How to recover from a major financial setback?

June 5, 2013 5:14 PM

I lost 25+ years' worth of financial achievement, essentially overnight. What do I do now?

Hello

I need advice. Essentially overnight, I suffered a major financial setback. In the past, I wasn't rich, but I was ... OK. Debt free, mortgage free, nice savings and respectable disposable income.

Well, all that changed in a short time due to an unforseen tragedy. Now I have a large debt, savings slashed, and my income is less.

I don't know what, if anything, I ought to do to recover. Realistically I have to wonder if I can ever be like it was before, house paid off and money saved up.

Right now I guess my money strategy is 'I don't really care'. Because I got nailed so badly, I really don't feel motivated to try to save up, or to pay down the debt beyond the regular payments, or to invest. I figure, what is the point? So maybe in another 25 years or so, things might be better?

So if my kids want a new toy, I'll buy it. If I see something on ebay that looks nice, I'll buy it. Fancy vacation? Sure. Like I said, I don't really see the point of scrimping and saving just for... what? I worked like a pig to get to where I was, and there were rare opportunities that came my way. Now the score is reset and I'm not sure I care.

I guess I'm asking for advice, what if anything I ought to do financially to recover, beyond giving up.

posted by anonymous to Work & Money (12 answers total)

Is bankruptcy an option? At best, it could wipe out your debt. There's nothing worse than watching hundreds of dollars a month disappear into servicing a debt that won't be repaid for decades (as I know from experience, what with student loans and all).

My heart goes out to you. Give your kids an extra hug for me.
posted by math at 5:18 PM on June 5, 2013

Can you meet with a financial planner to talk about these options? I feel like they are going to give you more realistic advice than us internets.
posted by quodlibet at 5:23 PM on June 5, 2013 [1 favorite]

When a spider is attacked, it folds up for protection. The immediate strategy might be: minimalism. Just do what you have to do to get through the next few weeks or months, until you have a clearer head.

Emotional reactions do not serve anyone well when it comes to financial decisions, and that is particularly true when there are spouses and children involved.
posted by megatherium at 5:30 PM on June 5, 2013 [2 favorites]

Doing "everything right" & then getting hit hard must be a serious emotional blow; you might want to talk to someone in general besides a financial advisor.

If the debt is medical related, talk to the responsible creditor & work out a payment plan, even as small as $25 a month, stating your major hardships, & use that both as a starting piont for picking back up again & getting your life regoranized.

Then pick a finiancial sense site & follow it. Coupons, frozen credit cards (have paypal or ebay temporarily suspend your acccount), & so forth.

I'm sorry for your tradgedy, whatever it may have been. Talk to someone, please.
posted by tilde at 5:31 PM on June 5, 2013

Now the score is reset and I'm not sure I care.

My advice is to show your kids that when you're knocked down, you get up off the dirt.

Based on your question's vagueness, I can't give advice on what you should "do financially to recover." I understand why you don't want to give details; but you have posted this question anonymously, so you might consider using the Contact form to ask a moderator to add at least a few of those details. I'd be inclined to question anybody's financial advice if based on your question as it stands.

For more general advice with respect to attitude? When you lose something, you feel loss. To mitigate that feeling, sometimes it's helpful to embrace a perspective broader than your own experience. Take some time to help someone who's never had whatever you've lost, or who has less than you have today. Find someone who can't buy his/her kids that new toy. Help them with something. In so doing, you may help yourself.

I am very sorry for whatever loss you've suffered, and I sincerely wish you a better tomorrow.
posted by cribcage at 5:36 PM on June 5, 2013 [1 favorite]

Ask yourself where you would be now if you hadn't done everything right in the past. Setbacks happen - the best you can do is position yourself as best you can to handle them when they come and learn from your mistakes.
posted by NoDef at 5:38 PM on June 5, 2013 [1 favorite]

This might sound strange, but I would buy a book on grief. Something truly valuable is lost, and you need to process that loss emotionally. Just because the thing that was lost was money doesn't make it less important or real a loss.

It was your future security. It was your sense of freedom. It was many things that are now gone. You may want to behave as if they are not gone but that will only sabotage you further.

