Are you searching for the best ways to recover financially after addiction? If you’ve struggled with addiction in the past, you’re not alone. In fact, around 46.3 million people in the U.S. meet the criteria for a substance use disorder each year, and it’s one of the most common causes of poor financial management.
While getting your finances back on track may seem like an uphill battle at first, it’s a necessary part of taking control of your life and maintaining your sobriety.
How Addiction Affects Finances
Addiction can disrupt every facet of your life, and finances are no exception. Unfortunately, it’s not uncommon for people struggling with a substance use disorder to put their substance use ahead of financial responsibilities, which can result in bankruptcy, repossession, foreclosures, and more.
Some of the most common ways addiction impacts finances include:
- Missed rent or mortgage payments
- Home eviction or foreclosure
- Missed car payments
- Car repossession
- Lost employment
- Drained saving accounts
7 Tips to Help You Recover Financially After Addiction
If you’re searching for ways to regain your financial health after addiction, we’re here to help. Here are seven tips to help you get back on track.
1. Assess Your Current Financial Situation
The first step in financial recovery after addiction is taking a long, calculated look at your finances, as this will allow you to gauge the severity of your situation and help you create an action plan.
Taking an inventory of your finances will also help you determine whether you need to seek help from a financial advisor or secure emergency funds to avoid eviction, repossession, or other consequences of economic neglect.
When evaluating your finances, examine your:
- Credit score
- Savings and emergency funds
- Bill due dates
Plug everything into a spreadsheet so you’ll have the data on hand when you create your budget.
2. Address Common Causes of Poor Financial Management
Do you need to address the causes of financial problems outside of addiction? Addressing problem areas can help you reduce spending, save more money each month, and pay down debts.
There are many common causes of poor financial management, including:
- Limited money management knowledge and skills
- Impulse spending
- Living outside your means
- Medical issues
- Unexpected decreases in income
- High amounts of debt
If you’re experiencing high amounts of debt because of your addiction, you’re not alone. People often borrow money to feed their addiction and then fall into debt as a result.
Fortunately, you can create a plan to get out from underneath that debt and improve your financial health. One strategy is to create a budget and list all your debts. Then, commit to paying them off one at a time, from smallest to largest.
If you’ve acquired medical debt due to hospital stays, rehab, outpatient services, or substance use-related health issues, you may be able to negotiate the debt with the hospital or get on a payment plan.
3. Talk to a Financial Advisor
It can be worth seeking help from a financial advisor as you begin your financial recovery after addiction.
A financial advisor can help you:
- Develop a budget
- Create a savings plan
- Establish repayment plans
People with severe debt are often the first to seek financial counseling; however, almost anyone can benefit from meeting with a financial advisor. One of the best things you can do for your financial recovery is to master money management skills so that you don’t repeat the same mistakes.
4. Develop a Budget
Creating a budget is a key step in financial recovery after addiction that anyone can benefit from.
Budgeting helps you:
- Pay bills on time
- Organize your monthly expenses
- Track your spending
- Save money
- Pay down debt
Creating a budget doesn’t have to be overwhelming. Once you sit down and get started, you may find you can easily design a workable budget in just a few hours. And you can do so for free using Microsoft Excel, Google Sheets, or a free budgeting app.
Here’s how to get started.
Step 1: List All Monthly Expenses
You can create a budget by outlining your current monthly expenses, including food costs, rent or mortgage, utilities, car payments, credit card payments, and other routine expenses.
Step 2: Calculate Your Income
Estimate your monthly income to better understand what money you have that can be put toward debt or savings.
Step 3: Stick with It
Finally, you’ll need to adjust your budget over time, including when you’ve repaid a debt or if your monthly expenses or income change.
5. Live Modestly
By living within your means, you’ll save more money, repay debts faster, and achieve financial recovery after addiction.
Look at your budget and consider costs you can reduce, such as:
- Dining out
- Subscription services
6. Pay Bills on Time and in Full
Each month, aim to pay your bills on time and in full. Doing so will help you pay down debt and maintain good standing with your creditors. Making regular, on-time payments will help you rebuild your credit score, leading to better financial health and freedom later.
If you’re repaying larger debts, like a personal credit card, make larger payments toward high-interest debts to help reduce the interest fees you’ll pay over the life of the debt.
7. Stay Focused on Your Recovery
Make your recovery your number one priority. Achieving financial recovery after addiction can take time, and it’s important not to lose hope for the future or jeopardize your sobriety.
Practice self-care so you’ll have the bandwidth to remain emotionally and physically healthy. This means keeping daily stressors in check so you aren’t driven to unhealthy impulses. By focusing on your recovery, you’ll improve every area of your life, not just your finances.
How Do I Stop Regretting Wasting Money?
Regret can eat away at you if you let it. Be kind to yourself. Most people have wasted money on one thing or another, like frivolous purchases or extravagant vacations.
You can’t change what has already happened, so focus on the future instead. Aim to gain financial recovery after addiction by improving your money management skills and paying down your debt.
Once you have a plan and are on the road to financial recovery, you’ll be better equipped to stress less about money and let go of regrets.
Get Emergency Financial Assistance from Power Finance Texas
If you’ve just begun on the road to financial recovery after addiction and you need money now to cover rent, a mortgage payment, medical bills, or other necessary household expenses, Power Finance Texas can help.
We can quickly provide up to a $1,250 installment loan to help you avoid eviction, foreclosure, and more.
With an installment loan from Power Finance Texas, you’ll have six months to repay the loan. Apply for a personal loan today and get the help you need as early as today or tomorrow.