When I was eleven years old, my father had to have surgery for a malignant brain tumor. Considering my age, I did not understand the enormity of the situation. But, I distinctly remember asking my dad years later when I was in high school this question, “How did you go into the operating room that day knowing your brain was going to be exposed to the elements?” I mean, the thought of him having to anticipate that literally makes my stomach turn today. I remember the day as if it was yesterday. My brother and I usually rode our bikes to school, but that day my dad drove us to school. Then, it was off to the hospital for him. To have to go about your daily life with that agonizing thought?!

I will never forget his response. “I went into that operating room assuming I was not going to come out alive. I had come to terms with death and I was at peace with it.” He still had the will to live. He had two young children and a wife to live for, and he fought. He survived and is still living a full life. But, coming to terms with your situation and reality can bring an enormous sense of peace.

I remember the day some time ago that I had to come to terms with my personal financial situation. Granted, my situation was no where near as grave as my father’s health crisis, but I did learn a lesson from it. That moment that I realized that things could not keep going the way they were going. We were definitely on a crash course with reality if things did not change…and quickly. That was scary.

But, then, I came to terms with my situation. I made peace with it. Fear was holding me back and trying to get me to keep doing what I was used to doing. However, that was clearly not serving me well anymore. Once I came to terms, I felt so empowered! There was this enormous sense of relief around me. I no longer had to keep trying to make it all work knowing it did not. I could be real now. I didn’t need to keep up with anyone or put on a show.

Peace was all around me. No matter what happened, I was at peace with it. I knew we could get out of it. But, things were going to change…and that was okay.

Coming to terms with your situation can be freeing and enlightening. Are you putting on a facade? Are you trying to make something work that just clearly isn’t going to? Do you keep burying your head in the sand? It’s okay, the first step is coming to terms.

I woke up about 4:00 this morning to the sound of rain on my window. I was having a difficult time falling back to sleep, but I didn’t mind, I love listening to the rain. Living in California, we don’t get nearly as much as the rest of you throughout the country, so I love it when it is here. Plus, is there anything better than snuggling up in a warm bed listening to the rain? Okay, maybe there is, but it is certainly one of my favorite things to do. But, I digress, the reason I am so focused on the rain is because as I was laying there I thought about how cleansing the rain is. Doesn’t everything just seem cleaner (cars excluded) after the rain? Very purifying. That is when I decided to come clean about how I successfully maneuvered my family through a one third decrease in our income over the last two years. It has been a very painful, eye opening and cleansing process, but I am very proud now.

Yesterday I ran through my families estimated taxes, just wanted to make sure we didn’t owe the IRS anything before the 15th of January. When I pulled the numbers together, I had to show my husband because I almost fell out of my chair when I saw them. Our income was the lowest since before I started my practice in 2003. No wonder last year was so painful, we have two more children since then! I’ll explain more about why I was so proud later.

Some of you may know that my husband is an electrical contractor and he has his own business which he runs on the side. I have my own practice as a CPA. For the last five and half years we have been on the self employed financial roller coaster. With the economy the way it was last year, my husbands side business became almost non-existent. My practice definitely took a hit as well as the fact I hired a part-time employee. So, how did it all fall nicely into place?

• The Purge – It all started in the summer of 2008. The poop was hitting the fan financially. That is when I started to realize we had completely over extended ourselves. That is when I accepted the fact that my very own actions had gotten us in some hot water. It was ugly. It was painful. But, once it was out, there was nothing left to fear. All my dirty laundry was out there for everyone to see and I was okay with that because now, maybe I can help others.
• The Plan – Once all of the ugly stuff was out there, my husband and I made a plan. I bit the bullet and sold my one year old full size SUV for $7,000 less than I owed on it. Not to mention the $30,000 in depreciation it took in just over one year. Tell me that didn’t hurt! But, the fact of the matter was, I could not afford the $726 per month payments, so I had to make it work. We went through our financials and cut back wherever we saw necessary.
• The Forgiveness - I cannot tell you how many times I have woken up in the middle of the night and lay there beating myself up about the decisions I had made in the past. But, there came a point where I realized that was not serving any purpose. As my husband always says, “It is what it is.” I can’t change the past, I can only change how I choose to move forward in the future and beating myself up is just not smart. So, I moved on and started to look ahead instead of in the rear view mirror.
• The Execution – No, I swear no one was executed in this process! This is the execution of the plan. My husband and I started to keep meticulous tabs on our financials. Being a CPA, I have always kept close tabs, but I am talking about having a weekly budget and following it. Saying no to things if we could not afford it. Absolutely refusing to break out the credit cards for anything. And, slowly paying down the debt we had accumulated. We got rid of our pest control, our pool guy and our housekeeper. We started shopping only at Walmart and Costco. We cut our monthly budget by almost $5,000. Was it easy? No. But, we did it and it was not nearly as bad as you would think it was.
• The Proud Moment – Yesterday when I finished the numbers and saw how much our income had gone down, I felt a little deflated. But, then again, I think almost everyone is feeling that way right now. However, when I realized what we had accomplished, I was almost giddy. With our income as low as it was, this is the most in control I have felt with our finances since becoming self employed. I have plenty of savings, our debt is being paid down and we are not using any credit.

Should I have been more careful to begin with…yes. But, I have learned some valuable lessons and I don’t mind airing my dirty laundry if it means you learning something. I hope this gives you the momentum you need to finally take your financial life by the horns.