By Paula Hendrickson
Who can’t use some of free financial advice reducing debt and increasing savings? When I learned the host of Spike’s new series, Life or Debt, grew up within 100 miles or so of Rockford, I became even more interested in the show. I had a chance to ask the host, Victor Antonio, a few questions. His answers reveal a bit of what you’ll learn from his new show.
Paula Hendrickson: How did growing up in Chicago prepare you to help other people set their finances straight?
Victor Antonio: My upbringing helped me develop a strong aversion to financial instability. My parents moved to Chicago from Puerto Rico in the late ‘50s not knowing the language and with a 5th grade education at most. We lived near Humboldt Park, which at the time was one of the most violent areas, because my parents simply didn’t earn a lot of money. My mother eventually became disabled with a back injury, putting the full brunt of financial burden on my father. That financial instability led to arguments, drinking, fights, and eventually separation. It’s something I don’t want other families to go through. When families fight back, I fight harder because I can see what will happen if things don’t change.
PH: What is the hardest – or most useful – lesson you’ve learned about managing money?
VA: The short answer is, “Stop trying to impress others.” Too often we are driven by comparison. It’s the hardest thing to learn because our brain is wired to compare and register discrepancy. We look at what others have and try to match what they have while at the same time sacrificing our own financial stability. We strive to keep up with the Joneses. The reality is that 75 percent of American families are living paycheck-to-paycheck (i.e., the Joneses are most likely broke). When you stop trying to impress others by not comparing, you are then free to focus your financial resources on what’s important to you.
PH: In your experience, what’s harder to overcome: well-paid people who spend without saving, or lower-income people who don’t have much, if anything, left at the end of the month to “pay themselves,” and why?
VA: Both are equally hard for different reasons. High-income earners can cut back and achieve positive cash-flow, but too often they’re mentally vested (i.e., stubborn) when it comes to giving up luxuries. They have the ability to be financially stable, but lack the will and discipline to do it. In short: good income, bad mindset.
Low-income earners are willing to work with me but they don’t have any place to cut back because they’ve already cut as much as they can. Which means, we have to figure out a way to get them to earn more, which is far more difficult than simply cutting expenses. In short: bad income, good mindset.
PH: Do you advocate any type of incentive system to motivate people to save more or spend less?
VA: I’m really torn on this question. I’m not a believer in extrinsic motivation (i.e., reward); I’m an intrinsic motivation type of guy. To reward yourself with a dinner, vacation, day at the spa, is fine I guess, but I believe the REAL reward should be satisfaction. The satisfaction you get in knowing that you’ve paid off another credit card. The growing peace of mind that comes in seeing your debt load dwindling. The momentum you feel when you’re getting more and more in control of your finances. That, to me, is better than any extrinsic reward you can give yourself. Plus, it’s hard to enjoy an incentive when you’re still in debt.
PH: What are the worst financial habits you’ve seen in your clients? And the best?
VA: The worst would shopping because you’re unhappy, depressed, or angry. All three moods lead to poor purchase decisions. A close second would be couples who spend money on ‘wants’ and not ‘needs.’
The best I’ve seen is couples who automate their contributions, whether it’s the maximum possible into a 401K or 10 percent of their pay directly into a savings account.
PH: What is the most common mistake people tend to make when it comes to money?
VA: The Credit Card Debt Spiral. People put a little bit of money on their credit card and think nothing of it. They pay off the card at the end of the month and the cycle begins again next month with new debt. Until one day the amount on the credit is a little more than they can afford and they miss a payment. Then, the new 29.99 percent APR kicks in. They miss another full payment and so on until one day they settle on just paying the minimum. And when you’re paying the minimum, you’ve entered the Debt Spiral and they ask themselves, “How did this happen?”
PH: How are you using Life or Debt to educate people about money management?
VA: People tend to have a selective blind spot when it comes to their own shortcomings, but are quick to judge others. This show is about telling the story of how people got into debt. And in telling that story, we hope that people will see themselves in it. We also show how families can get out of debt by using our blueprint and financial tools. We also hope that as people are watching, they’ll learn how they too can achieve financial stability by applying the principles of running your family like a business.
Life or Debt premieres Sunday at 9:00 p.m. on Spike.