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A Woman's Guide to Family Finances


Five Stages of Financial Recovery

By Ellie Kay
Guest Writer

CBN.comI've always been an exercise advocate. It increases my energy, keeps unwanted pounds at bay (when I'm not scarfing down Krispy Kreme doughnuts), and even improves my disposition. It's easier to exercise at some times than at others. I remember feeling extreme frustration while trying to get in my daily walk when we were expecting our youngest child, Joshua. I had Daniel (age seven) on a bike, Philip (age five) and Bethany (age three) in a double stroller, and Jonathan (age one) in a backpack. Of course, the baby whale was out front (he weighed 10 lbs. 6 oz. when he was born). It was tough to push that stroller and balance Jonathan on a tired back with my expanding middle leading the way.

I used to walk three miles, three times a week, right up until the last few weeks of pregnancy. But the thing that bothered me the most was not the physical exertion -- no, it was the way people gave me "the look." I was in complete denial about what a comical sight I was and the fact that most people had never seen such a walking circus before. After rounding up Barnum and Ellie's circus clowns, I'd head out the door to do my routine, and people would drop jaws and stare. Oh sure, some were more subtle than others. Some would just give us a sidelong glance. Others would openly gape. There was one neighbor, in particular, who I was convinced called her friends and asked them to come drink coffee on her porch at precisely 9 A.M. every Monday, Wednesday, and Friday. I think she might have even sold tickets for a front-row seat.

Bob said that one time a friend of his was driving by with his windows down and saw me glaring at a motorcycle driver who had slowed down for a better look. This "friend" told Bob he overheard me shout, "What are you lookin' at?"

I don't remember it that way.

Bob said I must have had a memory lapse due to my "delicate" condition. Believe me, at that time the only thing delicate about this determined mama was my ego. I had to face the rude awakening that I was the neighborhood entertainment.

Sometimes families face a rude awakening when they have a financial counselor crunch their numbers or if they use an online source to do the same (there are excellent tools found at or at under My Money/My Accounts.) Pamela York Klainer, Ed.D., the author of How Much Is Enough? (Basic Books, 2001), says, "When you get all your finances together, and you see it all in front of you, it's very jarring." Klainer says the typical client response is "Is that all there is?" and "Is it enough?" She even likens it to other news: "It's like going to the doctor and getting on the scale. Now you have the data."

So when we have to face the hard facts about our finances, it's not always an easy transition. In fact, depending upon the severity of your financial situation, many families go through five different stages that are similar to the stages of grief: shock, denial, depression, anger, and acceptance. Let's take an in-depth look at each stage.


I recently worked with various families in a reality television series called "Simplify Your Life" on a brand-new network called The Fine Living Network. It's a great premise for a reality show: examine basic problems that families have and bring in experts to solve their problems. I was a financial expert that was sent to work with families on a couple of different episodes. One of the families experienced firsthand the "rude awakening" that I described above: a moment of truth where the bottom line of their finances was revealed. How would you feel about finding out the bottom line of your family's finances in front of a national television audience with a camera pointed in your face? You can imagine the look that registered on the husband's and wife's faces. You guessed it: shock.

Their mouths dropped open, and they stared in disbelief at the figures on the paper I held. I spoke to them in a calm, soothing voice and assured them that the figures were accurate.

Shock is defined as a violent, unexpected disturbance of mental or emotional balance (Webster's II, New Riverside Dictionary). Consequently, the shock you feel at this stage will be directly proportionate to the predetermined belief you held about your finances. It wouldn't be a violent disturbance if you already knew your net worth was 50K in the red, and you're only mildly shocked at how those numbers look on paper. It still doesn't make you feel good, but it's not a severe shock. On the other hand, another family would suffer a severe shock if they thought they were only a couple of years away from being debt free -- but the numbers indicate that if they continue paying the minimum balance and acquire no new debt it will take them fifteen years to become debt free. That is a severe and violent disruption of their emotional balance and will take time to absorb. Obviously, the latter would most likely be a state of shock longer than the former.

