Personal Finance for People in Recovery From Addiction

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Stephen Schrader Counselor
Stephen Schrader Counselor

Stephen Schrader is a retired counselor, specializing in drug and alcohol rehabilitation. He offers his advice on handling finances during rehab and into recovery.

This guide was written by Danielle Kiser

Danielle Kiser

Danielle Kiser is passionate about sharing stories that impact our lives and communities. After more than a decade as a journalist, she is now a freelance writer providing accurate, informative and inspiring stories for fellow Money Geeks.

If you’ve faced addiction and are now working through your recovery, you’re not alone. In a national survey from the United States Surgeon General, 1 in 10 adults say they once had a problem with drugs or alcohol but no longer do.

Just like the diverse nature of those it affects, addiction can take multiple forms. In 2018, more than 19 million people aged 18 years or older had a substance use disorder, according to the Substance Abuse and Mental Health Services Administration (SAMHSA). Many Americans struggle with alcohol addiction, drugs or both.

Addiction affects people of all backgrounds. It can strain your health and wellness, including your physical, mental, emotional, spiritual and financial health. While addiction may have disrupted your efforts toward financial wellbeing, you can be successful at building and strengthening your finances.


The Annual Cost of Addiction

While it can be hard to measure the emotional impact of drug and alcohol addiction, the economic cost of addiction to the country adds up to $740 billion annually. This includes the costs in related crime, lost work productivity and health care, according to the National Institute of Drug Abuse.

Cost of Addiction in the U.S.
Substance Health Cost Overall Cost
Tobacco $168 billion $300 billion
Alcohol $27 billion $249 billion
Illicit Drugs $11 billion $193 billion
Prescription Drugs $26 billion $78.5 billion

For people addicted to drugs and alcohol, the costs can make an immediate and dramatic impact on their lives. Using alcohol as an example, if you drank heavily every night (an average of 4 drinks a night) at an average cost of $3 a drink, you’d spend more than $4,300 a year. That’s the cost of a used car, and after a five-year addiction, that’s the cost of a new car. Other illicit drugs cost double that, with a gram of cocaine averaging $150 a gram in the U.S. according to the 2018 National Drug Assessment. Heroin is the most expensive at more than $900 a gram. Some drug habits can hit more than $10,000 a year.

Cost of Drinking at $3 a Drink
Amount of Drinks per Week Cost Per Week Cost Per Month Cost Per Year
7 $21 $91 $1,092
14 $42 $182 $2,184
21 $63 $273 $3,276
28 $84 $364 4,368

How Addiction Impacts Finances

While most people have set financial commitments, people addicted to drugs and alcohol may put their addiction ahead of living expenses and other financial responsibilities. A short-term need to fulfill a habit can take higher precedence than the long-term obligations of loan payments and bills. This choice, repeated regularly, can have significant financial impacts.

Beyond the expense of the addiction itself, other financial effects of drug abuse include:

  • Missed Mortgage

    Even one missed mortgage payment can lower your credit score, but if you miss several months in a row, you could face foreclosure. Mortgage servicers cannot file for foreclosure until the borrower is more than 120 days delinquent. If you’re behind on payments, it’s essential to know your rights.

  • Missed Rent

    If you are late paying your rent, you'll likely incur late fees. These quickly add to your monthly expenses, making it hard to pay additional bills. If you stop paying rent or otherwise break your lease, you can expect to be evicted in a process that can take 30–60 days.

  • Missed Car Payment

    Similar to missing home payments, lenders can repossess your car if you stop paying. Many lenders will allow you to defer a payment 30 days but will eventually repossess your vehicle and sell it at auction. You may even be expected to continue making payments for a car you no longer have.

  • Lost Job

    The consequences of addiction extend beyond personal repercussions and may also negatively impact your career. One of the most noticeable side effects of drugs and alcohol is a lack of productivity, which can put your job at risk. People who are addicted to drugs and alcohol may lose employment because of poor work performance or too many days of missed work. Previous or numerous similar incidents may also make it harder to get back into the workforce after treatment.


Finding Drug or Alcohol Treatment Near You

Getting treatment for addiction is essential for reaching the recovery stage, and studies show it is effective. Federal research finds most people who get into and remain in drug treatment stop using drugs and improve their occupational, social and psychological functions.

