Crazy About Money: Why We Make Irrational Choices (Especially When Moving!)

In this episode of Moving Tips + Tricks, I sit down with Dr. Maggie Baker, author of Crazy About Money, to explore the hidden emotions behind our financial decisions—especially during stressful transitions like moving. With 35 years as a psychologist and 20 years in financial therapy, Dr. Baker shares personal stories, client breakthroughs, and eye-opening concepts like “mental accounting” that reveal why smart people make irrational money choices. We also discuss practical ways to stay calm, avoid shame spirals, and make better financial decisions during life’s biggest changes.

Mariette Frey is a relocation strategist, life coach, and host of the Moving Tips + Tricks podcast. Every week on Smart Move Monday: Coach Mariette’s Corner, she offers free coaching to help listeners move with clarity and confidence. Check out her favorite tools, trusted show sponsors, and more at www.decidingtomove.com. Free spots are limited — coaching roster opens soon!

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Crazy About Money: Why We Make Irrational Choices (Especially When Moving!)

From Shame To Confidence With Dr. Maggie Baker

I am super excited for the episode because I have Dr. Maggie Baker with me. After 35 years of practicing psychology, Dr. Maggie Baker is well seasoned dealing with transitions, especially concerning finances. She has been focused on financial therapy for many years. If you’ve never heard of financial therapy, it’s a practice where she helps clients improve their relationship with money by becoming aware of their long-held beliefs, attitudes and emotions regarding finances.

Dr. Baker lives in the Philadelphia area. She’s five minutes away from her son’s family and her two granddaughters, Haley and Molly Claire. She’s a fun grandma because for fun, she sings in her church choir but she is also into rocket climbing. That’s the coolest thing. She also wrote this awesome book. If you’re on YouTube, I’m putting it up so you can see it. It’s called Crazy About Money, and I am more than halfway through it. It’s been such an easy read. It’s all about teaching you to finance your stories, which I have had so many epiphanies since starting this book. It’s going to be a fun interview. Dr. Baker, welcome to the show.

Thank you so much. I’m delighted to be here and pass on my well-seasoned wisdom to all of your readers. Particularly, I have a lot of compassion for what’s involved with moving since my son and his family just moved from Denver to Philadelphia. The surprises that came along with that move were quite stunning.

Moving Mayhem: Unexpected Surprises When Relocating

What happened? Now, I want to know.

They’re pretty well organized but I don’t care how organized you are. There are things that happen. They were in the process of selling their house and they didn’t know whether it was going to sell. They had somebody who was interested and then they disappeared. They got somebody else and they were sure that they were going to take it. Ultimately, they did and there were screw ups with the bank. They had two mortgages until the sale was complete. They didn’t know when the closing was going to be, so they lived in a pool of uncertainty.

It was stressful enough leaving their jobs, their friends, and their kid’s schools and going somewhere else. The only saving grace is that Alec was coming home and he was getting into by living here but his wife didn’t know. She had grown up in Colorado, so she was anxious about whether she would fit and belong and whether she could get a job because neither of them had tied up a job yet.

Also, just making new friends.

When they got here, the house that they thought that was going to be just fine, ended up talking to the neighbors and the neighbors said that the guy who was selling it was a scammer and had a criminal record. By the way, he left a big hole in the roof that they didn’t see the first time. They were just about to sign the contract. Fortunately, they didn’t. I think they did sign the contract but one of his best friends from home was a real estate agent and he worked very hard to cancel the contract even after it was signed because there were so many things that were wrong with the deal then he found a place for them.

As if it’s not stressful enough.

I know. Can you imagine getting all excited and then going out talking to the neighbors and saying he was basically a criminal. I wanted to say that one of the principles in terms of stress is that if you have one or two things to worry about, that you find stressful. Most people can handle that but moving, you think it’s only going to be two or maybe three. Guess what? It compounds and there’s surprises that you don’t control. I have a lot of compassion for people who have to move.

You have to be very adaptable. No matter how prepared you are, things are always going to throw you off and roll with it and know that these are things that are going to happen. You just have to be prepared on how you’re going to handle it. You’re either going to get mad or you’re just going to let it ride. I always say like, in situations where if it feels very difficult, what if it were easy? What would that look like? Saying that in the moment and verbally processing what that would feel like if it was easy because there are situations that you could just never even imagine that come up when you’re moving.

I don’t want to do an advertisement for Viking Cruises, but if I were in that position, I’d say, “Viking Cruise, come help me.”

