Finances, pesky finances.
Even those of us who seem to have our finances totally under control have bad days. And those bad days may extend into weeks if we don’t nip it in the bud. It usually comes from overwhelm.
As with any other part of our busy lives, we expected that computers and other new technologies would make life simpler and leave more time for plain ol' living.
However, in the past we only had to check our checkbook balances and look at paper receipts to know what cash we had spent and what we had available. Today it’s ATMs, online purchases from bank cards or Paypal, automatic deductions, phone-based text message contributions, debit cards, credit cards, gift cards, and so on.
And how do we keep track? We have invoices and statements that are mailed to us. Others are online. Some, like Paypal, we have to go hunting for. We might use online services like Mint.com or CommonSense or Quicken (to name but a few) to consolidate things. Or we might try to do it all manually.
Now that’s just our current personal finances. Not to mention any investments, IRAs, etc.
And that load might double if we own a business!
So if you’re feeling overwhelmed, unmotivated, and stretched too thin, you have the right to take off that Superwoman cape every so often. Turn off the incessant chatter in your head. Take a day or two where you give yourself permission not to keep rehashing what a mess your finances are in. Breathe.
But not for too long. Because the world didn’t take that day or two off with you. Life moves on regardless. And any backlog will just get worse.
Once back and focused, you do have a few choices of how to handle the situation. Some are healthy and some are not.
1. You could stick your head in the sand and totally ignore things. Known as the Ostrich Method of Personal Finance, this one catches up with you eventually and by then the chaos is so great, you might find yourself facing bankruptcy. Or at least your credit will be in shambles. Not wise.
2. You could just deal with the “screamers.” (As in “He who screams loudest gets my money.”) Those are the bills that have red letters on the outside of the envelopes. Or the calls you’re getting from creditors…or collectors. Again, your credit will be ruined and your nerves will be shot from the anxiety. And eventually the whole thing will come toppling down on you. Not smart.
3. You could keep juggling things the best you can, trying to remember all you have to pay, what’s due when, what’s where, what’s siphoning off which account, what credit’s left on what credit card, and all the little expenditures you don’t even feel yourself making, called “bleeders.” But not for long. Eventually you’ll wear yourself out, or forget something that triggers a spiral of late charges, unpaid bills and worse. Not good.
4. Or you could take the time to give yourself every chance to succeed with your finances. You could “wrestle” them into submission in three simple steps:
Step One: Do a handwritten brain dump. First, take a deep breath. Then do a handwritten download of everything you can think of that needs to be done regarding your finances. (No computers here!) Unless you have a clear picture of what you’re dealing with, you will see your situation as worse than it is. (Overwhelm will do that.)
Writing it all down on paper becomes a sort of cathartic brain dump. That, in turn, frees up space in your head for you to be more creative in your solutions. And it doesn’t matter if you hate writing and haven’t held a pencil in your hands in years. It’s important to have the physical sensation of writing and visualizing what’s going on…in your own letters and numbers…for you to own where you are and feel the true impact of what you need to do.
Step Two: Simplify, simplify, simplify your life. Besides all the payments you have, you also have all sorts of open loops: car insurance you keep saying you want to re-quote to lower your premium; rebate forms to send in; charges on your credit card statements that you don’t recognize; or doctors’ bills that didn’t go through the insurance company and you know you don’t owe that much. These are soul-suckers. So, unless you’re rich enough to tear them up and forget about them, make a list. Cross off the ones you decide aren’t worth the effort. For each one that stays on the list, gather the backup information, plus contact numbers, and pick a day when you promise yourself to clear them all up. And do so.
Next, look at everything you can get rid of: pay off credit cards with tiny balances and stop using them so you have one less statement to deal with; pick one debit card and lock all the rest away so they don’t get used; consolidate bank accounts that don’t have any justification other than your laziness to close them; get radical in paring back every financial tool you can live without. But don’t overlook any impact such an action might have on your credit rating (for example, don’t shut down credit cards, just sideline them).
You’ll be amazed at how many things you can do without, with minimal inconvenience. So many were just added over the years, without removing old ones. And by lowering the number of financial tools, your finances are easier to get under control.
Step Three: Systematize or delegate. With far fewer financial tools to deal with, it’s easier to set up systems for what remains. One thing that helps is to have all bills coming due at the same time, unless you’re paid twice monthly, on the 1 and 15 of the month. In that case, you might want to split bills between the 5th and the 19th to be sure your deposits have cleared. A simple call to a service provider will usually result in a changed due date, with a one-time prorated adjustment for the extra days covered. At that point, all you need to do is schedule an appointment with yourself to pay bills twice a month.
If you have a friendly bookkeeper, you can delegate some of the tasks to that person. But remember, you are only delegating the act of paying, not the responsibility.
Out of chaos, comes order. And out of order comes clarity regarding the inflows and outflows of money. Out of clarity comes a feeling of control…critical control that frees up time and energy to make more money, save more money, and release the financial genius you know down deep you are!