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7 Steps to Repair Your Finances After Debt, Divorce, Job or Market Loss

Updated on May 22, 2018
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Christine earned her law degree in 1996, worked in estate law and banking, and has Professional Financial Planner (PFP) certification.


"Change" Happens

Maybe you’ve lost your job. It’s happened before; you know you’ll survive, but this time it’s taking too long to find something comparable. The weeks stretch into months. Your financial plan is on hold, perhaps forever. Money is tight.

Perhaps you were on the way to debt-free status, but somewhere along the way you accepted a mail-in credit card offer with a terrific initial credit rate. Your holidays were expensive, and you picked up a department store credit card or two for the convenience. Before you knew it, eight months had passed since you’d made anything but the minimum payments. You are startled to realize that you’re approaching the credit limits on all your cards.

Or . . . a baby is on the way, something you never anticipated at this stage in your life. An aging parent has special needs, and someone in the house must give up a paying job for a while to provide support.

Sometimes, everything changes at the drop of a hat – and not in a good way.

Perhaps you had successfully paid down your credit card debt, stayed on course, and been walking tall with self-respect. Then you wandered into a place offering payday loans. It seemed like a great way to cover your cash shortages, until the day you found yourself taking out a second loan to cover the first one. You’re in over your head. Again.

Maybe you’re sliding right back into that same financial hole you were so determined to escape back when you were making plans.

Seven Steps to Get Back on Track

Follow these steps to turn your ship around.

Yikes! It's a Whole New Ball Game”

As in other areas of life, relapse is part of the process. Illness, family problems, a troubled child with special needs… unexpected obstacles crop up all the time, and sometimes they must take precedence over our long-term financial goals.

Life changes – we change – and sometimes our best efforts to pull our financial lives together get dragged down by the rest of life’s pressures. So how do we fix it?

You can begin to piece together the puzzle that is your financial life by following a step-by-step strategy. Put the brakes on the problem, review the situation, and get back in gear toward your goals. This is what it takes to get to a place where your finances support you rather than the opposite.

Get started as soon as you feel yourself veer off course, and you’ll be back on track before you know it.

You are moments away from clarity.

Step One: Face Up To The Process

When everything changes, it's time to re-evaluate.

You know something is wrong, and you’re trying not to think about it. You’ve put off addressing it because you don’t have the time/energy/focus right now. Most of all you don’t have the desire to deal with this on top of everything else that’s going on in your life these days.

Stop. Take a break from whatever you’re doing to avoid the situation. Sit down with a pencil. Breathe deeply. You are moments away from clarity.

Seven Steps: Video Lesson One

Step Two: Determine Where You Stand

When a powerful storm blasts through your neighbourhood, the first thing you want to do is get out there and check the damage. With as much dignity as you can muster, review “Chapter Two: Where do I stand?” Outline your financial assets and liabilities for a revised net worth statement and list your income and your expenses for an income statement.

Get a rough idea of what is going on with your finances. Are you still showing some forward progress? Are you right back where you started? Are you continuing to fall behind?

No matter the outcome, all is not lost. The skills and focus you have developed from creating your financial program are still with you. For now, take a good, hard look at where you stand. You are on your way to recovery.

Step Three: Determine What Caused The Problem

After you gain a sense of your current financial state, take a few minutes to determine what made you veer off course.

Sometimes the problem is nothing more than you. Honesty is the best course of action here.

Were you slipping into old financial bad habits? Did you fail to take certain steps to mitigate the damage? Did you make a promise to yourself to follow your goals to a brighter financial future, but take the easy road instead?

If so, join the rest of the human race. Immediate gratification is always the easiest, most attractive solution to our problems. Instead of taking the easy route, you must determine where you went wrong for a more resilient end result.

Sometimes the problem is other people, like family members or a resistant partner (see the end of this chapter for some ideas on how to deal with this issue). Or perhaps the situation is truly beyond your control.

Despite the best-laid plans, life sometimes runs us smack into a ditch when we least expect it. The new house required unforeseen repairs. Hospital bills spiralled after a medical emergency. You encountered a string of sheer bad luck.

To paraphrase a well known quote, “stuff happens.” Chalk it up to one of life’s little surprises and take some steps to limit the damage. Don’t blame yourself. How you deal with this difficult time is a test of who you really are.

It’s also possible that you don’t have a problem at all. Despite appearances, you may be handling things exactly as you should. Consider:

Have your goals changed without your realizing it? Childcare, elderly care, a lower paying but more rewarding career, or a more relaxed lifestyle for you and your family may all be reasons why your financial plan is not where you think it should be.

Check out "Where am I going?” to take another look at your core values, the foundation of your financial plan. Review the next few steps to tweak your financial strategies. Values are key, and flexibility is the name of the game.


Step Four: Revisit Your Touchstone Values

Whatever your definition of financial independence, ask yourself what deep-down values or personal principles create resonance for you. Why are you doing this?

Perhaps you crave independence from the employment run-around, the freedom to choose a career or work that truly satisfies instead of just paying the bills, or the pride and security of knowing you are providing the best possible future for your loved ones.