Alcohol treatment is similar. The National Institute on Alcohol Abuse and Alcoholism reports, “One-third of people who are treated for alcohol problems have no further symptoms one year later. Many others substantially reduce their drinking and report fewer alcohol-related problems.”

Find a Treatment Center Near You Using This Interactive Map:


Paying for Drug or Alcohol Rehab

The cost of substance abuse treatment can vary between $3,000–$20,000 based on needs and location. According to a national drug survey, it is the main reason why those struggling with addiction did not seek treatment. While the price seems daunting at first, there are several options and resources available for paying for rehab.

When you begin your search for treatment facilities, ask for financial costs upfront. Facilities should tell you typical costs for your course of treatment, which services are covered by insurance and which are not and if payment plans are available. While it’s essential to find a treatment option you can afford, there are low-cost facilities and state funding resources available.

a couple figuring out their finances

Insurance Coverage for Rehab

Most insurers cover some drug or alcohol rehab, whether it be in a residential facility as an inpatient, or on an outpatient basis. You should call the number on the back of your insurance card to learn your specific coverage options. You’ll want to know the following coverage details and understand the meaning of the following insurance terms:

  • Deductible

    This is the amount of money you’ll need to pay out-of-pocket before your benefits begin covering costs.

  • Copayments

    Some insurers ask you to pay a small amount of money upfront to providers. You may need to pay each time you visit the facility.

  • In-network Facilities:

    Insurers work with providers to negotiate rates and create a network of doctors. To ensure the best price, get a list of facilities within your insurer’s network.

  • Days Covered

    Ask if there are limits on inpatient days and outpatient sessions, as well as what costs you will need to cover if you go beyond those limits.

  • Medications

    If you require medications to help in your recovery, they may be covered by your insurance. Similar to provider coverage, you may be required to meet a deductible or include a co-pay.

  • Additional Services

    Always ask if there are other services offered. With some courses of treatment, a case manager is covered who can help work with you directly, managing care and helping you evaluate your options.

Paying Out of Pocket for Rehab

Insurance is typically the most straightforward way to pay for addiction treatment. You can enroll in coverage anytime if you have a qualifying life event, including marriage, divorce, having a baby or changing jobs. There are other payment options for you if you don’t have insurance. However, it might take some persistence and a few phone calls to access available resources. Here are other steps to take to help fund rehab:

Grants and Scholarships for Recovery

Some individual treatment facilities offer scholarships on a case-by-case basis. There is limited financial aid for substance abuse treatment available, so it can be challenging to find and receive. Still, it’s worth asking about the availability of such programs at any treatment facilities you’re considering. Before you apply for a substance abuse treatment scholarship, review the following:

  • Who Qualifies?

    Financial aid for rehab is typically reserved for those who would not receive treatment without it. Treatment facilities are looking for those who have exhausted their payment options. Facilities also want to make sure scholarships go to people who complete the program, so they are looking for those dedicated to recovery.

  • Finding a Scholarship

    Most financial aid is offered directly from facilities, so there is not a list out there to easily search. Your best resource is your community. Ask your local health agency, social workers, churches or charity groups if they have a list compiled. Nationally, the non-profit group 10,000 Beds works with local agencies when they have openings and provides scholarships to fill those open beds. They are not an overnight placement service and can only accept 25 applicants at a time.

  • Getting Accepted

    With so few scholarships available, you’ll need to communicate your need for both treatment and financial aid clearly. To show your financial need, explain what steps you've already taken to find funding. You’ll also want to demonstrate your commitment to recovery by stating your personal goals, describing how you’ll achieve them and planning for rehabilitation long term.

  • What’s Not Covered

    Most scholarships won’t cover the full cost of a program, so ask what’s not included. Also, if you don’t complete the program, you’ll likely lose the scholarship and be financially responsible for all treatment.


Financial Recovery After Addiction

People who live with a drug or alcohol addiction know that recovery is a lifetime commitment. Every person who enters the recovery phase of treatment faces their own personal journey.

Some people recovering from substance abuse are single, young and on their own, while others have a family depending on them and are looking to rebuild those relationships. While every situation is unique, there are steps to take to get back on steadier financial footing.

The first step to financial recovery is to start small. No one tackles finances overnight, so it’s a good idea to list your priorities and work on funding those first. Setting priorities is one of the first steps to creating a budget.

Address the big things first, such as housing and earning an income. The more detailed plan you have for money management in recovery, the less stress you’ll have and the less likely you will be to relapse.

