Have you lost a ton of money from your investments in the past two years? Is your capital gain loss? Does the chart of your net worth for real estate, stocks, bonds, oil or other commodities resemble a cliff? Do your IRA and 401-K remind you of the Titanic? Many people have had huge financial losses.
But it does not have to stay that way. There are certain steps that are common to building wealth and restoring wealth- ways to turn your capital loss to capital gain. Let’s take a look at them.
First, you have to get motivated to build or restore your wealth. Many people feel they are losers when they see their wealth dwindle. This kind of economy is an event. It has nothing to do with your character, but it can build your character. Many react by losing their self-esteem, their health, their faith, their hope, their friends, and even their ability to think clearly. If you are retired or close to retirement age, it takes a huge effort to fight the fear and make yourself do something–anything to move forward. Tell yourself, “If I made it once, I can do it again.” In fact, the steps you take in hard times are what create wealth.
Second, you need to take a fearless assessment of where you are in all areas of your life: financial, spiritual, emotional, physical, mental and social. Look it squarely, fearlessly. How much does it take you to live? How can you adjust your life to live on less? Add up your assets and liabilities in all areas of your life. Find out where you really are; you may be better off than you think
Third, set goals for yourself in all of those areas, not all at once, but the most obvious, or the easiest to deal with, so you can see quick progress. Write down those goals and post them where you can see them.
Fourth, decide on a strategy for reaching at least one of those goals. You may see a combination of strategies, but focus on only one at a time. Get it in place and operating before you start another.
Fifth, work on debt management. In our society, you will always have some debt, even if it’s only the 30 day credit card variety. The less consumer debt you have, the more you can put toward investment. Managing credit may mean you have some investor debt to create the opportunity. The whole point is, you may not be able to totally eliminate it, but you do need to learn to manage it, otherwise it will manage you
Sixth, manage your credit. You may need to undergo some sort of credit repair with a professional. But, in reality, unless there are errors on your credit report, the best credit repair is simply to do all of the above, and your credit will improve over time. Until then, create a realistic money plan. You may have to readjust your lifestyle for a few years. This is a doable thing.
Seventh, take action every day. Even baby steps, even a half inch forward brings you closer to restoring your retirement wealth.
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