Financial Recovery in Sobriety

Financial Recovery in Sobriety

Substance-use disorders are expensive. Your savings may have been depleted by the cost of past drug or alcohol expenses. Steady employment and income are hard to maintain during your addiction, and it may be difficult for you to find or hold down a job during your recovery.

Legal fees and the cost of treatment may have left you in a bad financial situation. You can gain control over your finances and start making better financial choices to help support your sobriety.

Financial recovery is one way to lower your stress and reduce potential triggers that can put your sobriety at risk. At Right Path, we help our patients learn the skills they need to keep their triggers under control.

Money Issues Can Cause a Relapse

Financial management can be hard for anyone, but it can be even more challenging for someone recovering from a substance use disorder. You may feel ashamed about the amount of debt you’re in or feel like you’ll never get control over your financial situation. You may have lost your home or car to foreclosure or repossession during your addiction or while in treatment.

You may not have the financial skills to know how to manage your money. You can feel easily overwhelmed by the information and not know what to do. Poor money management can lead to growing debt and even more stress.

During your recovery, added stress and feeling like you don’t have control over your financial situation can also lead to feelings of hopelessness and increase your chances of suffering a relapse.

A relapse happens when you revert to old coping mechanisms like drugs or alcohol to help you cope with your new situation. You can avoid triggering a relapse by learning how to manage your finances. Understanding how to track your spending, make a budget, and save money for the future gives you the skills you need to cope with financial stress.

How to Manage Your Finances

How to Manage Your FinancesAfter you complete your treatment and are working, you’ll need to start managing your finances. Begin managing your finances by opening a bank account and tracking your spending.

Take an Inventory of Your Assets and Debts

You have to know where you’re starting from before you can take your first steps in financial recovery. What amount of income are you making? How much money do you have after monthly expenses to put toward paying down old debt?

Figure out how much debt you have and where you owe money. Start paying down past debts when you can afford to do so. Using a debt consolidation service can help you take control of your finances by combining all your debt payments into a single monthly payment.

Set and Keep Money Goals

You can start creating money-based goals once you know how much income you have and the amount you owe for bills, debts, and other expenses. Make a monthly budget and set extra money aside each month into a savings account. Create goals of how much money you’d like to save in a year or how much debt you’d like to pay off to help manage your money and build your budget.

Make a Budget

Set and Keep Money GoalsYour monthly budget should cover your needs like food, housing and utility payments, credit card bills, and any other typical monthly expenses you have. Include transportation costs to get to work and the cost of any prescription medications you need in your budget. You should also include any debts you owe from loans or mortgages in your budget, including car loans or student loans.

Leave room in your budget for a few fun things, so you’re not feeling like you’re depriving yourself. You can also use your budget to help rebuild your savings. Budget a small amount of money you can deposit into a savings account every month. Even if it is just a few dollars each week, this can rebuild your long-term savings and financial health.

Be Smart With Your Money

Set up direct deposit with your employer, so you’re not tempted to cash your paychecks and use the money for something you don’t need. You can also use the envelope method instead of relying on an ATM card.

With the envelope method, you withdraw only the cash you need for your budgeted expenses and bills and place it in an envelope at home. You only use the cash inside the envelope to pay for things, and when the envelope is empty, you can’t spend any more money.

This method holds you more accountable to your budget than paying for things with a debit or credit card. If you can only use the fund you have, it’s easy to keep track of how much you’re spending.

Use Available Resources

Many banks and other financial institutions offer free financial planning services to lower-income customers.

They can help you:

  • Open accounts you need
  • Negotiate with creditors on your behalf
  • Set up payment plans for your debt that fit within your budget
  • Offer advice about filing for bankruptcy

Learn about your rights as a consumer and how you can benefit from financial protections offered in the Federal Consumer Credit Protection Act.

Rebuild Your Credit

Missing payments on housing, car loans, and student loans can harm your credit score. Losing your job during your addiction meant you couldn’t pay bills, and your debt kept piling up. This all makes your credit score go down, and it takes a long time to rebuild your score afterward.

One way to improve your credit is to make every monthly payment on time. Payment history accounts for 35% of your credit score. Try setting up automatic monthly payments, so you don’t miss a payment by accident. Lowering the debt you owe also improves your credit score. Negative marks on your credit score can take up to seven years to be removed.

Work on Your Financial Recovery With Right Path

Part of sobriety involves recovery from the financial toll your addiction caused. You may feel overwhelmed by the amount of debt you’re in or feel stuck in your current financial situation.

Talk with an addiction counselor if you feel like financial stress might trigger a relapse. Our behavioral counselors at Right Path help patients learn the skills they need to handle all aspects of their addiction. We can teach you how to minimize your chances of relapse.

Written by Sergey Zhitar, MD Medical Director

Native of Moldova, Dr. Zhitar is Board Certified in Addiction Medicine as well as Internal Medicine and completed his training at UPMC Shadyside, Pittsburgh, PA in 2000.