“Calgon, take me away.” Remember that commercial?

Take me away. Take care of me and you do it.

From Personal Struggle To Financial Therapy: Dr. Baker’s Journey

You’ve had decades as both a clinician and researcher. What first drew you to specialize in financial therapy? Was there a particular moment that you had or a client tells you a story that was like, “This is a focus I need to focus on?” How did that come about?

Most of what I’ve done in my life has been generated by my own personal experience. When I turned about 50, my husband had taken care of the finances up to that point but he didn’t like doing it. I thought the way he did it, I didn’t like it. To give you an example. He was so aversive about it that one day, I went into his office. As I was just coming to the door, he sheepishly looked at me and I thought, “Something’s going on here.” I go in and I see him about ready to put a $25,000 tax bill on a credit card because it was due the next day.

I thought, “This is no way to handle or manage your personal finances.” Long story short, we had a big talk and I said, “Why don’t you let me handle it because I’m more pragmatic and I like dealing with other people. You’re more academic.” That conversation went on. I took over and started to “straighten” things out, which was great until 2000 came along.

I thought I was doing a pretty good job and I changed financial advisors to somebody who was much more engaged and more aggressive. I tried to protect myself as much as possible but I got very over invested in technology stocks and then in March of 2000, they plummeted. I lost $100,000 and that loss sent me into about a year and a half worth of depression, which was hard.

Like many women, I blamed myself. I privately took it in and used a psychic whip on myself because I screwed up so much. Eventually, about a year or a year and a half later, I remember being in the shower and watching the water freely come down out of the shower head and I started to envy the water but it also made me cry. I sobbed and sobbed. I became a waterfall. Somehow, that freed me to act, which I hadn’t been able to do because it feeds into a sense of helplessness, vulnerability and worthlessness.

I put on my roller skates and joined a financial investment club. I learned how to analyze stocks. I fired the guy that I was working with and I found somebody that was much more conservative. I said, “Get me diversified. I want to have the most diversified portfolio you’ve ever managed.” The other thing is, I had tried to do some stock picking and everything myself through the club. That was a very valuable experience but to do the stock picking and taking care of your own portfolio is so laden with a sense of emotional responsibility that throws you off.

I know according to the research people that have financial advisors are far more resilient in the end than people who don’t. I was very lucky I found somebody who was conservative, understood what I wanted and did what I wanted. Now, I’m in a good situation thanks to his hard work and to my speaking up about what I wanted that would make me feel financially secure.

What Is Financial Therapy? Understanding Your Money Mindset

I imagine that’s why if you are participating in financial therapy with someone like you who has been through it and understands it. It probably is very liberating to be able to talk freely about that shame because money is something that we should be starting in kindergarten. We’re just expected to know some of these things and it’s a travesty on our US schooling. At the same time, it is your responsibility to figure it out. If somebody is unfamiliar with financial therapy, what does that mean? Tell me what happens. How is that different from a financial advisor that you went to or psychotherapy?

What I do is to help people understand what they’re deeply held beliefs are about money and their attitudes about money. That they may be partially aware of, but not aware enough to change their behavior. I’ll give you a concrete example of somebody who was an entrepreneur. He had a business that he started. He was very engaged with the business but as it grew, he got more detached and bored. He thought to himself, “I’m just bored and detached. I’m going to start a second business. That will excite me.” He starts a second business.

What I do is help people understand their deeply held beliefs and attitudes about money. They may be partially aware of these, but not enough to change their behavior. Share on X

Lo and behold, after a few months, the both of them started to falter and he got very scared because he’s like, “Here I am an entrepreneur and I’ve got two failing businesses.” That’s what brought him into the therapy. What he learned was that, as a child, he thought his parents were poor and he was growing up poor because they were pretty strict about money. The most important thing is, they taught him the facts and figures of money. What they didn’t teach him was the emotion that went with the money.

For instance, if his mom got a credit card bill at the end of the month. She either started to scream or sobbed. He obviously could feel her upset which was transmitted to him and he didn’t know, “We must be poor because she gets so upset. That was the connection that he made and maybe what I want is also causing them hardships. Maybe I shouldn’t want what I want.” It all goes underground because he doesn’t know that he’s feeling these things because a seven-year-old doesn’t have a capacity to reflect but they’re embedded in his psyche.