Grieve. Get angry. Just like love that was built over years can die in a moment, so can a fortune. It does not mean you are bad or greedy that you need to cry over this loss. It does not mean that you are shallow. If you don't grieve, you will continue to make choices that hurt your future because you have not made peace with your past.

You can rebuild your financial situation, but first, you need to rebuild your emotional situation. Grieve the lost plans, the tragic change of events. Then, you'll be able to face the future whole.
posted by SarahBellum at 5:57 PM on June 5, 2013 [10 favorites]

You don't sound very at ease not caring. I don't know when this happened to you, but I have a feeling after a decent amount of time you'll come out of this phase naturally. You won't be the same, but you'll come out of it.

It would take me years to get over what you described. Give yourself a little time to gather your thoughts.
posted by milarepa at 6:03 PM on June 5, 2013 [3 favorites]

I'm so afraid of this coming off as a meaningless platitude, but if you were my husband/father, you would be my hero. You just took a huge hit. You prepared in such a way for 25 years that you could take a huge hit like that and still keep a roof over your children's' heads. Much less still buy them expensive toys and fancy vacations. You did a really good job. You built a fortress that could take a beating and still stand up.

I don't blame you for being stunned, shocked, and feeling like rebuilding is pointless. Honestly, it sounds like you deserve some rest. Even if your financial setback hadn't happened, the time might have been due to take a bit of a break anyway. Working like a pig for 25 years can break you down in and of itself.

Go easy on yourself. I really second the suggestion to talk to someone about this, or maybe just take a rest and then talk to someone about it. Because this question is framed to be about "what if anything I ought to do financially to recover," but I have a feeling you know how to do that, or a financial planner could tell you. And I get the sense that if your feeling in reaction to this setback happened to be a different feeling, like I don't know, denial, or defiance, you would just get right back to it. So, I know this is stating the obvious, but it makes me say the reason you don't feel like financially building right now is because of exhaustion and hopelessness. And I do think it would be worthwhile to talk to a counselor about those things eventually.
posted by cairdeas at 6:03 PM on June 5, 2013 [17 favorites]

Geneen Roth wrote Lost and Found after she got Madoffed. No idea how parallel her situation may be to yours but I found it interesting. She doesn't just talk about herself but about a number of people she knew who were affected in different ways by losing all their money.

For what it's worth, I have experienced a lot of anger and frustration about working and saving, because of the way something like a medical crisis will wipe you out. Or how you can play the investment/retirement game according to all the rules and still not win. I think it is totally legitimate to feel a sense of futility about all this. It makes you question what's valuable in life, and that can be a good thing.

I guess I'm asking for advice, what if anything I ought to do financially to recover, beyond giving up.


I really like the idea of waiting a bit. Eventually you'll feel like getting back with the program; don't force it now.
posted by BibiRose at 7:16 PM on June 5, 2013 [2 favorites]

It sounds like in addition to addressing the emotional issues here, as wise folks have noted above, you also need to get goals back that you care about.

I suggest sitting down with any other financial decision maker in your family and talking about what you want in your life in 10 years - given the current circumstances, of course. Be realistic but have a dream.

Previously, the dream might have been bigger, but that doesn't mean that you have to give up completely now. If the prior dream was a slightly early retirement with some savings to use to live in comfort, perhaps now the dream is to have savings to fall back on after retirement so that you don't have to keep working when you are elderly. The prior dream may have been to pay in full for your childrens' college educations. Then now the dream would be being able to provide them with a financial cushion so that they do not have to take out private loans in addition to the lower interest government loans.

I can't say what your goals should be specifically, but I think choosing a few that are near-term, a few that are midrange, and a few that are in the more distant future would be a good thing. They should be things that will motivate you, and not just obligations that would be nice to achieve. But I feel like knowing what would happen if you were to have another tragedy without having significant savings and low debt - that's really important too, because a lot of people neglect having an emergency fund do not consider this possibility.
posted by treehorn+bunny at 8:46 PM on June 5, 2013 [2 favorites]

Bankruptcy leapt right out at me as an option. Talk with a qualified attorney in your area about your options.
posted by Aizkolari at 11:21 AM on June 6, 2013