A father and son smiling at each other and grasping hands

Finding Stable Housing After Recovery

Stable housing is a crucial element of maintaining long-term sobriety. Should you live with family, on your own or with others recovering from addiction? You need to find a living environment that will give you the best chance to succeed in your sobriety.

As part of its housing recommendations for people in recovery, SAMHSA suggests that potential residents and case managers understand the house dynamic and ensure it’s a good fit for everyone. These guidelines and questions can be applied to all recovering housing options:

  1. Is the house culture generally healthy and does it include peer investment in recovery?

  2. What is the level of medical and therapeutic care available, and does it support your needs?

  3. Does the geographic area and neighborhood environment support the recovery process?

  4. Are current residents welcoming, committed to sobriety, employed, engaged and supportive?

According to SAMHSA, “Community support is a critical aspect of achieving and maintaining recovery. Therefore, recovery houses are uniquely qualified to assist individuals in all phases of recovery, especially those in early recovery, by furnishing social capital and recovery supports.” Because sober homes have first-hand knowledge of the challenges of recovery, they are an excellent resource for people just out of rehab. They can provide a stable environment, medical knowledge, medications, and peer support.

Search SAMHSA for nearby treatment facilities and sober living centers using SAMHSA’s treatment locator.

Employment in Recovery

We all want and need a steady income to support ourselves and our family. However, it’s essential to recognize some jobs do not support a sober lifestyle. Work can be a trigger for relapse when it’s an unhealthy environment or unsupportive peers surround you.

It’s crucial to recognize possible triggers and put yourself in a position to avoid them. If your current job puts you at risk for a relapse, it may be best to seek new employment.

When looking for a job, look for positions that are a good fit for your sobriety. People in recovery may find a structured work environment and set duties work best with their sobriety plan. Chaos is not a good fit for those working to find structure, balance and stability.

Job searching in recovery can be stressful, but some employers are supportive and create healthy work environments. While there’s not a list of these employers, almost all rehab centers and sober living homes have job placement programs and contacts available.

Your county or state may also offer free career counseling services. People in recovery who have a criminal record can get help with job placement, too. CareerOneStop has job search and skills assessment resources for people with criminal convictions.

Bank Accounts and Responsible Credit After Addiction

Holding yourself accountable in recovery for your spending habits is essential for staying on a budget and staying sober. This situation is best handled with a bank account or credit card account to better track where and how you spend your money. Cash also introduces the possibility of spending on substances you're working hard to avoid.

Because most people can go weeks without using cash in today’s society, it’s possible to rely almost entirely on bank or credit cards for your budgeted spending. If you want to stay away from using cash, at least initially, set up a bank account, but don’t get ATM access.

Credit cards are another cashless option, but you should only use credit when you know you can pay it back. Credit card debt, fees and interest payments add up quickly and can create more financial stress.

True Link offers a prepaid bank card specifically for people in recovery. The sober credit card allows caseworkers, family members or guardians to add money to the card. It limits some transactions and prevents purchases at liquor stores, casinos, bars and other places that could be triggering.

Legal Fees

Unfortunately, some people battling addiction end up facing criminal or civil cases. While you have the right to an attorney in criminal cases, you’ll still face high legal fees if you’re arrested for a drug- or alcohol-related offense. These offenses can range from possession of illegal substances to driving under the influence.

Legal advice website NOLO surveyed people throughout the country and found that the total average cost of a first-offense DUI charge adds up to $6,500. While NOLO’s cost breakdown of these charges doesn’t account for everything (line items such as missed work, transportation costs once someone can’t drive themselves, etc.), seeing the cost breakdown of this figure helps illuminate just how costly a DUI is.

Cost Breakdown of First-Offense DUI Charges
Attorney’s Fees $1,900
Fines $1,100
Car Insurance Rate Hikes $800
Court-mandated Courses Such as Traffic School and Substance Abuse Education $360
DMV Fees Such as License Reinstatement $260
Ignition Locking Device as Mandated by Law $170
Towing and Storage of Vehicle $170
Bail $150

Even if someone is in recovery, these costly expenses may take years to pay off entirely. It’s important to pay these off as soon as possible. The government can withhold tax refunds to capture overdue court fees and judgments.

