QUESTION: I have totally screwed up my financial life. Where do I start? Overspending, maxed out credit cards, a bankruptcy. I mean it’s bad. I just woke up one day and I had dug myself into this incredible hole. But now I want to get out and I really don’t know how. Is it even possible?
ANSWER: Sounds bad. Very bad.
Is it possible? Yes. Easy? No.
Let’s start with something I heard consultant Wayne Cotton say, “If you don’t like your past, fix your present and you’ll have a new past in your future. Just clean-slate it and build a new past by building your present properly.”
That’s not just cute verbiage. It is profound advice.
Anyone with a traumatic past (self-induced or not) can become fixated on that past, to the detriment of both their present and their future. Our unconscious selves may even demand a prison term of forced regret to pay for our past financial sins. The problem is no one ever told your unconscious self just how long this season of sorrow is supposed to last. So let’s try this instead…
Recruit a partner or coach. You’re about to go on a long journey, much of it retracing the steps of how you got here, in order to create your new past. Most of us will need help with both direction and determination. You’re going to need to get someone in your life, either professionally or relationally, that is 100% for you and will help you stay on course.
Look at the past one last time…to learn. You get one last shot to talk and think a lot about what you did wrong. Only this time, you and your coach are going to leave off the blame game. This post-mortem process is solely for the purpose of learning what you did wrong so we don’t repeat that same mistake in the future.
Give yourself permission to move on. Once you’ve looked back to learn, leave it. Leave your past to the past and give yourself permission to move on. You may need to seek forgiveness from others you have hurt. Do it and it will no longer have such power over you.
Stop the bleeding by fixing urgent problems. Personal finance 101 says you’ve got to spend less than you make. You and your coach will have to work on a plan to lower your expenses, stabilize (or even increase!) your income and get your bills paid on time. You may have to work out payment plans with creditors, sell assets or work overtime. But don’t just start doing one of those things – you do the right combination of them as set forth in your plan.
Start to grow by focusing on important priorities. Once you’ve begun your “crisis containment program,” you need to take the actions that will prevent future crisis and foster future opportunities. That will include protecting yourself, starting to save, then starting to invest, staying on track and consistently re-calibrating in light of changing circumstances. This is the proactive and healthy stage you’ll want to be in for a long time.
Stay consistent by simply not stopping… no matter what. Stuff is going to happen. The perfection of your plan on paper is never going to happen just like that in real life. So what? DO NOT GET DISCOURAGED AND QUIT. Not allowed. That’s the main reason for recruiting a coach. When the wheels fall off, but them back on and keep driving. Perfection is not your goal – just persistence.
I’m sorry for the struggles you’ve had in your past. But other than what I’ve mentioned above, let’s forget about your past and focus on creating a new past in your future… by fixing your present.
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Byron R. Moore, CFP® is Managing Director / Planning Group of Argent Advisors, Inc. Email him at firstname.lastname@example.org. Write to him at 500 East Reynolds Drive, Ruston, LA 71270 or call him at (318) 251-5858. The opinions of any single advisor do not necessarily reflect the opinions of Argent Advisors, Inc. No forecasts can be guaranteed. Argent Advisors, Inc. does not offer tax, insurance or legal advice. The information contained in this column should not be construed as a substitute for personalized investment, tax, insurance or legal advice.