What we unearthed in the therapy, it didn’t take years. It took probably about 7 or 8 sessions. What he learned was the idea, the belief that once poor, always poor. He has a kid. It’s vowed that he was going to be rich as an adult. That’s what he was trying to do, but the belief that he could never be not poor was so overwhelming. That it was steering his adult behavior. Once he realized that, he was like me. He went through a mourning period and the shame of screwing up, but then he got on fire. He let the second business go. He worked very hard in a diligent, efficient way to scale up the first business and became very successful.

Unpacking “Crazy About Money” And Behavioral Economics

That’s what I loved about Crazy About Money. The book is called Crazy About Money: How Emotions Confuse Our Money Choices and What To Do About It. You highlight in there how childhood influences adult money decisions. That’s a great example because nobody told him they were poor. He just made that connection in his tiny little brain.

through his whole life, he went with that. It’s almost like a money script that resurfaced from a while back. There’s so many things I want to talk about. I love this book. You talk about behavioral economics and there was a passage that I did want to talk about, too. We’ll get to it but mental accounting. What is behavioral economics?

Let me zoom back here a minute. The traditional attitude is what was called the efficient market theory where people would do what was best for them. They would take a very logical approach to wins and losses. They would invest with a steady factual mind. They wouldn’t take hot stock tips from a cocktail party. They just went to or they wouldn’t gamble or if they gambled, they gambled with $50 and then walked out of the casino.

Daniel Kahneman and Amos Tversky were the one the founding fathers of behavioral economics. What they developed through very stringent research was the emotions and the experience of risk and the potential experience of loss motivated much of financial behavior so that people ended up doing very irrational things. You have a love of wanting to make money and you get detached from it. You go start a second business that takes your mind away from it or you end up self-sabotaging. That was the more familiar experience of investors than, “This is what I should do, follow a logical path.” As if you were following as if you were solving a math problem but people’s emotions are not mathematical.

Very irrational. Is that what motivated you to write Crazy About Money? How did you get all those stories? If you’ve not read the book, I highly recommend it. It is chock-full of stories. I’m more of a storyteller and a visual learner. Listening to these stories helps me say, “I’ve done that. I will do that.” It’s great because it’s not like, do this and do that. It’s like, here’s a good story. Why do people do that? How did you get all these stories because people are sometimes very ashamed to talk about money? You have a ton of stories in here.

These are actual clients that I’ve worked with over the years and I got written permission from every one of them to use them in the book disguised. They’re true stories. I’m not spinning fiction here.

The “Mental Accounting” Trap: Why We Rationalize Spending

The passage that I wanted to read is very appropriate for people when they’re moving. I can think of a situation that I know I was in. I lived in San Francisco. I was living in a place in the Marina and it was a great little rental but it had its quirks. It was an old building and the kitchen was incredibly old. My refrigerator kept going out. It was from the 1960s. It was terrible. I spent the money to make a move. I pack up all my stuff and move to a different apartment. This was in 2003 to I think 2009. I was paying $2,200 a month for rent for a one bedroom.

It had boomed through that time when I left. They started charging like $5,000 for that same apartment. They didn’t make any upgrades. They didn’t do anything, but in my head, I was like, “I’m going to move into this other apartment down the street. It’s got a better kitchen.” It seemed bigger but wasn’t bigger but I was saving maybe $100 or $200 a month. I justified all that stress and packing all my stuff up and paying for movers and all that stuff.

I ended up getting transferred to New York City six months later. I never even recoup the money, but there’s a chapter. In this book, there’s a passage called mental accounting. I want to read this to you because I laughed out loud because that would be something for me. “Imagine you bought a $150 ticket for a concert featuring your favorite group. At the arena, you realize you left the ticket at home. After hopping up and down but moaning your luck and possibly yelling at your best friend for not reminding you to bring the ticket. Would you spend another $150 to see that performance?”

“Now, imagine the same scenario. Except that you plan to buy the ticket at the box office, but when you got there and pulled out your wallet. You realized you lost $150 somewhere in the parking lot. You still have more than enough cash to buy the ticket, but would you? Most people say they would buy another ticket if they lost $150 in the parking lot but not if they left the ticket at home. Why? It’s mental accounting.”

It goes on to say if you had to buy a replacement ticket, which means you’d end up spending $300 on entertainment. However, the money you lost in the parking lot doesn’t come out of your mental entertainment account. You’d buy a ticket even though the bottom line is that you still spend $300 for that ticket. Mental accounting is a sneaky way. It’s to protect yourself from the pain of loss. With that story, I was like, “Oh my gosh.” Let’s talk about that. What is mental accounting? This is such a funny concept to me.