But keep in mind that shock isn't always a negative emotion. You could be pleasantly shocked that you are farther down the financial road than you thought you were. And that would be a pleasant shock (we should all be so shocked). It reminds me of a scene from "Fiddler on the Roof" when Tevya was told that "riches are a curse," to which he responded, "May I be so cursed that I never recover!"

Another benefit found in the state of shock is that it is the first step toward financial recovery. It may be a harsh reality, but it's a place to start, and you have to start somewhere. The shock phase can last anywhere from hours to months -- depending upon the reality of where you are compared to where you thought you were.


This is the most common stage in financial recovery. In fact, some people never move out of this stage and end up with perpetual financial woes. M. P. Dunleavey, a hilarious staff writer for MSN Money, had this to say:

"Here I was thinking I'd conquered most of my financial demons, when I got burned by the oldest and most insidious: Denial. The evil Dr. Denial is short, bald and, for a demon, very persuasive. His official title, for the record, is 'King of Willful Ignorance and Subtle Acts of Self-Destruction.'

"'But really,' Denial said in a brief phone interview, 'I just do whatever people ask me to do: cover-ups, muddled thinking, head-in-the-sand jobs, that sort of thing.'

Well, that may be a funny way to look at denial, but the truth of the matter is that the enemy does not want us to be financially free and will use all kinds of tactics to keep us in financial bondage. But once we face denial we can overcome it and be well on the road to recovery. Dunleavey goes on to say, "Recent surveys of consumer spending indicate that Americans spend with one hand and use the other to cover their eyes" (, December 2002). This statement is backed up by the following facts:

  • Two-thirds of Americans aren't saving enough for retirement.
  • The average credit-card-carrying household is sitting on a total balance of more than $8,500.
  • According to a 2000 Consumer Expenditure Survey, U.S. consumers spend about $8 million a minute.
  • Last year Americans dropped about $63 billion on various forms of gambling.

This last fact may seem a bit out of place when we are talking about financial recovery -- but it's right on target! The more people deny the seriousness of their financial situation, the more likely they are to try to find a quick fix to the problem. In fact, denial makes us more at risk for the temptation to gamble, figuratively or literally. People in denial are easy prey for various get-rich-quick schemes that are rampant on the Internet and in your e-mail inbox.

According to Margo Geller, MSW, a wealth counselor at GV Financial in Atlanta, there are four red flags of financial denial. She says you are in trouble if:

  • You find yourself in the same financial pitfalls over and over and you're not sure why. You are always paying late fees, missing payments, balancing bills, or perpetually short of cash.
  • You find yourself behaving in ways you know you shouldn't, such as buying another suit on your credit card, eating out when you promised yourself you'd cook at home, buying a special toy for your child for no reason.
  • You are financially stuck and cannot get unstuck (you are unable to reduce your debt, or if you do, you are soon back into debt again).
  • You find yourself using the following stupid rationales to explain the above: "I'll deal with it." "Other people do this all the time." "Right now this is more important." "I need to." "I don't care, I'll figure it out later." (, December 2002)


My husband knew what had happened when he came home early from work and followed the trail of chocolate candy wrappers down the hall, up the stairs, and into our bedroom, where I sat curled up in my robe and fuzzy bunny slippers reading a book and drinking coffee.

"Did it happen again?" he asked compassionately. "Yes," I replied, trying to stifle a sob.

"How much?" he asked in a soothing voice as I sat crying softly.

I took a bite of amaretto truffle. "Twenty dollarrrrrrrrs!" I wailed.

Poor Bob; this happens every time I purchase something and then find out I paid too much. It's enough to drive a Savings Queen to drink (coffee).

Okay, so I'm exaggerating a wee bit. I have to confess that sometimes I look for the tiniest excuse to play hooky from life and stay in my robe a bit longer, make another pot of java, and snitch a good piece of Godiva.

