recovery

The 6 Stages of Dealing With Financial Disaster

Nick Wharton — Tue, 05 Aug 2014 13:00:03 +0000

Sometimes, no matter how frugal and prudent we are, financial disaster hits and turns our lives upside down. Maybe it's an unexpected health issue that we're not insured for, a whopping and unavoidable housing expense, or a job loss that leads to a long stretch of unemployment. It happens — and if it hasn't happened to you, you probably know someone who's been down that rocky road. (See also: Are Your Finances Fragile?)

Whatever the cause, it seems people have similar reactions to financial disaster and similar phases of recovery. Here are six common stages we go through as we grieve our loss and work to rebuild our financial lives.

1. Shock and Denial

Understandably, dramatic changes in our financial fortunes can initially inspire a sense of shock, disbelief, and denial. Whatever path brought us up to and over the edge of our financial cliff may have been paved with the best intentions and highest optimism — buying a new house, investing in a business, or pursuing an advanced degree. Part of the recovery process is waking up to the fact that the dream is over — at least for now — and who wants such a rude awakening? Shock and denial insulate us from a painful reality and forestall the inevitable packing-up of our dream.

2. Depression

Once the shock wears off and constant denial simply can't be maintained, depression fills the void. Depression prepares us for acceptance and is both a part of admitting defeat and its logical result. Depression is the clearest mourning phase in financial upheaval — it's the point at which we acknowledge a very real loss, grieve the plans we made, and emotionally and financially hibernate.

3. Acceptance

Acceptance is the first stage of active recovery. The shock is passed, the denial is over, and depression is giving way to reality (however wince-worthy it may be). At this point, it's helpful to remind ourselves of the things we still have — marketable skills, the support of family and friends, zero debt, or a car that's modest but dependable and paid for. However deep you have to dig to find the positives, find them and use them to fuel your momentum.

4. Analysis and Learning

In marketing, we call this the post-mortem stage. It begins by asking and then honestly answering a few very simple questions.

What (Really) Happened?

Getting a clear answer is trickier than it sounds. Often, we struggle to understand the nature of the problem. What led to the foreclosure — was it an unmanageable interest rate? An ill-advised refi? Out-of-control spending? All of the above?

How Did This Happen?

Digging a bit deeper, asking "how" helps us link behavior to circumstances and outcomes. The answer is the first step toward making the changes necessary to minimize the chance of future trouble.

What Could I Have Done Differently?

Once we understand what happened and how it happened, we can begin to reflect on options that might have helped us dodge the disaster, or do so in the future.

What Have I Learned for Next Time?

This question links everything together. And while the answer isn't always crystal clear, asking it is important. The lessons we learn from financial upheaval are some of the most valuable things we're left with. Making them an honest part of our story helps turn them into foundations of future success.

5. Rebuilding

This is go time. The rebuilding stage gives traction to the analysis and learning we've done. Here, we've fully surrendered the Plan A and are focused on creating a just-as-wonderful (although perhaps more modest) Plan B. New insight and smarter approaches take shape (complete with redundancies and safeguards) as we plot the next steps to achieve our goals.

6. Fortification

This stage can be summed up perfectly in a famous quote by Scarlett O'Hara in Gone With the Wind: "As God is my witness, I'll never be hungry again." Fortification is "recovery plus" — an attempt to make any sort of hiccup or failure extremely unlikely by having extra savings, additional resources, or deeper knowledge. For example, re-entering the real estate market might happen only after a person is sure of securing a better interest rate, borrowing far less than she's qualified for, having a healthy emergency fund, and securing a space large enough to take in a rent-paying roommate. (See also: A Step-by-Step Guide to Creating Your Emergency Fund)

A wise and dear friend of mine used to say, "Few things in life are irreversible" and those words are especially important to remember if you're facing or recovering from financial disaster. As remote as the idea may seem in the thick of things, we live in a world that still gives second chances; don't ever feel like you can't claim your own. Again, in the immortal words of Scarlett O'Hara, "After all…tomorrow is another day."

