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Managing financial stress and mindfulness

How to budget successfully

Managing financial stress and mindfulness.

In the second part of our financial stress webinar covering managing financial stress, we look at goals, mindfulness, and monitoring progress with expert help from Lea Clothier, a Master-certified behavioural money coach involved in the development of the Financial Mindfulness program. Part one looked in detail, decision making, literacy, and learning new skills.

Setting financial goals

By definition, moving forward – out of financial stress – means we have to do things differently.

“If we stay where we are, we’re going to get more of what we’ve got,” Ms. Clothier says.

The reason for setting financial goals is because they can help unlock genuine and transformative behaviour change.

The theory of behaviour change is that we need to be motivated to make changes. Setting goals is a way of taking early but clear steps towards change.

“These goals can be tiny, or they can be very significant. I’m a big fan of what they call small but significant goals,” says Ms. Clothier.

One type of goal is a milestone – reaching a certain target of savings or being able to afford something we’ve targeted, like the deposit to buy a property, or fund a small business.

On top of the achievement of reaching a goal, the very act of setting financial goals can actually help reduce financial stress because it makes us feel a little more positive about our money.

“We can start to see the progress that we’re taking away from what we don’t want, towards that which we do want,” Ms. Clothier says.

In setting financial goals it’s a good idea to nominate an ‘accountability partner’ and make them part of your process.

That is a person to check in with around your progress.

The more you think about how you got into financial stress – this point where major change is necessary – and reflect on your history of self-defeating or disorganised behaviours with money, the more you’ll see accountability is essential in changing your relationship with financial stress.

It’s important to note things may not happen quickly. Making a meaningful change that can be sustained for a lifetime will probably be slow.

It is also just a reality that we are likely to go through periods of not seeing any changes or slipping back into old patterns with money.

That might seem depressing, but depending on your perspective and openness to change, the re-emergence of old habits is an opportunity.

How?

We have a clear choice: we can slip backward and give up or re-evaluate our goal, our process and perhaps set a new smaller financial goal.

Small financial goals and milestones are also rewarding.

It’s well-known by experts in goal-setting that most goals consist of smaller tangible goals, like stepping stones on a path.

“I’m also a fan of doing something physical to acknowledge reaching goals,” says Ms. Clothier.

“Whether that be like marking off a calendar every time you complete payment towards debt or colouring in a picture that has 52 elements of savings that you’re doing weekly over a year.”

This is important and useful because our relationship with money has become even more abstract than it was: very often we don’t even see or touch money in our cashless society.

Because so many transactions have become contactless or online during the pandemic the likelihood of not carrying any cash at all has increased for millions of us.

“We have lost that connection to the reality of our physical relationship with money,” she says.

“That money ‘disconnect’ is very real and it helps our ability to reach financial goals if we can get back a sense of connection to money.”

We are more likely to think of concepts and issues every day if we feel connected to them.

Discovering the power of mindfulness

Lea Clothier trained as a meditation and yoga teacher when she saw clients to her money behavioural coaching business were suffering acute stress.

“When they started to talk about money, they talked about their hopes and dreams with cash or their actual reality with money I could see that it was stressful, and I could see that stress was directly linked to their wellbeing,” she says.

Financial stress is a type of stress, and as we discussed in a previous blog which means it responds to a range of stress reduction techniques, including mindfulness.

Mindfulness – which at its most basic is about bringing our awareness to the present moment – is an important stress reduction technique.

“It means we are paying attention; we’re fully invested in this very moment,” Ms. Clothier says.

“We do that through the application of our five senses. It means that we start to pay more attention to our touch, our sight, what we can smell, hear and taste.”

“By doing that, we get out of that hectic, noisy head of thoughts that all of us have.”

The power of mindfulness with money is it’s two-fold.

It means we need to bring our full attention to our finances.

We need to pay attention to what’s going on in our bank accounts, with our spending, in how we earn money, and in the way that we interact with money every time we use it.

Mindfulness also has the power to help to reduce our stress levels. It is known and proven to be able to reduce cortisol, the stress hormone.

There is also research to show mindfulness can actually increase the density of the pre-frontal cortex, also known as ‘the thinking brain’.

This is important because our responses to money are so often based on how we feel and our emotions.

This means that we’re reacting when we’re interacting with money; we’re not responding. We’re not making logical, clear, calm, well-thought-out decisions.

“For me, mindfulness is like a superpower when it comes to our finances,” Ms. Clothier says.

“It’s a way to slow down and give provide enough space to practice better decisions and practice a better way to manage money.

“Think about when you’re in the shopping centre, and you’re about to buy something.  You’re not thinking much about it, you just like it, you’ve seen it and you want it.”

“You go to the counter, you tap as you go, you walk out, and as you leave, you get in the car, you go home. You get home, and you go, “Argh, I probably shouldn’t have bought that. I don’t have the money, and I’ve got those bills coming up.”

The emotional part of the brain reacts seven seconds faster than the thinking part. It’s unlikely we would turn to the knowledge gained in improving our financial literacy in that time.

But we can just stop.

A mindful approach with money in that situation would involve, slowing down our actions, and stopping before tapping the card, taking a breath, and checking in about how important the item really is?

The same can apply to investing in the share market, or lending money to family or friends for them to invest.

But by approaching and adopting mindfulness, we just slow everything down, and we don’t react.

“We can stop and consider the repercussions of any decision or action before making it.”

How to measure and monitor our progress

Very few of us know how financially stressed we really are. We need to have some kind of idea of this before we really know what progress looks like.

To measure financial stress, we need to look at more than just our bank account balances.

The context for how we spend, why we spend, and what we spend it on matters a great deal.

“Think to the gym and doing a fitness assessment before you get there,” Ms. Clothier says.

“Where you’re sitting with your PT, and they’re saying okay, ‘tell me about your diet, tell me about your state of mind, your sleep patterns, tell me about your exercise routines.”

“It’s the same concept as that, except it applies to your relationship with money instead of food or exercise.”

Financial Mindfulness developed the Financial Stress Index (FSI) as a way to measure and monitor the financial stress of individuals and groups of people in detail.

It is contained within the Financial Mindfulness app and measures the levels of financial stress on five dimensions with suggested solutions for individuals.

These are the financial status, the physical and psychological burden, the social engagement, the psychological impact, and the behavioural signs of stress.

The score given to each user is a starting point, a baseline.

Returning to doing the FSI every 30 days or more allows users to clearly see their progress across the five dimensions.

