Every financial comeback has three parts. You can subdivide these three things into as many as you need to fit your personal circumstances, but each of them will fall into one of these categories: Closure, Cleaning, Credit.
1. Complete, finish, end, stop, move on, and get done with it
Call it what you want: personal financial collapse, crisis, meltdown, breakdown, or disaster. “It” is the event or the combination of events that led to the loss of your income, assets, credit standing, and financial reputation. The first step of your recovery is to get past whatever it is that caused your financial problems. You have to stabilize again. Think of your situation as a leaky boat. Your first job is to fix the leak and stop taking on more water.
Take some examples. If you lose a job, you must find new employment. Divorce? You must wait until it is resolved and your income and expenses are predictable again. And if you are filing bankruptcy, you must complete the process and obtain a discharge order.
Your first step is to get past whatever it was that started your problem. You can’t make a fresh start as long as you continue to sustain new injuries. Do any of these that fit you, and find more of your own.
- get well (find the new normal for your health)
- get a new job, get a better job, get a second job
- finish your divorce and call your creditors
- give up the house you can’t afford
- get help for a spending addiction and stop wasting money
Recognize you have started over. Life is a long series of changes. Understand that you have entered a new phase of your life.
2. Clean up, do the laundry, fix your credit, dispute CRA reporting errors
Your next step is to bring order to your new life. Once you have stopped a leak in your boat, you have to bail the water out, right? The same is true of your fresh start. You have to clean up any mess that is still hanging around, organize your new circumstances, and start taking action.
Clean out your closets, both the physical closets and the mental ones. Have a garage sale or give to Salvation Army. Move your furniture around a bit. Do a little home and auto maintenance. Get a new daily exercise routine. Eat right and get plenty of rest. Yes, believe it or not, these activities will help you with your financial recovery.
For your financial recovery you will need to clear up your credit reports. You need to ensure that the Credit Reporting Agencies (CRA) are giving you the best report possible.
- Get your credit reports from the three major CRAs
- Dispute errors, inaccuracies, and unverifiable information
- Repeat, repeat until you are satisfied that you have done all you can to remove negative info
- Try it on your own, but if you need help, hire someone to help you
- Opt out; take your name off of marketing lists
- Add your phone numbers to the federal Do Not Call registry
Most anything used right now by marketing companies and CRAs will be connect with the past, so lower your profile. It will grow back as you make new history.
3. Make New Credit History
Join a new community organization, start a new hobby, go back to school. Get involved with your church, do meals on wheels, help others. All of these activities will help you make new friends. Filling your life with good thoughts and good deeds is the surest way to enjoy a good life.
Regarding your financial recovery- If you don’t remember anything else, remember this: Simply clearing up your credit history will not remove the cause of your breakdown, and it will not create any good news for your credit report. If you don’t have any credit, then you are not adding any more bad news to your credit report, but you are not adding any good news either.
Getting new credit, using it wisely, and making payments on time is the only way you can make new positive credit history.
This post is getting pretty long, so we are going to stop here by noting that we have said before why we like AddvantageUSA. It is a good place to start getting new credit. Start with them, but don’t stop there. After you have used your account for a while, you should see some improvement in your credit rating. If so, you can start looking for other opportunities to expand beyond the AddvantageUSA credit offer.
More to come.