Have you weathered a financial disaster? What were the most difficult stages as you coped and recovered?

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This article is from Nick Wharton of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

4 Workout Recovery Essentials for a Healthier Body

Ashley Marcin — Tue, 05 Aug 2014 11:00:03 +0000

We focus intently on our workouts. We spend much time finding new ways to challenge our bodies and burst through plateaus. We sink money into races and events aimed at showcasing our progress and athletic prowess.

But one aspect of exercise often slips through the cracks and that is: recovery. And it's essential for keeping our muscles, bones, and minds healthy. (Related: 5 Easy Ways to Avoid Exercise Injury)

The good news? Most of these post-workout recovery tools and methods are low cost. They can also keep injuries at bay, helping to save on doctor bills.

1. Water, Water, Everywhere

Hydration is one of the cornerstones of recovery. So much that you should even start drinking before your workout is complete. Water will help cool off your body's systems and keep you from getting dehydrated. I tend to stay away from sugary sports drinks and go straight for plain water. If I'm particularly parched, I try a homemade mixture of 2 cups water, ¼ to ½ cup juice (lemon or lime works well), a couple tablespoons of honey, and a pinch of sea salt to replenish electrolytes.

But how much fluid is enough? You should certainly start drinking before you're thirsty. Immediately following a workout aim for 8 to 24 ounces or enough to make you use the bathroom within 60 to 90 minutes after a sweat session. (Related: Save Money With These 10 Homemade, Healthy Energy Drinks)

2. Smart Sustenance

Restoring lost calories might sound counterintuitive, especially if you're trying to lose weight. Still, food and calories are critically important post-workout because they help to balance the glycogen that you depleted. The coolest part? Muscles store glycogen best right after activity so they can heal faster.

Consuming protein and carbs in combination can bring a powerful punch, so good mini-meals include eggs with whole wheat toast, banana with peanut butter, pita bread or crackers with hummus, and chocolate milk with trail mix. Smoothies are another way to do the trick if you don't feel like eating solid foods, just keep them simple. (Related: 15 Grab-and-Go Post-Workout Breakfasts)

3. Ice, Ice, Baby

If you're into running or cycling, two activities that regularly tax leg muscles, you might want to consider taking ice baths after your longest or hardest workout of the week. The cold penetrates sore muscles, fighting inflammation, easing soreness, and flushing waste products out — all at the same time. In fact, they're so soothing, professional athletes consider ice baths critical to their overall routines. And you need not purchase an expensive cryotherapy tub to enjoy these benefits at home.

Simply pour ice in a tub of cold water. The temperature should be at 50 to 59 degrees Fahrenheit (make sure it isn't colder by checking with a thermometer) and immersion time should fall somewhere between 10 to 20 minutes (just remember to be safe). You can get a similar, though less intense benefit, by soaking in a cool lake or stream.

4. Get On a Roll

Foam rollers are immensely popular with the running club where I live. They can provide relief for ailing IT-bands and tight muscles. You can get similar self-massage (called self-myofascial release, if we're being technical) benefits from everyday objects like golf and tennis balls, a can of beans, or even your own two hands. Avoid applying pressure to actual bone and joints (particularly the spine).

Otherwise — find knots and apply simple pressure, perhaps rolling or rocking gently for a few minutes. Whatever feels best. A little rolling each day is better than one long session only once a week for maintenance. If you have a persistent or sharp pain, visit your doctor.

What are your recovery essentials? Please share in comments!

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This article is from Ashley Marcin of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Recession Journal V: Mind, The GAP

Jabulani Leffall — Wed, 14 Oct 2009 15:00:11 +0000

Ours is a society of self-actualization, both real and imagined. There are best-selling books and rich-to-death gurus who peddle “secrets,” visualizations and the fostering and eliciting of new mind sets for individual transformation.

