ShareThisNo surprise: This year's economic free fall has intensified everyone's anxieties about money.
And in a culture where self-esteem often gets wrapped up in what we buy or what we own -- the biggest house, the coolest car, the sleekest wardrobe, the latest tech toys -- many people find it difficult to get a handle on their financial "issues."
That's where so-called "financial recovery counselors" like Terri Ciochetti come in. She and others in the field can't recoup the losses in your plunging stock portfolio or restore your dwindling 401(k) balance. But as therapists trained in money management, they help clients go after the root causes of overspending, under earning and getting stuck in chronic debt.
We sat down with Ciochetti recently, following her talk at a seminar on "Smart Investing for Women." Here's a slice of that conversation.
Q: Your career started as a "loan workout officer" helping distressed franchise owners avoid bankruptcy, then switched into psychotherapy. What prompted you to meld the two and become a financial recovery counselor?
A: When I was doing loan workouts, I heard a lot about what people were going through financially -- the pain and hardship it was causing, how it was affecting their marriages, their relationships. That led me to become a psychotherapist. In (10 years) working with clients, money issues kept coming up. I kept seeing the problems they were creating in people's lives.
Q: As a financial recovery counselor, you're not certified to offer financial planning advice. Why would someone come to you, instead of a financial planner or an investment adviser?
A: The goal of financial recovery is long-term behavioral change. We don't give financial advice. But we get referrals from financial planners who've had clients unable to get on top of their spending issues.
We work with the emotional side of someone's financial life, as well as helping them track their spending and change their behavior. A lot of people in financial distress go to debt counseling companies, and there are a lot of good ones out there. But often, within two to five years, people find themselves back in the same financial position because they haven't changed their behavior. The underlying issues haven't been addressed.
Q: Why are money and emotions so entwined?
A: Look at what happened (last) week: The government announced that -- yes, indeed -- we're in a recession. That's not news to most people. But the market reacted and sank more than 600 points. That's a perfect example of how psychology and emotion play a part in today's (financial) markets, nationally and internationally.
Q: What's your advice when trying to calm people's financial worries?
A: It's a time to get a realistic picture of your financial situation. If you're looking daily (at your stock or 401(k) account balance), it's not helpful. It only feeds the fear and anxiety. If you're planning to quit your job or retire next year, look at your spending and cut back where you can. Try a little bit of self-soothing. ... Talk yourself back from the ledge. History has shown things will get better.
Q: Why is it people are often reluctant to discuss their money troubles?
A: People are far more comfortable talking about their sex lives than their financial lives. ... Money represents success. When it's assumed you have a lot of money and your (status) is dependent on that, there's a lot of embarrassment to admitting that you're in debt. I had a client who couldn't afford to fill up his BMW. That brings a lot of anxiety.
Q: How do people get started changing their spending behavior?
A: By tracking your expenses and writing down everything you spend money on. Especially if you use a credit or debit card all the time, writing it down gets you in touch with where your money is going on a daily basis.
Q: How do our emotional issues get tangled up with our finances?
A: Money is an easy expression of love. In our consumer-driven culture, we see it a great deal in parenting -- buying (expensive) toys, clothes for our kids. But as adults we all need the basic ability to delay gratification.
I'm continually surprised by the level of debt people carry without the ability to pay for it. If we can't steer clear of what we can't afford -- diamond earrings, a new car, a new kitchen floor -- life can be very painful.
Q: Do you see differences between how men and women approach money?
A: Men have a healthier sense of entitlement regarding pay. Most women negotiate less aggressively for salary and promotions. They're more interested in preserving the relationship or getting approval. That's why many women are "under-earners."
(Reach Claudia Buck at cbuck(at)sacbee.com. For more stories, visit scrippsnews.com.)
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