What to Do When You're in Debt

Hitting financial rock bottom

This weekend I went to a financial seminar. Not usually how I like to spend my Sunday, but it was the grown-up, post-divorce, single-mom, responsible thing to do. I like to think I know a bit about managing my money, and that’s because of my dad. Jeff Green has two hard and fast rules that were ingrained in the Green kids, that I still live by today.

  1. Pay off your credit cards every month. You may think this is nuts or impossible, but I live by this rule. I repeat, I LIVE BY THIS RULE.
  2. From your very first paycheck, contribute the maximum you can to your 401K.

I’d love to tell you that because of these “commandments,” I’ve never been in financial trouble. HA! It’s true, I’ve never had credit card debt and I am proud of my 401K. But, alas, here’s the story of my financial rock bottom.

It was the week my divorce became final. I’d taken a trip to visit a sick cousin and purchased Bruce Springsteen tickets (a non-negotiable purchase). I was up to my ears in divorce lawyer bills, and because I was so sad, I’d purchased a new pair of boots—retail therapy really helps!! Then I received an email from the bank stating I was overdrawn. Impossible! I went to the bank in person to take care of this obvious miscalculation.

Truth time: I was overdrawn.

The stages of debt/grief began. I denied, it, then I felt sick, then I got angry and belligerent with the banker. I made them go over the numbers with me for the thousandth time, and then I just cried, right there in the bank. I was a mess. I had no money. But from there, from the floor of the bank, there was nowhere to go but up. Organizing your budget when you start at $0 is fairly easy.

Often it takes a devastating a life change, like divorce or financial ruin, for people to fully claim ownership of their financial responsibilities. And for me, it could have been a lot worse. My dad’s rules are still my Bible, and they helped keep me from deeper debt. The financial seminar this weekend (Affiance Financial) was all about how to talk to your kids about money. Thank you, Dad, for doing this in the ’70s! And even though my oldest is only 11, if she receives Bat Mitzvah money next year, we’ll have that talk and she will become a tween investor.

As for me, remember the boots I bought during retail therapy? I never wore them. I returned them, and I like to think of them as the metaphoric bootstraps I used to pull myself out of debt.

Steve Lear from Affiance Financial will be on my show tonight to share tips about talking to your kids about money, so tune in or catch the podcast.