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Managing financial stress – Decision making, literacy, learning new skills

Managing financial stress - Decision making

Managing financial stress – Decision making, literacy, learning new skills.

In the first part of our financial stress webinar covering managing financial stress, we take a detailed look with expert help from Lea Clothier, a Master-certified behavioural money coach involved in the development of the Financial Mindfulness program.

There are so many triggers to create financial stress in our lives today that reducing and managing financial stress has become an ongoing, sometimes daily task.

Thankfully financial stress as a specific type of stress is finally being acknowledged and a number of different methods are available to deal with it.

There are a variety of well-practiced stress reduction techniques which we can use to help address financial stress.

These include exercise, maintaining positive routines, and getting curious about the things that do reduce your general stress – for instance, short walks and/or short meditation sessions.

The Financial Mindfulness app is a proven, evidence-based tool for reducing personal financial stress that packages together some simple but extremely relevant tools:  mindfulness, goal-setting, and financial literacy.

Its development has enabled us to tread new ground in the measurement of financial stress.

Why you need to get organised – on many levels

Reducing financial stress on day-by-day and week-to-week levels can be complex, with accounts, different income streams, expenses, taxation, investments, and other factors to manage.

So, developing personal systems that work for you is essential.

Being disorganised with finances will invariably lead to an increase in financial stress.

But getting organised with finances also means aligning what we think and how we feel with our actions.

“I constantly see with the clients I work with that someone might know that they need to start a budget,” says Ms. Clothier.

“They take action or the behaviour of implementing a budget. Yet on a thinking level, they have some challenging and limiting beliefs about budgeting. And then, on an emotional level, they feel disempowered, or they feel restricted, so whilst we’re taking positive action of budgeting, we’re not aligning that with positive thoughts and emotions.”

“And then we wonder why we don’t get the results that we’re seeking.”

The answer to this is to explore your relationship with money and your beliefs about it – including beliefs that might be holding you back.

Our relationships tend to be a good place where our money beliefs and values come to light.

For some people, it may be useful or necessary to do more personal work on these issues with a financial counsellor, a financial wellness consultant, and/or more specialised therapist.

Moving forward, there are many ways and means to manage financial stress, as we said.

This blog will cover a handful of tips, tools, and techniques that Ms. Clothier has found most useful in her work.

Accepting past decisions

Money is an emotional topic. Just look at the importance of it in almost everybody’s lives, that importance can create strong emotions.

“Like it or not, we are where we are today because of past experiences, decisions, and actions or past inactions or indecision,” Ms. Clothier says.

We have to accept the past and move forward.

Yes, there may be greed, shame, guilt to feel and let go of.

It can be painful to confront difficult emotions, but that’s normal too. Trying to not look at these emotions doesn’t work as a long-term strategy, even if it’s appealing.

At a practical level, our decisions are often made on habit.

When the habits are mindful and not reacting – especially to emotions – our trajectory with finances is usually positive.

But if our money habits tend to be reactive and we spend as a reaction to feelings and even urges and impulses, our money problems are usually chronic.

Accepting past financial decisions isn’t easy, but it’s important.

“We can make peace with the past; we can learn from the past, and then we can move forward and make better decisions,” Ms. Clothier says.

The importance of financial literacy

Don’t take this personally, but levels of financial literacy in Australia are “abysmal”, Ms. Clothier says.

A recent Melbourne University survey, the regular Household Income Labour Dynamics in Australia (HILDA) survey found that half of the respondents could not answer five simple questions about inflation, interest rates, compounding, and diversification correctly.

We are not saying you can’t answer those questions, but the point is financial literacy is fundamental, it underpins most of your money choices.

Again, remember how important money is to our lives, and our ability to make choices – it pays for our day-to-day lives and sets up or potentially undermines our futures.

Even worse there is a frightening gender gap relating to financial literacy. One in three female respondents couldn’t answer any of the HILDA questions.

Most fundamental lessons people learned about money were learned in the home, and partly by watching and learning.

Schools are getting better at teaching financial literacy today, thankfully. The media also contains a lot of information about finances in the form of clips, podcasts, articles, and blogs, such as this.

The good news is that there are many tools out there, free websites, free content, classes, books, and podcasts that you can listen to increase your financial literacy.

“I always say that learning finance is like learning a new language,” Ms. Clothier says.

“You speak the lingo, and once you know the speech, it makes it a lot easier.”

Learning new financial skills

Continuing on from the above point, learning new financial skills is an important way to help us manage financial stress.

Knowledge is only powerful when it’s applied, we actually need skills to get the most out of our knowledge.

Even if we know certain key facts and believe in a course of action, we can still slip up because money is so emotional.

For example, we know we should spend less than we earn. We know we shouldn’t big amounts of money on our credit cards.

We know we should be looking at our financial statements and bills and budgeting regularly.

But just because we know those things don’t mean that we do them.

“This happens because money is emotional and because it seems difficult,” Ms. Clothier says.

The problem is many of us don’t have the skill levels needed to practice good day-to-day management of money and financial stress.

“Learning new financial skills can be a straightforward way to reduce our stress levels,” she says.

It’s building a habit; it’s making a unique knowledge and skill base.

It can involve something as simple as learning how to manage a credit card better.

Or even how to manage and read a credit card statement.

“I’m often surprised how many of my clients cannot read a credit card statement and understand the impact of only paying the minimum balance on an ongoing basis and what that means to them,” Ms. Clothier says.

Starting to build those skills from a basic level up to a more advanced level can help create a better and healthier relationship with money.

Next week: How to manage financial stress part 2 (using goals, mindfulness, and progress).

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Disorganised finances

Disorganised Finances

Disorganised finances.

A persistent, nagging fear of money is all too real for many people.

The medical word for it is Chrematophobia, also known as Chrometophobia and its sufferers have a much higher likelihood than average to experience financial stress.

The individual reasons are probably as varied and nuanced as the number of sufferers, but it’s a reasonable assumption that we haven’t learned how to manage money effectively.

One way to consider the fear of money is to ask: how many with such fears are disorganised with their finances?

We’re not suggesting an answer to Chrematophobia – we’ll leave that to you, your financial counsellor, and even your psychologist.

But we can help encourage people to look at the widespread issue of disorganised finances.

Why does it happen?

For some, it will be deep-seated issues, and again, we won’t go into that. But it’s worth considering whether you do fall into that camp before considering the next point – and getting extra help if you do.

