The New Year is an ideal time to evaluate what we need and value at a deep level, and reflect on how those needs and values are met or expressed through our relationship with money. In other words, how can you best take care of yourself this year by making choices that fill you up rather than leave you feeling empty or deprived?

With that in mind, I’d like to share a short video produced by CMN.TV in which I speak briefly about how, by acknowledging the emptiness or sense of deprivation we may feel, we can make conscious, healing choices that allow us to not only restore our financial well-being but discover how to “fill-up” that inner emptiness.

Once you’ve had a chance to watch the video, I’d love to hear how this message resonated with you. Leave a comment below. I’d love to hear from you.

For many people, the holiday season is a mad rush of spending too much time, too much energy, and too much money. We start the holidays with dread and end them in debt – and it’s no wonder: for months, we are bombarded with advertisements and peer pressure to buy more, spend more, and do more.

What happened to connecting with people we love? Celebrating the joy of being alive? The simple pleasures of giving? At the Financial Recovery Institute, we’ve helped thousands of clients break their holiday over-spending habit, and I’ve learned that the best way to do it is by making a solid plan. Having a plan for the holidays means understanding your history, being clear about your expectations, and coming up with a balanced approach to spending your time, your energy and your money.

In my Holiday planner, (which is yours for free- please download it on the left side of my homepage at : www.financialrecovery.com.) I walk you through the ten steps you need to create your own holiday spending guide using the MoneyMinder® Holiday E-book and Planner. We’ll start by examining your holiday spending history. We’ll imagine what the perfect holiday might look and feel like from both a financial and an emotional viewpoint. Finally, we’ll plan out how you’re going to achieve the goal of having a more balanced, meaningful, and debt-free holiday.

The steps are actually quite simple to follow. In each one, I’ll explain exactly what you need to do. The hard part is coming face-to-face with how you’ve spent your resources in the past, and taking a hard look at what you need to do to achieve balance this time around. Money can be a highly emotional topic for many people, and you may find it a bit uncomfortable.

Of course, when you remember that you’re giving yourself the precious gift of peace-of-mind, as well as a debt-free January, the difficulty of the exercises become a great deal easier.

So let’s get started planning out the happiest holidays you’ve ever had! My holiday e-book and holiday spending plan are yours for free, as my gift to you. Simply download from the left side of my home page at www.financialrecovery.com

A Note from Karen:  The following article continues our mini-series on how to take the first steps in healing your relationship with money. If you’re already well on your way to financial recovery, you may want to forward this email to someone you know who is struggling with money issues.  My intention is to send you information that is immediately useful to you, so please let me know if there is a certain topic, challenge, or issue that you’d like to read about.

Money & Financial Recovery: Walk With Compassion on the Road to Financial Recovery

There is an expression that states: “You’re only as sick as your secrets.” And people who are in financial crisis — no matter how they got there — tend to keep a lot of secrets. They feel so much self-judgment, shame and embarrassment about having chronic money problems that stay isolated and avoid reaching out to get the help they so desperately need.

I mention this because last week I invited you to take an honest look at what’s not working in your relationship with money.   You had to shine a light on what’s true for you and face those issues, symptoms and feelings you might prefer to ignore… or even deny. Believe me, I know how difficult this can be. It takes guts to admit to what’s not working and risk feeling the heaviness of your own self-judgment, discouragement and shame.

This is why, as we move forward and take the next steps in healing your relationship with money, I implore you to do so with compassion, without any judgment or blame. Even if your financial life is a mess, even if you’ve blown it a dozen times or more, you won’t improve things by flogging yourself with shame and criticism. To heal, to recover, you must be kind to yourself.

As Maya Angelou said, “You did then what you knew how to do and when you knew better you did better.” With that in mind, let’s dive into the second step of assessing where you are now and where you want to go.

 Define What You’d Like to Accomplish

Now that know how your current financial situation is affecting your life, what do you want for yourself in the future? Imagine you’ve already applied the principles of Financial Recovery to your relationship with money and you’re finally experiencing the financial reality you truly want. What does that look like? How will you know that you’ve achieved your own definition of success?

In your money journal, write this: “I will know I’ve succeeded in my Financial Recovery when…” and then list those experiences, practices, and accomplishments that tell you you’ve been successful and have, in fact, transformed your relationship with money.

For instance:

• How will you behave around money?
• What will be the measurable differences in your life?
• How will you feel about your relationship with money?
• How will you spend your time?

This list is completely personal, reflecting your own needs and desires for how you want to live. When I ask clients to do this, some people start by listing “things” they want — a new car, a house, or some other purchase. But with a little prodding, nearly everyone starts to say things like, “I’ll be able to manage my bills,” or “I’ll no longer have debt,” or “I won’t be worried about money all the time.”

Do you crave something simple, like getting a good night’s sleep without worrying about money? Do you long to live without the heartache of fighting with your family about money? Perhaps you want to feel safe and secure, or get out of debt, or finally have savings. Or be a role model for your kids so that they don’t struggle with money in the future.

Imagine how a healthier relationship with money might allow you to live or work wherever you choose. Or travel. Or start a business. Or contribute to a cause that has meaning for you.

No dream is too big. No detail is too small. Keep this journal entry handy so you can refer to it later. You’ll use it along the way to remind yourself of your goals and to recognize your progress.

Next week, we’ll talk about how to become conscious of and connected to your money. But until then, if you want more information on how to transform your relationship with money, you can read my new book, Financial Recovery: Developing a Healthy Relationship With Money [see sidebar for link].

If you’re worried about your finances or struggling to get by, it’s easy to think that the root of your problem is that you simply don’t have enough money. You can’t help but think, “If only I had more money then I could…” You can fill in the blank.

