At some stage in recovery, we start to take responsibility for our actions and how it has impacted us in the present. But many of us are afraid to address the financial wreckage. We are quick to make amends to friends and family and to do whatever it takes to make it right with them, but when it comes to situations with our own finances, we often freeze like deer caught in headlights.
We may have overdrawn accounts or no accounts, written bad checks, owe money to the government for unpaid or unfiled taxes and maxed out credit cards. Even if our financial situation did not become that dire, we may still be finding it hard to make the money we do have, stretch from one payday to the next.
Each person’s situation is different and there is no “one size fits all” method of taking financial lemons and creating lemonade. But there are some tools, which if implemented, might help to untangle some of the mess we have made and allow us to do some financial spring cleaning.
If your financial situation is very complicated, I highly recommend working with a financial coach. That person can do two things for you. They can help you work your way out of a debt quagmire and help you to start to make better choices for yourself going forward. These are not mutually exclusive and a good coach will be worth the cost of the service.
Backing up just a bit, there are several key suggestions I would make to start the house cleaning process. Even if you’re not connected to 12 step recovery, we can take a lesson from it as regards taking inventory. Similar to the inventory in the Fourth Step of a 12 step recovery program, I advocate for doing a financial Fourth Step. It is not as complicated as it might sound.
A Fourth Step can incite incredible anxiety for some. People are afraid to face the harms they have done, the resentments they harbor, the behaviors that have caused shame in the past. And yet, guided by a sponsor, the shadows of the past lose much of their power when committed to paper so that they can see the light of day.
A similar process can be followed with a financial inventory. We begin by making a list of every person or entity to which we owe money including how much we owe them and what the payment terms are supposed to be. We can’t begin to fix our financial problems until we know the extent of those problems, so regardless of whether you owe $100, $10,000 or $100,000, it is what it is and it is not going to go away by ignoring it.
The other thing we know in recovery is that we didn’t become addicts overnight and we are not going to be graced with complete recovery overnight either. It is a process. So, when we look at our financial inventory, we recognize that it will take time to fix the problems.
We also make a list of our current needs, not wants, that are necessary to maintain life. Things like, the cost of a place to live, food to eat, clothing and transportation all need to be included. We learn to live on less and not live beyond our means.
There are some specific steps we can take, especially with the advent of technology, to live on what 
we have. We can find YouTube videos to teach us how to balance a checkbook. This is a skill that is invaluable. Just checking your balance at an ATM is not useful, as there might be checks that have not yet cleared your account and therefore, you may have less in your account than you think.
We can also seek sources to help us financially. For instance, we seek out local food banks or co-ops to supplement our grocery budget. Many pharmaceutical companies will provide medications for little or no charge to those with modest incomes. Some utility companies can provide subsidies to reduce the monthly cost of heat or water service. Sometimes churches can help with a little bit of financial support to deal with a “one time” issue.
We may owe a great deal of money on mortgages or in credit card debt. There are some options short of filing for bankruptcy. A key to remember is that some bills need to have higher priority than others because of the consequences associated with not paying them. Many people don’t realize that if they don’t pay their mortgage regularly, or work out a payment arrangement with their mortgage holder, they could find themselves looking at foreclosure and loss of their home. Most banks do not want to be in the business of owning real estate and will work with you on a refinance of your mortgage, perhaps to lower your monthly payments but extend the length of the mortgage.
Sometimes if we contact the credit card companies, they will be willing to work with us on partial payments and may even be willing to waive certain fees and interest in order to get the balance paid. I recognize that negotiating settlement of debt or filing for bankruptcy will make an impact on a credit rating. However, we have to prioritize. If we are very over extended, our credit rating is already in the toilet. We don’t want to let our pride stand in the way of being able to build a more solid foundation to move forward.
As I stated earlier, each person’s financial situation is individual. Each person must find their way through their financial inventory. What works for one person will not necessarily work for another. Just as it is best to work the steps of recovery with a sponsor, so too, it is best to work on the steps of financial recovery with a financial coach. Whether you need a year’s worth of guidance and support or only a few sessions, it can be the best investment you make to help you move forward.
3 Comments
Thank You Jackie for these very practical suggestions. When I was making money and had 0 expenses it was an opportunity that I missed. After a year of what I called careful consideration, turned into lack of experience. My mindset was, “I can stop spending and start paying anytime I want”. My Denial… Little did I understand that the plan of repaying was no where near as simple as I thought it could be. This awakening was rude and alarming but the step by step approach always offers the way out. And usually for me without help it always too much. Xo
Debtors Anonymous is also available.
Fortunately for me, my credit rating is good to excellent. However that happened over the years. My problem especially when I was working is that I give people money. At work, it was my students because a lot of them really needed things and so did our classroom.
Now I find myself living like I can afford to still do this and I can’t. I like this article. It made me take a look at my truth.
You can’t lend money out if it hurts you or you find yourself borrowing from your savings to make up for what you lend out. Thank you for your article.