Even though I make light of my need to bag the best bargain, a series of financial disadvantages can add up to a ton of problems. And when these problems come crashing down around us, it can be downright depressing!

This depression stage is characterized by any of the following:

Concentration: An inability to concentrate on anything that has to do with finances. An avoidance of any type of discussion on the issue.

Insomnia: You cannot sleep well because you are bothered by the apparent hopelessness of your situation and are preoccupied with worry over the steps that you must take for financial recovery. Another issue that robs you of your sleep is concern that your spouse or other family members will not be supportive in the recovery process.

Guilt: There can be a great sense that you are responsible for where you are -- whether that feeling is valid or not. Sometimes people take on the responsibility of their spouse's or their own circumstance (lost job, medical bills, and other catastrophic events), even when they are not responsible, and the result is feelings of guilt.

Dejection: A predominant sense of disheartenment in which your spirits are down to such a degree that they contribute to a sense of depression.

Once again, the amount of time you spend in this stage will be directly related to the severity of your financial condition. Hopefully, you will pass quickly in and out of this natural step in the process of financial recovery. But if you find yourself unable to move from this state, I would suggest you secure the services of a qualified financial counselor. Go to the Yellow Pages and look up Consumer Credit Counseling Services. Be sure you call the nonprofit organization and not a for-profit look-alike. This service will give you a plan to emerge from your present state and will help you take the steps necessary to move to the next step. They can get credit card interest rates lowered, payments deferred, and help you with a decisive plan to emerge from the debt cycle.


It is sometimes said that depression is simply anger turned inward. The anger stage is sometimes scary because anger can be manifested through a wide range of emotions at a high intensity level. It can be as mild as severe displeasure or as severe as outright hostility. When the number one issue cited in divorce today is "finances," you can see people in this stage of financial recovery end up in the "debtor's prison" of divorce court. Following are the top twenty statements people express in this stage of financial recovery. Some are justified and others shift the blame. I threw in a couple of responses that are clearly uncommon, but they're funny in an otherwise unfunny list -- see if you can figure out which ones they are.

Top Twenty Reasons I'm Angry About Our Finances

"My spouse bought that new _____________ (fill in the blank), and that is why we're in financial trouble."

"My parents have tons of money; they could help us but they won't."

"Our ___________ (fill in the blank with neighbors, parents, siblings, friends, etc.) never have financial difficulties; they don't know what it's like to have problems."

"My spouse is a spender, and I have no hope of financial recovery as long as I'm married to him."

"My plan was to move to Bora Bora, but my spouse won't let me!"

"My spouse got laid off of his job and we can't even pay our bills. I'm so angry at (fill in the blank with your choice of blame targets: from the company to the economy to the president or God)."

"We had a family member hospitalized with a severe medical problem, and now we can't pay our bills. Why would God allow this?"

"We work hard for our money and end up paying all that money in taxes -- it isn't fair!"

"The cost of living is so high where we live, we'll never get ahead!"

"My spouse made a bad investment, and my children and I have to pay the price of his mismanagement!"

"My ex-spouse has lots of money, and I have to work night and day to make ends meet; he doesn't deserve it!"

"I always seem to be a day late and a dollar short, no matter how hard I try."

"I couldn't afford to go to college, and I'm stuck in a dead-end job."

"I got a college education, and I'm overqualified and underpaid for this job."

"I have a third-grade education and don't understand why I'm not a corporate CEO yet."

"We've tried budgets, and they don't work for us because we can't stick to them. We've tried reading financial books, and they don't work for us."

"We've talked to a financial counselor, but it didn't work for us."

"We've got a reason why everything you've written in this book doesn't work for us."

"We're not to blame."

You will notice that there tends to be a lot of blame shifting in this stage.

Is it the best response to the circumstances? No.

Is it typical?


