Ron at The Wisdom Journal wrote about this recently, and, while I was not among his taggees, it seemed like a good topic to reflect on here. Thanks for the opportunity to play, Ron!

1. When downsized, not cutting back on spending or expenses. When I got downsized, I received the highest rate of Unemployment Insurance the state I had worked in offered. However, instead of cutting expenses, I spent a lot updating my presentation because I figured the better I looked the better my chances of getting a job at a similar salary. Also, I was trying for positions at the level I was training for when I had been downsized, and felt I had to dress “up to the position.” A year later, when I had gotten no jobs and no temp work at all, I was forced to take a job at about 1/3 my former salary, to which I could wear tee shirts and jeans. I was left with huge credit card debts, and the clothing got passed on to a friend who had just gotten a corporate job.

2. Depending on friends/loved ones/relatives to bail me out. It’s nice to know people are there for you, and turning to them to help instead of doing it yourself is real seductive. Having to turn to them all the time, though, sucks rocks in the long run. For one thing, you totally alienate the very folks who are your biggest support system. Worse, you feel more and more powerless as you keep handing bits of your ability to handle your own affairs away (unless manipulating others is your thing, and that’s a whole different kettle of fish). But each little blow to your self-esteem takes a real toll.

3. Spending more than I earned, even when I was making a good salary. This may have been the actual worst blunder. It’s a long-standing issue that I have only begun to come to terms with over the last two years (and, yes, I still backslide sometimes) when I was forced to become the financial “adult” in the household. I was one of those folks who had to have the newest and best toys, and the clothes, and all the stuff that my contemporaries did. If a book interested me, I bought the hardcover. If I went to a concert, I had to have really good seats. I took cabs everywhere, when it was not necessary to do so. I ate out six to seven times a week. When I cut down on the overspending (and I will, one day, get it eliminated altogether), it made a huge difference. I was able to start paying off my debts, begin an emergency fund, and begin to lessen my dependence on others.

4. Ignoring creditor calls/pretending the financial mess would go away on its own. A huge mistake, although perhaps not my actual worst. All this did was allow the situation to fester to the point where I not only still had to pay back the money, but had the stress of fighting some of the real bottom-feeders of the debt pond: the guys who buy your debts at a discount, then proceed to harass you with threats of legal action, tell you it’s your fault for being in the position, and generally don’t give a damn about following the rules set out by the Consumer Protection folks. Yet, even these idiots, once I began to rebuild my integrity by keeping my word, began to work with me. I ended up being able to get a lot of the ridiculously high interest that was accruing wiped out, but I still ended up paying a lot more, both financially and stresswise, than if I had not hidden my head in the sand for so long.

5. Moving in with someone who is worse with finances than me. Okay, this was not so much a decision as a corner I backed myself into, by making the above blunders. It turned out to be my wake up call, and an opportunity to put my life back together, but I still would have been a lot smarter to ask more thoroughly about my roommate’s financial difficulties before I moved in with her. Had I known that her difficulties were a pattern that had run her entire adult life, and that her mother had been bailing her out for decades, as opposed to the temporary downturn she represented them as being, I would have been a lot more wary.

I am by no means done with this process, and I am sure I will still make a blunder or three along the way. The main thing I have learned from all of the above, though, is that even a huge stumble does not mean I should give up the fight.

Folks say I’m persistent (well, the nice ones do, the others call me a stubborn witch). I think I’m finally learning to use that to make positive changes in my life, instead of being hell-bent on self-destruction.first

Taking a long, hard look at your financial blunders is one of the first steps in fixing them. Are you willing to take that look?