Here are some stories of people who got into financial difficulty because they never had a plan, they never developed a healthy relationship with money. Consider Patricia, who was a self-employed consultant. She made good money when she made it, but it was one of those on again, off again kind of jobs. Sometimes the topic she consulted in was in great demand, and sometimes it wasn’t. It was a seasonal type of work. She would make very good money for a few months, and then had a lot of leisure time for the next couple of months.
The sensible thing to do would be to work out a plan for how much money she needed for the year, or which might be more realistic, look at how much money she typically earned in a year, and create a budget that spread this money out over the entire year. If she had a good month, however, she would spend everything she made that month. Then when she had a bad month, she had nothing at all.
Her relationship with money was one of dearth. When she had it, everything was great, and when she didn’t have it, was a real struggle. Often her bills suffered until she had income again. The downside to this is that her credit rating wasn’t very good so it wasn’t possible for her to get the kind of bridge financing that she needed. What happened was a dream came true, she inherited money, quite a bit of money, it was about a quarter of a million dollars, and she used it to catch up her debts, which was great. But then she used it to do all the things she felt she’d been deprived of over the years because of the up and down lifestyle she led.
In less than two years, she not only was no longer consulting, because with this inheritance, she no longer felt that she needed to work as a consultant. Besides the income for a consultant was too up and down, she thought, and she would rather not work at all. She devoted herself to making up for all the lost fun she had when she didn’t have enough money and she spent every cent of her inheritance.
It’s very hard, after you’ve been out of a certain consultancy or workplace method of doing things, to get back into the swing. New things had happened in her field, but she hadn’t kept current. Other people stepped in where there was a gap created by her not being a consultant anymore, and her situation was desperate. She had no plan for re-entering the workforce just as she had no plan for creating financial security when she was consulting.
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