Some self-improvers go so far as to cut pictures out of a magazine and put them on a cork or “vision board,” so that they can attain the perfect house, husband, life career position, amount of money and bliss.

There something to this even for the sharpest of cynics. So much of how we perceive what we read, see and hear everyday about market fundamentals and economic determinants is based on sentiment.

This begs the question: can we think our way out of this recession as corporate citizens and collective consumers?

Recently, on a late-night, three-episode bender, watching a new network show via the Internet — I don’t own a television and thus am saving some wise friggin’ bread with no cable bill every month — I noticed that many of the advertisements had common themes: either compassion, nostalgia for affordable quality or upbeat sentiments.

Saturn for instance, knows it’s hard out there. Northwest Mutual Insurance says anyone can be strong once but can you be strong over the long haul, or something to that effect, after which it brags on its investment track record. Charles Schwab offers more “bang for less buck.” Chucky you naughty, frugal boy.

Apropos of this pattern, a couple days later, I noticed this story in the New York Times about the rose-colored specs of advertisers. Apparently Bank of America, despite the fact that its CEO just quit, says in a new ad that “America is growing stronger everyday.” General Electric, itching to offload its media properties to focus on industry and having made job cuts, according to the report, has an ad showing GE workers who still have jobs, working. Levi Strauss & Company has hearkened back to its frontier-era roots and is biting Walt Whitman’s funky rhyme style to sell us jeans with a pioneer theme.

The power of suggestion is at play here as it always is but people forget that advertising is media too, the most powerful media some would argue. After seeing images of recession over and over and over again, after hearing about the weakness of the dollar and the rise of China and India, perhaps seeing a well done skit about new loans at Bank of America, a heart string pulling story about manifest destiny or an everyman’s journey to financial freedom will change…our minds.

The study of the mind, psychology, is a more exact science in determining out attitudes toward money than say economics or even the behavioral and environment-driven discipline of sociology.

True enough, our everyday spending decisions are based on the economics of our lives and our given realities and also based on our social strata, but ultimately attitude, mind state, is what makes us put those dollars down.

I’m hungry for that particular thing. That’s a cute sweater that I can only get here. I think I need a new TV. When I get some money I think I’m going to buy that. If I had the money I think I’d buy that. Or, you know, I think I feel good about this purchase. I think this is great.

These are thoughts that go through billions of consumers heads in some variation or another every single day and in more advanced or to use a more apt term, commercial societies, these thoughts are tapped into by advertisers almost non-stop.

So if advertisers reflect good times, promise good times or keep bombarding us with promises of good times to come or regale us with thin and thick veiled slices of Americana, perhaps things will turn around.

I know with Christmas coming up, nothing makes one feel better like buying a good gift, feeling worth something, seeing a smile on their child or love one’s face. Wouldn’t it be interesting to see if there was, despite a downward forecast from the National Retail Federation, some kind of yuletide shopping rally that shocked everyone and got everyone back into the malls.

This is not likely to happen and there would be no real lesson for us if a turnaround led to a return to consumerism that made banks, apparel companies and industrial firms even happier than their ads, but the mind is a powerful emitter of hope, creator of purpose. But the mind can also, in the words of Rick James for what he said about cocaine, be a “helluva” drug when thoughts based on delusion and forced euphoria — the kind that tells us these shoes will make us feel better.

Think once, think twice, think about this.

This article is from Jabulani Leffall of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

The new normal economy

Philip Brewer — Tue, 30 Jun 2009 13:34:13 +0000

The economy is way short of full employment, so naturally, consumer spending is down. Sooner or later employment, I think, will return to normal levels. Consumer spending will return to normal too--but don't look to the first half of this decade as "normal." Normal is something very different.

Jeannine Aversa, AP economics writer, has a piece out that looks at what the early signs of economic recovery will be.

