My third read in the 52 Books in 52 Weeks series was the The Money Trap. The author of The Money Trap, Ron Gallen, has a formal education in business, but has real world experience helping people with addiction recovery. This combination makes for an interesting analysis of those suffering with various forms of money additions. Gallen contends that those with money disorders can be divided into four main groups:
- Overspenders - Overspenders, the largest of the four groups, live life way above their means. You probably know several serial overspenders in your own life. As Gallen points out, overspenders buy things they know they can’t afford, “damn the consequences.” They intentionally drive themselves further and further into debt by buying things they can’t afford in an effort to boost their poor self esteem, or relieve some unrelated anxiety.
- Workaholics – This category almost seems dated. We rarely call people “workaholics” these days; we call them “dedicated” or “hard working.” As Gallen points out, that alone is a sad commentary on where we’ve come as a working society. Workaholics sacrifice relationships with families, friends and even their own colleagues in the name of getting ahead. They justify this sacrifice with the promise of some future promotion, or partnership, that will bring them floods of money, and at that point they can “back off.” Of course, workaholics never do.
- Money Obsessives - Interestingly, money obsessives can suffer from the disorder regardless of their level of wealth. Both the broke and wealthy are equally at risk of obsessing over money. Essentially, anyone who has money at the center of their lives is a money obsessive. Many pour over spreadsheets and ledgers for hours each evening to update bank account balances, stock portfolios, or debt accounts. Not that updating your checkbook is a bad thing, but anything can become obsessive if done at the expense of all other areas of your life.
- Underearners - Underearners develop money disorders for many of the same psychological reasons Overspenders do. However, underearners are polar opposites in terms of earning and spending. They tend to shrink their world to avoid all forms of external temptation. Sure they want things too, but their reactions are much different than that of Overspender. Underearners acknowledge when the cannot afford something, and tell themselves that they could never afford it. Nice things are reserved for rich people, and they will never be in that club. Underearners would be best represented by “Eor” from Winnie the Pooh. You know the type, “Eeeee-orrrr…poor man can’t get ahead.”
The remaining sections of The Money Trap go on to provide some real world examples of representatives from each category. Gallen has consulted with people on each extreme end of the money disorder spectrum. You’ll meet some habitual overspenders, a few workaholics bent on getting ahead at their jobs at all costs, a couple who obsess over money, and a classic underearner. I found a little bit of myself in each example, particularly when I looked back at past life stages. Early in my career I was a workaholic, putting in way too many hours for the returns. I’ve caught myself obsessing over money at times (mostly the lack of it) to the detriment of relationships with loved ones. Interestingly, my underearning phase came when I was making a decent salary, but felt so broke thanks to previously accumulated debts that I went into a deep spending diet, cutting any excess from my own spending plan. I’m trying to loosen up some, but the ultra-frugal inside of me still leans towards this underearning disorder.
The final three or four chapters provide the mechanics for getting out of debt and developing a personal spending plan. I particularly like the section on developing a spending plan because it provides more detailed budgeting advice than you typically find in a personal finance book. Gallen provides detailed recommended budget categories along with a great explanation on how to determine a percentage of income to allocate to each category.
At 199 pages The Money Trap is a relatively quick read, but certainly worth it. I recommend it for anyone concerned that they may be suffering from a money disorder.