I think if I hear the words “bail out” once more I might scream. It seems that everywhere I turn these days someone, some company, or some institution is getting bailed out of their bad financial decisions. As someone who has tried very hard to live within the rules and not make bad or irresponsible decisions, this gets to me. When times have been tough for me, I have worked through it, not looked for someone to bail me out. I have taken responsibility for my own financial situation and, when it wasn’t so great, done all I could to make it better. It burns me that those who have been irresponsible are getting their misdeeds reduced or forgiven.
Personal responsibility is a concept that we seem to have forgotten, but yet it is the cornerstone of financial success. Actually, it’s the cornerstone of any kind of success, if you want to get right down to it. Whether you seek success with money, your family, your career, or your weight, you have to take responsibility for the situation you are in and work to make it better. No one can knows you like you do and no one can help you if you won’t help yourself. You are responsible for whatever situation you find yourself in and you are the only one who can be responsible for getting yourself out of it.
Personal responsibility is one of those concepts that most of us know in the abstract. We know what it means to be responsible and we can tell when someone else is not taking responsibility for their actions. Yet it’s one of those areas where we tend to have personal blind spots. We can see when others lack personal responsibility, but it’s often harder to see that we are not taking our own measure of personal responsibility. We tend to deny that we’re at fault for anything and look desperately for someone else to take the blame. We complain that the government has screwed us, that our employer didn’t live up to his promises, that someone, somewhere is out to get us. We will do anything to avoid acknowledging that we are at fault because if we acknowledge that we are the reason why our finances are in a mess, we will have to deal with it. Blaming others means that these “others” have to fix the problem, not us. And when nothing gets fixed, we can say, “See, so and so didn’t do their part and I’m still in a mess so it’s not my fault.”
So for those who have forgotten or don’t know what it means to be personally responsible for your finances, here are some examples. Personal responsibility is:
- Admitting that you didn’t save money when you should have and that this is the reason you have no emergency fund
- Admitting that you bought more house than you could afford and this is why you are facing foreclosure
- Taking another job or selling everything not nailed down when you need more money rather than ignoring your bills
- Saving money for retirement so that you are not dependent on the government or family for your existence in your old age
- Giving up luxuries like cell phones, cable TV, nice cars, etc. when times are tough
- Understanding when you have to improve your skills and abilities in order to get a better job (and thus more money) and then following through
- Blaming yourself rather than the credit card companies for getting you deep into debt that is charging 30% interest
- Living below your means
Of course there are others and I’ll tell you a story that illustrates just what failure to take personal responsibility looks like. I know a woman who is facing credit card payments of $750 per month, and that’s the minimum payment. She got into this mess by overspending; none of it was “tragic debt” like medical expenses, emergencies, etc. It was all instant gratification. In addition to this, she has a house payment that is about half her take home pay, a HELOC, a $22,000 auto loan on a car that’s worth about $12,000 (older loans were rolled into this one), no retirement savings and no savings in the bank. Her life is like every caller on an episode of Dave Ramsey all rolled into one person. All of her problems were caused by personal irresponsibility. She simply wanted what she wanted right then. She was not willing to save for anything.
Now that the economy is in the tank, everything is blowing up around her and she whines to me about how much trouble she’s in. She blames the lenders for letting her have the credit. She blames them for raising her rates. She blames her neighborhood for making her spend to look like she belongs. She blames the car companies for letting her roll all those loans together. She blames the government for letting housing prices fall. She points the finger everywhere but where it belongs, which is at herself.
So I asked her the other day, “What are you going to do?” I’m hoping she’s going to say something along the lines of, “I’m going to buckle down and get out of this mess.” Nope. She says that she’s going to walk away form the house, stop paying on the credit card, and let the car get repoed. Her credit’s already trashed so she reasons she might as well finish it off. It’s so much easier than trying to dig out of the hole she’s in. She got into this mess by being irresponsible and she’s going to be irresponsible to the end. I don’t know her very well, but I know this about her: She will never succeed at life unless she changes her approach.
I realize that some, maybe most, people will never change; that they just don’t care enough to take responsibility for their lives and their finances. They will live deeply in debt, never getting ahead until they die and never understanding what was wrong with their choices. They will complain that, “That’s just the way life is” and blame everyone else for their circumstances. Then there are the few who are special. They will step up and take responsibility for their choices. They will admit their mistakes and fix them. They will do what they have to do to get ahead, even if it makes their life less fun for a while. They will sacrifice in order to make a better financial life for themselves and their families. They will never complain that something isn’t possible or that it’s too hard. They will never blame someone else for their financial situation because they know that their situation is a direct result of their own choices.
Here’s a story about one of these special people. I know a single mother who lives debt free in a nice house in a nice neighborhood. She drives a nice, but not fancy, car, travels with her kids a couple of times each year, and has a good bit saved for her retirement and the kids’ college expenses. She does not make a large income (about $55,000 now) and the deadbeat dad doesn’t pay child support. How does she do it? She takes responsibility for making her life and her kids’ lives better.
Several years ago she had no income and was living on government assistance. She got a job paying minimum wage and then added another one to that. She didn’t have money for daycare, but she did have initiative. So she bartered with a local daycare provider for childcare in exchange for cleaning their offices. She worked during the day and cleaned at night with her kids doing their homework at the break room table in the daycare. She got promoted at one of her jobs and finally made enough money that she could quit one of the jobs. She wanted to move up but needed education, so she went to school online and at night. Her family lived on the bare minimum for years, clipping coupons and buying nothing that wasn’t a need. She got her degree and got a better paying full time job with benefits. She worked hard at that job and got promoted to a better job. As things came together she began to save some money and refused to spend more simply because she could. She continued to save until she could buy a house. Now she lives a pretty nice life but still keeps things small. She buys a few luxuries now, but is careful to keep to a budget.
I don’t know how she did it, but she did because she knew that she wanted a better life and that she was the only one who could make that happen. Was it exhausting? I’m sure it was. Was it fun? Probably not. Was it easy? Absolutely not. Could she have given up, complained, and blamed everyone from her ex-husband to the government? Sure. Could she have relied on credit and financed her way to a better life? Probably, but then the bills would have come due and left her deeper than when she began. But she did none of this. She took responsibility for her life and finances and changed her own life and she’s now living a modest but secure life. She endured some pain but knew that the payoff would be worth it. This is what personal responsibility looks like. It’s not easy, and it’s not always fun but it’s the only way to achieve lasting, real financial success.