Making Friends with Your Financial Fears Part One

As we plan for retirement, we have many decisions to make and sometimes fear of becoming poor (again) makes us afraid to make tough decisions. The following article can help, Part one for today and part two will be published tomorrow. The article was written byh a wealth coach and makes sense to me, I hope it helps you as well

Making Friends with Your Financial Fears  By Mark Ford, wealth coach, The Palm Beach Letter Wednesday, May 30, 2012

The fear of losing something you value is completely natural. And it is also healthy as long as the fear is not too great. But when fear is great – and I sensed that for this person it was – it can be destructive. Unbridled fear produces two negative responses: immobility and rashness.

When you fear too much, you won't take the positive actions you suspect you should. When opportunities are presented, you'll shun them for fear of the potential dangers and downsides.

Tim Mittelstaedt, a research analyst at The Palm Beach Letter, sent me the following note after he read the first draft of this essay:

I've wanted to buy rental real estate since high school more than 13 years ago, but fear has prevented me from doing it all of these years. And at times I've wanted to start a business, too, but fear got in the way. Do you have ideas on how I can overcome my fears? 

Tim isn't alone. Years ago, when gold was trading at around $500 per ounce, fear was the reason why so many of my friends and colleagues were afraid to invest in gold, despite my urging them to do so. It is the reason that many of my Palm Beach Letter readers are ignoring my advice to buy real estate now.

It's important to remember that the major media are almost always wrong about investing. When prices skyrocket, they write stories about people making money. When prices drop, they write stories about people losing money. Most readers have a hard time disbelieving the major media. They wonder, "How could all of these pundits on TV be wrong?" So they stay on the sidelines, waiting for positive confirmation from their favorite newspaper or television channel. But that never comes until it is too late.

Some investors who don't trust the major media are fearful, too. They are persuaded by what they read in the alternative press about government debt and worldwide economic collapse. So they put all their money into gold or bury it in their backyards. And when gold soars, they are afraid to cash in and invest in the stock market. The end result is just as bad for them as for those who foolishly trust the mainstream media.

I see how fear impoverishes people in the world of business all the time. Smart, hard-working people who want desperately to quit the nine-to-five routine and start their own businesses fail to do so because they can't get the threat of failure out of their minds. I spent 10 years writing books and essays on entrepreneurship and taught hundreds of thousands of people the secrets to business success. But only one in 10 was actually successful. When I met them at conferences and got to know them, the reason was obvious: They were simply scared.

If you fear losing money too greatly, you will never implement the knowledge you gain. You may invest money in investment education – thousands and thousands of dollars over time – but you won't put the ideas you learn into action. Instead, you will do only the few things you are comfortable with. As a result, you will make no progress toward your wealth-building goals.

So that's what I want to talk about today: How to make friends with your fear of losing money.

This is how I did it.

I was 26 years old. I was halfway through a two-year Peace Corps stint as a teacher of English at the University of Chad. (Chad is in Africa.) My new wife and I were living in a three-room, plaster-coated mud house. We had no kitchen, and the bathroom was a latrine.

But we had a porch that overlooked a garden of Eden frequented by a family of monkeys and a dog that barked at them insanely when they hung over the roof, begging for food. We also had neighbors who became lifelong friends. On weekends, we had parties at which African friends and Peace Corps volunteers would drink copious amounts of Gala beer and dance madly until the sun rose