Find your touchstone values and you’ll begin to reconnect with the process again.

Personal values change. Independence, once such a driving force for you, may grow into a craving for greater connection with family, community, or the environment.

The desire to be a terrific parent for your young children may evolve as you aspire to provide the best possible model of an independent, fulfilled adult for them and for yourself. Consider adjusting your timeline.

Reconnecting with your deepest principles is one of the most important lessons in creating your own version of financial independence.

Seven Steps Video Lesson Two

Step Five: Take Steps To Get Yourself Back On Track

If you’ve been following this plan, then you already have most of the skills you need to make your financial goals a reality.

Make a list of three crucial steps you need to take to redirect yourself in your financial life. Or, start with one small step, gathering forward momentum to get back on track with your goals.

Pick up the telephone to set up an automatic debt payment plan or investment plan. Schedule a meeting to connect with people in your field of expertise (or desired expertise). Consider putting something up for sale to bring in a little extra cash, if cash is scarce.

Take action today and keep on keeping on.

Step Six: What If The Time Is Not Right For Action?

Sometimes we feel stuck. We’re waiting for the kids start school so we can expand our income opportunities; for the house to finally sell so we can move to a less expensive place; for the court case to be resolved so we can get back on track with our plans.

Sometimes, we just to hang in there until the time comes for us move forward again. This is where our courage is truly tested.

Hang onto your power by keeping your values at the front of your mind through all the chaos and frustration. Stand your ground.

Take tiny steps to position yourself for your next move. Care for yourself and those who rely on you. Stay positive in the face of a negative situation. Get support, get right with yourself, get your plan in order. When the time comes, you’ll be ready to hit the ground running. This is where your real power kicks in.

You are embarking on a difficult and noble task.

Seven Steps: Video Lesson Three of Three

Step Seven: Deal With The Human Factor: Resistance

Sometimes, resistance comes from other people.

Your spouse won’t let go of destructive spending habits. Your kids pressure you to spend money in ways that are no longer in your family’s best interests. Your peers, whom you would like to rely on for support in this new endeavour, continuously pull you back into routines that don’t work for you anymore.

Resistance from other people is tough to manage, and can deep-six our financial plans like a stone in a paper boat.

Slow down. Sometimes we expect too much, too fast, and our family members resent it. Our children and partners have a lot invested in the status quo, and people are notoriously resistant to change of any kind, even if they accept it in theory. Take your financial changes at a slow, steady pace and your loved ones will find the process much more palatable.

Include them in the planning process. Kids can provide valuable feedback on reasonable ways to cut costs. Ask them to help with shopping, to brainstorm ideas for reducing household expenses, or to pursue part-time employment to help with miscellaneous expenses.

Your partner can be helpful, too. They may hate the idea of buying things second-hand until they find out that they’ve got a real knack for negotiating the best price.

Get people on board by including them in the process. Remind them why you are doing this.

Your friends may come around, and even offer some valuable suggestions for keeping costs, down once you explain how important it is to you.

A family member who considers the notion of “financial independence” a waste of time may love the idea of looking into another line of work once the financial underpinnings are in place. Kids may not care about bills or funds until you start to post results in a place where the whole family can monitor progress.

If your spouse or partner flat-out refuses to cooperate, you may want to consider separating your finances as much as possible. Keep your credit cards in separate names. Open a spending account of your own and be responsible with it. Your behaviour will provide a valuable model for your spouse.

People connect with a project when they see a personal benefit.

Sabotage: It Happens

Sometimes, despite your best efforts, you regretfully conclude that someone who should have your best interests at heart in fact doesn’t.

Your sister may be jealous, your boyfriend may not want you to succeed, or your parents may be more comfortable with you as a dependent child instead of an adult responsible for your financial independence.

If these people support you in other ways, they may consciously or unconsciously have mixed feelings about your success. Quietly separate yourself from their feedback on the issue and start on your own path.

When all else fails, you may need to extricate yourself from a consistently negative relationship. Recognizing that not everyone has your best interest at heart is a step toward living your own life.

When The Time Is Right, You'll Be Ready


Sometimes, Resistance Comes from Within

Perhaps you allow yourself to be vulnerable to the criticisms of others because you feel you don’t deserve the best in your finances or in life. You may feel out of line with your deepest values. Or maybe you’re frustrated with having to keep deferring gratification in your financial life.

The strategies for internal resistance are the same as those for dealing with other people. Slow down. Review your deepest motives and determine how to follow a plan that works for you. Be responsible with what you can, and try to minimize the damage of your own worst behaviours.

Sometimes, simply recognizing that you are sabotaging your own progress can free you to behave in a way that originates from your personal values rather than negativity.

You are embarking on a difficult and noble task. Now is the time to take a deep breath, remind yourself of what you’re trying to accomplish, and stick with the process.

You will reach financial freedom on your own terms. You will triumph, and when you remember how you overcame these obstacles, you will relish your success.

Ready for some top-notch, kick-butt moves to power your plan? Tune in to the section for more wealth-building strategies.

When the time is right, you'll be ready!


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