Truth be told, personal finance isn’t the most popular topic in recovery for reasons we won’t get into, but this is exactly why it should be addressed. Imagine everyone trying to stay sober on their own – success stories would be scarce. Many of us have direct experience with the outcome of trying to get the results we want all by ourselves, and those results are typically slim to none on a solo venture. The same goes for recovering financially, something many of us are doing while recovering from addiction. When we connect, share difficulties with each other and ways to overcome adversity with resilience and triumph, this shared strength becomes a part of our own success story. What I have found is that the same concepts apply to financial recovery.
Money touches all areas of our lives – from health, relationships, quality of life and addiction, to deeper reflections of the human mind. From greed to generosity and overall self-awareness, many things can be reflected in a financial statement. To say “our lives were unmanageable” would also speak for most of our financial positions as well.
The most common causes of stress are money related issues. When the mind is stressed, it shifts to automated behavior as a way to free up energy while in this fight or flight state. This automatic behavior can also be referred to as habits, or the things we engage in without having to think about what we’re doing. Since drinking and drug addiction are unwholesome habits, stress causing us to resort back to old behavior can mean relapse for someone in recovery, and relapse could mean death. Because money is virtually never discussed in recovery, there could be a blind spot for many of us wreaking havoc in the back of our minds. Some of us are completely unaware of this problem, let alone having an understanding of how to ease the squeeze on our bank accounts. Through my own struggles with this topic, Personal Finance for People in Addiction Recovery was born; a book written for those in recovery trying to regain control over their financial lives. Looking back through my journey, there was a lot I would have done differently.
I started my life over at age twenty-five, new to soberiety, and deeply in debt. Life was truly unmanageable in every sense of the term. I had about seventy-five thousand in unsecured debt, no assets, had narrowly escaped a year sentence in jail. On top of this, I was about to do another bid for tax evasion if I didn’t get my act together quickly. Stress was an understatement as I channeled my addictive qualities into workaholism. This can easily be avoided, however. While maintaining a spiritual program that works for you and producing steady income, here is a six-step process for those starting out fresh in sobriety with overwhelming debt.
The Big Six
- Establish a Savings Habit: No matter how big or small, contribute something to the savings account every week. The habit is more important than the amount, even if you have more money coming out than you have coming in. As time goes on, the amount can be increased. Start with as low as five dollars a week if you have to! Automating the process can eliminate the need to remember to do this as well as keep the spending temptation off our minds, conserving energy in the process.
- Anything threatening your freedom or sobriety should be addressed first and foremost: Whether it be child support, alimony, tax evasion, or any sort of legal matter, our new lives can hardly be enjoyable if we’re running from the law in the same way we were active. Details can be worked out with a financial coach or a good friend. In very serious cases, an attorney may be a worthy investment.
- Take care of any debts in collections: There are a few reasons for this, but the most obvious is that this will dramatically increase your credit score. On top of that, collection agencies will offer great deals on debts paid off in lump sum. I personally received 40% off for three separate hospital bills! There is a catch, however. When in negotiation to settle the debt, ask that the collection’s agency be removed from your credit report. This will be sure to increase your credit score and createmomentum going into the next step.
- Debt Snowball & Debt Avalanche: Coined by personal finance guru Dave Ramsey, the debt snowball involves listing your debts smallest to largest and paying them off in the same order, regardless of the interest rate attached to the loan. Some of the lower balances can be eliminated, freeing up more money. As the balances get bigger, it may be wise to shift to paying off balances with the bigger interest rates to save more money long term. This method is known as the debt avalanche.
- Explore Refinancing Strategies: As your credit score increases, there may be additional options to refinance some of the loans. Restructuring a loan can help in two ways; by lowering the interest rate and lowering the payment. This frees up more money to attack the balance with, allowing you to pay it off quicker and relieve more stress.
- 6.Enjoy Life: It may seem silly to reward ourselves given our history of excessive self-indulgence, but this step is something I wish I had done more of myself. Instead of depriving and punishing ourselves with workaholism and frugality to pay for past mistakes, we should be quick to reward our success by leaving time and money available to enjoy our new life in recovery. This can help keep us on the path of growth and development if we leave time to enjoy the ride. Not only does this help avoid the pitfalls of workaholism, but it can increase our discipline in effective budgeting as we leave room for fun. Some may even choose to invest at this point!
Taking control of my financial life had a direct impact on my recovery and provided a stronger sense of maturity and responsibility as a provider for my family. With two kids and a wife, it did wonders for my self-confidence. I am now completely out of consumer debt and own two rental properties. I invest to free up my time so I can spend less of that time working and more time helping others. Without financial awareness, this would not be possible.
Brandon Turner is a family man, author, facilitator, and financial coach for people in addiction recovery