Small Steps, Long Term Results

They told me it wasn't going to happen overnight – and they were right.

While trying to dig out of my financial ditch, I looked for quick solutions everywhere. Cashing in retirement savings to keep my car on the road. Using credit cards to make loan payments. Borrowing money from family to make ends meet.

I wasn't fixing the ditch. I was digging myself deeper.

You may have heard this before, "The first step to getting better is admitting you have a problem." I heard the phrase plenty of times, but never wanted to apply it to my own situation.

In my case, it was a problem with debt. Similar to other significant life challenges and financial problems, my circumstances had real world consequences and long lasting effects. To this day, my experiences living with poverty changed how I think and feel about money – and how I use it.

Here are a few things I learned on my own path to financial recovery. If you're experiencing something similar, hopefully these steps help you stop digging and start repairing.

Financial hardship can start to dictate your life. But it doesn't have to.

Recruit financial allies.

It wasn't easy to ask for help, but doing so made the biggest difference in regaining control over my personal finances. For me, the allies I enlisted were Visions, my older sister, and her spouse, my brother-in-law. They became my accountability partners, and we met regularly to help me stay on track.

If you're trying to pick a team, keep in mind your finances should stay private, so you should choose people you really know and trust. Think of your credit union and your inner circle. Probably not your barber, unless they happen to be your closest friend.

At first, I thought a financial institution like Visions would be the last place to turn, but that wasn't the case at all. It's one of the big differences between credit unions and banks – credits unions have people at the center of their mission, instead of profits. They're committed to service.

By the end of my first meeting, I learned that Visions offers a free financial counseling service, budgeting tools – all kinds of support – and it's not only for people who were in the same boat as me, but also for people who just want a second opinion about their goals and financial plans. The biggest relief was that most of these resources are free and easily accessible online.

Request settlements and payment plans.

My financial wellness coach at Visions helped to guide me through the next steps. The things I had been avoiding–¦

While I was behind on utilities and bills, I avoided contact with my service providers. I was expecting some kind of verbal abuse or beratement, so the thought of it gave me a feeling of dread.

Then, sitting down with my financial wellness coach, I learned that I could call the companies or write them a letter to communicate my circumstances. That's when I learned the term "financial hardship," and it's surprisingly common. They say over a third of US households face similar hardship sooner or later.

Somehow, writing about my financial hardship was easier than talking about it. I could work through my emotions and think about my words, instead of letting my guilt or frustration get in the way.

After writing an official hardship letter to these companies, I felt a huge weight off my shoulders.

Ultimately, this honest communication helped me to define a path forward. Being honest with my debtors helped me to add up my exact bills, my overdue payments, and determine which paid services were or weren't necessary in my life – or in my budget!

The companies worked with me to establish payment plans so I could catch up. Some of them even accepted "good faith" installments, so that my main utilities didn't need to be shut off. Within less than six months of slow, steady payments, my credit score started showing significant improvements.

Find affordable alternatives.

Working with my financial coach and allies, I addressed one of my other roadblocks: my budget. Without understanding how to budget, even if I managed to pay off a few debts, I could have easily fallen back into the same old traps.

My budget – the system of record-keeping, allocating, and tracking my income – would be my ticket to change. It helped me to define which expenses are necessary, which ones aren't, and how to explore a truly affordable lifestyle.

That's the big thing with a budget. You have to decide what you can and can't afford, but sometimes it's not as clearcut as you want it to be.

For example, I can afford a car payment while saving for some repairs. I can't afford an expensive new vehicle, especially one with a higher insurance cost or low fuel efficiency. For now, I'm sticking with the affordable option, and attempting to save for something nicer in five years.

Just like that, I'm reframing how I look at my expenses. Once upon a time, I thought if I was earning $750 per month, then I could spend $750 per month. I realize, now, that I was preventing myself from saving and investing. I was unable to pay bills when they began to fluctuate. I couldn't afford medical expenses when I was injured. And when my car needed maintenance, I was stuck asking for favors.

Always put a portion of your income into savings and decide which expenses are fixed and necessary. Then – and only then – can you accurately assess what's affordable for your budget.

Consider Consolidation

My last bit of advice is to try to consolidate your debt. My brother-in-law mentioned this as a good idea, but I didn't get to it right away. That was part of my biggest frustration as I started to tackle my debt. My credit was too low. But I didn't feel comfortable letting my family cosign.

I wanted to take that ownership and be responsible for my own debt.

If you need help with credit, you may discover – like I did – that it takes time to improve your credit score. But that time pays off.

It was such an accomplishment to consolidate the debt and know that my loans only needed one payment to one financial institution each month.

In the few years since my "financial rut," my personal finances finally feel healthy – and my stress and social anxiety have even improved.

Take those small steps and really commit to long term changes. It pays off. Trust me.


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