Avoiding our finances to the point they become disorganised can feel strangely empowering in the short term.

We all know that feeling: ‘I don’t have to do this difficult thing if I don’t want to or maybe ‘This is boring/hard/exhausting, so I’ll get back to it tomorrow/next week/next month’.

This is avoidance, with more than a little misguided rebellion at its heart.

Whatever is underneath our avoidance of maintaining our finances, the result is often the same: it’s a bit of an ‘own goal’.

‘It can be a bit like a teenager not wanting to clean their room. They don’t see a need for it,’ says Hamish Ferguson, a Director at Vision Property and Finance.

It is frustrating when they can’t find an important document or number, but unless it becomes a large enough pain point, people generally don’t – or won’t – understand the need and don’t make it important.

One thing we all have, of course, is plenty of distraction these days.

There are usually too many other things we believe need to be done now or make more important – and we focus on those instead of our finances.

“Examples could be keeping the boss happy, dealing with children or a spouse that wants attention or even just allocating time to more pleasurable activities such as TV, time with friends or outdoor activities,” says Mr Ferguson.

The link between financial stress and disorganised finances

If we don’t pay attention to our finances, they don’t usually improve. This may seem obvious,s but it’s important to act on it.

Paying no attention to our financial situation means some form of financial stress, and even distress becomes inevitable.

If you can’t see this coming, you probably need some new habits with money!

“Generally, the more stressed we are, the less logical we think and or the more disorganised we become,” Mr Ferguson says.

With a stressed mindset, we don’t tend to manage our time well because we spend more time on the stressor than the solution.

“We often fail to realise that being organised with money will reduce the time that we tend to think about money, which should give us more freedom and time to spend in more pleasurable areas,” Mr Ferguson says.

The importance of regular routines around money

The busier we are (or more’ time poor’ we are), the more important having healthy routines are.

Most people can recognise that sense of not having enough time in the day.

“So, building structure and routine around our finances is essential,” Mr Ferguson says.

Some examples of healthy routines with money are:

    • ​Review bank statements and credit card statements every month so we know what we are spending money on and the amounts;
    • Review repeating expenses and reflecting on whether we are using what we are paying for effectively. Gym memberships are a good example, as are streaming subscriptions;
    • Compare bills to prior ones so that you can be aware of any increasing expenses and spend some time thinking about why this is occurring;
    • Review all significant items that may need to be renewed over time. This could be a car, fridge, hot water system, maintenance on the house. Come up with an estimated time before money would need to be spent and start to put a savings plan in place around this; and
    • Start and maintain a budget.

What’s a good place to start if my finances are disorganised?

“Being disorganised with finances is often an indication that bills are not being paid on time, savings are limited (or even non-existent) there isn’t a savings habit or goal,” Mr Ferguson says.

When we experience any bill as an unexpected expense, we need new habits with money and quickly.

In the most basic terms, a person disorganised with finances often doesn’t know how or where to allocate money helpfully over the long term.

Becoming organised would mean thinking about the following:

    • Knowing where all my documents and paperwork are – physically, digitally and online;
    • Having a regular time to sit down and examine the bills or expenses that I am incurring;
    • Understanding what my costs in life are;
    • Having financial goals; and
    • Managing the difference between my income and expenses

Once or twice a year, it is helpful to sit down and analyse three months’ worth of transactions.

If this seems too onerous, looking at some software to help you be proactive here may be worth considering.

Also, many banks now offer basic cashflow analysis.

“Are you using the free tools available to you? There are plenty,” Mr Ferguson says.

A final word on goal setting.

‘This is very, very important,” he says.

Financial goal setting actions can be as simple as looking at major expenses on the horizon and breaking down the need into weekly or fortnightly amounts to putting away can help become organised.

But they can also be empowering when we look forward to what we want to do with the next 5-10 years: buy a property? Travel? Open a business?

The possibilities become almost endless when our finances become organised, and we can start making financial goals and achieving them.

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Money and relationships

Money and relationships

Money and relationships.

Many elements can lead to relationship tensions and even breakdown.

One of the most difficult to change can be disputes or differences over money.

Perhaps strangely, often ‘opposites’ attract when it comes to money and relationships.

“You’ll often see a spender/saver dynamic in a couple,” says Lea Clothier, a Behavioural Money Coach.

The reason for this can be based on deeply set value systems. Money can be tied to, for example, freedom, security or success.

“Money can represent all three to us, but we often have a dominant main value system around it,” says Ms Clothier.

Value systems and money

Understanding the underlying values in your relationship will give us insight into our behaviour and what is happening when there is tension over money.

Someone who sees money as a means to freedom is likely to be more of a spender, Ms Clothier says.

They are also less likely to stick to or use a budget (which they find restrictive). They may enjoy spending money on experiences and enjoying life.

On the other hand, someone who sees money as all about security may use their money more restrictively.

They are likely to be more savings-focused, manage money more tightly, and stick to a budget.

‘For these people, having a cash reserve gives them peace of mind and reduces financial anxiety,’ Ms Clothier says.

Those who see money as a measure of success may display their wealth through their choice of career, the car they drive, and the clothes they wear.

They may have big financial goals and see money as the tool to achieving these, Ms Clothier says.

Money is likely to be at the centre of or influence many of their major life decisions.

Conflict over money

Conflict can happen in partnerships and relationships when people have conflicting money values.

Imagine a relationship where one person is freedom-focused and the other security-focused.

The actions one person takes could be seen to compromise the other’s need for freedom or security.

Where money values are fundamental to us and clash with someone else’s equally strongly held beliefs, conflict seems inevitable at some point.

Understanding each other’s values around money can help reduce conflict and diffuse conflict.

“Many couples don’t manage money together as a team,” Ms Clothier says.

Getting ‘on the same page’ financially means both are taking an interest in finances in the relationship. Ideally, both also have an active role.

Ultimately a shared household spending plan is a great idea, so both partners work together towards joint financial goals.

Keeping some financial independence is also a good idea, perhaps in the form of having a small amount managed separately, so each can choose to spend independently of common money goals and actions.

But this should be transparent: any habit of hiding money will undermine trust.

Financial stability, relationship stability

Financial stress and financial instability are leading causes of stress globally and often contribute to marital and relationship breakdown.

Improving our sense of financial security and stability provides peace of mind and invariably helps to steady many partnerships, Ms Clothier says.

“It can create a platform for individuals to pursue their dreams and for a couple to achieve shared goals,” she said.

