82. From Setbacks to Comebacks: A Guide to Financial Resilience

In this episode, host Laura Sexton discusses how to navigate financial setbacks and build resilience to bounce back stronger. The main topics include acknowledging the inevitability of financial setbacks, the importance of emergency funds, and strategies for maintaining a positive mindset during financial stress.

In this episode we’ll discuss

.     How to prepare for the unexpected

.     How to build and use emergency funds

.     Tips to maintain a positive mindset

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Transcript

Laura: 0:37

Hello and welcome to the Accelerate Your Legacy podcast. I'm Laura Sexton, your trusted financial coach and money mindset specialist. Join me as we explore the world of money and money mindset while also paving the way for a lasting legacy that extends far beyond money. Together we'll eliminate stress, amplify freedom, and ensure you stop paying for your past so you can start saving for your future. If you're seeking peace in your finances, more margin in your budget, and a legacy that inspires generations to come, you're in the right place.

1:20

Hey accelerators, today I want to talk to you about navigating financial setbacks and bouncing back stronger. You see the first part, the falling down, that's the easy part. It's easy to fall down, it's easy to hit a setback. The choice to get up And to keep getting up, that's the hard part. So what we're going to talk about today is what it looks like to get back up and how to remain resilient. But we can't get stronger until after we talk about the falling down. Financial setbacks happen, job loss happens, medical emergencies happen, unexpected expenses, it all happens. So what I want to do is provide actionable advice on how to build a resilient financial plan that allows you to recover quickly, but also sustain your growth. So, when it comes to setbacks, things are going to happen, I'm trying to pinpoint which of the many different conversations I can have with you today. I live in Southern California, and you may have heard that recently California implemented a 20 minimum wage for fast food employees. Now, this may sound to you like a great idea. You may be like, well, yeah, they need to make more money because it's expensive to live in California. Do you know why it's expensive to live in California? Because it used to cost me 5 bucks to get a Big Mac and now it costs me 15. Okay, that's why it's expensive to live in California, and it didn't cost 15 to get a Big Mac until they started messing around with the minimum wage. I'm just going to put my political thoughts to the side. I think it's absolutely stupid. I said, I was going to put him to the side and here it is. I think it's stupid. They made the minimum wage 20 because 20 in fast food ended up being 20 across the board. Because if I want to have my car repair technician come and fix the tires on the car. I'm going to have to pay him 20 because if I'm not paying him at least 20, he's going to go flop whoppers at Burger King and make 20 bucks. So costs all across the state have gone up and wouldn't you know it, 10, 000 fast food employees have lost their jobs since April. There are 10, 000 people just in the state of California, just in the fast food industry who have lost their job in the last four months. Job loss happens and it happens to all of us and sometimes we can see it coming. Sometimes we know that the company's getting bought out and sometimes we know that they're downsizing. Sometimes we can see the writing on the wall that. Yeah, it'd be great to make 20 dollars an hour, but the fact that 10, 000 of us lost our jobs means that we can't move forward with that particular industry. Sometimes we can see it coming. Sometimes we get completely blindsided, like a medical emergency. You guys may remember that in July of last year, I ended up taking my 1st ever ambulance ride to the hospital to the emergency room because I was choking and I got to have this really fun, unexpected medical emergency that I got to pay for. Thank goodness I have medical insurance and could cover it, but I was not planning on that. Unexpected expenses, these are probably going to come up without any kind of forewarning, you get a crack in a windshield, you have to get it replaced and it's not cheap to replace a crack in a windshield because there are all kinds of sensors and things inside the windshield help handle things on your dashboard sensors on, you know, being too close or not close enough or, you know, seeing all of the things in your car around your car. There's so many sensors now. I probably sound like I don't know what I'm talking about, because I don't actually know 100 percent of what I'm talking about here. I just remember when we got our windshield replaced before we went on the long road trip, they had to reset the temperature gauge to be able to figure out what the temperature was. Apparently the windshield is what determines what the weather's like outside. We need to mitigate our risk, right? We know that some of these things are coming. We know beyond a shadow of a doubt that we are going to have some sort of medical intervention at some point. So, what do we want to do? We want to have health care. We want to make sure that our medical insurance is up to date, and we'll cover us and everybody in our family. We know that we're probably going to have some sort of car accident