Where the money comes from has a deep emotional response and the way you said it was terrific. It means trying to protect yourself from loss or from conflict. I’ll give you another example that’s in the book. Where the woman decided that she wanted to get some new clothes. She goes out and she knows that her husband is pretty frugal. He doesn’t want her spending a lot of money. She buys a dress for $150 and she puts $50 on one credit card, another $50 on a second credit card and $50 on another one

Where the money comes from has a deep emotional response. Share on X

She goes home and shows her husband the dress, then she says, “On my credit card it’s only $50.” He’s very pleased and she’s very pleased until he realizes when he gets all of the bills that in fact this is $150 but, in her mind, she was cleverly avoiding the conflict with her husband that ultimately had big consequences but, in the moment, it felt great.

Creative financing. I love it. We do that, especially when we want to move somewhere that is maybe more expensive than what we’re paying. You figure out ways to justify it or even the opposite. A lot of people justify moving. I lived in California for many years. California has gotten incredibly expensive to live in. There’s just no inventory. The supply and demand is pretty great. I moved to the East Coast.

A lot of my friends moved to Florida or to Texas where they may have had a million-dollar house in California, but they came to Florida and that was a $500,000 house. The expense of the move justified going, that’s mental accounting. That’s the mental gymnastics that you play with yourself but you still pay $15,000 or $20,000 to hire movers and to disrupt your whole life. You’re in disarray for a year and what is that worth?

The other thing is that and I think I mentioned this in the beginning. If you have one or two things or maybe three things that are stressful. Most people can handle that but if you have five or six things that are stressful and uncertain, that is very difficult for people to handle. They start doing this mental accounting bit because the expenses are flying at them rather than throwing up their hands and saying, “I can’t do this,” and dissolving into a puddle.

They keep justifying, “This will happen. Don’t worry, I can pay off the credit card. I may have interest payments that I don’t like but it’s so important for me to get to Florida. That’s what I’m going to do.” They sit down at some point and they realize how much it’s cost them to move. One of the things that behavioral economics enlightened everybody about was the intensity of the emotional reaction to loss, which is about two and a half times greater than a positive win. People don’t realize this and they get either depressed or exceedingly anxious because they are dealing with a deeply felt sense of loss that they didn’t expect.

Navigating Financial Shame And Overwhelm During Transitions

Even going back to the childhood example of your entrepreneur that had the two businesses. There’s something to be said for having to admit something is not working. You go through so much shame attached to finances. Some people have shame around having too much money and some people have shame about not having enough and then there’s all the people in between. Maggie and I thought we’re going to have like a fifteen-minute conversation prepping for this episode and we ended up talking for almost an hour just about all the differences. It was such a great conversation, like, “I wish we recorded that for the episode.”

We talked a little bit that there’s several different theories out there in financial coaches. You’ve got your Dave Ramsey’s and your Suze Orman’s who are very shame-based. They feel like it’s that tough love. If you don’t have the money to pay off your mortgage or pay off all your credit cards, you know you shouldn’t be doing it. I was a Dave Ramsay coach for a while.

There’s the shame-based side of financial coaching and then there’s the other side where it’s very methodical and consistent. When you have clients come to you, how do you coach him through? Does everybody just come and just vomit all of their financial problems on you then you have to pick up the piece and figure it out? What do you typically tell people to do?

I listen more than anything else and then I say, “We’re going to take this at a pace that you can handle,” because getting locked in shame means that most people withdraw and stop reaching out. I outline that this is something that piece by piece you can do much better with. Let’s look at why you’re blaming yourself because there are many reasons why people have trouble with money. Maybe you’re being awfully hard on yourself. With a more compassionate self and compassionate attitude, it will make a lot more progress. I try to break it down into manageable bits.

Especially when you’re moving. It feels like you’re just bleeding money.

That’s one of the advantages of Zoom. With me, you can have Zoom sessions. If you’re leaving California to go to Florida. If you stop in Arizona, we can still have a session.

That’s nice because a therapist has to be licensed in that state. You being a coach having that designation is nice.

I’m a licensed Psychologist in Pennsylvania, but there’s no licensing for financial therapists. That frees me to go anywhere.

I love that. As I said, when you are moving, people don’t realize and this is what I try to prepare people for when we talk about finances. It’s the least sexy thing I talked about. People don’t want to know. They’re like, “I’ll just get boxes.” You go to Home Depot and you buy 30 boxes and that’s $300. There’s a lot of things. You got to buy tape. There are so many things that are hidden sunk costs from a move.