Financial stability is also the foundation for a stronger financial future and makes goals and dreams more affordable.

Financial stability is created through two essential elements: communication and cash flow, Ms Clothier says.

Money is a very emotional topic, which can make communicating about it difficult.

Learning to be open and transparent about money matters and communicate clearly about them is essential to remove the tension that money often causes in relationships.

Managing cash flow is the foundation of all financial plans.

“It’s about being mindful of every dollar that flows into your life and intentional with the very dollar that flows out,” says Ms Clothier.

When we have a system and process in place to manage our cash flow and ensure we are spending less than we earn, paying off debt as quickly as possible and building a cash buffer, we can begin to focus our attention on growing our wealth investing it.

Many people go straight to the investing part, only to find they are building on a shaky foundation.

If you are doing this, seek some help getting your fundamentals right – improving your cash flow situation to spend less than you make.

The dealbreakers of money and relationships

A major dealbreaker regarding money that will undermine a relationship, perhaps surprisingly, is poor communication.

Even worse is lacking transparency – which to a partner can quickly erode that most important element in any partnership: trust.

This applies to all stages of a relationship – including the beginning of one.

A partner with an undisclosed historical debt is a partner with a burden that can harm a relationship.

Hiding purchases and spending habits and having secret stashes of money will also destabilise a relationship.

Teamwork and shared responsibility regarding joint finances are essential. It’s constructive, but its absence is a big negative.

Working together on a joint budget, a spending and saving plan builds a sense of partnership – and trust because the goals are shared. Both partners can enjoy the feeling of achievement that comes from successful planning with structure and clarity.

If there’s debt, work out a debt management plan either together or with complete transparency.

“Lacking a plan means that our finances often control us, rather than us controlling it,” Ms Clothier says.

“It also means we are less likely to achieve our goals and dreams because we don’t have the means or method to achieving them.”

Another huge dealbreaker is procrastination.

So many typical money milestones fall on a particular date, so that that avoidance can be very costly.

So don’t put off paying the credit card bills or the insurance – that will create tension in a couple and family.

This also applies to investment. The saying goes: the best time to invest is yesterday and the second-best time is now.

Some regret over financial behaviours and decisions is inevitable and painful, but communication over shared goals can help prompt action rather than avoidance.

Another look at communication

In countries where the cost of living is high, money is one of the most emotive regular topics we face.

Shame, guilt, fear, anxiety, jealousy – all big emotions – are all common around money.

We can feel anger, too and even slip into useless or even damaging fantasies over finances.

And most of this happens in one place – inside our heads.

Learning to be open and transparent about money matters and communicate clearly can remove significant triggers for tension and disagreement.

It’s important to remember that a lot of financial behaviour is habitual.

“Most of us don’t bring much awareness or mindfulness to what we do with our money on a day to day basis,” Ms Clothier says.

Our money habits, particularly negative, can be detrimental to our finances and cause conflict in a relationship.

If you or your spouse notice some unhelpful financial behaviours, it’s important not to launch into judgement, blame or attack. Instead, offering support to see what is driving the habit or behaviour is more beneficial.

It’s important to explore – with honesty – if there are ways that one or more bad money habits, we have either individually or as a couple could be reduced or replaced with something healthier.

Suppose money is a source of regular conflict in your relationship. In that case, it may pay to consult with a financial counsellor, money coach or financial adviser who could support you to get back on the same page with your finances.

Often, they can provide perspective, an objective view, great support and practical tools to work together and master the art of managing money as a couple.

It’s important to note again that money challenges can reveal significant underlying issues, such as the need for security, freedom, or success.

Suppose the behaviour of one or other partners in a relationship is controlling or obsessive in pursuit of these values, leading to major relationship clashes. In that case, marriage counselling or couples therapy might also be helpful.

 

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What to do if lockdown has caused me financial stress

What to do if lockdown has caused me financial stress

What to do if lockdown has caused me financial stress.

Right now, millions of Australians are under public health orders to stay at home in an attempt to reduce the spread of the Delta variant of the Covid-19 virus all around the country.

More than half of all Australians face this uncomfortable but necessary reality, and it is producing feelings including loneliness, fear, worry, depression, and stress.

The unprecedented – and extended – interruption to normal life has worn so thin that for many, it’s starting to feel like a depressing new norm.

Uncertainty and fear were defining characteristics of the pandemic from the outset.

The uncertainty isn’t something we can do much about: nobody has a crystal ball.

Fears are a little more tangible. We fear for the health and safety of our families and ourselves.

Thankfully, there are plenty of official and expert resources to help people deal with their mental health during the pandemic.

Here’s a great government link with plenty of advice and links to specific types of support.

The respected Black Dog Institute has produced 10 tips for managing anxiety during Covid-19.

We suggest you use these links if you need them.

People also fear for their finances, and this isn’t just a ‘first world problem’; it’s real and much deeper.

While some of us are saving because we are not going out, the lockdown means many people cannot get to work and have lost hours, and therefore, their wages are reduced. In mid-August, it was revealed 150 child care centres closed – all have staff, and all those staffs lost wages.

In 2020 Australia experienced negative wage growth due to the pandemic-led economic downturn.

Or even worse, some have lost their jobs. This is acknowledged by the government’s latest round of Covid disaster payments.

Everyone losing wages or their job will experience financial stress, sometimes at an acute level, and if these changed circumstances persist or worsen, the financial stress will likely become chronic.

Fearing for our financial security shakes us to our core; for many of us, it feels like it’s about our very survival, even a matter of life and death.

Financial stress has moved from a fringe issue to a serious, even core problem. It is acknowledged by the likes of the Black Dog Institute’ managing financial stress during lockdown.’

‘Mental and financial health can be a vicious cycle,’ says Black Dog. ‘Financial instability can lead to poor mental health, which can make taking action to protect your financial situation harder.’

‘When people are under pressure, they may start drinking more or avoid talking to family and friends, which can make it even harder to cope.’

This blog looks at financial stress during Covid lockdowns – why we feel stressed, what we can do with financial fears, and what practical steps we can take.

Why do we feel financial stress during lockdowns

Hamish Ferguson, a Director at Vision Property and Finance, says it’s important to acknowledge that feeling financial stress during a lockdown is to be expected.

“Lockdowns introduce unpredictability into our lives. One of the requirements of effective cashflow management is being able to predict both your future income and expenses.”

