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Even rich folks have bag-lady syndrome

You would never confuse Emily Scott Pottruck with a bag lady. On the surface, she has it all: independent wealth, a mansion in San Francisco's Presidio Heights, fancy cars, an M.B.A. from Cornell, years of experience on Wall Street, and a successful husband, David, the former CEO of San Francisco's Charles Schwab Corp.

But inside, Pottruck suffers from "bag-lady syndrome," a fear many women share that their financial security could disappear in a heartbeat, leaving them homeless, penniless and destitute.

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"I wouldn't say I thought I would be homeless," Pottruck says. "What I was concerned about was that I wouldn't be able to pay for things like health care, or have any kind of discretionary income, or that I would be really old and have to continue working at a high pace, and there would never be a moment that I could relax."

Bag-lady syndrome plagues, puzzles and, in more extreme cases, paralyzes women who want to get a better grip on their financial lives, according to Olivia Mellan, the author of "The Advisor's Guide to Money Psychology" and a Washington, D.C., therapist who specializes in money psychology. Lily Tomlin, Gloria Steinem, Shirley MacLaine and Katie Couric all admit to having a bag lady in their anxiety closet.

"It cuts across women of all social groups; it's not like wealthy women don't have it," says Mellan. "Heiresses, women who have inherited wealth, have big bag-lady nightmares because they really feel like the money came to them magically and can leave them just as magically."

Women tend to be unprepared and overwhelmed when widowhood or divorce suddenly plops their financial security in their hands. If they've long feared they will wind up a bag lady, these transitions can feel like the nightmare is about to play out in real life. As a result, they tend to avoid money, horde money or invest too conservatively to make the money they'll need later in life.

"Older women tend to fall into two camps: the deer in the headlights or the ostrich," says Kathy Boyle, CFP, president of New York-based Chapin Hill Advisors. "They either freeze and can't make a decision at all or they just put their head in the sand and hope everything just works out."

Mellan agrees, "One of the ways that it impacts women's lives is it makes them afraid to take risks with their money. That's why a lot of women have lots of money sitting in a checking or savings account doing nothing. They're afraid they might need it if they end up on the street."

What are the causes of these bag-lady nightmares? Why do women get them and not men? How do they disrupt your life? And can you overcome them? Roll your shopping cart this way, and let's find out.

Meet your inner bag lady
Despite its clinical-sounding nickname, bag-lady syndrome is not a true psychological condition at all, according to Donald Black, M.D. and professor of psychiatry at the University of Iowa.

 
 
Next: Fears of eating cat food when they're 80-something ...
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