Our monetary lives were a mess back then.
It was hard to admit that we were a total wreck.
Especially embarrassing since I am the “money girl” in this family.
I have been advising others on money and debt management, as well as the deeper problems that money causes us, for the better part of 20 years.
Is it unimaginable for us to end up in such an awful place with all this knowledge, experience and wisdom about money?
As with many Americans, it happened slowly over time.
Little changes and warning signs that we handle. Drastic changes in the behavior of money are not required. Just one glitch. Nothing serious.
Now, we think so.
However, those initial little warning signs were bigger than we recognized.
How was it possible that we had lost them? Are they really that subtle?
All was well in the land of money. We had a nice home, a healthy 401 (k) plan, and income was flowing regularly. We drove good cars and paid our bills on time. We use credit wisely, something we think was required of us to build a good credit score.
He took regular vacations to nice places and celebrated parties and birthdays with delight.
We followed all the rules that financial experts suggested and for many years we kept humming it very well.
Until we didn’t.
And, in the blink of an eye, we crash and burn.
How was that possible if we followed all the rules?
What if the rules had changed and we just didn’t notice?
Perhaps we are following them incorrectly?
Or, what if they were ones that we shouldn’t follow in the first place?
Those were haunting questions, but the answers were so desperately needed. Not only for my own healthy financial life, but also for my clients.
I had to take a step back …
And take a deep breath …
Then dive into what really happened.
It took courage to look back at all the warning signs that we had overlooked and admit that we could have done something different back then.
At first, I punished myself. I blamed myself for my stupidity and ignorance. He chided and criticized my intelligence, knowledge and skills.
But then my anger washed over me and set me going. Enough with all that self-flogging. It was time to take action to reverse this wreck!
So what were the warning signs we needed to sit down and take notice before they got unmanageable?
You may be surprised by some of them, something that I had to embrace as well.
Here are nine of the most common warning signs:
1. Your house is too small or you feel compelled to buy a different one. You think a newer, bigger, or different neighborhood is better. However, you need more space for your things.
2. You refinance the home to pay off the debt. However, to pay for your car. Maybe more than once.
3. Believe that your home is an asset and your equity is healthy. You look great on paper, but you can’t put food on the table or pay your bills fairly. And, as long as you live in the house, you are a liability.
4. Use credit to pay for everything or to get things you don’t have cash to buy. Did you know that when you use credit to buy or pay for everything, you spend more? Up to 83% more. And by the way, if you don’t have cash, you can’t afford it.
5. You don’t save regularly or have an emergency fund. Just a glitch or an added cost could mean you can’t make ends meet or pay your other bills. Does someone puncture the tire?
6. You have a magical thought. You are convinced that everything will be fine no matter what you do or how bad it gets. Where is that magic wand when you need it?
7. Flaps or flies you across the seat of your pants. You have no plan or budget. You earn the money. You spend it. That’s.
8. You think you will earn more in the future. Even though statistics show that paychecks are flat, only a single percentage point increase in wages in the last 40 years.
9. You thought the financial roadmap you were following was right for you.
How many of these do you see in your financial life? Do any of them make you squirm a bit?
Did you object to any of them being a warning sign? If so, that in itself may be a warning sign!
After all, I didn’t see the big mack coming until it hit us squarely. I don’t want to be graphic, but it was a shock.
All it took was a financial recession in 2008 plus my husband’s company made a big layoff, so he was one of them. Add to that, our 401 (k) was cut in half and our house was turned upside down.
I realize that these were catastrophic life events, which most Americans would not financially survive.
However, we certainly would have weathered the storm better if we had heeded the warning signs early on.
Do you want to know what we did to change things?
* We accept responsibility for the mess we have made with our financial lives.
* We stopped using credit to buy things, in fact, we no longer use credit at all.
* We pay for and keep our vehicles.
* The only debt we had was our mortgage.
* We cut unnecessary expenses and pay cash for everything.
* We plan and track our money regularly.
* We don’t buy anything that we don’t really need and we get rid of things that we no longer use or want.
* And we don’t upgrade our house to “keep up with the Joneses!”
In other words, we made radical changes in life.
We admit we made a mistake, we take responsibility, we take a deep breath and change our ways. And, we design and follow our own monetary roadmap, not someone else’s.
Recently, we have even considered selling our house, depositing our money, and renting.
Those are radical people!
Maybe some of these ideas would work for you? Why not give it a try! Don’t wait for that big mack truck to catch your eye!