10 Mistakes I Made During My Bankruptcy

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Summary
In this episode, Louisa Larado shares the 10 mistakes she made during her bankruptcy and offers tips on how to avoid them.

Takeaways

• Avoid avoiding thinking about money and instead become aware of your finances by tracking income and expenses.
• Set up separate bank accounts for different expenses to better manage your money.
• Openly talk about bankruptcy to reduce shame and increase support.
• Set money goals to stay focused and motivated.
• Let go of blame and take responsibility for your financial situation.
• Educate yourself about money to improve your financial knowledge and decision-making.
• Step out of your comfort zone and try new strategies to improve your financial situation.
• Shift from a lack mindset to an abundance mindset to attract more opportunities and positive experiences with money.
• Align with your partner on finances and regularly communicate about goals and progress.
• Believe that you can rebuild and improve your financial situation after bankruptcy.

Keywords
bankruptcy, mistakes, money management, financial goals, blame, education, comfort zone, lack mindset, partnership, struggle

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Disclaimer: The information contained on today’s podcast has been provided as general advice only. The contents have been prepared without taking into account your objectives, financial situation or individual needs. Before making any decision regarding the information, strategies or products mentioned on today’s episode, please consult your own financial advisor or other professional first.

Chapters

• 0:00 Introduction
• 2:26 Mistake 1: Not Thinking About Money
• 5:49 Mistake 2: Not Setting Up Effective Accounts
• 8:56 Mistake 3: Not Talking Openly About Bankruptcy
• 11:28 Mistake 4: Not Setting Money Goals
• 14:23 Mistake 5: Holding Onto Blame
• 16:40 Mistake 6: Not Educating Yourself About Money
• 18:43 Mistake 7: Staying in Your Comfort Zone
• 20:59 Mistake 8: Having a Lack Mindset
• 26:48 Mistake 9: Not Being on the Same Page As Your Partner
• 28:29 Mistake 10: Believing Money Will Always Be a Struggle

Transcript

Louisa Larado (00:00)
Hello and welcome to the Bankruptcy to Bliss podcast. On today's episode, I'm going to be telling you the 10 mistakes that I made during my bankruptcy and I'm sharing this today. So hopefully you can avoid making these same mistakes.

So I've been thinking a lot recently about my recovery through my bankruptcy and what went well and what just didn't go so well and what stopped me getting back on track sooner. Because I did feel really stuck for quite a while. So I was just reflecting and these were the 10 biggest mistakes that I found I made initially after I went bankrupt and for about a year or so after some of them I made for a lot longer till I learnt

they were not serving me. So I really just wanted to share with them with you today, just so that you can be aware of some mistakes you might be currently making and not even realizing it. And hopefully gives you some tips on how to avoid these mistakes

and how you can find different ways to deal with each of these areas so that your money starts serving you again rather than you feeling stuck or like you're not getting ahead or you might be feeling like you're just getting further and further behind. All right, so the very first mistake that I made was, and this was when I very first went bankrupt, I just tried not to think about money. I didn't want to think about how much money we were spending, how much money...

We had to pay for certain things, how much our bills were. I let bills sort of pile up for a little bit just because I felt so, scarred by the whole situation. And the idea of money was really something I just did not want to have to deal with. And in my household, I'm the one that manages our finances. And at that time, initially, I just sort of let

out the money to sort of dictate what we were doing. So instead of being on top of that bill payments, knowing how much money we had coming in versus how much we had going out, I just sort of switched to autopilot and I almost buried my head in the sand. I just didn't want to have to face up to thinking about any money related things because it just felt too hard for me. It just felt too hard and too overwhelming.