Is there a healthy alternative?


The solution for this stage is to talk to someone, almost anyone, because talking through your feelings of anger will help defuse those feelings. It's obviously important that we not behave in a verbal or hostile manner toward family members. It's not going to help if you call your spouse a "fat, selfish toad" and pack your bags for Bora Bora. If you or your spouse have these tendencies, then it's important to have a mutually agreed upon third party present when you express these feelings -- preferably a financial counselor or family therapist.

Pamela York Klainer, Ed.D., the author of How Much Is Enough, gives four suggestions for those who are reluctant to face the ugly truth in this stage.

Blame -- Don't blame your spouse. Or your parents. Or your lousy childhood. Or yourself. Stop playing the blame game, as it only generates more anxiety and escalates feelings of failure and incompetence.

Own Up -- The flip side of not blaming yourself is to own up to your own mistakes and admit the places where you've fallen short financially. For example, the time you took a vacation instead of paying off debt.

Practice, Practice, Practice -- Unless you are a genius at handling money, you are going to need to build your skills. Learn to budget, save, and invest. It takes time. Even the Williams sisters have to get on the tennis court on a regular basis to stay at the top of their game. "Cut yourself some slack," advises Klainer.

Mastery -- We are all unique, and what works well for one family's finances will not work for another's. Some families love computer programs that organize their money. Others prefer self-help books. Or financial counselors. Or seminars. Become a master of your own methods of balancing your budget. Once you develop a level of confidence, it will help to eliminate fear, anxiety, and especially anger.

One final note on anger: Don't be afraid of it. Anger can be good. Anger can be your friend. It is the last step before acceptance and complete financial recovery. So if you see this characteristic in yourself or your spouse, and you deal with it in a proactive way, then anger becomes a good thing. A very good thing.


By the time you've reached this stage, you've dealt with all the icky issues: the shock over the bottom line of your financial situation, the denial that you've got a problem, the subsequent depression that occurs when you face the truth, and the anger you feel as you look around for someone to blame. By now you are ready to enter the last and final stage of complete acceptance.

This is not a stage where a fairy appears, your finances magically get better, and we read, "They lived happily ever after" as the credits roll. You know you've reached this stage when at least some of these elements are evident in your life:

Change -- You've asked yourself what you need to change, and you're willing to make those changes now.

Responsibility -- You've accepted responsibility for what you did to contribute to your current financial status and identified the possible reasons that have contributed to that choice (money personalities, inadequate budgeting allocations, giving in to keep-up-with-the-Joneses pressure, emotions, habits, etc.).

Accountability -- It's not enough to accept responsibility. In order to make the changes stick, we need to talk it over with at least one other person in order to solidify our purpose and strategy. If you're married, this should be your spouse. In addition, you could also speak with a financial counselor or financially savvy (and trusted) friend who can keep confidences.

Hot spots -- You've identified the hot spots of where you've fallen short financially so that you know what needs to be fixed.

Patience -- If money has made you anxious in the past, you've now realized that there's hope. You realize that with patience, you will eventually succeed. You are also more tolerant of you or your spouse making mistakes and learning from them. You are ready to keep going.

Escape -- You realize that in order to achieve your previous goal of escaping to Bora Bora, you'd have to fly to Tahiti, take several boat trips, and swat mosquitoes the size of sparrows. You decide to cancel those reservations and take the family to Niagara Falls instead.

Put It Into Action: From Fighting to Freedom in Four Relatively Easy Steps

Now that we've looked at your money personality, the emotions associated with money, and the five stages of financial recovery, it's a good time to put what we've learned into practice. Studies indicate that you retain 10 percent of what you hear, 20 percent of what you read, and an amazing 60 percent of what you hear, read, and do. That's why it's so important to put these principles into action, and the best place to start is in the marriage relationship.

Most couples, when asked if they argue about money, will reply, "Well, we really don't fight about money, we just have some occasional disagreements."

