Financial Recovery--developing a healthy relationship with money by Karen McCall--Founder of the Financial Recovery Institute.
ISBN 978-1-57731-928-3
Published May 2011 by New World Library.
Info taken from my info sheets:
"On the surface, handling money seems so easy. It's just simple math, right? Spend less than you earn. Pay your bills. Use wha's left for optional things. If it's so simple, why do so many people struggle with money issues? According to financial recover expert, Karen McCall, "It's because our money behaviors are about more than math. Much more. Your financial life is largely determined by the quality of your relationship with money."
Karen McCall's story is dramatic: 27 years ago, she hit rock bottom. Though she looked successful on the outside, her finances were a catastrophe--she had a large growing pile of unopened and unpaid bills on the top of her refrigerator, and she was perilously close to living on the streets. "I had been living in a 'money coma' completely unconscious of my finances until desperate circumstances finally roused me. I HAD to discover what had led to my problems so that I wouldn't find myself in this situation ever again."
She went on to make some major changes in her life, and then to found the Financial Recovery Institute. In her 20-plus years of working with a large number of individual clients and groups, McCall has observed that people who have a hard time managing money often find themselves repeating money problems no matter how much or how little they have. They try budgets, and fail. They dig out of debt, only to find themselves right back where they started. Many have patterns of overspending, under-earning, or chronic debting. These lead to a condition she calls the Money/Life Drain, a force that sucks our energy and, without change, results in a stressful life lived under the shadow of shame."
My Review:
I dived right in to reading and kept on reading. My husband and I recently bought our own home, bringing with it paying full bills instead of sharing as we had before. We tried making out a budget, no help. I put together a bill calendar, no help. Bills were not being paid on time, shut off notices were coming in etc.
I read lots of this book out loud to my husband and told him that we are putting her practices into effect right away. To start, we found that I am what is called and under earner. I don't earn enough for the crafts that I make and sell, or for cleaning services that I provide. We found that his is an overspender. Ok, I knew he always overspent, he didn't, and still doesn't realize it. We are working on that. According to her book, the place to start is by keeping track of ALL money coming in and ALL money going out for 30 days. This has not been as easy task as most days he "forgets" just exactly how much he spent and tries to just tell me what he bought. This is going to take us more than 30 days, but he is getting better at handing me receipts as soon as he gets home.
This 30 days will tell use how to set up a spending plan....as well as where we are spending that is unnecessary or can be cut out, or down.
I like how throughout the book she shares cases she's helped with. We both seen ourselves in these many times. I feel like after reading Financial Recovery, we are well on our way to being able to live and enjoy the life that we enjoy.
I highly recommend this book as a must read no matter what your financial situation is. I also want to mention to visit her website at http://www.financialrecovery.com where you will find lots of free information and forms as well as some that have just a nominal fee to help you with your journey.
Now I want to share this:
By Karen McCall
Imagine how it would feel to have no worries about debt. There is a simple but powerful way to get out, and stay out, of debt. I call this strategy “Saving Your Way Out of Debt.” People get out of debt all the time. As with yo-yo dieting — when weight is lost, then regained — people often pay off debt, and then old habits resume and they find themselves carrying a heavier debt load than ever. The real challenge is staying out of debt. You probably spent your way into debt. Now it’s time to save your way out of debt.
Step 1. Avoid Deprivation Mode
People assume that they must cut out everything that is fun or pleasurable until their debt is paid off. Leaving essential emotional and physical needs unmet sends us into deprivation mode. Deprivation often leads to overspending. Overspending often leads to more debt. Identifying your essential needs and building a spending plan that meets them (even in simple ways that don’t involve spending money) is vital during the process of eliminating debt.
Step 2. Stop the Leaks by Stabilizing Debt
Prematurely paying down debt while still using credit cards keeps you stuck in the debt cycle. This is like sitting in a boat with a grapefruit-sized hole in the side and bailing out the gushing water with a thimble. The most foundational step to freeing yourself from the debt cycle is debt stabilization. It’s nearly impossible to stabilize your debt while you continue to use credit cards. Stabilizing debt simply means that you stop adding to it.