then as a result of this, what was happening was we were constantly running out of money before our next pay was coming in. I thought I had a rough idea, you know, of how much was coming in and going out, but this never seemed to be the case. And because of this, we weren't able to save any money. We were just having that constant stream of money just running out and it

definitely didn't feel good. the way that I sorted out this problem was I realized that I actually need to become aware of my money. I need to really get clear on how much money that we have coming in and going out each month. I wasn't big on setting a really tight budget because I didn't want to feel restricted to it. And I did try a tight budget actually at first, which also didn't work well for us because that sort of kept me feeling like

and worried about money and stressed about money. So I needed to find a way to set up our finances so that it felt good for us. I didn't feel those restrictions and I started to feel a bit better about our money. And so to do this, I got really clear first of all, all the money that was coming in, all the different expenses we had going out. And I started looking at different ways to

manage our money a little bit better. So having that awareness of your money is such a vital step in the right direction. Being very clear on your incomings and outgoings that will just help you stay focused and it makes you feel like you're the one in charge of your money rather than it feeling like it's just overwhelming you constantly. So I definitely recommend if you want to avoid that mistake get clear on your money. Set up

a system that works for you so that you can monitor incoming and outgoing money and when bills and things need to be paid in a way that works for you. And this flows into my second mistake that I made. So the first one was just not thinking about money. So then when I realized, well, I do need to think about it. I do need to start managing this better than the next mistake I made was not setting up my accounts to.

help support that new way of thinking about my money. So there were still bills that I thought were coming out of a certain account, but then we'd overspend on that account or our grocery bill might be more that month. And there wasn't enough money for the bills that were being automatically deducted from that account via direct debit or auto draft. So I needed to find a better way to set up my account so that it worked.

better and it was a more streamlined way and it meant that I was spending less time focused on where our money was going and more time being able to enjoy the money. So to do this, I made sure I set up a few different bank accounts to streamline what we wanted our money to do for us. So we had an account that was set up purely just for our day -to -day living expenses. So things like groceries, fuel,

different activities the kids were doing, if we went out for dinner, just all those basic day -to -day expenses. Then we had another account that was set up purely for all the money that was being direct debited or auto -draft out of our account each month. So this might be things like various bills, like electricity, phone bills, internet, insurance, and all those sort of things that would come out automatically each month.

So then I would know that when our pay came in, I would make sure I allocated the day that the pay came in, the exact amount of money that I needed in that account that was our bills account, we'll go in. And then that way I knew for a fact that all of our bills were gonna be set up to be automatically paid. And I didn't have to think about it because it was gonna be the exact right amount of money in that account. And then all I had to stay on top of was our daily expenses account.

And then down the track, when we started working on some savings as well, then I set up a couple of different savings account, depending on our different savings goals too. And I realized the day that our pays came in, I needed to automatically pay all those accounts first before.

we went out and spent it on other things. So if I had a certain amount that was going into our savings account, I'd make sure that would come out straight away. We had a couple of different savings accounts, one for our home deposit and one for holidays. So a set amount would come into those two accounts. The set amount would go to our banking and direct debit account. And then our other account would just be our day -to -day expenses. So whatever was left in there.

would be now I knew what we could spend. And this just made us feel really empowered about our money. We were very clear each month exactly how much money we had left over to spend. And it stopped us over spending and it kept us from going from running out of money each month to actually starting to have some savings building up too. So making sure that you are aware of your money and don't just have one account.

make it work for you. If you have one account and it works for you, that's great, that's amazing, but you have to be really clear on how much money's in that all the time. I found it a lot easier not to have to think about that. I've taken the frustration and the stress out of it and I've just set it up so that now our money starts working a lot better for us. Now the third mistake I made when we went bankrupt was I didn't openly talk about it at first to other people.

And a big factor was this, was that my husband and I had found success very early in our lives. We made some really great decisions very early on to do with investment properties. And we were living a really great, abundant life for quite a number of years until a few bad decisions led to our bankruptcy. Now you may have heard my story before, and if you haven't, can go back and check out another episode that tells you all the details.

