Q: I have lost three homes to foreclosure and was forced to file bankruptcy. What do you recommend I do now?
A: Take a deep breath. You’ve probably been in fight-or-flight mode for many months or even years now, which can cause a constant state of panic and alarm, but also creates paralysis when it’s time to act. It’s time to simply stop and set yourself up for a successful recovery, emotionally and financially.
Your first step? Let go of any embarrassment, shame or judgment you are placing on yourself about what has happened. These emotions are counterproductive and will keep you stuck feeling less than your true worth, which can cause problems when you need to be in action to rebuild your financial life.
I want you to also start rethinking your experience with the foreclosures and the bankruptcy. This starts with the words you use when you think about it. The phrase "lost homes to foreclosure" and "was forced to file bankruptcy" imply that you were a victim of foreclosure and bankruptcy.
There might, in fact, have been a number of factors that contributed to your situation that were totally beyond your control. However, I’m a big believer that if you claim responsibility for where you are now, you can claim the wisdom of the lessons about what you can do differently to avoid ever being in this situation again.
Here’s a word trick to consider from the self-help world: Responsibility is the ability to respond. Start to look for how your own decisions and behavior created this situation. Don’t dwell on it to the point that you live in guilt, just get an understanding and file that away in your mental "Life Lessons Learned" file.
Here’s one more word trick I made up myself: Foreclosure is for closure. It’s not for drama, self-flagellation, beating yourself up or staying stuck in a poor mindset. You created a situation that eventually culminated in three foreclosures. You’re clear on the role you played.
Good — now, keep it moving. It doesn’t make sense to have experienced the costs of foreclosure if you’re going to stay in a mindset of poverty, self-blame, blaming the bank or any other stuck state that prevents you from thriving going forward. It’s done — so let it go.
And I’d encourage you to avoid spinning tales of these "losses" with others, outside of a therapeutic context. That’s one of the easiest ways to stay stuck and in the emotional depression that accompanies a personal financial depression like the one you’ve just come through.
I personally recommend "If the Buddha Got Stuck," a nonreligious book by Charlotte Kasl that is filled with strategies for kickstarting your new life. I’d also strongly encourage you to take a financial therapy teleclass from ConsciousBookkeeping.com, which will help you glean the lessons of your financial past and give you some concrete tools to reposition yourself for a prosperous future. …CONTINUED
1. Regroup. Do whatever it takes to experience closure from these traumatic experiences, including acknowledging how you helped create them. Make a conscious decision that you’re moving on with your life and putting these things behind you.
It’s true that you might not be able to buy and sell homes and use credit like someone who hasn’t had foreclosures or bankruptcy for a few years. That turns this next few years into a window of opportunity for you to step out of the consumerist lifestyle so many of us have led for so long and find out what is truly important to you.
Rethink this whole experience from trauma into opportunity, and cultivate positive anticipation about the life you have ahead of you and your power to make of it what you choose.
2. Reassess. There’s an old saying that poor is a state of mind, but broke is a state of accounts — the implication being that broke is something you can change over time. To really change what you have, strategically, though, you should first know what you have, who you owe and how much. Take stock of both your assets and liabilities, and don’t limit yourself to financial ones.
Also do a clear inventory of your nonfinancial assets and liabilities. Skills, talents, relationships and habits that either hold you back or have the power to move you forward in life should all be assessed and brought to the front of your mind.
Then, reassess what you want. How do you want your life to be next month, next year, and years from now? What is important to you? Spend some time with this question and, ideally, put pen to paper to document your vision.
3. Reposition. Put an action plan in place for how to get from where you are now to where you want to be. It might involve changing careers, changing your spending habits, moving away or even totally revamping your relationship with money. What it will take should be clear from your vision document. Once you know what you need to do, take a step or two (or three) back to determine what comes first.
Financial therapy? Getting a second or better job? Going back to school? Starting an automatic savings account? Slashing the spending? Paying off your debts (unbeknownst to many, if you’ve filed for Chapter 13 bankruptcy, you still probably have bills to pay).
Take the first steps to equip yourself to execute your action plan.
4. Recover. Recovery starts the day you take the first step. The day you sit down to take stock of what you have, what you owe, what you want and how you’ll get there is the day you can say you’re truly done with that hard phase of your life and are in recovery mode. Your recovery might not be quick, easy or without setbacks, but the sooner you start, the sooner you’ll get there.
Tara-Nicholle Nelson is author of "The Savvy Woman’s Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Ask her a real estate question online or visit her Web site, www.rethinkrealestate.com.
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