Carl Richards

Carl Richards is a certified financial planner in Park City, Utah. His sketches are archived here on the Bucks blog. His new book, “The Behavior Gap,” will be out in January.

One of the most powerful outcomes of writing about your experience is that you learn things you didn’t know before you started.

The process of sharing one of the more intense experiences of my life, the short-sale of my home, was terrifying. In hindsight, I’m glad I did it because of what I learned. Here are a few of those lessons and answers to some of the questions that readers raised:

I told myself stories: As David Brooks recently pointed out, “people are really good at self-deception,” and I’m no exception. Real people are notoriously good at gathering information, data and “facts” to support the conclusion we want to hear. Often we even call that research.

We are even better at ignoring information that we don’t want to hear. Have you ever noticed how you avoid the scale when you’ve been eating garbage and seek it out when you are eating well? I have wondered if I rationalized my behavior, and the answer is, of course I did. I made mistakes and then looked for a way to make sense of them.

Short sales: A short sale is a negotiated settlement between a borrower and a lender. I worked closely with the bank to explain my situation. The bank reviewed it very carefully, and in the end, we worked something out that both parties felt was better than the other available options.

My wife and I found a buyer for the house at a price the bank agreed to accept. It accepted a loss on the risk it took, and we accepted the consequences on our side of the deal. We lost our home and trashed our credit. Both parties agreed to the deal, but neither party escaped without consequence.

Obligation to society: While I don’t have a debt to the bank, I do feel like I have an obligation to society. This is one part of the experience that I still really struggle with. I know that my decisions had an impact on society as a whole. My individual impact was small, but just like everyone tossing a small piece of trash, it adds up. I’m not sure how I will fulfill that obligation, but I’m pretty sure that it’s part of my life’s work.

That obligation is also a large part of why I do what I do for a living. We have to change the way we deal with money if we’re going to avoid repeating the same mistakes over and over. I have recently found myself really interested in learning from others who have both succeeded and failed because it’s incredible what you can learn from people who have already been there. Maybe, just maybe, sharing my story can help someone avoid the same mistakes.

Security versus securities: One of the things in my story that got the strongest response was how I got into the financial world by applying for what I thought was a security job.

I recently had a meeting with a senior executive at a large research company who told me that he remembered applying for a job after college. It was a window sales job. He thought he would be selling Microsoft Windows software. It turns out it was actually the kind of windows you look through.

I guess I should have included the fact that it started as a part-time job when I was still a full-time college student. I also delivered flowers and worked at Subway. But what followed were years of some of the best training in the industry, a degree in finance and one of the more rigorous industry designations there is.

The point I was trying to make was that life is a journey, and most of the time the path we thought we were on will take a twist, often for the better.

Why I told the story: There’s no good way to address the claim that I wrote the story to sell books. It reminded me of the press conference after Lance Armstrong won his first Tour de France. He was asked how he would respond to people who claimed that his chemotherapy was performance enhancing. As I recall, he said something like, “Let them try it!”

There would be far better ways to sell books than to take your family through three years of hell and then, just as things were starting to feel normal, share it with the whole world.

I decided to tell the story after people I knew asked me for over a year to tell it. These were people who genuinely felt that it needed to be told because it might help others make sense of their situation. Based on the overwhelming number of gracious e-mails I’ve received from people sharing their stories, I think telling my own was the right thing to do.

Getting a second opinion: As my friend Tim Maurer, also a financial planner, says, “Personal finance is more personal than it is finance.”

Because it’s so personal, it’s very hard to stay objective. We are just too close to it to think clearly. Doctors routinely avoid operating on or treating family members and really close friends. After all, that emotional connection could very easily cloud their judgment should something go wrong and require a critical decision during a stressful situation.

When you think about what money represents, it’s easy to see that it’s emotionally charged. Money is about more than spreadsheets. It’s about our most cherished dreams and often our greatest fears. With those stakes on the line, why is it so hard for us to recognize that we shouldn’t be “operating” on ourselves?

Unless you wake up in the morning and see Warren Buffett in the mirror, chances are you need help. Finding someone to act as a sounding board, an objective third party, is worth the effort.

Now I realize that as soon as I say that we have another issue – who? The traditional financial services industry has a well-earned reputation of being untrustworthy. It’s still really hard to determine who is a real financial adviser or even what they do that makes them worth the cost.

But it’s crucial to try. We can seek out a trusted friend, parent, C.P.A. or our lawyer. Our family hired a real financial planner and after working with him for just a few months, I’m convinced we would have avoided many of our mistakes had we hired him five years ago. Just having a rule that before making major decisions you will walk some objective third party through your thinking would be a step in the right direction.

Co-pilot: Getting advice is different from abdicating responsibility. In the end, after all the advice in the world, there is only one person that can make the best financial decision for you. It’s you.

I like to think of this objective third party as playing the role of an experienced co-pilot. This person is there to point things out and to make sure you have thought of alternatives, but ultimately the decision and responsibility is yours. So while I take full responsibility for my decisions, it does help to know that my family now has a trusted third party to help us, hopefully, avoid bad decisions in the future.

Moving forward: No matter what we do, the reality is we all make mistakes. When we make these mistakes, it seems like we should face the consequences, glean the lesson and then move on. We all have a choice. We can wallow in self-pity, blame others and complain, or we can move forward. I’m not sure what role talking about it plays in moving on, but I do know that hiding from the past never seems to help.

One of the things I did learn from my experience is that until you walk in someone else’s shoes it’s impossible to understand what they’re going through and the motives for their actions. I have found myself a bit kinder, a little slower to judge and maybe even looking for ways to give others the benefit of the doubt.

I had zero expectations that sharing my story would change anyone’s mind about what I did. I did hope that it would help people struggling under the crushing weight of financial mistakes. I also had a teeny, tiny hope that those people who vehemently disagree with me would maybe see the other side of the story and understand.

Not agree, just understand.

Article source: http://feeds.nytimes.com/click.phdo?i=3661c980ce946529fcdd2759794a540b