There is a saying that in the absence of good information, people will make poor decisions.

There is a lot of emotion in the community, and at times misinformation spreads. This poor-quality information can affect people who give it too much attention, and some will either not look after themselves or spend too much money thinking that this is an excellent way to reduce stress.

‘Many of us will spend more money when we have higher levels of emotion,’ Mr. Ferguson says.

‘It is quite clear that emotion levels in society are higher, so this will produce binge spending or emotional spending at a higher level.’

What can we do about our financial fear during a lockdown?

Practicing mindfulness is not just about sitting down to meditate, though that is recommended.

Mindfulness is actually about paying attention to thoughts and feelings and is said by experts to resemble curiosity as a state of mind.

So be curious about how your spending patterns are changing and where your money is going.

That helps us achieve financial mindfulness, which is simply described as having awareness and paying attention to your finances and financial behaviours.

It means more than being money smart or financially savvy, as it includes the capacity to regulate emotional responses that can lead to unhelpful financial behaviour and financial stress.

‘One of the strategies that many professionals will suggest is to break down the information we receive into what we know to be true and separate it from what may or may not be true,’ says Mr. Ferguson.

This can help us to focus on more reliable information.

Another strategy is to focus on verbalising things we can be thankful for when stressed or anxious. For example, are you safe at home, and do you have good home-cooked meals and a relatively comfortable environment where you live?

Being thankful can help to balance the information we are receiving and not just focus on the negative.

An example of the power of positive thinking is that rather than just thinking “I might lose my job”, to say to yourself, “Last time this happened, my employer and the govt worked well together to enable me to keep my job. I don’t have any reason to think that this won’t happen again.”

We’d also suggest turning off the television, or the online and social media news updates, as often as possible.

Constant updates on Covid are not helpful to most people. Information from sources of dubious origin is even less helpful.

‘Sometimes we just need to switch the world off and enjoy the silence,’ Mr. Ferguson says.

He suggests reaching out to people in your community going through similar experiences, for example, work colleagues, family friends.

‘Especially reach out to those people that you see as positive or “glass half full”. They are more likely to help you balance your thoughts,’ Mr. Ferguson says.

What are some practical steps we can take

In a period where our emotions are potentially impacting our financial behaviour, especially in a negative way, it’s time to take a step back and look at the basics.

“Review all spending to ensure you are focusing on needs and not wants. Strip your budget back to bare basics,” says Mr. Ferguson.

He suggests focusing on identifying the real fears or stress points and finding someone to help you work through those.

“Community and communication are very important.”

If you are not budgeting or haven’t reviewed your budget for a while, then it’s an excellent opportunity to do so.

Why revisit my budget?

Instinctively, we know that budgeting allows us to manage money wisely, avoid financial stress, and be in control.

During a lockdown enforced by the government, one thing we don’t feel is in control. That’s not comfortable for many people. Budgeting helps us to get back some sense of control in our lives.

Also, it’s a habit that is always helpful to our financial situation.

Even if you have a budget, here’s a reminder of the main steps to building a budget:

    • Properly determine your household income
    • Begin tracking your living expenses over three months
    • Balance your budget – subtracting all your expenses from all your income
    • Go back and review your expenses – what’s missing?
    • Review your income potential
    • Balance your budget again, this time with nothing missing!
    • Maintain your budget

Remember, most people who try to budget fail to get the benefits of a budget because they cannot maintain the practice.

Maintaining a budget involves several steps too:

    • Schedule a budget practice
    • Make budgeting a game that you win at
    • Review the value of your money and simplify your budgeting
    • Get smarter about your use of credit
    • Get real about planning
    • Experiment with ‘not spending’
    • Nominate a budget buddy and become accountable
    • Become proactive – and stay positive

You can read our complete blog series on budgeting at these links: why budgeting helps your personal finances, how to budget and maintaining a budget.

If you are still struggling with balancing your budget, you can seek support. You could consider contacting a financial counsellor or a budgeting coach for help.

Remember, budgeting is learning a new life skill; it takes practice. And at a time when you may feel worried, uncertain, or even out of control, it will help with financial fear and financial stress.

If you are struggling with your mental health, please seek help:

    • Lifeline crisis support service (24 hours): 13 11 14
    • Suicide Call Back Service (24 hours): 1300 659 467
    • Beyond Blue phone support and online chat service (24 hours): 1300 22 4636 or www.beyondblue.org.au

 

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How to reduce the shock of unexpected expenses

The shock of unexpected expenses

How to reduce the shock of unexpected expenses

Unexpected events are by definition surprising and can cause anxious feelings in most of us.

Where it’s a positive surprise that speaks for itself, positive feelings of wellbeing usually follow.

But where it’s an unwelcome unexpected event, we can be quite shaken.

A flood or fire, a theft, a vehicle accident, or a shock health diagnosis will all create feelings that lead us to think our lives have been turned upside down.

Even something as temporary as a lightning strike taking out the electricity in our street radically changes life for a few hours or even days.

It’s similar if an essential appliance just stops working one day, such as your fridge or hot water system, or if a beloved pet gets sick.

In a day and age where everything has a cost, unexpected events usually mean unexpected expenses.

That means as well as we suffer some level of shock, the same thing can happen to our finances.

‘An unexpected expense is one that you have not planned for or previously known about,’ says Behavioural Money Coach Lea Clothier.

Even some positive surprises come with costs, such as pregnancy or when a marriage proposal gets accepted.

An unexpected windfall can radically change our financial reality, too, though that isn’t the subject of this blog.

Here we want to look at those unexpected expenses that can threaten to derail our financial plans and create financial stress.

‘It is possible to reduce the shock of unexpected expenses and the financial stress they cause,’ Ms. Clothier says.

Dealing with a sudden financial shock

If an unexpected circumstance means you owe money and can’t see how you can pay all or even some of it, the first essential point is to communicate this to the person or organisation you owe it to

‘Putting your head in the sand like an ostrich may be a temptation when faced with acute financial stress, but it won’t work,’ Ms. Clothier says.

‘Doing that could cause you more financial stress with penalty payments and fees,’ she says.

If it’s a problem, you pay to fix it; avoiding the issue till the last minute could cost you more.

Think about that: would you rather book a plumber to look at your faltering hot water system when you know it’s playing up, or call one out at 6 pm on a Sunday when they can charge whatever they want?

It’s essential to assess the priority of the expense properly, Ms. Clothier says.

