Money on a Runaway Train? First Stop – Financial Awareness

by Guest Contributor

The following is a guest post by Janet Lombardi, author of Bankruptcy: A Love Story. If you’d like to contribute an article for Money Q&A, check out our guest posting guidelines.

Bankruptcy: A Love Story by Janet Lombardi“I’ve got to get my finances together!” At some point, most of us have made this promise, whether it’s fueled by out-of-control credit card debt, off-the-leash student loans, or paycheck-to-paycheck living. I was aboard the runaway train myself several years ago when I secretly discovered my husband had been hiding hundreds of thousands in debt, emptied our accounts, let life insurances lapse due to non-payment, and other money chaos.

My memoir, Bankruptcy: A Love Story (Heliotrope Books), due out in June 2017, tells the tale of financial and other infidelities. But here’s the good news: within three years of learning of the horrific state of our finances, I became debt-free, bought an apartment, purchased a new car, and saw two sons through college.

My road to true financial reform began with the most important step: financial awareness. Once I realized how much our finances had derailed, I set out to get a clear picture of our assets and liabilities, i.e., what we owned and what we owed. It took months and steel nerves to get a true assessment. If I hadn’t done that, we’d still be spinning in vagueness, uncertainty, and fear.

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Get Acquainted with Your Numbers

Financial awareness means knowing your numbers. Start with a blank Excel sheet or the old-school pen and paper. Then list:

  • What you own and what you owe. Gain a deeper understanding by breaking it down item by item. If you have debt, for example, which credit cards? Rate of interest? Balance? How much do you currently paying? When are payments due?
  • Then tally the good stuff: What are your assets? Home? Car? Savings? 401K? Same questions. What are those assets yielding? What is the term, i.e., how long you will be invested?

Get the details. Simple, yes. Easy no! It takes time to gather the snapshot, so don’t get discouraged.

If you’ve got debt and have been afraid to look at the numbers, sit down with a trusted a friend or family member who has a good relationship with money. If you need more support, consider joining a Debtors Anonymous (DA) group or other money participation group.

Once you have clarity around your finances, you’ve taken the first step to self-care and financial health. Here are the seven step you can find on janet.lombardi.com, that can help you go from financial floundering to solvency.

Step 1: When disaster strikes, don’t just sit there.

Financial disaster doesn’t have to hit you between the eyes before you take action. You probably have a sense that things are getting worse before they explode. 

I knew the finances were unraveling long before I cared to admit it. And, that’s normal. It’s called fear. But once I saw the proverbial handwriting on the wall, one of the most important things I did was not to do nothing!

Step 2: Know what you own and what you owe.

Clarity about finances is essential to improving your money situation.

Step 3: Stop debting.

You’ll never get out of debt and build wealth if you keep relying on credit cards. I got out of debt by joining Debtor’s Anonymous (DA), a 12-step program that recommends no debting “a day at a time.”

Step 4: Create a spending plan and stick to it. 

Devising a money plan sounds about as much fun as having a root canal, right?

I won’t sugar coat: it takes effort, focus, and willingness but I think of my spending plan as something I do to keep myself well. It’s up there with going to the dentist, getting haircuts, and taking Chick-Boxing classes. I choose to adorn myself with self-care because I honor and love myself. My spending plan is part of my self-care options.

I choose to adorn myself with self-care because I honor and love myself. My spending plan is part of my self-care options.

Step 5: Tackle money problems with a punch list.

I’m a list person. So, just like the punch list, a contractor creates when he or she completes renovations in a house, I created my own punch list for eliminating some big money headaches. #1, #2, #3.

I hung onto that list tenaciously, even carried it in my wallet so I could look at it and be reminded of my goal. I tackled the money offenders one by one. It took a few years, but I reached my goal of getting solvent. You can do it too.

Step 6: Be bold with your money moves. 

I knew my house would go into foreclosure if I didn’t have the means to support it.  And I didn’t have the stomach to withstand a loss or process like that. So I sold my just-renovated four bedroom beauty. It broke my heart (I cried every day), but I didn’t die.

Step 7: Ask for support.

Surround yourself with people who love and support you. Some who know more than you do about personal finance. Most are happy to help if you are doing your part.

By help, I don’t mean asking for money.  Ask a friend who has good money habits to help you review and stay on track with yours. And go live with a relative or friend if that will help you get back on your feet.

My son and I moved into my sister and brother-in-law’s house.  I expected to stay a few months but remained two years, helping my son with his college tuition and saving some bucks, which I couldn’t have done had I had living expenses of living of my own.

Janet Lombardi, author of Bankruptcy: A Love Story, has written for Salon.com, Newsweek.com, Newsday, and others. She has been a featured guest on radio and appeared on Huffington Post live web. The mother of two grown sons, Janet lives in Rockville Centre, NY.

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