But because we had been what I guess the outside world would see as successful and then we'd lost it all, it was a bit embarrassing at first. We didn't really want to have to go around and tell everyone that, you know what, we actually stuffed up and now we're bankrupt and we have to rebuild and start all over again. So instead of...

openly being able to confide in people about it. At first we felt a bit embarrassed and ashamed so we didn't openly talk about it. But all this did was increase that feeling of shame and embarrassment and no confidence in money. And it wasn't until then we started that open dialogue with people and said, know what? Yeah, we have gone bankrupt but we've found that we've made a really good financial decision. We made the best financial decision for ourselves and our family at that.

time that would enable us to just get back on track

this actually was a good decision for us because we're starting again. And when we started openly speaking to a few people about why we made that decision, you think everyone's talking about you.

It took that away because you were giving them your side of the story and what happened and it made them see bankruptcy in a new light. And there is not a lot of open discussion about bankruptcy. It is still quite a taboo subject. So by starting that open dialogue, it really created some great conversations and educated our friends and family members on actually what bankruptcy was because a lot of people's only idea about bankruptcy is all the negative stuff you see on the media.

And that definitely wasn't the case for us. So just by opening their eyes onto what bankruptcy was, why we made that decision, it really empowered us and it helped rebuild our confidence. I wish I'd spoken about it sooner. So if you are still not openly talking about it to people, I encourage you just try with a couple of people at first that you really trust and see if that makes a difference to how you feel about your money.

now the fourth mistake I made and this tied into the first one where I didn't want to have to think about money was I didn't set any money goals and I probably didn't set any money goals for at least a year after we filed for bankruptcy because the first year I felt we were just sort of in rebuild mode

Prior to our bankruptcy, we'd always had these big goals. We were always working towards some sort of financial goal, whether it be for something to do with an investment or an amazing holiday or renovations to a property. So there was always something that we had on our radar that we were saving for. So we'd had these really extensive goals before. But when we went bankrupt, because I felt like we were...

just sort of living on autopilot after that for a little bit where we were just trying to get through the week or trying to get through the month. I did not feel comfortable setting any new financial goals for ourselves. And I guess a big part of that was I was still lost on that idea that because we were bankrupt, we'd never be able to buy a property again because we'd have this constant black list next to our name. So I didn't even think about the idea of saving up for a house deposit at first.

And obviously that was not true because we now own our house a few years later. But initially that wasn't on our radar. And like I said earlier, we felt like we were just sort of living on autopilot. So when you're living on autopilot, you're just sort of getting through the day, one day at a time. And you're not really looking at the big picture as such. So it wasn't until we actually decided to start setting up those savings goals. And that's like,

When I said previously, we had those accounts set up for different savings goals that we had. We had our big savings goal, which was a house deposit, and then a smaller goals, were family holidays. once we decided to set those goals, then amazingly, we started having money in savings. Before we had any goals and we just thought, maybe we'll have some money in savings. We'd always go into our savings. We'd get to the end of the month and we'd overspend in our daily expenses.

we'd have to go into what we'd put aside for savings. when you have those clear goals set, it makes you really clear on what you're working for, what your why is, why you're doing this, which makes it a lot less likely to go into those savings for just general daily expenses. So it's really, really important, I found, to have some really clear

money goals and they don't have to be huge. We started with some really small ones at first and then we slowly build it up. Now the fifth mistake that I made during my bankruptcy and again this mistake I feel like it lasted longer than some of the others was holding on to blame. So when we faced our bankruptcy like I said before I was the one in charge of our finances so I had a lot of blame

towards myself. I'm the one managing the money. So if we went bankrupt, then I took that on that that was because of me and it was my fault that we went bankrupt because I didn't do enough to avoid that situation. And obviously that was definitely not the case. So you might be blaming yourself, somebody else, the circumstances that led to your current situation. And all that I found holding onto blame does is it keeps you in that

place of resentment, anger, shame, maybe if you're blaming, say your partner or somebody else, then that causes a real big rift in relationships. And until you can let go of that, you're going to still be stuck in the past because what blame is doing is it's keeping you focused on the problem and it's not looking at the solution of, okay, well, that's happened to us. Now, how do we move on?

