Break out of your Bastille

Today, France commemorates Bastille Day, which is similar to our Independence Day. For centuries, kings and queens ruled France and squashed those citizens who disagreed with them. They would often toss dissenters into The Bastille, or prison, which became the symbol of the worst aspects of the monarchy. On July 14, 1789, a large number of French citizens gathered together and stormed the Bastille, kicking off the French Revolution. In the end, the war proved that power no longer resided in the King, but in the people.

Today I want to start to equate the Bastille with a similar, though perhaps more insidious prison. The financial equivalent to the Bastille is something we ourselves build – too many people are prisoners to a lifestyle they can not afford. I thought about this after speaking with a young couple who purchased a house that was a stretch, but doable as long as the husband used his annual bonus to augment the household income of $250,000. Things went smoothly for the first year, but this year, the bonus was half of last year’s take. Flash forward six months and I am on the phone with a guy who has amassed thirty grand in credit card debt.

After running through the easiest suggestion -- refinance the first mortgage, the line of credit and the credit card debt into one thirty year fixed rate mortgage, we got down to it. “I know that I hardly know you, but I need to state an obvious fact: You can’t afford your lifestyle and you are going to have to make some difficult decisions.” After twenty minutes, we had found exactly $30,000 of extras that they could cut, including the country club and the fancy vacations. The guy was not happy, but I promised him that if he could “get by” without these things, he would likely sleep better.

I have heard theses stories up and down the food chain, from the multi-millionaires who can’t figure out how to make it on $20 million, to the guy who earns $500K, but is broke, to the family that makes $100,000 and is having difficulty making ends meet. I know that’s hard to imagine, but each one really does not look up or down, rather he compares himself to his peer group.

With surgical precision, I try to identify the source of the problem without judgment. Once the people on the other side of the table get serious, they can easily slice and dice their way down to the essentials. For those who don’t have too much, it may be something simple, like stop buying lunches and coffee. For the millionaires, it may be the sale of the extra “fun” car or the need to rent the summer house for a month.

What is remarkably similar is that at each level, so many people have reached for a lifestyle they simply can not afford. For the sake of feeding their desires or keeping up with their neighbors, they are now living in the Bastille, wondering how they can earn freedom. Of course nobody is keeping you in the jail except yourself. But that’s actually the good news, because you hold the keys to your own financial freedom. Sure it might be painful at first, but could anything be worse than living in that Bastille that you built?