Yeah, right.

When Bob and I were newly married, he went into an electronics store to buy batteries and came out with a new VCR. We were $40K in debt and barely had enough money to buy groceries. But did we fight about his irresponsible, compulsive, selfish, horrid, despicable, and not to mention stupid decision to drop $300 on a new VCR when we didn't even own a TV? Nah. We just had a disagreement.

Okay, I'll admit it, Bob and I have more than disagreed about finances -- we have gone to our respective corners and come out fighting! Especially in the early years of our marriage, when Mr. Born Spender and Ms. Born Saver tried to mesh together two vastly different views of money management.

According to Barbara Steinmetz, a financial planner in Burlingame, California, tension mounts between partners partly due to poor communication. "It usually happens because the two people involved aren't on the same page. One person thinks they have a shared goal of saving for a house, car, or retirement, and the other doesn't." I would also add that they may not agree on tithing or paying down consumer debt.

What can you do to get on the same sheet of music and head toward financial harmony? Sometimes one of the biggest keys to solving a problem is recognizing what triggers financial disputes. Once you know what the sources of strife are, you can steer clear of those trouble spots. Here are several factors that often contribute to financial discord:

Problem: A Spender Bender This is an age-old problem that began when Eve was willing to pay the price for that piece of fruit and convinced her husband to ante up, also. If one spouse is a born saver, then get ready for the sparks to fly when the born spender goes on a buying binge.

Solution: The Balanced Budget The best way to begin to curb a spender's buying habits is to sit down and work out a family budget (see chapter 4). If you've "been there, done that" and it still isn't working, then do it again -- in front of a family counselor who is familiar with principles of household budgeting.

Problem: The Done Deal "This is when one person opens the credit card bill and -- surprise! -- sees the tab for the drum set, the new suit, or the night your mate took the entire office out for lunch," says M. P. Dunleavey, columnist with "The fantasy here is that because it's a fait accompli your better half will let it go. Oh, but they don't!"

Solution: The Return Deal With the average American family in $8,000 of credit card debt, we find that this "done deal" policy only leads to more debt-and family problems. If you still have the receipt and can take the item back for a refund, this is the quickest fix to the problem. Additionally, make it a family policy to always consult your spouse for purchases over (fill in the blank). Sometimes just the idea of calling to ask what your spouse thinks about buying that $500 suit is enough to help you forgo the impulse buy.

Problem: Where's the Money, Honey? This is where you (or your honey) hits the ATM machine on Friday, and by Monday you have no idea where that money went. You have nothing to show for it. Nada. Zilch. Nothing.

Solution: Target Practice The old saying "If you aim at nothing, you'll hit it every time" is particularly true in your family's finances. The solution lies in tracking the money. Keep a list in your purse or car of when you got that $200 from the ATM and where it went. This takes seconds to document and makes you think twice about spending carelessly.

Problem: Too Many Chiefs, Not Enough Indians In New Mexico, we lived near several tribal villages, and there was always a tribal chieftan. Many financial problems stem from family members trying to grab control of available resources. If you're not careful, the kids can grab a large part of the control with all their needs and especially their wants.

Solution: Checks and Balances In most families, one partner is better with money than the other. It's natural to put that person in charge of paying the bills and administering the household budget. But it's also crucial that the other partner knows where the money goes and how it is spent. I'm the better "money handler" in our family (big surprise), but we establish our budget together. Bob writes the checks, and I review the checkbook, so that we have built-in accountability.

"How good and pleasant it is when brothers live together in unity." Psalm 133:1

Excerpted from A Woman's Guide to Family Finances by financial expert Ellie Kay. Visit

Used by permission of Bethany, a division of Baker Book House Company, copyright 2004. All rights to this material are reserved. Materials are not to be distributed to other web locations for retrieval, published in other media, or mirrored at other sites without written permission from Baker Book House Company. Visit

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