Funnily enough, personal finances have very little to do with finance and more to do with the way you think and behave. There are things you can do to feel better immediately about your money situation no matter how much financial stress you are under.
We think more money is going to help us (and yes it definitely can) but not as much as we think if our behaviour stays the same.
I have seen it time and time again, and I have also experienced it myself, there is a certain pattern to being deep in financial stress.
It starts with experiencing a setback (like losing your job) that creates money stress. From there all our instinctive money behaviours start to kick in…
Generally, our feelings towards the situation will become quite negative and fearful and this leads to a downward spiral. At this point, our money situation tends to go from bad to worse, and sometimes this can happen very quickly. It will spiral to a point where you feel like you just can’t take any more, you have hit rock bottom and there is no other choice but to make a change.
Turning your money situation around
This is the part where you decide it is going to change because you are so frustrated, angry or fed up that there literally is no other choice. You might not even know what it is you are meant to do, you just know you have to do something.
Even without knowing what to do this change in mindset will start to slow the downward spiral.
Now it is about making reacting differently. For a while, you are going to experience the same types of money issues and it is up to you to be aware of what you would have done previously and decide to react differently.
You might get an unexpected expense that threatens to set you back again. You may get hit hard.
The challenge is to ignore the associated feelings that come with the financial setbacks. Don’t feed the situation with any attention whatsoever. Give yourself some space to process your feelings and thoughts and respond differently this time.
When I am making any new changes, I love when this happens. It is a sign that I am on the right path. Obstacles exist to test your resolve… “Do you really want to be financially secure? I am just going to send a test to make sure!” The more you respond positively to obstacles the less they show up, and finally, they stop.
This is the next stage, things stop spiralling.
At this point you will find that the downward spiral has stopped, the obstacles are few and far between and your money situation has stabilised. It is not getting worse but it is not getting better, it does feel less overwhelming.
From here it is up to you to start making different decisions. The calibre of those decisions is what makes your money situation gain momentum in an upward spiral.
Break down your larger goals into small steps
There were a number of things that I did to get into that upward spiral and they really were about the way I was thinking about things.
I decided to break down what felt like a large challenge into smaller chunks that I could manage mentally and felt I could achieve. My overall debt was $30,000 at the time but it was made up of a number of smaller debts.
I had enough work to cover my baseline expenses so I knew that if I worked more I could put all that money that I earnt to debt repayment. I started to play a bit of a game where I worked out how many extra days I needed to work to pay off certain debts.
– Three extra days work would pay off the car.
– Twelve extra days work would pay off the credit card, etc.
Then I focused my thoughts purely on getting that three days work or twelve days work. It felt achievable and almost fun. When I did the work I felt grateful and positive about working because it felt like I had a purpose.
My debt reduced very quickly after using this tactic.
How to make a lasting change
The other shift I made was to ensure that I didn’t end up in this position ever again. It is true to say that the problems we have with money are not unique to money. If we have financial instability then if we look hard enough we will find that we have instability in other areas in our life also.
I looked at the rest of my life carefully to see where things were not as stable as I would like. Once I pinpointed these areas I set about making them stable. The impact of addressing all areas, not just financial, was surprising.
There has been such an improvement in my life, and that of my family, after all the changes. I am able to give that gift of stability to my children. Hopefully, that will become their normal.