Step 3. Build a Firm Foundation with Periodic Savings
One common myth is that we can’t begin saving until we are debt-free. In fact, saving right from the start is the key that will free you from the yo-yo of the debt cycle. Start by building periodic savings. This is money available to meet periodic, non-monthly expenses, such as car insurance, taxes, and family vacations — that’s right, the obligations and the fun stuff. Life happens. Surprises always crop up. Without savings, we resort to using credit cards. Then we’re back in the leaky boat, bailing away.
How do you save when money is already tight?
Make minimum payments on all but one targeted debt.
Reduce optional spending for now.
Look for creative ways to bring in more money.
Saving your way out of debt may seem slow at first, but eliminating debt forever will pay for itself a thousand times during the course of your lifetime.
Step 4. Use Periodic Savings Guilt-Free!
Most of us feel that savings are not to be touched. Periodic savings are meant to be used, guilt-free, to pay for periodic expenses rather than charging them.
Step 5. Reduce Debt with a Proven Strategy
Once debt is stabilized and you’re building your periodic savings, you’re ready to start reducing debt. Designate whatever amount above the minimum that you can pay toward just the targeted debt. When that’s paid off, roll over the payment amount to the next debt target, until you’re eventually debt-free.
The higher your debt, the slower the process of debt reduction will be. But please, reassure yourself: going slowly in the right direction is enormously better than going in the wrong direction at any speed.
Step 6. Build Your Safety Net
It’s important to have a plan for the possibility of an interruption of income. A Safety-Net Savings account is designed to cover your living expenses if your income is interrupted for any reason. Your Safety-Net account is to be used only if you have an interruption in income. Once you’re no longer paying off debt, you can roll that money right into savings without changing your monthly spending plan one bit.
Acrobats on the high trapeze always have a safety net below. This offers the acrobats not only protection, but also the confidence to really fly. Safety-Net Savings protects us, but it also offers us the freedom to create new career possibilities rather than feeling trapped in jobs that make us unhappy. That’s why I think of this account as a “freedom fund.”
Step 7. Celebrate Being Debt-Free!
Living debt-free may seem like a fantasy, but I have celebrated this reality hundreds of times with people who have used the saving-your-way-out-of-debt plan. Clients have literally danced in my office after they made their last debt payment. I’ve danced with them! Be sure to celebrate your accomplishments. You deserve it.
Step 8. Plan for the Future with Long-term and Investment Savings
Periodic and Safety-Net Savings not only keep us out of debt, but also protect our investment and retirement accounts. With Periodic and Safety-Net Savings in place, your long-term savings are truly secure.
Step 9. Resist the Seduction of a Zero Balance
Once you’ve eliminated debt, those big zeros on your credit cards can call to you. Instead of succumbing, use your periodic savings to pay for non-monthly expenses. Learn to delay optional purchases until your savings grow enough to make them. Enjoying a special purchase that is made without incurring debt doubles the pleasure.
Step 10. Enjoy Real Financial Freedom
By leveraging the power of savings, you can free yourself from debt once and for all. Debt-free and secure, you can experience financial serenity. Imagine a life without being confined by the cage of debt and the stone walls of worry. Saving your way out of debt is a powerful tool in securing a healthy relationship with money at whatever your income level.
Karen McCall is the founder of the Financial Recovery Institute, an international organization for financial counseling training. Her latest book is Financial Recovery: Developing a Healthy Relationship with Money. More information can be found at www.financialrecovery.com
Based on the book Financial Recovery. Copyright Ó 2011 by Karen McCall. Reprinted with permission of New World Library, Novato, CA. www.newworldlibrary.com or 800/972-6657 ext. 52.
Disclaimer: I received Financial Recovery from New World Library along with promotion materials for the purpose of this review. I was not compensated in any other way and all opinions are my own.