The gist of her analysis is that people are still spending on discretionary items, but spending conservatively. They're still eating out, but they're not getting as many appetizers, bottles of wine, or deserts. They're still going to the spa, but they're going to local spas rather than taking a vacation at a resort spa.

It's a good analysis--there are levels of discretionary spending, and she's got a useful list of those second and third level discretionary items that have taken the biggest hit--and whose recovery will be an early sign of a more general recovery.

But I think she's missed the really big story:

What used to be an afterthought, from ordering wine with dinner to jetting off on a resort vacation, still feels like a splurge. No one knows when consumers will feel financially secure enough to return to old spending patterns.

Because, see, the "old spending patterns" were never sustainable. They were based on an economy of cash-out refinancing in a world where the value of people's houses only went up. If the value of your house went up by $70,000 every year, you could just refinance annually, take out the $70,000, and live off the rising value of your house. In that world, owning a house was an alternative to having a job. But that was always an illusion. That pattern is not going to return. And, without it, I don't think the "old spending patterns" of the housing-boom economy are going to return either.

In the new normal--in any real normal--something like "jetting off on a resort vacation" will always feel like a splurge, except to the truly wealthy. It is only in a fantasy economy--where we're all truly wealthy--that it doesn't.

It's just that we've had two fantasy economies in a row (the dotcom bubble and the housing bubble), so people are understandably unfamiliar with what normal looks like.

Here's a clue: In a normal economy, people have to live on less than what they earn and save up for what they want to buy. I look around and observe that we're starting to see those things happening again. That makes me think that what we've got now is starting to look a lot like a normal economy.

This article is from Philip Brewer of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

The end of a recession versus recovery

Philip Brewer — Tue, 17 Mar 2009 15:17:52 +0000

There's an organization that picks the "official" dates for the beginning and ending of recessions. It considers the recession as running from the top of the peak to the bottom of the trough in economic activity. That's a reasonable definition, but it produces a slightly odd result: At the start of a recession, almost everybody is doing great--we are, after all, at the peak. The "start of the recovery" (because it's the trough in economic activity) is often the point of maximum pain.

It's worth keeping this in mind as the recession grinds along. We're all looking forward to the end of the recession--to the point when things quit getting worse--but don't imagine that point as being the end of the pain. Better to think of it as the mid-point of the pain.

In an ordinary recession it's not quite that bad. The economy is full of forward-thinking people, so job losses and stock market losses tend to be at their worst early in a recession--everyone is looking ahead and trying to position themselves to survive the downturn. Then, once the bottom is in sight, people who foresee recovery try to position themselves for that as well--they try to buy cheap stock in companies that'll do well as the economy recovers, and they try to hire great talent when the talent isn't in a position to hold out for top dollar. That means that employment, wages, and stock prices all turn up pretty quickly--often starting to turn up even before the recession officially ends.

This recession, though, is a bit different. Most recessions are kicked off by the central bank raising interest rates to choke off inflation. That's not the case this time. This recession was caused by household balance sheets getting out of whack--too many people spent more than they earned to the point that now their entire disposable income is tied up servicing those old debts. We can't get a real recovery until people's balance sheets have recovered. That means that people need to spend less and pay off debts. Only once that happens are we going to have a recovery worth the name.

This could very likely mean a recession where the bottom is not so much the beginning of the recovery but just the end of things getting worse. The bottom may be only a few months away--at least, Ben Bernanke seems to think so--but I'm afraid that it's a bit of a leap to go from that to recovery.

So, the main point of this post is just to remind you that the end of the recession is not the same thing as a return to the way things were at the peak. It's fine to look forward to the end of the recession and the beginning of the recovery, just don't expect that things will be better immediately. Yes, that's the point at which things start to get better--but only in the sense that it's the point at which things are at their worst.

[Update 20 September 2010: The NBER announced today that the recession ended in June 2009.]

This article is from Philip Brewer of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: