CONQUER THE DEBT DRAGON PART 2

In the last article, we unpacked the landscape of debt in South Africa. We also explored the stories clients and the world creates that lure them (the clients) into the Dragon’s Den of Debt.

In this part, we will explore the red flags that indicate over-indebtedness, which we can explore in a Financial Coaching Conversation to create awareness and further open it up with the client's permission. We will also analyse some of the first steps, new moods and narratives that we can explore with our clients to help them escape the Debt Dragon’s Den. In part three, we will explore the frameworks and tools we can use to support our clients on their journey to financial freedom so that they can enjoy their best lives now and in the future.

AWARENESS

?As financial coaches, our clients need to be aware that their current narrative (mood, body and language) results in them being over-indebted or could lead them into the Dragon’s Den of Debt.

Here are some of these red flags we can be on the lookout for:

• Clients spent their income within the first few days of the month.
• Clients do not pay their bills every month.
• Clients only pay the minimum amount on their credit and store cards, and the balance is slowly creeping up.
• Clients do not know how they spend their income and rarely balance their accounts.
• Clients paid cash for clothing and other goods in the past, and now they are charging it to store accounts.
• Clients are unaware of their debt’s terms, durations, interest rates, and balances.
• Clients take up credit in different forms, for example, personal loans, credit cards, store credit and microloans.
• Clients consolidate credit at regular intervals.

We, as financial coaches, must be curious about what we observe. Our function is to explore, with our client’s permission, which of the behaviours mentioned above are grounded and how are they currently serving our clients or not, and the impact on their personal and financial well-being over the long run.

CONQUER THE FEAR OF THE DEBT DRAGON

We can see a story the client told themselves led them to accumulate debt which created significant anxiety.

Before we can start coaching our clients, we need to determine their emotional state. Depending on their level of anxiety, they can be experiencing a flight, fight or freeze state, this can lead to a form of self-imposed helplessness. Financial coaches can simultaneously reduce financial anxiety and stimulate the physiological arousal of clients so that they can move clients to more helpful states.

Physiological arousal is the person’s precursor for action. Phases of arousal include being relaxed, and being excited (Grable, et al., 2015, pp. 1 -7). ?In ontology, we can ask what mood will be the most resourceful for the client to take action?

Planning intention, taking into account clients’ anxiety levels and physiological arousal, can be mapped across these four quadrants:?

Firstly, it is important to note our own arousal levels to create a calm and non-threatening environment for our clients. Research shows that you can create a calming environment in physical office space by removing items like screens that show the news and economic newsletters. Instead, replace them with educational literature, plants, and lifestyle magazines that can stimulate wonder and novelty. Furthermore, client interview offices designed like a sitting-room with low tables and soft chairs create the least threatening and most conducive environments to encourage planning intention?(Grable, et al., 2015, p. 4).

?Points to take into account when engaging with clients with financial anxiety:

• The longer the client has experienced financial anxiety, the lower the client’s intention will be to engage in a financial planning discussion and make changes.
• Physiological arousal can further be stimulated through conversations depending on the particular client’s underlying reasons for experiencing financial anxiety:

Exploring what assertions, beliefs, and assessments are not serving them so they can explore new possibilities.

Exploring and grounding their feelings, as feelings and assumptions are not grounded assessments. Also, explore what alternative mood other than anxiety will serve them better as mood is a predisposition for action.

Addressing a client’s concerns through expanding their knowledge and building their experience.

Exploring a client’s legacy, values and what creates meaning in their life.

From personal experience, despite mounting debt, most clients have a roof over their heads, food to eat, and clothes to wear. Things are not as bad as perceived by them.

It is vital to get them to detach their debt from their identity. They are not their bank balance or the sum of their debt.

It is further essential for them to change their narrative, where they realise that, “Their creditors do not own them; they only owe the creditors money, not their life (Mundis, 2012, p. 56).”

?

• Continually adapt your approach based on your client’s anxiety and physiological arousal levels, as they need to take accountability for their debt and take action. (Grable, et al., 2015, pp. 15-16). ?Their current debt is temporary, and by responsibly taking action, they can live in prosperity and abundance and be free of debt for the rest of their lives.

?My Dad had a quote against the wall above his favourite reading chair that read, “Today is the first day of the rest of my life”. As a kid, I did not comprehend this quote. However, as I grew older, I understood the wisdom in these words. In this context, our clients have today to make a difference to their financial position, and what is the next step they can take?

?THE MOST CRITICAL DECLARATION YOUR CLIENT WILL MAKE

?Jerrold Mundis, as well as Debtors Anonymous, have the following declaration that forms the basis of conquering the debt dragon:

“JUST FOR TODAY, ONE DAY, DO NOT INCUR ANY NEW DEBT”

And this becomes your lifelong declaration.

-?????You are only committed to today. Tomorrow is a new day.

-?????No But’s

Jerrold Mundis makes the following powerful statement:

“You cannot Get Out of Debt by Borrowing More Money”

“No more than an alcoholic can become sober by having another drink” (Mundis, 2012, p. 80)

TAKING CONTROL

?We assume that our clients and we have achieved the following by this point:

• Awareness – Our client has admitted that they have a debt problem and they explored what narratives lured them into the debt dragon's den.
• Mood – They conquered the anxiety mood and replaced it with a mood that new possibilities can unfold as they pay off their debt and create a new debt-free life of opportunity and peace of mind.
• Mood – They moved from a space of fear (flight, fight and freeze) to taking deliberate action, focusing on what is possible now with the resources they have.
• Future Action – They declared: “Just for today, one day, I will not incur new debt.”

Our client has changed their attitude or structure of interpretation of how they view debt and their financial future. Our client lives in a mood of acceptance, possibility, and courage. Let’s be honest; we know that our clients will experience moods of resignation and anxiety as they conquer the debt dragon. However, as they gain traction, these moments will be less and less. ?

Our client is ready to take action and will be open to suggestions from us on what tools and processes they can follow to support them on the journey to being debt-free and enjoying financial freedom. We will explore the tools and frameworks in Part 3.?

THOUGHT LEADERSHIP - JUNE 2022

If you missed our thought leadership session, we had such a great conversation with our astute South-African panel Panel Jasmine Kinsman from Nelson Mandela University, Deepa Lala Financial Coach and Dr Prince Sarpong from the School of Financial Planning Law at The University of the Free State. How open are you to your client's unique financial planning needs?

PURPOSE-DRIVEN FINANCIAL PLANNING

A planner's guide to understanding and helping clients build and sustain financial prosperity is available in Kindle format on Amazon.

May you enjoy the coaching conversation with your clients until we meet again.

Regards,

CRAFFIES YOUR CRAZY FINANCIAL COACH