. Junk food affects your health and well--being and, ultimately, your ability to perform well at your job and your kids' ability to do their best at school. Junk food is not the path to happiness and a long life. If you eat healthy, balanced meals, -you'll feel satisfied. -You'll be a healthier weight, -you'll live a healthier life, -you'll feel more attractive, and -you'll spend less money trying to find clothes that -don't make you look fat. Buying and cooking your own meals with whole foods means healthier meals and a healthier future. I've written a whole book on the connection between the weight in your home and the weight on your hips. Check out Does This Clutter Make My Butt Look Fat?: An Easy Plan for Losing Weight and Living More for strategies and techniques for tackling this area.

We'll talk about clearing the clutter in your diet in the next chapter. For now, all I ask is that you -don't waste money on anything that promises to make you thin. Invest in a long and healthy life, -don't splurge on the easy, empty, quick--fix promises that -you're bombarded with every day. Instead, take the time to plan meals that truly nourish and sustain your family.

Little luxuries are often the most painless cutbacks to make. But -there's no point in making these sacrifices if you -don't end up with the savings to show for it. If you decide to eliminate your daily latte, then put aside the cost of however many lattes you used to have and make weekly or monthly deposits in a savings account or a "drip" fund, stock funds that often let you make investments of as low as ten dollars. (Drip—what better name for a fund holding your coffee savings?)

Remember my grandmother, who used to say that you can go broke saving money? I've said it before and I'll say it again: -There's no such thing as a bargain. Instead of looking for the best deal, I want you to practice mindful spending, valuing quality over quantity. Cheap things -don't last. They either perform badly or soon need to be replaced. -That's how you can go broke trying to save money.

Just like the clutter in your home, -it's easy to ignore your financial situation. Over time those numbers stop feeling meaningful. Maybe you buy lottery tickets or hope -you'll get a windfall from the lonely, childless widow next door or long--lost Uncle Bill who moved to Florida twenty years ago. But denial -doesn't work forever. You need to take control of your money while you still can. You need to take responsibility. Money may not interest you, but you need it to live. You need it to create certain (though by no means all) aspects of your ideal life.

Clearing your debt—just like clearing any clutter that stands between you and the life you want—should be a priority. Make it one. Keeping your spending secret from your partner is another form of denial. You think if your little gambling habit or shopping problem is never acknowledged, then it -doesn't exist. Wrong! The longer you deceive your partner, the harder it will be to restore trust. Shame is hard to endure, but the damage that dishonesty wreaks on a relationship is far worse. Cut your losses and clean up your mess sooner rather than later.

My onetime colleague, Lynne, had two grandfathers who were both lawyers. They both worked for the government, so neither had an enormous income. One grandfather was a savvy investor. He invested all of his savings in the stock market and real estate. The other avoided risk, especially when it came to his money. He put all of his savings in treasury bonds, with a low but reliable interest rate. At the end of their lives, the grandfather who invested was a millionaire. The conservative grandfather left his wife with a small apartment, a pension, and barely enough savings to get her through the next thirty years she went on to live without him. Riskier investments have greater returns. Get advice that helps you know what level of risk -you're financially and emotionally ready to handle.

You could lose your job. Your home might burn down. You could be in a severe car accident. A family member may become suddenly ill. You will most certainly die. Thinking through these possibilities -isn't doomsaying, nor does talking about misfortunes cause them to occur. Dispense with the superstition and be realistic. You need to protect yourself and your loved ones from financial ruin if the unexpected occurs.

If -you're the primary breadwinner for your household, consider how long it might take you to find a job. If it will take you six months, then how much money do you need to have readily available in a money market or other accessible bank account? You should try to have enough money to cover six months of living expenses. If you are self--employed, you need to think about disability insurance. If you think you -don't need it because -you're in perfect health, think again. According to the American Council of Life Insurers, nearly one--third of all Americans will suffer a serious disability between the ages of thirty--five and sixty--five. And as for life insurance, if your untimely death would put your family in dire straits, -don't live in denial. Take care of them. By all means, leave a will. An estate planner can help you make sure your assets -aren't tied up in probate while your loved ones live on bread and water. And be sure to update these policies if you marry, divorce, have children, or remarry. I know -it's hard to contemplate these hardships, but -don't let your emotions clutter your priorities. If you care about the people closest to you, -you'll spare them cleaning up your mess when -you're incapacitated or, you know, dead.

