3 Simple Steps for Wrestling Your Finances into Submission

By on August 1, 2011
wrestling with money

By Sharon O’Day –

Finances, pesky finances.

Even those of us who seem to have our finances totally under control have bad days. Typically, it comes from being in financial overwhelm. If we’re not careful, those bad days may extend into weeks if we don’t nip the problem in the bud as soon as possible. If we don’t attend to our financial overwhelm, we risk facing unpleasant consequences.

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As with any other part of our busy lives, we expect that computers and other new technologies will 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 we have ATMs, online purchases from bankcards or PayPal, automatic deductions, phone-based text message contributions, debit cards, credit cards, gift cards and so on.

Keeping track of these various financial outlets can be exhausting. We have invoices and statements that are mailed to us. We view others online. Some, like PayPal, we have to hunt 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.

All this just for our current personal finances, which doesn’t include any investments, IRAs, etc.

This 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 in which you give yourself permission to stop rehashing what a mess your finances are in. Just 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 the very least, your credit will be in shambles. Not wise. This technique is often used by those who do not have a true understanding of personal finance. Learning about credit and personal finance is very important because it gives you the tools to ensure that you have money now and in the future. Understanding bankruptcy is also vital, as the more you understand it, the more you will want to avoid it. Many of the over 34 million people and companies that have filed for bankruptcy since 1898 could have repaid their debts, but chose not to because they did not fully grasp the consequences.

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. 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, how much credit is left on what credit card and all the little expenditures you don’t even feel yourself making called “bleeders.” But this won’t work for long. Eventually, you’ll wear yourself out, or forget something that triggers a spiral of late charges, unpaid bills and worse. Also not good.
4. 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 make a handwritten list of everything 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.)

Handwriting it 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. 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 that you don’t owe much on. 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 up. Then do it.

Next, look at everything you can eliminate. 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. Don’t overlook, however, the impact such an action might have on your credit rating. For example, don’t close credit card accounts just sideline them.

You’ll be amazed at how many things you can do without, with minimal inconvenience. By reducing the number of financial tools you must manage, your finances will be easier to get under control.

Step Three: Systematize or delegate. Now 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 1st and 15th 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. Just remember, you are only delegating the act of paying, not the responsibility.

Out of chaos, comes order. 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 your time and energy to make more money, save more money and release the financial genius you know down deep you are!

Sharon O’Day is the author of the upcoming book “Money after Menopause.” She’s a global finance and marketing expert with an MBA from The Wharton School. Sharon has dedicated the last 10 years to understanding the money issues that hold women back from reaching financial security. Website: http://sharonoday.com/,  Twitter: www.twitter.com/SharonODay,  Facebook: www.facebook.com/SharonODayFB.

About Sharon ODay

Sharon O’Day is the author of the upcoming book “Money after Menopause.” She’s a global finance and marketing expert with an MBA from The Wharton School. Sharon has dedicated the last 10 years to understanding the money issues that hold women back from reaching financial security. Website: http://SharonODay.com Twitter: www.twitter.com/SharonODay Facebook: www.facebook.com/SharonODayFB.

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3 Simple Steps for Wrestling Your Finances into Submission