‘Can it wait until next month? Is there an alternative option?  Can I arrange a better payment option? Do I need to spend this amount on it? Is there a less expensive option?’

Another crucial point to make here is to avoid the temptation to borrow quick and expensive credit when faced with the debt.

We strongly advise against borrowing money to pay a debt too often that creates disempowering financial situations known as debt traps or debt spirals.

Debt spirals can lead to a life of chronic, debilitating financial stress.

So, look at all other options before borrowing to pay a debt.

It is possible to arrange a payment plan for most debts – if you contact your creditor and are very clear about what you can and cannot do.

‘Communicate with the creditor or person you owe the money to. You may be able to negotiate a payment plan or way to help you manage the expense,’ says Ms. Clothier.

Getting past an unexpected expense is likely to mean a change to your other spending for a month or so, maybe longer, as you shift money around.

To do this, you may need to cut back on spending in the short term.

If you don’t have access to cash reserves to cover this expense, and you’ve determined that the expense must be taken care of, then you’ll need to review your budget to see where you can make some changes to try and cater to this expense.

‘Review your budget – where can I cut something this month? Is anything in this not absolutely essential?’ Ms. Clothier says.

‘Can any other expenses be put off for a month?’

Before you decide to borrow money, determine if you can raise money some other way, for example, selling something of value you don’t need/use anymore?

As a last resort, you may consider asking for a temporary increase in a credit limit you already have.

Unexpected expense or unplanned expense?

This is another crucial point on this subject.

Sure, acts of God can’t be accounted for – even though most can be covered in a way that won’t financially ruin you. We’ll return to that.

But many unexpected expenses are better described as unplanned expenses. Or costs we just didn’t think through or forgot entirely.

It’s important to get honest with yourself on this point. Is there any way you could have seen this expense coming? Or was it genuinely impossible to have predicted it?

Once you start to keep better track of your expenses, you will begin to see many of these are just one-off future expenses.

Where people go wrong with unexpected expenses

The primary way we go wrong on future expenses is by regularly putting aside small amounts for more one-off significant expenditures.

‘People are often surprised by unexpected expenses such as a wedding, Christmas, holiday or even home maintenance pr repair costs,’ Ms. Clothier says.

Rather than looking ahead and thinking through what might or could happen and putting aside a regular amount towards these, people get blindsided by big bills that break their budget.

Many people take an “it won’t happen to me” approach and plan for the unexpected.

They don’t think about what could crop up financially if something were to go wrong with their health, possessions (home, car, and other assets) rather than brainstorm what could potentially go wrong and work towards creating a cash reserve or buffer that would cover this,

Borrowing to cover unexpected expenses is a significant way people make the wrong choice. That includes using credit cards.

‘Turning to high-interest credit options (such as credit cards) to manage expenses can add pressure or strain on future cash flow as it creates new ongoing expenses (i.e. the expense of paying the credit card back, plus the interest),’ Ms. Clothier says.

Another way is that they may try to ignore the expense or try the ostrich approach of burying their heads in the sand, hoping it might go away.

If you know you’re going to have problems paying unexpected expenses, the sooner you can speak to the creditor, the better.

There are often options, including payment plans, etc., that can be arranged if we are upfront and willing to work with them to find a solution within our budget.

How to stop unexpected expenses derailing us in the future

‘Having a plan or strategy to manage unexpected or emergency expenses can significantly reduce your financial stress,’ says Ms. Clothier.

It can also support you to stick to a budget, save and build wealth for the future. Failing to have a safety net or plan can be very stressful if you are faced with a surprise or unplanned financial obligation

Being able to develop and maintain a cash reserve is a great way to manage.

This is all about planning.

Once we start to pay much better attention to our finances, we plan ahead naturally and learn to put money aside if it is possible.

We also realise there are even ways to put money aside for things like fire, flood, or health emergencies – by taking out insurances to protect against these expenses

It’s a valuable exercise to make a list of all of the so-called unexpected expenses you’ve experienced. It might look something like this:

    • Medical expenses;
    • Prescriptions;
    • Doctor/Dentist bills;
    • Unplanned school fees;
    • Kid’s expenses such as sports, activities, trips, and other expenses;
    • Vet bills or animal care;
    • Membership Renewals / Subscriptions;
    • Car Maintenance, Registration;
    • Home maintenance and repairs;
    • Weddings;
    • Gifts for celebrations, birthdays + parties;
    • Talk of interest rates going up; and
    • A family member starting to become unwell.

‘There are also likely to be other predictable expenses that you can add to your list that are more specific to you,’ Ms. Clothier says.

How many of these could not have been predicted?

Estimate the cost of these expenses. Estimating the costs of upcoming expenses will help you make a plan for managing them.

Review your bank and credit card statements to see what irregular expenses pop up, or research what the cost might be if you were to face these expenses in the future.

Build these expenses into your budget or spending plan.

When you go to do next month’s budget or spending plan, review this list of items to see how and where you can incorporate irregular expenses into your budget.

These steps shift your focus to planning for these unexpected expenses instead of being surprised by them.

KEY POINTS

    • Don’t borrow to pay off an unexpected expense.
    • Don’t bury your head in the sand.
    • Talk to the person or organisation you owe money to – asap.
    • Are your unexpected expenses just unplanned costs?
    • Develop a plan for unexpected expenses.
    • List all possible future/irregular expenses.
    • Build these costs into your budget.
    • Consider whether insurances may be necessary.
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Why you need to stay mindful with your use of ‘buy now pay later’ services

Buy now pay later

Buy now pay later.

Popular new payment services like Afterpay, Openpay, Zip Pay and soon, Paypal’s ‘Pay in 4’ – collectively known as ‘buy now pay later’ services – perform something of a trick in the minds of consumers.

The trick results in people walking out of a store with a television, a carry bag of clothes, and high-end vacuum cleaners before they have fully paid partially switches off a healthy fear of debt.

But like credit cards, they are a form of credit – basically a loan – and with the real potential to increase financial stress in users.

With buy now pay later services, the consumer can purchase items with only paying the first instalment of the purchase value, then paying the remaining instalments in the future over the next 6 – 8 weeks. It’s like a cross between a layby service and credit cards but you get the product or service now.

The appeal of BNPL payment services

Buy now pay later is attractive for the buyer because the buyer had to only pay a portion of the item before they could take it home.

This appeal combined with clever marketing has become hugely popular.

