How Recovering Addicts Can Rebuild Credit and Get Back on Track Financially

Do you provide life skills training? I’ve provided teens with educational training on how to balance a checkbook and have a budget. Some of the teens in the residential program also have a small budget and they get real life practice. I’m sharing this article from Constance Ray (@Recoverywell.org) because I thought it could be helpful.

How Recovering Addicts Can Rebuild Credit and Get Back on Track Financially

Submitted by: Constance Ray (Recoverywell.org)

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Photo courtesy of Pixabay by nattanan23
If you’re working towards a healthier, happier life through addiction recovery, you’ve probably been attending recovery meetings to heal your addiction. You might see a therapist to heal your relationships. Perhaps you’ve even attended churches to heal your spirit. But what about your finances?
After entering addiction recovery, many people wonder how to get back on their feet financially. To keep money from creating additional stress while you’re overcoming addiction, here are some tips for getting your finances in order.

 

Rebuilding your credit is a good place to start. Your first step should be to check your credit report. Many sites offer this service online for free. Credit scores range from 300 to 850. Higher is better.

 

You’ll also want to take a look at your free credit report to see if there are any outstanding debts that have been turned over to collections. If so, come up with a repayment plan.

Try not to get overwhelmed, even if you have a mountain of debt. You might consider one of the following methods for debt relief:

 

  • Consolidation. Debt consolidation involves taking out one large loan, which allows you to pay off your debts in a lump sum payment each month. While debt consolidation can end the annoying collection calls and make debt repayment more manageable, it is important to do your research. Sometimes, debt consolidation is a bad idea and there are many predatory companies out there selling harmful scams. Do the math, know your interest rates, and speak to a financial advisor before consolidating debts.
  • Snowball Method. Another option is to take the snowball approach by paying off your debts in order from smallest to largest. As you pay down each debt, your confidence (and your leftover money) will increase, empowering you to pay off additional debts.
  • Debt Avalanche Method. Unlike the snowball method, which advises paying off your smallest debts first, the debt avalanche method advises paying off the debts with the highest interest rates first. This saves you money in the long-term, although this debt relief method takes patience and dedication.

 

In order to repay your debts, you’ll need a steady source of income. If you’re not already employed, this means it’s time to start looking for a job.

 

If your work history is spotty or if you don’t feel ready for the stress of a full-time job, just take things slow. You might be able to start with part-time or seasonal work to keep stress levels at a minimum. You can always increase your hours down the road whenever you’re ready.
Next, consider your spending habits. Some people try a drug multiple times and never get addicted; others can try it once and become hooked. The same is true with our spending habits. If you put everything on your credit card, don’t budget, pay your bills late, and purchase items you can’t afford, it’s time to get your spending under control.
If this is too overwhelming to do on your own, consider hiring a professional to help you get your finances in order. Many addiction recovery programs offer financial advice to help you get started.

If your recovery program doesn’t include financial services, you can still hire someone to assist you. A few examples might include a certified accountant, a certified financial planner, or a daily money manager.

 

Try to avoid debt relief scams by only working with highly rated, well-reviewed individuals and reputable organizations. When in doubt, ask a trusted friend, sponsor, or loved one if they have recommendations for professionals you might contact.

 

Climbing out of addiction (and debt) can be scary, but doing it can be one of the most empowering and transformational decisions you’ll ever make. As you continue rebuilding your finances, you’ll do so with the knowledge that you’re working to create a bright, abundant, and addiction-free future.

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