The Great Recession of 2007 really had a horrible impact on the lives of so many of us. According to a report on Stanford.edu “Over 60 percent of U.S. households experienced a decline in wealth during the Great Recession.” In my home state of California, state workers were forced to take furlough days; countless people across the United States lost their jobs and were forced on unemployment, and let’s not forget about the housing crisis and the families who lost their homes. If you were one of the millions who was affected by the Great Recession, you are definitely not alone.
Personal finance expert and best selling author Patrice C. Washington struggled coming out of the recession, but learned the importance of holding yourself accountable when it comes to money. Patrice was kind enough to join me for an interview recently to discuss how families who are still being affected by the Great Recession can rebound from it, the biggest financial hurdles men and women face and how to overcome them, financial habits we can all adopt that will have a big payoff, where you can file your taxes for free and how you should spend your tax refund responsibly.
Candace Rose: Do you have any advice for families who are still struggling to rebound from the Great Recession?
Patrice C. Washington: “I do have advice, as someone who struggled myself coming out of the recession. There’s something that I learned that was really important and I don’t think enough people share this or talk about it, and I realize that when I was looking for help I would hear a lot about budgets and credit reports, but what it took for my family and I was to take a step back and really assess our part in this debacle.
I had a very successful business and it crumbled during the recession. I was hurt, I was bitter, I was embarrassed, I felt guilty. I had all this range of emotions and I loved to blame everyone else. I would sit with my friends and family and colleagues, and we would blame the economy. We would blame the President and we would blame the banks. It finally came to me in 2009 that if I was actually going to make progress and move forward in my finances, that I had to look at the person who had the most control over my finances, and that was me. It took a really hard look and it took some reflection, but I had to look at just everything that I had done and it wasn’t about blaming myself or beating myself up, but it was about regaining control because once I looked at the spending habits that I could have curved; once I looked at the purchases that I really didn’t need to make or the fact that I didn’t reach out to my mentors when I needed help the most, I realized that it was my responsibility too. It wasn’t just the banks, it wasn’t the economy, it wasn’t the President – I needed to look at Patrice, and once I did that I was able to take control and move forward.
For any individual or family who is still struggling to get through what happened during the recession, I would say let’s put the credit reports down for a second, let’s set the budget aside and let’s take a really hard look and have that difficult conversation and go – ‘What did I do?’ ‘How did I contribute to this?’ That will be the first way you can move forward.”
Candace Rose: What are some of the biggest financial hurdles men and women face, and how can they overcome them?
Patrice C. Washington: “Well, I think both men and women have these myths that keep them stuck where they are in their finances. I’ve done a lot of research on this, focus groups when I wrote both of my books ‘Real Money Answers for Every Woman’ and ‘Real Money Answers for Men’, I learned that we have these different myths that really perpetuate what’s really going on with our finances.
For women, we love to say things like ‘I work hard so deserve it’. That’s how we justify our purchases. That’s why we might go out and spend money on things that we don’t necessarily need. I challenge women to get over this hurdle and think about yeah, you work hard and yeah, you deserve something, but is it another purse? Is it shoes? Is it more makeup (or whatever you like to do)? Or do you work hard and deserve to leave a legacy for your children? Or do you work hard and deserve to start that business you’ve always wanted to start? Do you work hard and deserve to sleep peacefully at night and not worry about bills and phone calls from creditors? What do you deserve more? To get over that hurdle you have to ask yourself that question. Again, it’s about having that real talk with yourself – ask yourself that question and then prioritize based on what you really truly want more.
With men, there’s this myth that just because they were born male that they’re naturally good at money. That’s a myth that keeps them from financial success because it makes a man too ashamed or embarrassed to ask for help when he knows he needs it. When you live with this myth that ‘because I’m a man, I should manage the family income or manage the household expenses’; ‘because I’m a man I don’t need to talk to anyone about this’, what I often find is that men end up at retirement age going ‘I wish I would have asked for help 10 years ago;’ ‘I wish I would have sought out assistance 20 years ago or sat down with a financial advisor or an accountant – anyone 25 years ago, then I wouldn’t be in this position.’ That’s a hurdle that men have to overcome because if you stay in this place that because you’re male you automatically manage money wisely, in the long run you’re really going to hurt yourself and your own financial success.”
Candace Rose: What are some financial habits we can adopt that will have a big payoff?
Patrice C. Washington: “Well, one habit in particular that I really encourage people to adopt is budgeting. I know that makes people get tense, it makes you feel like ‘I have to deprive myself and I have to sacrifice’, but I really want you to look at budgeting not as a deprivation tool, but one of discipline. Budgeting is about telling your money where to go instead of doing what most of us do – look up and go ‘I know I got paid, but where did my money go?’ Budgeting is a tool that can help you plan for your savings, plan for paying off debt, plan to just manage your lifestyle better. It doesn’t matter how much you make. It’s not that I don’t make enough to budget, if you make $2 a month, it’s enough to figure out what you’re going to do with those $2 and plan accordingly.
You want to start up to build up that muscle. Just because you earn more money – which a lot of people think is going to be the big difference for them – earning more money doesn’t mean that you’ll have more money in the long run. If you’re not familiar with budgeting and planning, you might still blow it…and we don’t want you to do that. That’s one habit that you really want to get your hands around.”
Candace Rose: With tax season upon us, who is eligible to receive free tax services?
Patrice C. Washington: “Individuals and families who have a household income of $60,000 or less are eligible to file their taxes for absolutely free at MyFreeTaxes.com. Now what I love about MyFreeTaxes.com is that you’re not only filing your taxes for free with the federal government, but you’re also filing with the state. In all 50 states including Washington, D.C., you can file these taxes for free and you can get filing assistance for free. Just because you’re self-filing doesn’t mean that you’re on your own. Don’t think that once you log on and putting your information in you’re all by yourself because that’s not true, you actually get support! You get online support through a chat, you can get email support or even telephone support to help you through the process. If you get stuck anywhere there’s always a backup team there of IRS certified specialists to help.”
Candace Rose: How can families make the most of their refund if they are getting one this year?
Patrice C. Washington: “Well, how do you make the most of a refund? The first thing you want to do is make the most of filing your taxes by making sure that you look out for credits like the Earned Income Tax Credit. This is a credit that many Americans qualify for, but one in five Americans don’t even know, so they don’t take advantage of it and they leave their hard earned money on the table.
I want you to make sure that you’re taking advantage of maximizing the experience from the beginning (the whole filing experience) but when you think about the refund, I want you to not wait until the money hits the bank to start thinking about what to do. What you want to do is plan in advance because we don’t want to spend that refund emotionally. We want to make sure that there’s a plan in place that’s going to support us over the next 365 days. Think about your savings – do you have some savings that you need to beef up a little bit? Think about your debt – do you have debt that you need to pay off? And then think about some deferred maintenance. Do you have car repairs that you’ve been meaning to make? If you don’t make them now it’s going to snowball into something catastrophic. Do you have a home repair or maybe something as simple as dental work that you need to have done? What are those things that you’ve been meaning to get done, but you’ve been saying ‘I don’t have the money to do it.’ This is the time, so plan wisely so you can take advantage of all three buckets: saving, paying down debt, and then also taking care of any maintenance in your life.”
Candace Rose: Well, thank you for the great tips, Patrice. Where can we go for more information?
Patrice C. Washington: “For more information just head to MyFreeTaxes.com. You’re going to get tons of resources and learn more about how you can file your taxes for free, easily and securely.”