How do we recover from this? How do we rebuild? until you learn how to let go of that blame, then that's really gonna keep you stuck. And like I said, I held onto blame for probably a number of years. not as bad as I was initially, but it wasn't until more recent times where I've done a lot more mindset work that I realized I still was holding onto a bit of blame towards myself over our bankruptcy.

when I learned to finally let go of that blame and release that, it was amazing how quickly things shifted in our lives to do with our money and how many more opportunities opened themselves up to me that I was so closed off to before because when you're in that negative mindset, it's like you're looking.

through life with these blinkers on where you could only see what's right in front of you and you can't actually see the big picture. So that was a big game changer learning how to shift blame. Now, the sixth mistake I made was at first I didn't do anything to educate myself about money. Now, I thought because we've been successful earlier in our life that I was just this expert already and I didn't need to learn any more about money.

And that definitely was not the case.

Now you've got to realize that things are constantly changing. We're living in a world where there's all these new things coming in and it's really, really important to stay updated on different ideas that might help you better manage or make more money. So by being close to what you already know and there's nothing more to learn and when I was doing this, nothing changed.

We kept doing the same thing and we kept staying at that same level. We weren't getting closer to those goals that we were setting for ourselves. It felt that stuck feeling. when I decided to actually start learning and I started with reading some books and I did some online courses to just really.

educate myself more on a whole range of different money making and managing techniques, it builds up that confidence because you have more knowledge, which means you feel better about managing your money. You feel like you are more aware of the different ideas out there. You don't have to take them all on board and apply them in your life. But when you

have more knowledge on a whole range of different tools and strategies, then you get to actually choose the ones that are gonna work in your life. And this really helped us reach our savings goal of saving for a house deposit a lot quicker. when we set that idea that that was gonna be our goal and we found a house a lot quicker than we were anticipating. We had to come up with this massive deposit pretty quickly and...

When we had all these different strategies that I'd been learning over the last couple of years that we could put into place, it was crazy how quickly we managed to come up with the deposit money and it really blew me away. by having that tool set ready to go when you need it is such a game changer and it really can help you and your whole family. Just feeling good about your money, but getting ahead and reaching those goals quicker.

Now the seventh mistake I made was just staying in my comfort zone and this definitely happened initially probably for the first year or so where

when you're in your comfort zone. So you face this big financial setback and your brain's default is to keep you safe. Your brain is not out there to make you feel happy and empowered. That's something you've got to work on yourself. Your brain is that survival brain. So your brain's job is to keep you safe and to help you survive. So what it does in those situations where you have faced a big hurdle like bankruptcy is it keeps you feeling

like you should just stay safe and not take any risks, not learn anything too new, just keep doing the same sort of things that make you feel safe. if you're the same things over and over again that you were doing prior to your bankruptcy and you're expecting things to change, well then that's very unlikely because you know, isn't that the definition of insanity is doing the same thing and expecting a different result.

when I realized I was staying in my comfort zone and I thought I need to make some changes, it's scary the idea of learning new skills or trying something different, maybe taking a little risk, that's really scary. So what your brain tries to do is keep you in that comfort zone and keep you playing small. So it might come up with all the different excuses why you shouldn't.

It might make you focus on all the worst case scenarios of what could go wrong. And then you don't actually make those changes as a result. So it wasn't until I ignored all those thoughts and I thought, you know what, I've just got to do it anyway that we started seeing massive shifts in our finances. So don't stay in it for a whole year like I did. As soon as you realize those patterns are happening and you're feeling that it usually feels stuck.

