Personal Finance: Financial freedom, the TWAHCD way

In one sermon, a priest related a funny yet meaningful incident. As people were lining up for communion, he recognized one guy as the son of a lady parishioner whom he knew very well but hadn’t seen for a long time. His attention was so focused on the particular communicant that when it was the latter’s turn at the altar, the priest forgot to say the usual formula and instead blurted out, “Kumusta na ang nanay mo? (How is your mother doing?)” The priest went on to explain that the incident was a result of TWAHCD —that is, thoughts turn into words, words turn into action, action turns into habit, habit develops into character, and character leads to destiny.  The priest’s thoughts about the communicant and his mother turned into the words that he used to greet the communicant. Of course, the priest explained further that when applied to other situations, and for as long as the action is done over and over, it will turn into a habit, which will eventually be integrated into the character of the person and inevitably shape his destiny. This jibes with what Aristotle once said: “We are what we do repeatedly. Excellence, then, is not an act, but a habit.” TWAHCD can also be applied to practical matters in personal finance. Say you want to get out of the seemingly perennial debt trap. For starters, you start to think about the goal of being debt free, particularly being credit card-debt free.  You toy with the idea for a couple of days. You may initially lock it up in your subconscious but it manages to resurface, perhaps because of the nagging pains from cash shortages, budget constraints, bills, collection phone calls and letters, and the feeling of being in the payday to payday treadmill. The thoughts become strong enough that you one day resolve to do something about your credit card-debt problems. After expressing your goals into strategic (and maybe even written down) plans—such as cutting back on unncessary spending, asking the card company to lower your credit limit, reducing your cards to one by cutting up the rest, doing balance transfer to reduce interest, increasing your income and accelerating the repayment of your debts—you spring into action.  Each day is a tough challenge. Forcing yourself to go straight home after work to avoid gimmicks is so square. Staying home on most weekends instead of going to the mall is a bore and a penitence, especially during summer.  Saving a fixed portion of your pay to accelerate credit card-debt payments and then build up your savings requires immense fortitude.  Despite all the temptations to give up and take the easy road, you trudge on. Soon enough, your system becomes dull to the pangs of starving yourself of earthly desires. You imbibe the habit of saving. Now, the taunts of your officemates about being square bounce off like raindrops on an umbrella. Saving becomes so automatic and essential to you that skipping any opportunity to do so gives you a gnawing sense of inadequacy.  Soon enough, you reach your goal, however noble it may be. But because you have developed that character of being wise in spending and saving, you cannot refuse the lure of continuing on your journey, of broadening the scope, of fulfilling your destiny of becoming financially free. TWAHCD. It’s not French. All it is is simple habit.   Efren Ll. Cruz is a registered financial planner with the RFPI USA and is a member of the Financial Planning Association (USA).  He is author of the bestselling book, “Pwede Na! The Complete Pinoy Guide to Personal Finance” and a “Personal Finance Coach.” He is also the chairman and president of Personal Finance Advisers Philippines Corporation. Questions about the article may be emailed to cruise@skydsl.com.ph or efren7962@yahoo.com. Efren may be reached at the same email addresses for the scheduling of consultations and personal finance seminars. This article does not constitute nor forms part of any offer or solicitation of an offer to buy or sell any securities. Join the Seventh RFP Program (July 7 to August 25, 2007). Visit www.rfp-philippines.com or inquire at info@rfp-philippines.com/Tel. No. 6342204.

 

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