How To Clean Up Your Financial Indiscretions

The following guest post is from Neal Frankle of Wealth Pilgrim. Wealth Pilgrim is a fantastic resource, and on my list of daily reads. After reading the post, head over to Neal’s site and sign up to receive his posts.

Out in the personal finance world, there is a ton of great information about how to get out of debt, improve our credit score range and make smarter investments. The list goes on and on.

But there’s entire subject matter that we don’t talk much about; what to do about cleaning up our past. I’m not talking about cleaning up credit card debt or student loans. I’m talking about cleaning up the damage we did to others and ourselves by prior acts.

I’m talking about times we weren’t as honest as we’d like to have been. We fudged. We didn’t return equipment. We “forgot” about small (or large) loans.  Or times we didn’t follow through.  We got lazy and fell for some debt relief scam and cost the family this year’s vacation.

I get why nobody wants to talk about it. It’s shameful. But you know as well as I do, we carry that shame. It doesn’t disappear. It never will if we simply ignore it.

And make no mistake. The cost of shame is high. It colors everything we do and every financial decision we make.   From the jobs we take to the kinds of investments we make. And the worst of it is, we walk around in this world without being proud of who we are.

So how do you clean it up?

1. Stop the excuses.

You’ve been telling yourself that what you did wasn’t so bad (and maybe it wasn’t but that has nothing to do with it). Or your inner voice tells you the other person has done worse things. You’ve been very imaginative with the stories you’ve been telling yourself.

Just stop.

The purpose of this exercise is to let yourself off the hook. To forgive yourself.  You can only do that once you are honest about your past.  To stop being ashamed of some past behavior, stop the excuses and own up to the truth about your past.

2. Write yourself up.

Start a list of all the financial acts you’ve done that you’re not proud of. EVERYTHING. What did you do? Who got hurt? How did they get hurt? How much did it cost them? How might they have felt?  If you spent too much and now you don’t know how to generate enough income during retirement, how does that impact your spouse and your kids?

Be thorough and take your list to someone you trust. Maybe your Pastor or Rabbi. Maybe a good friend or even your mother. Select someone you trust and someone you know loves you unconditionally. Tell them about the list and ask for some time to go over it with you.

Once you read the list to the person you’ve selected, you’ll already notice that a huge burden has been lifted from your shoulders. That’s great…but you’re not done.

3. Action.

It’s time to approach the person and make amends. This can be tricky. You don’t want to do this if by doing so, you injure the other person (or someone else) further. That’s something to talk about with the person you selected to go over the list with. Before you take action, think about the best kind of amends to make. Think about the fallout of what you’re about to do as well.

Let’s say you and your co-worker each took something from the back of the store years ago. You are willing to own up to it and accept the consequences but if you do so, your co-worker might get fired too. What should you do?

This is something you need to think through…and seek council on before you do anything.

For those people you can approach, tell them what you did, how much it cost them and how it must have made them feel. Then listen.

Some people will be gracious and will appreciate your honesty. Others won’t be so nice. They’ll tell you they can’t believe you did what you did. You might feel terrible at first but later on, you’ll be glad you owned up.

You can’t control how others are going to react to your admissions. You’re trying to clean house and if by doing so you get bumped up, so be it.

This is a painful process but well worth it.  Several years ago, I went through this.  Just thinking about calling certain people made me break out in a sweat.  And I’ll be the first to admit that a few of the people I called weren’t gracious at all. They told me they were angry and disappointed.  They had that right.

But even with that negative feedback, I got it done and made the amends.  I felt 20 pounds lighter and 10 years younger.  And even the calls that didn’t go so well went much better than I had imagined.

Have you gone through a process like this?  What was it like?  What was the result?


  1. Years ago I was student teaching. I took a stapler to use while I was doing so, but never got around to returning it. I still have it and always wonder what should I do with it. Although unintentionally I stole it. The program I student taught as is gone now. I can’t go there and give it back.
    I think sometimes it will not be practical to return the item or even return to the scene of the crime.
    But it is always practical to apoligize to God and ask His forgiveness.

  2. Interesting point of view. While I never went through the process of forgiving myself, I did forgive my parents. Not that they ever did anything truly wrong, but I blamed them for my troubles. The turning point came when I took responsibility for my own actions, AND made a commitment for fixing them.

  3. So what you’re suggesting is we scour the phone book and Internet hunting down people that we haven’t seen in years in the hope that after we make out confession we will feel better.
    What if the person we are hunting down might not remember us, which may be irrelevant to your project, but imagine you are that person. You get a call out of the blue from someone you vaguely remember who was a colleague at your first job/was in the same bowling club as you/was a friend of a friend who came to your party/etc. They admit than 20 years ago they stole/borrowed something that belonged to you and never returned it.

    First: How are you going to feel? Perhaps: Why is the person wasting my time about something I don’t even recall owning? Is this some kind of 12-step program?

    I don’t see any point in bringing up stuff that people either don’t recall or don’t care about any more just to apease your conscientious. If you truly feel guilt over what you did then just do something nice and anonymous for the person you ‘wronged’. You don’t have to make a big song and dance about it.

    That way everyone wins. You have given something back to the person you took from and can feel “lighter” (as you put it) and the recipient will be happy to receive the kind gesture/gift, instead of being annoyed at you and having the impression that you are some kind of petty thief who ‘has seen the light’.

  4. Andrzej,

    I really admire your courage. I had a similar experience…but with a very different outcome. The person was pretty angry and stayed that way. Still….for me….it was the right thing to do.

  5. SuzieQ,

    A few thoughts on your remarks:

    – If a person is plagued by remorse after a lengthy period of time, it seems that it would be worthwhile to go through the effort of the process outlined above.
    – You are assuming that the incident was petty and/or against someone unclose to the offender. However, if it was major offense and/or against someone the offender cares about, it is a big deal. I would wager that is the more likely scenario if a person can’t just “move on.”
    – Who is so self-important that they aren’t willing to spend a few minutes on the phone letting someone get something off their chest? If it were a petty issue such as you described, I’d let the person know I was glad they called just so that I could tell them that it is not big deal. I can’t imagine being “annoyed” at the inconvenience if it is troubling someone that much.
    – If a person has wronged someone, fessing up and asking for forgiveness is a completely different process and experience than a simple, anonymous act of kindness. It seems like you are prescribing a band-aid for a deeper wound.
    – If a person is suffering from intense shame, the impressions of others is completely beside the point. Why NOT let them “have the impression that you are some kind of petty thief who ‘has seen the light’?” -that is exactly what happened!

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