ST. CROIX INSIGHTS

You can recover from bad financial decisions

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

Every now and then, I receive a desperate call for help – that call that no one wants to receive. They all have the same premise – someone made a bad decision and knew better and how are they going to recover financially and move on? It’s an SOS of how to recover from bad financial decisions or crisis.

My heart goes out to these people. These events shouldn’t define who you are. John Maxwell, Pastor, author of Failing Forward, talks about how these events shouldn’t define who we are. It’s a moment in time and can we fail FORWARD from these experiences. When you start to contemplate this, it’s so true for all us. We can fail forward, but I’d suggest it isn’t easy and each an one of us will probably require help.

Here are three steps you can take.

#1 – Take the embarrassment out. There isn’t one person that I don’t encounter that hasn’t or isn’t currently experiencing their own problems. I have them too. Find someone who has walked in your shoes. Most of us are afraid of sharing our problems because others are going to judge us. I’m here to tell you it’s easier said than done, but we need to get over it. I’ve learned over the years how much I can learn from others and it’s downright powerful – so powerful at times where I don’t have to re-invent the wheel.

This can come in many forms – support groups, church organizations, Employee Assistance Programs, counselors, non-profits, attorneys, CPAs, financial advisors, and even government resources. Do your homework, ask lots of questions about how can they help you, and how they have helped others in your situation.

#2 – You built it once; time to go do it again. No one’s said life’s going to be easy. At times, it’s not. I’ve talked to people who have lost it all; big time. For many, we forget that the pile of crap we are walking through, someone might have it worse. Sometimes the best way to rebuild is to be grateful for what we do have and realize that our situation could be worse. Though at times, it’s hard to see the forest for the trees.

Many times, we have to recover from a financial hardship or setback. For some it might be recovering from an unexpected $5,000 bill, for others, it might be that they lost their entire net worth. I’m here to tell you that if you built the financial resources the first time, you can do it again, and you know it.

It starts by examining your financial priorities and making some hard decisions you never thought you’d have to make. It’s not ideal because you never thought you’d find yourself in this situation, but you are. So returning to the basics is where to start. You will probably need to make some hard short-term decisions. Just go with it. Don’t fight it. Rip off the Band-Aid. It’s the slow rip that’s the most painful.

This might require selling your home, getting rid of stuff you really don’t need, cashing in your retirement account, taking a loan and list goes on. None of these are ideal but when you are in a tough situation, you need to explore all your options.

With your short-term decisions behind you, you can look toward mid-term decisions. What’s the plan for going forward? How are you going to pay yourself back, pay others back? How are you going to forgive someone else so you can move forward? Sometimes we need to reinvent ourselves. Do you need a new job that pays more or has better benefits? Maybe you need to change your living situation. It’s time to look at those decisions.

#3 – Bankruptcy – It’s the last resort, but it’s there if you need it. Our government has established a stop-gap measure and even a second chance option called bankruptcy. I recall a time when if someone filed for bankruptcy it was disgraceful and you were viewed as a bad or questionable person.

How many times did Henry Ford, Walt Disney or Famous Dave’s file for bankruptcy? Many. It happens. It’s a moment in time. It doesn’t define who you are, rather it’s a resource for a fresh start so that you never have to find yourself in the same situation again.

If you reached a point where you feel you’ve exhausted all your options, speaking with a bankruptcy attorney is a good option. They can educate you and help you determine if this is the right option for you and your situation.

You can recover from bad financial decisions. Shit happens. Life is short. Sometimes life is hard. But that doesn’t mean we can’t fix or find ourselves in a much better situation in a short period of time by making some hard short-term decisions. If you find yourself in this type of situation and would like a sounding board, please feel free to reach out. I’m happy to lend an ear and see what resources we can help put you in touch with.

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