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Financial Ruin: The Cost of Addiction

We've talked about the impact of addiction in terms of lifestyle changes, mental health concerns and family strain. What’s left? When people think of addiction leaving lives in shambles, we think of the families, the physical and mental health of the addict, the environment associated with addiction. In last week’s episode of Airing Addiction, Donna Pellegrino and her guest Rich Carr of Carr Financial Group and host of WTAG’s “Financial Freedom” talked about the financial strain of addiction.

“Finances are tough for the average person, throw addiction into the mix where denial and secrecy is a big part of the disease, and things get even tougher,” said Pellegrino. Bills pile-up, unemployment creeps in, debts begin to mount while everything takes a back seat to the person’s substance of choice.

Carr drew on his experience working with people struggling with addictions while trying to get their finances in order and often finds that families tend to enable the financial decisions of their loved one. When someone is struggling with addiction, it often impacts the whole family in their effort to help.

"The addicted person is usually a good manipulator, and they’re good at rationalizing decisions in their mind," said Carr. For anyone, major life surprises can happen at any moment. Carr said that what he and his team of financial advisors do is not only create a goal-oriented plan for financial success, but they help unravel what’s going on in the addict’s mind. As it turns out – the facts are often different from what his client believes.

"Once you know the facts – it's easier to put a plan in place with good decision-making," he said.

A lot of people struggling with addiction and struggling with their finances never dreamt they'd be in this situation, but Carr says that it’s possible to get back on track with hard work and discipline. It happens on both sides of the spectrum, from those living in poverty to those with so much money that they don’t know what to do with it all - that is, until drugs and alcohol come into the picture.

"There’s a correlation between addiction and financial destruction," said Carr. "Imagine if you had enough resources that you can wake up in the morning and do anything – after six months to a year, there isn’t anything new and exciting to do. They often turn to other things that are destructive -- drugs, unhealthy relationships, gambling. I know it first-hand with clients who have won the lottery. We see it often with celebrities, people who seem to hold the entire world in their hands are turning to drugs, alcohol, bad relationships and more to get their rush."

On the other side, people struggling with both finances and addiction tend to crave instant gratification and often spend what little money they do have on their substance of choice in order to escape the hardships in life. On top of that, having an addiction is incredibly expensive – beyond the purchase of drugs and alcohol. There’s the fines, the court fees, the lawyer fees, putting off education or retirement, child-care costs for the family who step in to take care of them, etc. Carr had a client who spent more on legal costs to make up for a drug-related crime, than they did for their other child’s ivy league college education.

"What do you tell clients, if it comes to potentially tapping out the 401k for treatment, how do you advise them with their finances while paying for treatment?" asked Pellegrino. Carr suggested these four thought processes to consider:

  • Think about the impact of the decision you're making. Treatment now prepares you for success later on.
  • Life cannot be measured with a down-to-the-penny finance plan, that's not realistic for most people but do your best.
  • Life changes every day, be prepared for the unknown.
  • What happens if this stage is unsuccessful? Be prepared for continued treatment.

No matter what happens, the only person in control of your destiny is YOU. To hear the entire episode of Airing Addiction, visit iTunes or SoundCloud and download the episode. Catch Donna Pellegrino on WTAG every Saturday at 10 a.m., right after Rich Carr’s show, Financial Freedom at 9 a.m.

If you or a loved one is struggling with addiction, Spectrum Health Systems can help. Please call (844) 233-6372.

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