Janet Lombardi is the first to say there were red flags about her and her husband’s finances.
She knew her attorney husband of 25 years was moving money around to cover some debts. It had dawned on her that they probably shouldn’t have refinanced their house with a $440,000 subprime mortgage.
But they weren’t living so differently than anyone else they knew. And her husband had it all under control, he said.
Then one day she called their financial adviser for an end-of-year statement that hadn’t shown up. He recommended she “get a lawyer, an accountant and a private eye.”
In her new book “Bankruptcy: A Love Story,” Lombardi tells the cautionary tale of how the financial security she took for granted was actually a lie.
Lombardi ended up deep in debt, while her husband, who she later divorced, was sent to prison.
After a financial and emotional catastrophe — whether it’s due to deception or divorce, addiction or mental illness — it can feel like you’ll never get on your feet again.
But if Lombardi’s tale is any indication, you can get there. Ten years later Lombardi still works for the same company, but now she owns her own apartment, a new car and lives a cash-only lifestyle.
Most importantly she’s vanquished her debt and learned to forgive. Here’s how:
1. Know what you own and what you owe
“You need to know your family finances all and complete,” says Lombardi. “If someone is not willing to show you that, that’s a serious red flag.”
Feeling a bit like a detective with her own family’s finances, Lombardi uncovered debts she knew nothing about and accounts in her name she hadn’t opened.
When the smoke cleared, Lombardi found herself with hundreds of thousands of dollars in debt. There was $40,000 in credit card debt. There was a $15,000 mortgage note for a time-share they never used. And then there was the house they’d lived in for 10 years and had recently renovated and refinanced, that had a mortgage of nearly half a million dollars.
“I was on the phone with Countrywide weeping,” she says of when she learned how much they owed on the house and how it was negatively amortizing.
2. Drain the emotion from your decisions
When a couple gets disconnected financially, they also get disconnected emotionally, says Lombardi. But those emotions can come roaring back after the revelation of a deception — with powerful ferocity.
A family financial catastrophe can leave you pulsing with feelings that change by the moment. You may be seething with anger, teeming with resentment, cowering with pity or immobilized by fear. None of them will serve you as well as letting them go, says Lombardi.
One of the best things she said she did was not to wring her hands for very long.
Lombardi said the turning point that took her from a blur of emotions to taking action was when she understood that, “yes, he did it, but he didn’t do it to me.”
3. Take clear-eyed and bold action
“When I realized that my husband wasn’t stepping up to fix this, that was a big emotional moment for me,” Lombardi said. “I was going to be the one to save myself and my children.”
So she made a punch-list and tackled the items one by one.
Most excruciating for her was selling her beloved house. But she saved money by moving in with her sister and brother-in-law for two years. She continued to work and paid out of pocket for her two sons’ college costs, hoping to keep their lives as normal as possible.
In three years she was solvent with no unsecured debt.
4. Build a support team
Lombardi says the most important part of her journey was having a support network.
She began attending Debtors Anonymous meetings weekly where she could talk through the progress she was making on the debt and challenges she faced.
“People were so willing to help,” says Lombardi, “that was a very inspiring thing to me.”
At a charity auction at her church, Lombardi saw a member had donated her time as a financial planner. Lombardi bid on it and met with the woman, an acquaintance, who said she’d help her and not charge her a dime.
There is a lot of shame around money, especially when there are secrets. “People are afraid to have a conversation about money and I feel like money is the last taboo,” she says. “But people can’t help, if you don’t ask.”
5. Rely on the best expert on your finances: You
People, particularly women, often feel like others are more qualified to handle their finances, says Lombardi. Stop with the, “I’m no good in math,” or “I’m not comfortable with money,” excuses she says.
“No one is more qualified to handle your finances than you,” says Lombardi. If you can add and subtract, you can manage it. Ask a million questions. Making a mistake or not knowing the answer, that’s a small price to pay.
The bigger cost is what may happen if you rely on someone else to handle your finances.
“I was raised to believe that I would be taken care of,” says Lombardi. “Then I realized that there was no one better than the person staring at me in the mirror.”