at some point, hopefully, you're not in the car. I would hope that the only car accident you ever have in your whole life is somebody hitting your car or tree falling on your car when you are nowhere near it. I'm just going to pray that over you that you do not get into a car accident. This is nothing to do with you. The worst it would be with you in the car is a blown tire going like, 20 miles an hour. Right? But we know that things happen. We know that fire start in kitchens, we know that we need house homeowners insurance. We know that we know that if we're renting, we need renters insurance to make sure that we have all of our risk covered. Because we don't need car insurance if we can cover the price of a brand new car. Most of us can't take that kind of hit. Now, I could pay cash for a car, probably not the best car ever, but I could pay cash for a car if I were to get into an accident and total my car. But I don't want to take on that risk. I don't want to have to buy a whole new car, much rather the insurance company cover that for me. Medical insurance, homeowners, renters, insurance, car insurance. These are all very important things to have in place to mitigate your risk. But let's be honest, those unexpected expenses that job loss, there's no insurance for that. So, what we have to do is we have to set up emergency funds for ourselves. You are not going to hear anybody talk more highly of an emergency fund than me. An emergency fund gives you great peace of mind, and I've told the story before about my son being in the hospital. He was 5 weeks old and had to have surgery, and it was terrifying, but I didn't have to worry about the money. I didn't have to worry about whether or not I was going to be able to pay for it or what was going to happen when we left. No, I only had to worry about him getting better. And that is peace of mind that I want to shout from the rooftops over and over and over again and emergency fund makes things feel more like an inconvenience. We have sinking funds that I think are very important car repair sinking funds are stays around about a 1000 dollars. There's no real unexpected expense. It's going to come up. That's going to be more than that that we can't plan for ahead of time. And if there is, we do have the big emergency fund as well. So we have our sinking fund for car repairs. This allows me so much peace of mind. If I have a blown tire, guess what? It's covered. If I need to get the transmission change, which I hope I don't have to because we do a really good job of making sure that everything is really running efficiently. I have the money to get it done. Well, maybe not a transmission with a 1000 dollars, but we have it in the emergency fund. I don't actually know cars. I try to pretend like, I know what I'm talking about, but I know how to change the oil and that's about it and change tire, but a fan belt blows. I got nothing and I'm going to have to take it in, but I have a sinking fund for car repairs and so I can very easily get that done. We have sinking funds for medical expenses. We have sinking funds for union dues that do come up. We have sinking funds for many different things. We have a sinking fund for our AAA renewing. We have a sinking fund for our Costco renewing. These are small things, but if you're not planning ahead, they can feel like an unexpected expense when they pop up. You know you have to pay these yearly expenses, so why not put the money aside when you can to make sure that it's covered? So an emergency fund, a sinking fund, those are things that are going to make sure that you feel good along the way. But let's talk about something Okay, there's going to be financial stress should one of these things come up and this is where we need to build in your resiliency and your money management. Let's say that you are feeling stress financially. What can we do to help you maintain a positive mindset? Now, you can work on things like mindfulness and gratitude. You can see a therapist, you can sit down with a financial coach where we can talk about the stress points and how to reduce some of that stress for you. I was working with a client recently, and he was saying that he opens his accounts repeatedly and was wondering how we could manage his stress. He was saying, you know, I'm a Christian. I shouldn't worry or stress out this much. I know that. Well, one, he's just adding shame on top of his already feeling stressed, and that's just going to make him feel more stressed. So we don't want that for him. What we were doing was we were sitting down and we were saying, okay, every time you feel the need to open this app, we need to pray about it. We need to be mindful. We need to be thoughtful. We also wanted to put some parameters around looking at those accounts. We have reduced it to once a day. We started out, he was opening up many, many times a day, almost subconsciously. He wasn't even thinking about it. He was just opening and looking and scrolling through his bank apps, his investment apps, and I was like, Whoa, let's slow this down. So we, we said, how about twice a day? Once in the morning and once at night, after in the morning, like you get up and you do a couple of things before you look at it, not the first thing you do in the morning, and then we can do it once a night, not right before you go to bed, but once in the evening and by doing this. We reduced a lot of the stress and you would think, Oh, well, the