IntroductionMoney Madness and Its Cure

Did you ever make an investment because you got a tip from a friend, or because a self-styled Wall Street pundit on cable TV came up with a “hot pick”?Ever go in on a time-share or even a summer rental because everybody you knew wasdoing it, it seemed like a great deal, and you just got caught up in the excitement?Ever plunk your credit card down on the store counter for something you couldn’t reallyafford—maybe an elegant cashmere sweater, or an antique porcelain bowl, or a 42-inch high-definition TV—because you believed buying it would make you happy? And heaven knows youdeserve such a jolt of happiness given the mood you’re in, or the day you’ve had, or the fightwith your spouse this morning.

Speaking of spouses, have you kept your income a secret from yourspouse? Or kept to yourself what you paid for that jacket you’re wearing? Doyou have a separate, secret credit card or bank account you haven’t botheredto talk about, much less share with your spouse?

If you answered yes to any of these questions, you have money madness.Don’t worry. You’re not alone. The condition I call money madness is nearly universal,and by acknowledging you have it, you’re on your way to the cure and all the rewards of beingmadness-free.Those rewards are substantial. Money madness is at the core of all our distress and worryabout money, and it keeps us from getting as much money as we could get, living as richly as wemight live, and enjoying the wealth we have. Cure your money madness and your distressdissolves. Cure your money madness, and you’ll get richer, feel richer, and enjoy what you have.

Financial how-to won’t cure your money madness. There’s plenty of financial how-toaround—24 hours a day, seven days a week, if we like—in books and magazines, on televisionand radio and across the internet. But money madness undermines our ability to do the how-to. Itmakes us deaf and blind to the information and advice delivered to us from all those media, onall those channels. The result is that

money madness impairs our income. It wounds our networth. It deprives us of joy—not just of joy in the wealth we have but in the life we’reliving.

So I use the word “madness” deliberately. Your money madness is not just anidiosyncratic quirk; it’s unwholesome, and it’s harmful. Remember the old saw about thestick-up man offering you the choice of your money

your life? Money madnessdiminishes both. That’s why it’s time for a cure.

Money is the Great Taboo

What is money madness? It is the irrational behavior that otherwise rational people, likeyou and I, are driven to when the issue is money.We can count on the fingers of one hand the number of people who made a fortuneovernight by taking a flyer on a hot stock tip—and it would probably be four people too many.But we’re so tempted by the fantasy of instant wealth—of changing our lives overnight—thatwe’ll dip into our savings to try for it. That’s irrational; it’s acting directly counter to what weknow to be the reality—namely, that our chances of getting rich overnight are infinitesimal. It’smoney madness.We go in on the time-share deal that all our co-workers or friends or family members aregoing in on because it’s there, because it sounds like an opportunity we can seize effortlessly,

because it makes us feel we are getting some kind of advantage we couldn’t have gottenotherwise. But it may make absolutely no sense as an investment, and it may make even lesssense, financial or otherwise, to be committed to the same vacation in the same place every year.That’s madness, too.We stand at the store counter, our jaws clenched with determination as we almost hurl thecredit card down to buy something we don’t need with money we don’t have. It’s what I call an“anyway purchase”—as in

I’m going to buy it

anyway

!—

even though it won’t really get us thelifelong happiness we’re trying to buy, and even though the consequences can be costly.Madness.We pride ourselves on the openness of our relationship with our spouse—till the spouseasks what we’ve spent on that new jacket. That’s when we shut right down. Money is the greattaboo, the place in our lives we don’t want anyone else to enter. So our bodies tighten and our mouths are drawn into a thin line, and we close ourselves off from intimacy—which erodes therelationship altogether. It’s as if we had produced the ultimate R-rated movie,

My Money Life

— no one under the age of 100 admitted without a parent.If that isn’t madness, what is?

Money Madness Has Big Consequences

Money madness is everywhere. It shows up in pretty much everyone, and it is as variedand individual as fingerprints.My friend Steve makes millions and has more credit card debt now than when he made$30,000 a year. Back then, he couldn’t pay his bills. He still can’t. The reason? He overspends.