Everyday Triumphs

Surviving My Personal Money Crisis

My pivotal moment was fifteen years ago, but I remember the day like it was yesterday.

It took a big emotional crisis for me to acknowledge the problem.

A few years out of college, I was out of control. I wasn’t making crazy or unhealthy life decisions, but I just had no idea what my financial situation was. And I ignored it because if I thought about it, I knew I’d see my future was bleak and I was heading for disaster. But over the course of two months, my life changed so much I couldn’t ignore my finances anymore.

I lost my job, my apartment, my car, and my girlfriend, all because I made a few personal mistakes. Moving in with family was my rock bottom, and I knew I couldn’t stay there. I moved into a relative’s basement and I finally acknowledged that I had a problem with money.

Sometimes the realization doesn’t come until a pivotal moment like this. At this point, you need to take a step back and face the problem head-on.

Then I decided I wanted to improve my situation and begin my life’s next chapter.

After the emotional distress of rock bottom, I had no other choice than to move forward. I decided to take control of my money, make better decisions, and carve out a future for myself that would allow me to prosper. I started making a number of major changes in my life that day, and now my life is a great example of how those decisions helped me achieve what I wanted.

It started with a budget. Looking at the numbers, writing them down with pen and paper, made my life real. I could no longer ignore my student loan bill or the fines for speeding tickets that led to losing my driver’s license. I couldn’t ignore my credit card, which helped me pay for the long commute to my non-profit job before the loss of both my car and my job. The numbers became real.

My plans for changing the world through a nonprofit were suspended when I had to find a new job accessible by train. With a new job, sufficient income, and reduced expenses, I was able to see positive progress.

The biggest impact on my finances came from tracking my finances publicly. I started a blog. I charted my progress and shared what I learned about money management. With feedback and encouragement from readers, I was determined to show my life was moving in a positive direction financially. Now there are thousands who share their financial progress online and millions more who use online tools to track their progress privately. Thanks to sites like Mint.com, organizing money information is easier than ever.

Here’s the strategy that works:

  • Start by paying attention and stop ignoring bills. Look at money coming in and going out.
  • Get organized. Use pen and paper or personal finance apps to make those numbers real.
  • Get support. Ask family, friends, and even strangers for encouragement. Nobody has to face difficult financial situations alone.

Once I wasn’t living paycheck-to-paycheck, I could ease up and focus more on the future.

While I was getting my finances out of the hole, I tracked every single penny. It bordered on obsessive, but it helped.

When you’re not in danger of ending each month with less money than the previous month, and when you’ve started to do a good job of building up savings, you can ease up. Tracking every cent is a good lesson that can prepare you for making better decisions when you do have more of a financial cushion. Now I don’t track every penny, but I do monitor my accounts frequently to avoid surprises.

With control, you’ll make better decisions. I was able to build a successful business, and now I have the opportunity to make a bigger impact with my life both inside and outside of that business, taking me back to my initial desire to change the world through a nonprofit. That may not be your personal goal, but whatever yours may be, you can get there by taking control.

Luke Landes is the founder of personal finance blog Consumerism Commentary and is a writer and speaker covering all aspects of personal finance and money management. He is also the founder and executive director of The Plutus Foundation.