Needless to say, I -don't want you to celebrate cleaning up your financial clutter by throwing the party of your life. The rewards that come from taking control of your financial future and clearing the financial clutter from your life are significant. Some of them only kick in when -you're sixty--five, but some of them come earlier—the sense of relief in knowing that you have a system that ensures bills are paid on time, without annoying late fees. The comfort you can take knowing that if something happens to you, your loved ones will be safe. The pride you have in having accumulated long--term security. The better organized you are about your finances, the less you have to think about money, the more time you have to live your life. And -that's what -it's all about.

Financial clutter always takes the form of paper. -Let's dive into it.

File cabinets are full of papers you will never look at again. I'm convinced that 80 percent of what goes into a filing cabinet never sees the light of day again. -It's incredibly difficult to throw away files. After all, at some point in time you thought this piece of paper was so valuable that it deserved to be filed. And now -you're going to just . . . throw it away? The answer is, yes. -That's exactly what -you're going to do—on a regular basis comb through your files and discard those once--indispensable, now completely unnecessary pieces of paper.

I dealt a lot with paperwork and filing in It's All Too Much: An Easy Plan for Living a Richer Life with Less Stuff, but -it's probably worth repeating here some of those broad and fairly conservative guidelines for managing your bills and financial records for tax season and audits. My official disclaimer is that you -shouldn't take my word for it and should check with your own accountant or financial adviser to verify that this information is up-to-date and accurate for your state and situation.

If you want to check the official word on this, read what Uncle Sam has to say at the website of the Internal Revenue Service. Download Publication No. 552 at www.irs.gov for complete details of what to keep and what you can let go of to keep the tax man happy.

Overstuffed files create stress and disorganization. -That's bad enough. But unopened mail always creates money problems. Those sealed envelopes contain bills that increase as they go unpaid. They contain reminders of the deposit due to hold your -child's place in school. They hold notices of changes in credit card rates. They hold insurance reimbursement checks that -don't earn you interest until -they're deposited. The longer you ignore envelopes, the more they build up. Unpaid bills get sent again so you have twice the work to figure out how much you owe. And the pile sits there, on the table in the entrance hall or, worse, spread across the dining room table, a constant reminder to you (and your family, if you have one) that life -isn't secure. Things -aren't under control. Disaster looms. Remember what I said at the beginning of this chapter? No more paperwork procrastination. -That's where I wanted you to start and -it's where I'll end. Start with the clutter. Clear it out, clarify your goals, and make the life you want a reality. Are you ready to go? -Here's a quick cheat sheet for tackling your home office and financial clutter:

Create a vision for the space where you handle your finances. There should be an inbox for bills to be paid and whatever supplies you need to pay them (computer or checkbook, envelopes, and stamps).

Overcome obstacles that prevent you from doing paperwork. Come clean with yourself and your partner and prepare to move forward.

Commit time, even if -it's only twenty minutes during which you sort and shred every day. Just make sure you prioritize your current paperwork. Handle new papers first, then spend leftover time dealing with the old.

Communicate with your partner about your shared vision for managing your finances. If you -aren't both committed, you -won't succeed.

Set boundaries. Live within your means. If you tend to overspend, give yourself a twenty--four--hour cooling--off period before committing to a purchase.

Make changes. Only by changing the role stuff plays in your life will you be able to stop buying more things, let go of the clutter, and find a financial balance that makes sense for the life you want.

Live in the present, but set aside funds for the future as soon as a paycheck comes in so you can live with the confidence that -you'll continue to enjoy life.

Face fears. Owning up to your money troubles is the first step toward solving them. If you ignore debt, it gets worse fast.

Celebrate successes. As you simplify your finances, you will feel more relaxed and secure. You work hard for your money. Enjoy knowing that -you're making the most of it.

From ENOUGH ALREADY! by Peter Walsh. Copyright © 2009 by Peter Walsh Design, Inc. Reprinted by permission of Free Press, a Division of Simon & Schuster, Inc, NY.