Bag Lady Syndrome

There was a time when I was young and poor. I was trying to get by on a minimum wage job (which was $3.35/hr. at the time) with a small child. I had hospital bills and school loans to pay. Fortunately, I was renting a trailer for a minimum sum. Unfortunately, it was poorly insulated, and heated by propane. When the propane ran out, I was left with a choice; fill it for $189, or do without. I didn't have that large a sum, so I opted for doing without. Thus began a three month struggle to stay warm. I sealed the windows with trash bags and masking tape, used a kerosene heater for several hours per day to keep the place from freezing solid (and I am very thankful I didn't die from the fumes), and cooked on a single electric burner. My one luxury was a hot shower; to warm up the bathroom, I turned on the electric hair blow dryer and laid it on the counter, then stuffed the cracks around the door with towels and let the room heat up. Dinner was often that staple of poor college students, ramen noodles.

I was young, and resilient, and by working hard, doing without, and saving every penny, I eventually dug myself out of my financial hole, got a better paying job, and settled into a nicer apartment.

It took me six years. Eventually, I got married, we moved into a nice house, and I am thankful that I have a good job that I like and some financial security. But with the constant drumbeat of financial doom for the last year or so, I find the old fears resurfacing. Enter the inner bag lady, or "bag lady syndrome".

According to Olivia Mellon, author of The Advisor's Guide To Money Psychology, "bag-lady syndrome plagues, puzzles, and, in more extreme cases, paralyzes women who want to get a better grip on their financial lives.....It cuts across women of all social groups; it's not like wealthy women don't have it." Several well-known women have admitted to it at various times, including Katie Couric and Lily Tomlin.

Bag lady syndrome is, in essence, the fear that one will suddenly become homeless and destitute; that everything will disappear, including family and friends, and that a once happy and comfortable existence will evaporate into thin air. I don't think "bag lady syndrome" is a recognized disorder; I couldn't find a mention in the DSMV. For many women, though, it is very real. Sometimes it is the result of having been raised in poverty; sometimes, because of a job loss or medical catastrophe that has suddenly wiped out finances at some point in their history; sometimes, it is the result of divorce or widowhood, when they are suddenly on their own, without adequate means of support or financial experience. Many times, there doesn't really seem to be any logical reason for it. The results of bag lady syndrome can range from mild anxiety to outright panic; dreams and/or nightmares about suddenly becoming homeless and destitute; and, more importantly, it can also trigger poor decision making, or no decision making at all.

My own tendencies are toward the obsessive-compulsive end of the spectrum. I can afford nice clothes, and yet I tend to buy most of my items from store clearance racks, even if I have to mend them. I've forced myself to eat food that I really don't care for, simply because I've paid for it. I find deals such as "2 hot dogs for $1.00" at the local gas station virtually irresistible.

So I save, and hoard my money, and that's a good thing, right? Not necessarily. The problem with those of us with bag lady syndrome is that we tend to park that money in a checking or savings account; these days, they're paying virtually nothing in interest. It's hard to argue with us, when so many people have lost their savings in the stock market. In fact, we might even feel a little smug about it. But the stock market is slowly building steam, and those of us who are in our 30s and 40s (I'm 39, of course!) still have a long way to go until retirement. In the end, it's probably better to start investing again.

How do we give our inner bag lady some peace of mind? The best tool is knowledge and a plan. I would give a thumbs up to Suze Orman, who's books and television show have explained just about every facet of financial management to me in a clear, concise manner. I don't believe it's necessary to pay a financial consultant to manage your affairs unless you have a complicated estate or vast sums of wealth. (And, I'm too cheap to pay someone if I can check books out of the library for free!) The main idea is to visualize each and every fear, and come up with a plan to counteract it. For years, I was terrified of losing my job. So I got a second, part time job. Afraid of divorce or losing your spouse? Plan for it now. Sit down and pretend the worst has just happened, then figure out what you're going to do about it. Afraid to invest your money? Don't do it in one lump sum; using an automated plan to invest small amounts every month is not only less painful psychologically; it's also a smart investment choice, as you'll be dollar cost averaging. If you're married, and both of you are working, try an experiment; live on just one income for 2 months, and bank every penny of the other salary. This will give you an idea of how much you really need to get by on, where you can cut back, and as an added bonus, the money you've just saved can be used to pay down credit card debt or use for an emergency fund. (Call it the bag lady fund, if you wish.) Make sure that you have your own credit cards, bank accounts, and retirement account.

You might want to sit down and take a good, hard look at your own intangible resources as well. If you truly fear that your friends would desert you in a crisis, then perhaps you should think about finding some new ones. Discuss your fears with family members, as well as your spouse. If you're not already involved in the financial workings of your partnership, you need to address that immediately.

Build your self awareness. Keep track of your spending; just as it helps profligate spenders to budget, it will allow you to review where your money is going as well. If you are willing to shell out for your teen's coveted electronics, but use a black marker to color the scuffs on your own shoes (oh, yes I have!), then you need to start taking a good hard look at your priorities. The idea is to strike a balance in your life; between security and freedom. You can always start a woman's investment club or social club, by the way, and give your inner bag ladies a chance to socialize as well!