In one recent Afterpay ad, Hollywood actor Rebel Wilson tells her on-screen boyfriend Afterpay is like eating a whole tub of ice cream at once but spreading the calories over six weeks.

This brilliantly captures the allure of the ‘instant gratification’ culture that is not just popular with millennials but with many people in nearly all age groups.

Afterpay boasts on their website they let customers get what they want when they want it, increasing average order value by up to 40%.

It is estimated one-in-five Australian consumers use a buy now pay later service, with over six million active accounts. The Reserve Bank of Australia says Afterpay is most popular with 3.4 million accounts, ahead of Zip Pay with 2.5 million.

The value of purchases made nearly tripled in Australia between 2017-18 and 2019-20, from just over $3 billion to over $9 billion.

Retailers love the services because they give the appearance of a new, cool, easy option when paying for your shopping – one that lets you walk out with products after spending just a quarter or one-fifth of its value.

How BNPL taps into the psychology of consumer spending

Buy now pay later have cleverly tapped into the consumer spending psychology and convinced shoppers to open their wallets – even though they don’t realise that is what they are doing.

Deferring payments is a relief to consumers, a positive feeling that reduces the pain of paying cold hard cash and even the nagging ‘I shouldn’t be doing this’ feeling that comes with using credit cards.

According to Dr Carey Morewedge, Asst. Professor at Carnegie Mellon University, the ‘pain’ of paying feels like it is reduced when using a buy now pay later service because we actually equate an imagined ‘pool of resources’ to having more cash.

M2P’s fintech blog explains the idea in an article titled ‘Factors and Psychology Behind the Great BNPL Allure’.

The larger your resource, the greater will be the inclination to make costlier purchases. For example, when shopping using BNPL, you feel like spending a small fraction of money from a large reserve with no immediate deadline.

So, the pain of paying becomes dramatically less with BNPL.

Whereas drawing a few currency notes out of your pocket seems like you are consuming a large portion of the available fund. Thus the pain of paying in immediate cash payment is more significant.’

Of course, buy now pay later providers know exactly what they are doing.

If a consumer cannot meet their end of the deal – and repay the full price within the agreed number of instalments, they are hit with late fees and charges, which vary depending on the fine print in the terms and conditions of each BNPL service.

It’s a very different mindset to using credit cards, which were first launched in Australia in 1974 and have peaked in usage in the past decade.

In 2020, there were 14.8 million consumer and business credit cards in Australia – more than one for every adult.

As credit card use has declined, the card companies have tried various marketing ploys to boost the use of their services, such as loyalty points schemes to 0% balance transfers.

But because so many people got into trouble with the complex and expensive interest payments on credit card companies, providers go out of their way to make it clear how repayments work.

According to Illion, Millennials under the age of 30 are twice as likely as their parents to fall more than two months behind in their credit card payments, suggesting they have greater difficulty balancing spending and debt, regardless of their credit limit.

The perils of buy now pay later services

The perils of credit card misuse are now well-known and widely understood. But the perils of buy now pay later are still developing as they are relatively new.

Afterpay, Zip pay, Openpay and equivalents remain relatively unregulated compared to the banks – meaning the gloss has not yet come off the services.

The perceived ‘win: win’ does not consider that our spending behaviour sometimes doesn’t make sense – for instance, how we can spend money based on our need to distract or ‘feel’ better rather than our need to stay within our limits.

Who could say they have never spent without thinking through all the consequences of a purchase? Probably none of us.

While it is entirely human to do so, it is the definition of mindless spending.

According to the Australian Financial Review, in 2020, Afterpay made $70 million from late fees, representing 20 per cent of its revenue.

The Australian Securities and Investment Commission also found that one in five buy now pay later customers were regularly missing payments.

An alarming half of users aged under 29 had taken out other loans to pay their buy now pay later debts.

How to use BNPL payment services safely

Just because buy now pay later services are relatively new, and the mixed impacts don’t make them bad news for everyone.

Andrew Fleming, Founder and CEO of Financial Mindfulness, says; ‘the way to avoid trouble with these payment services is the same as using any type of credit.’

‘Budgeting and sticking to your budget is key to ensure you do not get into trouble with BNPL products, but it also relates to any type of credit product, impulse spending is not wise’ he said.

‘Understand the product properly, including the fine print. Use BNPL services following your spending budget.’

‘The line between safe and unsafe use of these services is the difference between spending according to your budget and ‘reckless spending and not paying on-time’, he said.

You’ll have to decide for yourself what constitutes reckless, but it’s safe to assume that putting everyday shopping on instalments is not sensible.

To make the most of buy now pay later services, the optimum state of mind is one of financial mindfulness, which we define as ‘having awareness and paying attention to your finances and financial behaviours’.

But you have to hand it to the Founders of Afterpay, who discovered early the behaviour change with Millennials preferring to engage in cashless and credit-free spending lifestyles.

They have become a huge success story. The company was started 7 years ago and recently sold to Twitter founder Jack Dorsey’s Square for $39 billion making it the largest deal in Australian corporate history.

Buy now pay later
Buy now pay later
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Lowering financial stress and stress in general

Lowering financial stress and stress in general

Lowering financial stress and stress in general.

Financial stress is debilitating; it can add a layer of unwelcome, even toxic, distraction to everyday life.

It can affect our relationships and our productivity at work; plenty of research shows this, including research commissioned by financial mindfulness.

But people under financial stress don’t need research to confirm it, anyone under financial stress knows how it slows us down and makes everything that bit harder.

Financial mindfulness is a tool for reducing personal financial stress using mindfulness, goal-setting, and financial literacy.

“It’s useful to remember financial stress is a type of stress – and it’s helpful to look at what stress actually does to us,” says Dr. Michael Takagi, a Melbourne clinical neuropsychologist.

It’s also important to remember there are a variety of well-practiced stress reduction techniques which we can use to help address financial stress too.

Stress and financial decision-making

Stress can have a profound impact on us, Dr. Takagi says.

When it becomes chronic, it can adversely impact our lives in many ways, including our sleep, cognitive functioning, physical wellbeing, and overall health.

“Imagine trying to make a complex and impactful decision when you are sleep deprived, your scatterbrained and not able to focus, you have a headache, and your back is sore, and you feel rundown and exhausted,” Dr. Takagi says.

“It is not a recipe for good decision making.”

In the short term, we are more likely to make decisions that alleviate our immediate need for relaxation and help us to feel better, so-called retail therapy, buying expensive takeaway meals, drinking, or even gambling.

