How to Rebuild Your Finances Post-Addiction

Dealing with the aftermath of addiction can be overwhelming, especially if it’s left your finances in freefall. Whether your debt has spiraled out of control or you’re saddled with a bad credit rating, many people in recovery face some level of financial crisis post-addiction. The reality, though, is that financial troubles aren’t exclusive to addiction.

In fact, headlines like 76 Million Americans Are Struggling Financially Or Just Getting By or 63% Of Americans Don't Have Enough Savings To Cover A $500 Emergency show just how common financial worries are. So how can you fix it? myAutoloan has some tips to get you back on track.

Accept It

Now that you know you’re not alone, it’s time to let go of the negative emotions that can go hand in hand with financial worries. Perhaps you feel embarrassed by how you got here. Or, you equate your financial crisis with personal failure. You may even find you’re in one of the five stages of grief: denial, anger, bargaining, depression and acceptance. The first hurdle to financial recovery is to move along to Stage 5 as quickly as possible. You know where you are, accept it and focus on moving forward.

Add a Second Job

A second job won’t just help you get out of debt faster, it can also provide valuable social opportunities that can boost your addiction recovery plan. Also, knowing you have a backup plan should something go wrong with your primary employment can lessen your stress load.

When you’re looking for a job, your résumé may have an employment gap where you’ve been dealing with addiction and recovery, think ahead and be prepared to explain your time off.

Trim Your Expenses

Take a look at what you’re regularly spending and find ways to be more frugal.

• Shop for lower car insurance rates.
• Eliminate or renegotiate your cable service.
• Consider a low-cost cell phone plan.
• Eliminate subscriptions like Netflix or Amazon Prime.
• Go on a money diet.
• Try to find an apartment with lower rent that still meets your needs.

Make a Budget

A close examination of your expenses has helped you learn what you can and can’t live without, and this makes a good starting point for creating a budget.

1. Calculate your total monthly income. This includes your after-tax income/s, any Social Security payments, and any other income.
2. Calculate your monthly expenses. This will include all of your regular recurring bills, such as mortgage/rent, utilities, insurance, cell phone, cable service, and groceries.
3. Subtract your expenses from your budget to see where you stand. If you have extra income, create a financial goal for saving. If you don’t, consider adding that second job.
4. Once your budget is established, you’ll need to track every single expense; this is the best way to control your money. Consider using a resource like EveryDollar to help manage this process.

Repair Your Credit

During your recovery, you may have damaged your credit score. Fixing it takes some time, but start by following these steps.

1. Get your credit report for free at AnnualCreditReport.com, and make sure it’s accurate.
2. Resolve any disputes on the report.
3. Write a goodwill letter to any creditors asking forgiveness for late payments.
4. Look into auto financing with a reliable, professional company that will give you a good deal.
5. Establish some better credit habits. If you can, take out a small loan and pay it back immediately. This proves you’re able to manage your debt to potential lenders. If you can’t get a loan, consider applying for a secured credit card instead. Secured credit cards are reported to the credit bureau, and can help improve your credit score.

Avoid Scams

Once you’ve had credit problems, you can become the target of all sorts of consumer scans.

• Don’t pay for credit repair.
• Don’t settle for a higher loan rate.
• Watch for words like “bad credit, no problem.” This scam offers credit for up-front fees.

As you embark on a more stable financial future, don’t be hard on yourself. Remember where you’ve been, and how far you’ve come. A well-planned, patiently-executed plan, and one that doesn’t rely on quick fixes, will lead you back to financial freedom.