Don’t push me, cos I’m close to the edge

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In New Zealand we have a saying: ‘She’ll be right mate’.

The other night I heard a pretty hairy statistic that made me wonder if that attitude is keeping us from exploring just how true that phrase really is.

Nigel Latta is a clinical psychologist who recently created a series of documentaries about the big social issues facing New Zealand right now.

In an episode entitled ‘The new haves and have nots’ he says:

”Most of us are dangerously close to the edge.  When asked how long your household could survive if their main income earner was suddenly out of work, one in three households say they couldn’t make it past two weeks.  And most of us, (55%) are in trouble in just four weeks”

This is a chilling statistic.  It means that if the entire population of New Zealand was standing in a metaphorical swimming pool, most of us would have our noses just barely out of the water – and far too many are already gasping for breath as they sink below the surface into increasing levels of debt.

There is no question that poverty in New Zealand is growing at an alarming rate.  Many people teeter on the poverty line and often slip well below it.  The current minimum wage does not guarantee a standard of living that will pay for surprise car repairs or wisdom teeth removal. For these people, the threat of not being able to afford to live is already a grinding reality.

Looking further above that line, to the so called comfortable middle classes – I wonder how many of us can say with stone cold honesty, that we are doing everything we can to buffer ourselves from the inevitable shocks of life.  What happens if there is a company restructuring? If the contract is not renewed and your job is automated or outsourced overseas? what happens if you or your partner get sick or needs a major operation with several months to recover, how will childcare be paid for in that situation? what happens if you get separated or divorced?  Will she be right then mate?

These are are horrible things and I hope they never happen to you or to anybody.  But they are certainly happening to somebody - because they happen ALL THE TIME!

Too many of us are skating on thin ice.  Maybe it’s because we have no idea how thin the ice is, how likely it is to break, and how cold the water is below.  Maybe we know very well all of those things – and the anxiety creates a paralysis which makes clear thinking difficult.  This is the vicious circle.  Don’t ask, don’t tell.  It all appears good on the surface.  Just keep going.  Pay the minimum on the credit card bill and sort it out next month.  Christmas is expensive, so we’ll worry about it all in January, after the trip away.

Desperate people do not think straight.  Desperate people do things right now, because they have no choice.  Desperate people have so much on their mind they can’t take on new information, they’re backed into a corner so they have to cut corners, they start treading water. Ironically, desperate people often end up paying more for things because they can’t afford to bargain. Creativity and deliberation are not pursuits that desperate people are familiar with.

You don’t ever want to become desperate. 

You don’t ever want to be like Grandmaster Flash thinking:

”It’s like a jungle sometimes it makes me wonder how I keep from going under.”

I don’t want to freak you out.  This is going somewhere – I promise.

The remedy for financial bumpy patches is simple.  The phrase ‘emergency fund’ is a bit alarming, I prefer to think of it as ‘F*ck You’ money. (Pardon my French).  I’m not sure who came up with the term but it’s a perfect encapsulation of what this money can do for you.  It’s a fair distance from complete financial independence, but it’s entry level freedom. And it will give you a taste for more!

It means that whatever happens, you have breathing room. Time to regroup, retrain, find help, explore options.  If intolerable circumstances arise in your working situation – you can flip the bird* and walk away.  It reverses the mental framing from something scary (emergency!) to something liberating (stick it to the man yo!).

Imagine the quiet confidence that would come with having 3 months, 6 months, or ideally a year’s worth of income available to you.  It doesn’t necessarily have to be sitting in the bank. It might be in a series of staggered term deposits that mature at different times.  It might be invested in shares in a way that you can access the cash relatively easily.  It doesn’t really matter. As long as the money is relatively easy to access.

You might never need it – But just the feeling alone, of knowing the safety net is there to fall into – will make your day-to-day trapeze act much more joyful and flamboyant.

 

*Please note: I do not necessarily recommend a literal ‘flipping of the bird’ unless it is absolutely called for.  A figurative flipping will usually suffice.  New Zealand is far too small to burn bridges.

 

3 thoughts on “Don’t push me, cos I’m close to the edge

  1. Eli Inkrot

    Nice post and a good reminder. I’m unsure who first came up with the idea of “f-you money” either, but I first heard it mentioned on the site jlcollinsnh. Incidentally, I recently decided to “flip the bird” (figuratively); which was partially motivated by having 10 years worth of expenses in the form of net assets.

    Reply
    1. Post author

      Excellent. What a great position to be in. I will imagine you laughing triumphantly as you ride a horse out of the office :-)

      Reply
  2. Pingback: Don't Push Me, Cos I’m Close to The Edge... - Rockstar Finance

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