If you're feeling like that, then you need to start doing something about it, whether it's learning something new, educating yourself in some way, trying something you haven't tried before, even just reading a book that might open you up to some different ideas. So don't stay in your comfort zone The eighth mistake I made, which was the biggest one, the biggest one for me, and this was the hardest one to shift, was staying in that lack mindset.

like I've sort of touched on already in this episode, when you're in that mindset, when you face that big hurdle like bankruptcy, it's a really stressful time, it's really overwhelming. I just remember never feeling as stressed and worried leading up to our bankruptcy. So what my default was once we'd gone bankrupt and even beyond that was being quite scared and over cautious with our spending. So like I

said earlier, like when we first started budgeting, I remember doing a really tight budget at first because I just didn't want any money going on anything that I couldn't justify myself and I became really controlling with money like over controlling because I was just so worried we were going to lose it again and my most common phrase was we can't afford that so I don't know if you might find yourself saying that all the time.

Even if we did have the money, in my brain I couldn't justify spending money on whatever people in my family were asking for because I wanted to protect our money. And what this did, when you're in that lack mindset, makes everything to do with money is stress. Every bit of spending feels stressful or worrying. Or I don't know if you've ever experienced it where you go to tap your card and you're like, please let there be money in that account.

because you're just constantly worrying about your money. And those patterns also started to rub off on my kids as well, which was a real wake up call to me because I didn't want them feeling restricted by money. I wanted them to feel empowered by money. So when we were out shopping and maybe I wanted to buy them something now, they'll be like, but we can't afford that. That's way too much money. I'm like, no, we can afford that. So I'm trying to really change that in my kids.

But when I was stuck in this slack mindset, it's like you've got tunnel vision, you can only see what's right in front of you and any sort of threat to your money causes you stress, worry, anxiety, and it just doesn't feel good. So when you learn how to switch into more of an abundant way of thinking about your money, and this has nothing to do with how much more money or less money you're making.

You can go right now from how much money you're currently bringing in with a lack mindset to the exact same amount of money with an abundant mindset. And it is like your life transforms. It's like those blinkers come off. You can see clearly for the first time ever. And what I found at first, we were living paycheck to paycheck still. So my husband and I, when we were bankrupt, we were actually still earning really good money, especially my husband. had a great job. had

company housing. So we should really be getting ourselves ahead. But we were still running out of money every single month or going into our savings account and I could not work out why. And friends or other people we knew were on the same amount of money that had the same jobs as my husband and I. And they were so much more further ahead than we were and I could not see why. And then when I learned how to switch from that lack mindset into an abundance mindset.

everything changed. We started saving differently. I can't even explain exactly how it works, but it's like you see all these different opportunities that you were really closed off to before. Different things come up. When you're in that lack mindset, what we were finding was happening was all the things that were coming to our life would make us spend more money. So we'd have all these unexpected expenses constantly coming up. Things like...

things that need repairing like your washing machine breaks down, our dishwasher broke down, maybe you get a speeding fine or there's unexpected bills that come up. So there was constantly these expenses that were coming up that we hadn't accounted for. But when we moved into more of an abundant way of thinking and changed our mindset, then those things seem to stop. It seems really weird and it seems a bit crazy.

And until you actually do it for yourself, it's hard to understand, It's that whole law of attraction where like attracts like. So when you're feeling negative, worried, stressed, you attract more things into your life that create that. When you're feeling more abundant, grateful, joyful, you attract more things into your life that give you that situation.

It's like the two same people can be in the exact same situation and perceive it a completely different way. And that's all to do with your mindset. And that really has such power to transform your money. And you might've heard me say this before, but when I went through my bankruptcy, this was the thing that I realized. it didn't matter how many money -making tools and strategies I had learned or how many different ways I'd learned to manage our money better.

until I worked on my mindset, nothing changed. When I worked on my mindset, everything changed. So I compare it to if you're building a house, your money managing and money making skills and tools that you learn, they're like the roof and the walls of the house. Now you wouldn't put the roof and the walls up unless you had the foundation laid first. And that foundation is your mindset. So until you can learn how to work through that,

You might feel okay about your money, but it's not going to be a life changing transformation in any way. And it's likely you're still going to be playing it small. When you work on your mindset, then that's when you really start reaching those money goals that not only are great, but They're ones you right now probably don't even imagine to be possible for yourself. So.