more I know, the more I can have peace, but that's not always true. Sometimes watching the ups and downs just adds more stress. And by putting some parameters around that, he was able to give himself a sense of calm. He only looked at it when he was supposed to. And now we're looking at it once a day at the end of the day to make sure the things that we're supposed to go through went through. Nothing unexpected happened and he feels a lot more peace. We have to be mindful. We have to take captive our thoughts. So we're not ruminating on the negative and we're not ruminating on the what ifs. A lot of anxiety is stressing about things that haven't even happened yet, and studies show that 91 percent of the things that we are anxious about never happen. We're worrying about things that most likely will never happen, so we wanted to set forward some parameters to allow us to be calm, to pay attention when we need to pay attention, but to not overly obsess about it. Another way to reduce the stress and the anxiety is to set a realistic goal. I like setting short term goals and long term goals. Short term goals, we have a better chance of hitting them within the time frame. Long term goals, things happen. Long term goals have a better chance of changing than they do having us Reaching them because of the time frame, so short term goals, we know what we can do in the next month. We know what we can do in the next 3 months. We know what we can do in the next 6 months. I have a client, this couple that I've talked about before. They're absolutely hilarious and I love them and we sat down and we looked at their numbers and this may sound crazy to you, but they started out with almost 150, 000 dollars in debt. 5 months, they paid off 15, 000 dollars, but because of their changes in their life, that's coming up in the not too distant future. They have a couple of things that are happening a couple expenses that they've been paying. They're not going to have to pay anymore. What we did was to be sat down and we looked at their long term goal in the beginning. It looked like it was going to take 3 years to get everything paid off because they do make a good income, but they had some pretty big expenses. They had to take care of. And then we started looking and we said, wow, you can pay all of this off in 23 months. So that's what 23 months and then we realized there was 1 big expense that was going away. We realized that they could have everything completely paid off in 18 months. That's with them still being able to live a comfortable life. They're not doing anything extravagant. They're not flying off to Jamaica, but they are living a very comfortable life right now. And they're still going to be able to hit their long term goals. Now, their long term goals were originally to hit this goal in three years. We're shortening that to 18 months. Their long term goal for three years from now has now changed, but their short term goals, they're still hitting them every month. Now, what happens when we hit our short term goals? I want you to celebrate. If you were not celebrating the victories, what Are you achieving them for? It is time to start celebrating the small things. Now I'm not saying, okay, I paid off 15, 000 in debt. Now I get to go buy myself some expensive handbag. That's not what I'm saying, but what I am saying is you've hit your small victories. Let's celebrate, enjoy the moment. Don't hit your goal and then say, okay, what's next? Hit your goal and celebrate it. By doing this you add resiliency to your money management-to your money mastery, you can be more resilient and stick to a plan better. If you were celebrating along the way. Here is your immediate action plan moving forward. You need to prioritize your expenses. That's called making a budget. You need to cut unnecessary costs, things that don't actually bring you joy. Get rid of them. Re condo your budget. Get rid of anything that is not bringing you joy or isn't 100 percent necessary. All right, accelerators my kids are coming home from the pool, so I am going to be heading out of here, but I just want to go ahead and remind you sometimes we hit financial setbacks. It happens, but stay resilient. Keep moving forward and bounce back stronger. If you need help taking these proactive steps, if you need help staying positive, you are welcome to reach out to me. My coaching services, my money mastery program is here for you. You can click down in the show notes and schedule a time for us to have a call. I'm here for you. Please feel free to subscribe and leave a review to the podcast. It helps me get this to more people. And you know that I have a goal of helping change a million lives. Thank you so much for tuning in accelerators. I will talk to you again very soon until then go out and make a difference.

Laura: 16:07

Thank you for investing your time with us today on the Accelerate Your Legacy podcast. Remember, your legacy isn't just measured in dollars and cents, but in the tools, habits, mindset, and reputation you leave behind. Don't just listen to the show, but take action on what you've learned. Share this wisdom with a friend who can benefit and help us spread the word by rating and reviewing the podcast. For questions or encouragement, reach out to me on Instagram at Accelerate Your Legacy or explore the resources listed in the show notes. I will be back with you next week. Until then, build your legacy with intention.