Doing those things to try and ‘feel better’ can add to our financial stress.

“In the long term, we are less likely to delay gratification and less likely to make the decisions that are necessary for long-term financial stability,” Dr. Takagi says.

Stress management techniques can help us reduce our overall stress levels, reducing the adverse side effects of stress, which helps us make better financial decisions.

Valuable activities for stress reduction

In general, exercise is among the best options, Dr. Takagi says.

The specific type of exercise is less important than ensuring you regularly do it. As an example, gardening can be a good option that people may not consider exercise.

While gardening doesn’t usually raise the heart rate, many people find it useful – you’re outside, getting fresh air, and exerting yourself.

These activities produced stress-reducing brain chemicals such as serotonin, dopamine, and endorphins, where you exert yourself.

“Going for a walk with a friend is another excellent option; you’re exercising and socialising at the same time,” Dr. Takagi says.

Socialising with a trusted friend produces stress-reducing brain chemicals such as oxytocin.

Similarly, team sports, going to the gym, and running are all good options.

The primary considerations should be enjoyment and a degree of physical exertion, which produce the feel-good natural highs of dopamine and serotonin.

“If you enjoy doing something, you’re more likely to make it a part of your routine,” Dr. Takagi says.

Including someone else can help too – you’re more likely to exercise if there’s someone to do it with you, keeping you accountable with the bonus of that important social aspect.

Mindfulness is also an excellent stress reduction technique, particularly with stress caused by financial stress.

Mindfulness has been shown to stimulate all the ‘happy’ brain chemicals, especially serotonin and (when we stick to a regular practice) dopamine.

The anti-stress benefits of positive routines

Stress reduction techniques and activities do not have to take a huge part of the day, and they can change, Dr. Takagi says.

This could be incorporating a morning walk into your routine a few days per week, a 10-minute mindfulness session before you start your day, or a 5-minute progressive muscle relaxation session before you go to bed.

“The most effective stress management techniques will vary from person to person and vary on when they are most effective during your day,” says Dr. Takagi.

“Identify the stress management techniques that are most effective for you (e.g., breathing exercises, mindfulness, walking) and then work on incorporating them into your routines,” he says.

This means getting curious about what works for you. Try something and if it doesn’t help reduce your stress, try something new.

You can maximise the benefits of stress management techniques and activities by incorporating them into a routine and continuing to do that routine.

We need to simplify how we do this, and one way to achieve that is to do positive things at the same time every day.

Many people find it effective to have a stress-reduction routine in the morning while having plenty of energy before their focus is taken up by work.

This could look like some meditation and a phone call to a friend when you get up, or a brisk 15-minute walk, then you begin with a firm foundation for the day.

But if it works best for you to have a stress-reduction routine after work or in the evening, then try and stick with that.

The main point here is to have a routine and try to stick to it. If you miss a day, don’t worry, just start the next day again.

KEY POINTS

    • Financial stress can be reduced in several ways.
    • A program specifically aimed at reducing financial stress is beneficial.
    • Financial stress is a type of stress, and there are many stress-reduction methods.
    • Exercise is one of the best, so is socialising and mindfulness.
    • Experiment and get ‘curious’ about what works for you.
    • Incorporate stress-reduction techniques into your daily routine.
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How can we reduce mortgage stress

Top five reasons people get into mortgage stress

How can we reduce mortgage stress.

Despite sustained, record low interest rates, repaying a mortgage remains one of the most significant financial stressors for many Australians.

According to Moody’s Analytics, 20 percent of all Australian households are said to be under mortgage stress in Australia.

Government figures record just over a third of Australian households has a mortgage.

Considering the size of those mortgages, it’s hardly a surprise that the debt stresses us out.

ABS data shows the average mortgage across Australia is $728,500.

In NSW, it is $939,700 and in Victoria, it is $785,000.

Types of mortgage stress

At this point, it is important to define mortgage stress.

Mortgage stress is a technical term describing spending more than 30 percent of income on mortgage repayments.

That is the type of mortgage stress Moody’s refers to above.

However, another type of mortgage stress goes along with the technical definition and is real and consistently impactful on people.

This is the mental and emotional pressure of financial stress caused by being fearful, even panicking, about what might happen if your household could no longer afford the current mortgage repayments.

Why does mortgage stress happen

In short, the size of mortgage debts – for many Australians, it is the most significant loan they will ever repay.

When households are squeezed into paying over 30 percent of income towards meeting mortgage repayments at a low-interest rate, even the merest hint of a change in interest rates causes physical and emotional stress.

Don’t forget how the emotional significance of owning a home – and the fear for some of losing one – it’s a heavy burden for a lot of hardworking Australians.

As interest rates have remained low, mortgagees have become used to their repayment levels, meaning any increase in interest rates will only exacerbate mortgage stress.

“I think what is important though to realise that whilst most people are currently coping with their mortgage repayments, there is still a lot of anxiety about the future with regards to possible interest rate rises, security of employment and property prices becoming unaffordable or property prices going backwards in the future,” said Hamish Ferguson, Director of Vision Property and Finance.

How can we reduce mortgage stress

There are several successful methods of reducing mortgage stress. They include:

  1. Ensuring you are paying extra on your mortgage to build up a safety net or buffer which can be used when interest rates rise;
  2. Fix your loan if you are worried about rates going up and only have a small weekly surplus to your budget. This way, you won’t have to concern yourself with increased repayments for the time frame you have fixed for; and
  3. Review your expenses. Often when we are stressed, our level of comfort spending increases. We need to be aware of this and monitor our spending on those items that we tend to purchase when we are stressed. Eating out, TV subscriptions, buying gifts for ourselves or others, and upgrading items such as mobile phones, TVs, cars, and fashion.

How can we stop mortgage stress derailing our finances and relationships

What if we can’t eliminate our mortgage stress. How do we stop it from taking a heavy toll on our lives?

Perspective is so important. If we focus on the negative, on the difficulty of financial strain, then our relationships with money will remain challenging.

An example might be rather than saying ‘I don’t have enough money’. Instead, try to say, ‘well, at least I am still able to meet my commitments.

When it comes to relationships and money, transparency and openness are essential.

We can’t stress enough how important it is to ensure you are communicating with your partner and family and not bottling up worries and problems.

Being mindful of money goes hand in hand with good communication.

As we touched on, so much of the mortgage stress equation is about acceptable margins. Small changes – either way – in interest rates can have a significant impact.