Prepared by Script, semi-retired bookkeeper who has seen it all.
There is not one item on this list that I have not observed in the real world: in the lives of friends, family, former clients. In my own worst days, I was at a high Level 2, with some features from Level 3. Note: you are unique in your problems, so not every item in a certain category may apply to you. For example, even at my worst moments of high Level 2, my files always remained at Level 0.
What causes financial squalor: messes with money? A host of reasons: unemployment, illness, disability, divorce; poor investment planning, poor tax planning; depression, disorganization, unrealistic spending habits; gambling, drugs, drinking, compulsive shopping; legal difficulties, fraud. Each case is unique. For example, Script once prepared a back-log of financial statements for a dentist who had not filed income taxes in 10 years. The government had frozen his assets (Level 4). What caused his financial squalor? Paranoia and other mental illness, poor bookkeeping habits, inability to finish a project.
There is hope for everyone; even for those who see no light at the end of the tunnel. Sometimes the first step is the hardest: recognizing where you are and admitting that you have to make changes in your lifestyle, your attitude, your expectations. Script knew an engineer whose car was repossessed — Level 3 — because of a foolish lawsuit with his landlord. He has now regained his financial equilibrium after a business re-organization and change in attitude.
It is certainly possible for someone at The Bottom to get back up to The Top. In fact, there are any number of successful tycoons who had to 'start all over' after some financial disaster.
Some guidelines: Measuring your mess with money
Level 0 (The Top)
- All your papers, receipts, tax information, personal documents are filed and easy to retrieve.
- You pay all your bills on time all the time.
- You have an appropriate debt/income ratio: you are not overextended in consumer debt or mortgage, in relation to your income.
- You carry reasonable levels of insurance for your needs. You have a will that is appropriate to your assets and family situation.
- You have a high level of comfort with your income (enough for your needs); you have appropriate savings; you are confident of meeting your retirement goals. You and your family never worry about money.
- You are beginning to get behind on your filing. It is not as easy to find things anymore.
- Sometimes your bills are not paid by their due dates. You begin to incur interest or late payment charges.
- Your consumer debt has started creeping up; sometimes you are not able to pay your credit cards in full each month. You start 'putting off' minor home repair expenses.
- Your rent or your mortgage payments or your realty taxes are a little too high for your income.
- Your insurance may no longer be appropriate — too much or too little. You really aren't sure. Maybe your will is out of date too?
- Your income is not quite enough for you to make ends meet. You wonder if you should be saving more. You are not as comfortable about meeting your retirement goals. Once in a while you have a family spat about money.
- Your files are now seriously out of order. Routinely you are unable to find important documents. It is now becoming more difficult for you to prepare your taxes because of disorder at home.
- Your bills are past due almost all the time. You frequently receive calls from the utilities or credit card companies, inquiring about your account.
- Your credit card debt has mounted; you are routinely over your credit limit. You are unable to make major home repairs: roofing, plumbing.
- You do not carry appropriate life insurance; you have no will.
- You start missing one or two payments on your rent or your mortgage or realty taxes.
- Your income is not adequate for your lifestyle. You have specific worries about your savings: perhaps your investments are doing poorly. Your overall financial situation is causing increased family tension or personal anxiety.
- You no longer have a workable filing system. You cannot find important documents. You do not prepare your income taxes regularly, even if there is no tax payable. When you do prepare your taxes, you are unable to claim all your allowable deductions as you can't find the receipts.
- You are receiving calls from collection agencies; utilities or credit card companies send personal representatives to your home. Your wages are garnisheed for non-payment of debts.
- The utilities have been turned off in your home. You are more than one year behind on your property taxes or rent. Your mortgage is seriously in arrears.
- You are considering bankruptcy. You are thinking of selling your home to downsize. Your credit cards have been cancelled; your line of credit suspended.
- You are driving a car without a license or without insurance. OR you are unable to license the car because of outstanding parking tickets or unpaid traffic violations. OR your car has been repossessed.
- You experience suicidal ideation because you see your death as a possible financial benefit to your survivors.
- Your income is woefully inadequate for your needs. You are rapidly depleting your savings. You have major concerns about the future. You are having serious insomnia, anxiety or depression over your finances; frequent and serious arguments with family or partner. Your health is compromised with ulcers, other nervous disorders related to stress. You are not able to afford important medical care, drugs, or treatments.
Level 4 (The Bottom)
- The Government has seized or frozen all or part of your assets for non-payment of taxes.
- You have filed personal bankruptcy.
- You have lost your home: the mortgage has been foreclosed; or you have been evicted for non-payment of rent; or your municipality has seized your home for non-payment of property taxes.
- You are applying for public assistance and/or public housing. You have no income and no benefits.
- The stress over money issues has seriously weakened your health. You are hospitalized for depression, heart condition, a suicide attempt. Your marital tensions are so extreme that you are considering separation (or you have already separated).
What can you do about all this?
In all my years of work in the world of finance, I have never met anyone who wasn't troubled in some way about money or investments or taxes. The rich worry just about as much as the rest of us. So, just remember, "You are not alone." Now for some practical suggestions:
- Whoever you are and whatever your problem, start by accepting reality, whatever that happens to be. As FlyLady might say, "FACE the music: financial acceptance creates empowerment."
- Make a list of your outstanding debts (liabilities). Write everything down. However awful it is to see these numbers in black and white, you will have now taken the first positive step towards change.
- Make another list of all your assets. These may include: sense of humour, computer smarts, high pain tolerance, ability to lie convincingly on the phone. I said ALL your assets..
- Look high and low for extra sources of income. Get a part time job (I used to moonlight doing translations. Alas since I did the work at 4:30 in the morning before my 'day job', it was really "dawnlight").
- Take in boarders. Rent the basement. Sell the house. Downscale. Be creative! And be prepared to do anything legal to get out of this mess.
- If you are in the early stages of financial squalor, you might want to check out the material available on this site: "The SSSSSS Files". There are many simple suggestions available to help you before your situation worsens...The SSSSSS Files.
- There are financial resources, self-help groups and credit counseling services everywhere. A quick trip to MY local yellow pages shows a whole page of information on credit alone.
- Check the YWCA and local colleges for courses on money management.
- Likewise, for those who know that gambling or other addictions have added to their financial squalor, there are 12-step programmes everywhere.
- Perhaps your problems are more serious, and you are moving dangerously close to Stage 4. Take heart! We no longer live in Victorian England where debtors were thrown in jail (see Charles Dickens' Little Dorrit for a realistic portrayal of life in the Marshalsea Prison). No one wants you to be destroyed by financial squalor. Not the bank, not the mortgage company, not the credit card folks, not the tax auditors. It is not in anyone's best interest for you to fail.
- If you are interested in getting help, you will find it. If you are determined to dig yourself out, you can. Good Luck and never give up hope!
Copyright© 2005 Script. All rights reserved.