I really encourage you to do some work on that and if that's an area you want a bit more help on then you can check out some more of my podcast episodes or check out some upcoming events I have going on. The link to my website is below if you want to learn a bit more about that.

Now the ninth mistake I found I was making was I didn't get on the same page as my husband about our finances straight away. when we went bankrupt, I was spending my money or doing my budgeting in one way, he wanted to spend money in a different way. And we were always at conflict with how our money was being spent. And it caused a lot of arguments. caused

added stress, probably impacted our kids as well. until we could realize that, you know, what we really need to sit down and get on the same page, set our goals together and know how we're to make this work for us. So we're both working towards a common goal rather than having our own little separate ideas. Then it really didn't help our money. So.

If you are not currently on the same page as your partner, if you have one, then I suggest you sit down and you have the conversation. You can do this stuff on your own, but if you need to get whoever else is involved with your money and finances on the same page with you too. And have those regular check -ins, not just sit down and have one conversation and that's it, but regularly keep each other accountable and check in. Not only does it help you stay focused, but it is that great.

to have that accountability partner when one of you might be going a bit outside of what your goal is the other one can help bring you back onto what you're doing and why you're doing it. So make sure you're on the same page as your partner if you have one. And the tenth mistake that I made, which is one that I'm sure a lot of you have made at first as well, is when we first went bankrupt, I'd made the decision that money was gonna be a struggle from that point onwards.

So it was a struggle for us initially. when I'd made that decision that you know what, we're gonna have a blacklist next to our name forever, we're never gonna be able to borrow money again, we're always gonna be struggling, we're always gonna be broke because people who are bankrupt, it's a struggle. That's what I'd seen from media that bankruptcy was this bad thing and I'd heard all these things that I've realized now are

even true. They're just misconceptions that people have about bankruptcy. I thought we'd never be able to travel, everything I thought was going to be way harder. So initially it was way harder. And again, this ties into that mindset stuff I was talking about earlier. So if you make the decision that it's going to be hard, it will. If you make the decision that you can get through this and there's a way and you're to start focusing on goals or

the solution rather than the problem, that's when things will start shifting for you. So I highly recommend you not deciding that it's going to be a struggle because if that's your attitude, if that's what you believe, then that's what it will be. If you instead decide this is a great opportunity for me to rebuild, to set some new goals, to learn some new things, to upskill myself.

then things are going to be completely different for you. So don't make that mistake.

So let me recap those 10 mistakes so you can make sure you are definitely not making any of them yourself and learn from my mistakes. Number one was trying not to think about my money. Number two was not setting up my accounts so that money was working for me. Number three was I didn't openly talk about my bankruptcy Number four was that I didn't set any money goals for myself. Number five was holding on to blame.

Number six was I didn't do anything to educate myself about money. Number seven was getting stuck in my comfort zone. Number eight was getting stuck in the lack mindset. Number nine was not getting on the same page as my husband about our finances. And my tenth mistake was I made the decision that money was going to be a struggle now that I was bankrupt. So it was. So I hope you can avoid making those mistakes.

Now, if you'd like any more information about some upcoming workshops and events I have going on to help further educate you and empower you with your finances post -bankruptcy, then you can check out the link in the show notes for all the information. If you want to join our Bankruptcy to Bliss Facebook group for some ongoing support, accountability, and to answer all your questions,

and some more great free training and resources, then you can also find the link to that in the show notes below. Thank you so much for listening to today's episode.

If you've enjoyed today's episode, please feel free to leave a rating for the Bankruptcy to Bliss podcast and I'd love to hear your review as well. Thank you so much for listening and I'll see you on the next episode.