Randy is sitting in his home office in Northern Idaho, a large white board on the wall behind him. The board is divided into two columns, one column for goals, the other for projects. 

“We put our five year goals on the board and we give ourselves a certain number of years for whatever goal we’re putting on there, but not to exceed five years.”  

Financial goals, he says, are long-term targets, which, when achieved, improve your own or your family’s situation. “Goals usually require budgeting and a step-by-step plan. Projects are tangible tasks that just need to be done.” 

Randy talks easily about the systems he has in place to stay on track, financially, from excel spreadsheets to weekly budgeting. But it was only a few years ago, in the summer of 2018, that they had to declare bankruptcy. One of Randy’s family members was diagnosed with a serious illness, which saddled them with more than $100,000 in medical debt. 

You Can't Prepare for Everything

“There are only a handful of doctors who treat this type of illness. We never planned on having to file bankruptcy, but you know things happen and we had to look at it: Do we want to take a hit with our finances, or do we want to save our family member’s life? That’s an easy choice.” 

Randy and his family took a month off of work and took their family member to the Cleveland Clinic for surgery. “We ended up with $104,000 of debt. There was no way in our lifetime we could pay that back.”

Even so, when their family member recovered, Randy and his wife began the work of restoring their credit and healing their finances.

Despite the hefty debt weighing on them, Randy is still optimistic: “We’re working on putting everything back in place that was torn down. As long as the foundation is firm, you can rebuild the house,” he says. 

For Randy, declaring bankruptcy actually brought him a sense of relief. “You’re not stuck in that debt headlock anymore,” he explains, “and now you can see how you’ve got to start over.” 

Like for so many people, his financial troubles weren’t something he could have controlled or even prepared for. He points out, “Medical debt is the number one reason why people file for bankruptcy in this country. It’s not about not knowing how to handle your money. It’s usually a catastrophic event that wipes you out.” 

Even though it was hard to rebuild coming out of bankruptcy, Randy says the key for them was to keep paying the remaining bills they did have — they kept their house and vehicles for example — on time and in full. 

“Once you start paying your regular bills on time, then you can start using other resources to help you.” 

When it came to their credit cards, Randy and his family decided to be intentional, using only a minimal amount of credit, and only with cards that would help them rebuild their financial status. Having a bankruptcy on their record meant they’d pay a higher APR for a while, but they accepted that. 

“You’ve got to start somewhere in the rebuilding process, so using a card with a low credit line is ok, because it keeps you on track and you don’t overspend.” Randy’s advice? “Make sure you pay that card on time and pay it off every month, if at all possible. I know today’s financial world is so different than it was 30 or 40 years ago. But don’t just pay the minimum. Do what you’ve got to do to rebuild that credit, one payment at a time.” 

Though it was frustrating to be in their 50s, starting from zero and going through the process of rebuilding their finances from the ground up, Randy says his and his wife’s credit scores are now back in the 700s and they have new goals ahead of them. 

Randy is now working towards a gold standard certification as a security officer that could result in a 50% pay increase, although it may mean eventually moving to find better work, based on the changing post-pandemic landscape of the office/work-from-home hybrid. 

“Most of our new goals are house related, paying off a bathroom remodel, remodeling the kitchen, replacing appliances.” Randy thinks they’ll be in a good position to leverage the equity they’ve built in their home in the event they do need to sell and move in the future. 

Building Back from the Ground Up

Randy and his wife admit there was nothing easy about rebuilding after bankruptcy, and that dealing with day-to-day budgets and finances can be tedious. Even when your goals and values are aligned, it’s still hard. 

“Seriously, finances are a pain in the butt,” laughs Randy. “You work 40, 50, 60 hours a week, you want to come home and relax and have fun. That’s normal. But to do that, you’ve got to be in good financial health first. Financial health doesn’t necessarily mean big wealth, millions of dollars. To me it means having the stability and foundation to be free of stress, knowing your bills are paid and there’s some money in the bank. Because you just never know what Life is going to throw at you.” 

Based on his experience, Randy offered his tips for avoiding financial headlock, and building back one step at a time. 

1. Start with small, attainable goals

“You have to make sure the goals you’re putting down are attainable, first of all. If there’s no way a goal can get done in five years, it probably isn’t a good goal for you.” 

Start with something small, paying down one credit card, for example. Write that goal down, make it time bound, and put it where you’ll see it. 

“It’s easy to write something down and say, ‘eh, you know, we’ll get to it when we get to it.’ But when you have it in your face everyday, you can’t forget about it,” says Randy. 

The next step is to make a list of steps. “Ask yourself: What do I need to do in order to get this goal done, and then write that down,” he advises. That might mean seeking some advice from a professional, educating yourself with information from reputable sources, or joining a group of others whose goals are similar to yours. Whatever it is, be clear on what steps you need to take, and when one step is completed ask, ‘now what’s the next step?’. 

“Be willing to accept that sometimes things come up that can alter your goals, but if you’re making your goals attainable, there’s probably still a way to get those goals done one way or another. It may take a little bit longer, but you just have to adjust the timeline. Don’t get discouraged. Things happen. Life happens.” 

2. Once you’ve achieved a goal, don’t fall back into financial headlock

Once a goal is achieved, it’s easy to fall back into old habits. If you’ve paid off your credit cards, for example, keep setting aside that same amount into a savings account. “Now you’re paying yourself,” Randy points out. 

Although the feeling of being debt-free is great, resist running up your bills with credit cards just because you can. “That’s where the cycle of financial headlock starts all over again,” says Randy. “As human beings, we’re horrible at resisting instant gratification, it’s just not in our DNA. But you have to do whatever it takes, otherwise you’ll find yourself back at square one.” 

3. Trade off paying bills with your partner

Randy recommends alternating with your partner every six to twelve months on who manages the household finances, pays all the bills, balances the checkbook, and budgets. He likes being able to take a break from time to time from dealing with the finances and hand it off, knowing someone else has got things covered, and vice versa. 

“When you have total transparency with your finances it, one, lets both people know the other is being completely honest and two, opens the other person’s eyes to what’s coming in and what’s going out, every day, every month.” 

Randy uses excel spreadsheets and other software to categorize, graph and record every expense, every dollar coming in or going out. Whether it's gas for the cars, a coffee or meal out, groceries, or a home repair, every expense is a line item in their budget.  

“It makes a huge difference when you can see exactly where your money is going. It opens up the conversation to say: Where can we save? Where can we cut?” 

For example, you might switch to a cheaper cell phone plan, streamline your cable or other streaming services, downsize your vehicle or look for better rates on your home or auto insurance. “All of these things add up, and you can find yourself saving hundreds of dollars a month,” he says. 

4. Be kind to yourself, and acknowledge that you can’t prepare for everything

“When our family member was recovering, we joined a group of other people who had family going through the same thing. Not one person in that group said, ‘we were completely prepared for this.’ Because even when you’re doing all the right things, you can’t prepare for everything. You can’t know what’s around the corner.” 

But, Randy says, that doesn’t mean you shouldn’t try to be prepared. 

“Being somewhat prepared is way better than not being prepared at all,” he says. 

“There are things out there that can be disastrous to any of us, you know?  And it can wipe you out in a second. That's how life works sometimes, unfortunately, but we do our best.”  

“Look at ants. They build their little mounds and tunnels, and you can scrape it all away, and in  a few days guess what? They've rebuilt it all. Like me and my family had to do, we started over. You have to accept it and realize, this is life and I'm glad it wasn't worse, because we could have lost our family member instead.”

Today, Randy and his family are well on their way to filling their white board with a new list of goals and projects, empowered to handle whatever comes next.