I had around a three-hour face to face meeting with Leah and Eric on Saturday. On the drive down to meet them, I was wondering whether or not the closing on the short sale had actually taken place. I hadn't heard. As much as I knew Leah would hate the idea, if it hadn't happened I felt like I had to put the possibility of bankruptcy on the table.
As it turns out, the short sale did go through--and Leah hates the idea of bankruptcy. (In addition, if she was going to go down that path, we should have decided prior to the short sale, so as to keep the $3K she coughed up for the closing.) Leah wants to right the situation. She feels like she got herself to this place and she can get herself out. Interestingly, I believe that in the long term this will serve her better, teaching her much needed money lessens that would not be learned if she took the easy way out through bankruptcy.
We discussed exploring debt reduction/settlement solutions via the military benefits available to soldiers. Eric’s base offers free debt-reduction services, with an intake session every Monday. Leah agreed to obtain babysitting and go so we could see what options we had.
We spent the majority of our time together discussing how they got into this financial situation, beyond the obvious of bad luck with jobs and timing of it all. There clearly was some overspending along the way. As a veteran financial planner, I’ve come to believe that all the great advice in the world won't help unless my clients understand what their true relationship is with money...and that relationship started to develop through childhood and transforms over our adult life. Both Leah and Eric took turns sharing their childhood experiences that helped shape their views towards money as well as what had had an impact on them as adults.
As their adviser, the scariest part of the current situation is that they don’t find it as distressing as I do: Leah is USED to debt and it doesn't bother her. She openly shared that they are in denial.
So, I asked, why sign up for Budget Bootcamp? Wisely, Leah responded: To force us to deal with it!