Time for a Financial Do-Over? Tips for Turning Things Around


Let’s face it, a lot of us are bad with money. How we got here is usually a combination of factors, from picking up habits from our parents who weren’t the most financially savvy to not being able to see the long-term consequences of our poor choices.

You know you need to do something, but it is very easy to stay in bad situations for the sheer fact we are comfortable in them. Making a change requires admitting there is a problem, and that can be hard to do. Most people are in deep denial about their finances.

If you have reached the point where you really feel ready to do something, congratulations. This intention is powerful, and can get the ball rolling on making real changes in your financial situation. Here are just a few tips to get you started:

What Is Worrying You Now about Your Money Situation?

This part can be a bit unpleasant because you will have to face all your money fears; you are probably going to get really mad at yourself for being how you have been, and wishing you had done something sooner. Resist that urge. You can’t change the past.

So, what specifically is bothering you about your finances? Is it your paltry savings account that would only cover expenses for a few weeks should you lose your job? Is it your neglected retirement funds? Is it your debt? Do you feel you are irresponsible with money? Is your credit score in the toilet and you are planning on applying for a major loan in the near future?

By defining your money fears, you set the foundation for change. These specifics will help you devise strategies and goals.

Assess the Situation and Start Taking Action

Again, this part may not be fun because it involves really facing everything head on. First thing you need to do is crunch some numbers. How much money are you bringing in, and how much is going out? What are your bills every month? What are you spending on various activities? If you use your debit card a lot, checking out your past bank statements can be a big help in seeing where all your money is going.

You are going to need to make a budget. You can’t get in control of your money unless you have a greater awareness of how you are using it. This doesn’t mean obsessing over every dollar or never doing anything fun again. But, you have to have some sort of framework.

If you are behind with bills and have been avoiding creditors, it is time to face the music. In most cases, they are willing to work with you in setting up a payment plan.

Check your credit report to ensure everything is in order; there is the assumption that such an important record would be free from errors and this is not the case. Even something like an incorrectly reported credit limit could lower your score because it inaccurately reflects the ratio of debt to available credit.

If you see mistakes, it might be worth it to get in touch with a credit repair company for assistance. It is important to note here you can only fix legitimate errors—you can’t just have unfavorable information removed. Be wary of any company that makes such claims.

When deciding to take action, it is a good idea to just focus on a couple of things at a time, lest you will feel overwhelmed and end up doing nothing.

What Does Your New Financial Life Look Like?

Give some thought to your ideal financial life. What images and thoughts come to your mind? What goals do you hope to accomplish? How do you feel? This can be a very useful exercise to get you into a better mental space. When we have a specific vision, it is much easier to make positive changes. This vision can serve as a source of motivation, and make it easier to make the necessary changes.

Remember your money habits are based on beliefs and thought patterns up until this point—once you change what is happening upstairs, your situation has no choice but to change along with it.

4 Responses to Time for a Financial Do-Over? Tips for Turning Things Around

  1. I totally agree with the problem most households have with denial. There is no way to fix something you don’t recognize as broken. The only people in my financial education workshops that I truly worry about are those who make it clear that they already know everything they need to about personal finance. Ironically, they’re quite often also the ones who complain most about their financial problems.

    Regarding credit report errors, please keep in mind that disputing them first directly through the credit reporting agency (where you got your credit report) is both simple and free. It’s not guaranteed to work, but the 30 days it takes (maximum) to get a response is usually more than worth the $500 to $1,500 many credit repair agencies will charge to do essentially the same thing.
    If you have trouble getting the error corrected, consider approaching a local credit counseling agency for guidance. If that still doesn’t help, that is when using a credit repair organization may (and I emphasize the word, “may”) be worth the cost.

    Thanks for the post!


  2. Abigail says:

    Easier said than done of course, but I think another key factor is not to beat yourself up too much about the past.

    Not to the point that you slip back into old habits. But beating yourself up about things you can’t change — “If only I hadn’t taken that expensive vacation.” or “If only I hadn’t bought these designer clothes.” — will deduct energy from your current efforts.

    When you find yourself dwelling on “if only” it’s important to think about/list/say out loud a couple of things you’re doing to fix it and avoid that sort of thing in the future.

    That keeps your focus (and energies) on what you’re doing now.

  3. I used to spend more than I earn before and I was living from paycheck to paycheck. I had a budget, but at the same time didn’t follow it. I had lots of financial mistakes before and I learned from it, now I’m trying to stick to my monthly budget while keeping track down of my expenses and income.

  4. If you want to make a change, you have to start SOMEWHERE. Your course may need to be tweaked along the way, but if you don’t start, you’ll never finish!

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