If you’re renting, you’re putting first and last month’s rent down in your deposit or if you’re buying a house, you’re putting a deposit or your down payment down and then you’ve got everything else like the closing costs and all that stuff. When somebody’s overwhelmed by the financial aspect of what’s happening in the moment, is there anything that they can do that keeps it real like getting to a better place? What would you suggest?

This is going to sound ridiculously simple, but I would teach deep breathing in meditating. Getting to a place of calm through breathing, which you can do. I can demonstrate that for you if you like. In a calmer state, sit down and strategize. Are you listing the expenses that you’ve encored that you didn’t expect like how much tape is or how much boxes are? Go through and list all that you’ve spent.

If you’re just beginning this process, you can say, “Now, where can I get tape cheaper or where can I find boxes where I don’t have to pay for them?” You confront some of these things that you forget you’re going to have to do. The other thing is talking to your bank manager. There are all kinds of ways. You might be able to get help from the bank in terms of if they demand certain amounts, you can spread it over time or just even talking to somebody in a bank and getting their advocacy. Even if all they do is listen. It’s calming because what you need to do is calm down and that does not go with moving.

Before our interview, I interviewed another woman named Saunders Moore. She’s a psycho therapist and deals with transitions and that was one of the things. People don’t realize that it is a biological change in your body when you’re transitioning. You’re out of your routine. You could have fatigue and brain fog and all of these things that people don’t associate with the grief of a move.

You are grieving an old identity and an old place and you’ve got the loss of one routine then you’re moving to a new routine that you don’t know what it’s like yet. Your body is in this like fight or flight or freeze mode. I can identify with that. I love the idea of going to your bank. I bank with Chase. I’m seeing, do you want to spread these payments out? I never thought about that. That’s a great idea.

They can be very helpful for sure and they can also waive if you get behind on something and they charge you a fee for being late. You can often get them to waive that fee. If you never asked, they certainly aren’t going to do it for you.

That’s how they make their money. I love this. I am such a big proponent of your book. I have been loving it. I’m more than halfway through it. I have a long drive after this. I’m going to go see Freakier Friday with my friends Stacy and her daughter. I’m going to probably finish it in the next two days, which I’m super excited about. If somebody wants to coach with you, what is your website? How can they find you?

Get In Touch With Dr. Maggie Baker

My website is MaggieBakerPhD.com and/or CrazyAboutMoney.net. If you go to one, it’ll take you to the other, but you can independently go to each one if you want.

That’s how they can find you to set up time to meet with you.

On MaggieBakerPhD.com they can send me a comment.

This is going to be an eye-opener for a lot of people because there’s a lot of childhood ways that we’ve learned that follow us into adulthood. If we could be more rational in the decisions that were made around big moves and big transitions. It would be a lot less stressful because the money is the hard part. Everything else follows. Thank you so much for being here, Dr. Baker. It has been a wonderful experience.

Likewise. You’re great to talk with. I’m glad that you’re highlighting the difficulties of moving because there’s something called the Holmes and Rahe scale that gives points for change. Death, divorce and moving are the top three for change. It may ultimately be a positive change but it’s a change. Everybody should be very compassionate with themselves and not let themselves fall into a shame spiral and know that if they don’t, they’re increasing their resilience to issues.

Everybody should be very, very compassionate with themselves and not let themselves fall into a shame spiral. Know that if they don't, they're increasing their resilience to issues. Share on X

You’re going to recover. If they’re reading this, you have survived 100% of things that have been thrown at you. I’m confident that you can make it through there. It’s just going to stink for a little bit.

If you remember the phrase, “This too shall pass.”

We got to write it down and tattoo it on your arm when you’re going through a move. Everybody, go to MaggieBakerPhD.com or CrazyAboutMoney.net and find Ms. Baker. You’re going to get a lot of hits on this one because finance is something people are interested in. Thank you for being here.

You’re very welcome. I enjoyed it immensely.

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About Dr. Maggie Baker

After 35 years of practicing psychology Maggie is well seasoned dealing with transitions, especially concerning finances. She has been focused on financial therapy for the last 20 years. That is, helping clients improve their relationship to money by becoming aware of their long held beliefs, attitudes and emotions regarding money. This Philadelphia native also wrote a book called, “Crazy About Money: How Emotions Confuse Our Money Choices and What To Do About It” which helps you identify the unconscious emotions and beliefs that typically develop in childhood and drive your money decisions as an adult.