And you’re not alone. Most people think their money problems come from not having enough. But the truth is, the core cause of most people’s ongoing financial trouble is an unhealthy relationship with money.

While anyone can have a situational financial problem due to extenuating circumstances, like a job loss, a failed business, a medical condition, some people’s money issues crop up over and over again. Those ongoing financial challenges are not merely situational but reflect a destructive pattern in one’s relationships with money.

In his book The Secret Language of Money, my friend and colleague David Krueger describes our relationship with money as the “longest-running relationship in our life.” Even before you’re born, your parents’ financial circumstances and attitudes influenced your first experiences of the world, from the kind of prenatal care your mother received to what resources, education and opportunities were available to you as you grew. Your children will be influenced by whatever you teach them, intentionally or unintentionally, about money. And even after you die, your estate or lack thereof will live on.

While your relationship with money may not be the most important relationship of your life, it has an undeniable impact on all other aspects of your life, especially on those people and things you hold most dear.

But the good news is, no matter what your current relationship with money is today, there are proven steps you can take to heal and improve that relationship and create a future of financial stability and well-being.

Assess Where You Are Now and Where You Want to Go

The first steps on your path to a healthy relationship with money require nothing more than awareness and self-reflection:

1. Identify your situation.
2. Define what you’d like to accomplish.
3. Become conscious of and connected to your money.

Let’s focus on the first of these three steps.

Identify Your Situation

In a private journal, answer the following 3 questions. Be sure to take as much time as you need to answer them thoroughly.

1. “What’s not working in my relationship with money?”

List everything that comes up for you. For instance, are you always worried about money? Do you come up short all the time? Do you feel out of control with your spending? Write down everything that comes to you.

2. “What emotional and psychological consequences am I experiencing?”

Are you unable to sleep because you’re worried about money? Are you fighting with your loved ones? Do money troubles prevent you from enjoying your life?

3. “Which of the symptoms of financial dis-ease have I exhibited?”

Have you been ignoring the reality of your financial circumstances, pretending that they will somehow, magically get better? Have you lost control of your spending and find yourself making purchases you can’t afford?

By answering these questions honestly and thoroughly, you’ve made the first step to healing your relationship with money. In subsequent articles, we will cover the remaining two steps: define what you’d like to accomplish and become conscious of and connected to your money.

Until then, if you’d like more information and support on how you can develop a healthy relationship with money, I invite you to read my book, Financial Recovery: Developing a Healthy Relationship With Money (see side bar for link). Or visit http://www.FinancialRecovery.com to learn more about the Financial Recovery Institute’s Training programs or individual counseling with Karen McCall.

People get out of debt all the time. The real challenge is to stay out of debt.

Just like yo-yo dieting where you knuckle down, stick to a diet for 4-6 weeks and lose a lot of weight only to gain it all back, most people who work to get out of debt eventually end up with an even heavier load of debt. Again.

But it doesn’t have to be that way. Here are 8 Steps that outline how you can “save your way out of debt” and stay out of debt forever.

Step 1: Avoid Deprivation

Most people assume that getting out of debt requires living without all the things they enjoy the most. Not so. In fact, you have to create a spending plan that allows you to feel comfortable and satisfied, rather than deprived. Any feeling of deprivation will eventually lead to overspending. And overspending only leads to more debt.

Step 2: Stop the Leaks by Stabilizing Debt

If you try to pay down your debt while you’re still using your credit cards, you will stay stuck in the debt cycle. It’s like sitting in a boat with a grapefruit-sized hole in the side while you try to bail out the gushing water with a thimble. To free yourself from debt, you must stop adding to it. This is called debt stabilization.

Step 3: Build a Firm Foundation with Periodic Savings

One common myth is that we can’t begin saving money until we are debt free. But if you want to break free of debt, you need to start saving immediately by building “periodic savings.”  This is the money you use to meet periodic, non-monthly expenses, such as car insurance, taxes, and family vacations. Yes, that’s right. It covers both the obligations and the fun stuff. Periodic savings is essential to making your financial life work for without it, you will likely resort to credit cards for those “unexpected expenses.” Then you’re back bailing water from that leaky boat again.

Step 4: Reduce Debt with a Proven Strategy

Once debt is stabilized and you’re building your periodic savings, you’re ready to start reducing your debt. Designate whatever amount above the minimum that you can pay toward just one targeted debt.  When that one debt is paid off, roll that amount to the next debt target. Over time, you’ll have no more debt.

Of course, the higher your debt, the slower the process of debt reduction. But please know this: going slowly in the right direction is enormously better than going in the wrong direction at any speed.

Step 5: Build Your Safety Net

It’s vital to plan for the possibility of an interruption in income. A Safety-Net Savings account is designed to cover your living expenses if your income is interrupted for any reason.

Start to slowly build this Safety-Net Savings account. Once you’re no longer paying any debt, you can roll that money right into this savings without changing your monthly spending plan.

Step 6: Celebrate Being Debt Free!

Living debt free may seem like a fantasy, but I have celebrated this reality hundreds of times with people who have used the Saving Your Way Out of Debt plan. Clients have literally danced in my office after they made their last debt payment. I’ve danced with them too! Celebrate your accomplishment. You deserve it.

Step 7: Resist the Seduction of a Zero Balance

Once you’ve eliminated debt, those big zeros on your balance sheet can tempt you. Instead of succumbing, use your periodic savings as a way to make important, non-monthly purchases.

By leveraging the power of savings, you can free yourself from debt once and for all and experience financial serenity.

If you’d like more information on how you (or someone you know) can get out of debt, stay out of debt and develop a healthy relationship with money, I invite you to read my newest book, Financial Recovery: Developing a Healthy Relationship With Money (see sidebar). This book offers a straightforward system for eliminating self-defeating money behaviors and building lifelong financial stability.