Financial Hardships and Bankruptcy

More than 700,000 people file for bankruptcy each year in the United States, and the majority of those filings are due to medical debt and hardships caused by medical debt and medical issues, including time off work. Some of these bankruptcy filings could very well represent people struggling with addiction, medical treatments as a result of those addictions and time off work and income lost due to addiction.

Regardless of the reason, filing for bankruptcy can be devastating. These extreme financial hardships take a toll on your mental and physical well being. With small steps, there are ways to repair your financial situation.

When you first start a budget out of rehab, you should make a list of all the money you owe. Include debts legal fees, rehab expenses, credit card debt and overdue bills. Consider working with a sponsor or counselor to disclose all your debt, as well as your current expenses.

Once you have a complete list, you can determine what to do next. Bankruptcy is an option for those whose income won’t cover expenses and may offer a new chance at creating financial stability.

For some, bankruptcy is not the best option, and a better option could be creating a budget that pays off your debt over time. From your list of debt and expenses, look at where you can reduce or cut back on spending. That may mean cutting back on eating out with friends, but it’s essential to prioritize your long-term goals.

Debt is challenging for all of us, and it’s worth working with someone with experience handling creditors. Look for a nonprofit organization to help you, so you don’t add to your expenses. USA.gov has resources for dealing with debt, and the National Foundation for Credit Counseling offers help to get out of debt.

Financial Counseling

Throughout your recovery, you will lean on family, friends, sponsors and counselors. You may also need help from a financial counselor. These counselors know how to develop a plan to reach economic recovery after addiction and get you back on your feet financially. They can assist with prioritizing and paying off debt as well as building your savings. Counselors also hold you accountable for your spending habits.

Some rehab programs and sober living centers offer financial counseling as part of the recovery process. If your program does not, you can find accredited counselors to help. Most nonprofit counselors belong to one of two national agencies: National Foundation for Credit Counseling and Financial Counseling Association of America. You can use these websites to find an affiliated counselor near you.

Prioritize Recovery

As you make a budget to pay down debts, manage expenses and eventually build your savings, it’s vital to prioritize recovery. Your budget items should include the necessary resources for your recovery needs. These expenses can consist of counseling services, medications, medical visits and other items and experiences that enhance your physical well being. If going to the gym or yoga is essential to your recovery, then it should be essential to your budget.

two men discussing finances, one is a counselor

Establish Savings

Creating a savings account for the future takes time. Still, it's a crucial step in offering financial stability and reducing the stress that can come from dealing with unexpected expenses. As you make a budget, including a line item for savings. Start small — even five dollars a month over 12 months adds up. Don’t put too much pressure on yourself to save every spare dollar every single month. There are surprise expenses that come up for all of us, but if you include a goal every month, you’ll eventually see progress.

Avoid Financial Relapse Triggers

Managing your money can be a trigger for relapse. Not only can the stress of budgeting initiate negative thoughts and feelings, but money itself can be a trigger. In many cases, using cash reminds people of the addiction lifestyle. Recognizing if this is the case for you will help you set yourself up for success with responsible money management.

If cash is a trigger, there are ways to avoid using it. First, set up your paycheck to be directly deposited into a checking account to prevent spending it the moment you get it. Rely on bank or credit cards, specifically without ATM access.

Ask someone you trust to manage your finances. This person could be a family member, friend or sponsor. It can help hold you accountable to a budget and help you stay on track with your recovery.

Along with day-to-day spending stressors, building a nest egg and seeing the money accumulate may also create a trigger. Having extra money can lead to the urge to spend, and combine that with an addiction, you may get the urge to spend your savings on drugs or alcohol. If that’s the case for you, put your savings under the control of someone you trust. Getting help with this enables you to keep adding to your savings while only making withdrawals with your trusted person’s oversight.


Expert Advice on Finances in Recovery

Stephen Schrader is a retired counselor, specializing in drug and alcohol rehabilitation. He offers his advice on handling finances during rehab and into recovery.

What's the first thing people should know about the impact treatment will have on their finances?

The impact on your finances is very dependent on your employment situation. In group therapy, every individual is likely to pay a different amount. If you have a supportive employer and they stick with you, your impact will be much less. Your insurance will cover most of your expenses. If you're low income and quality for Medicaid, you’ll also receive treatment at little to no cost, with most services covered by Medicaid.

However, it’s toughest for the group in between because both the medications and the treatment sessions are expensive. If you don’t have an employer (and their insurance coverage) to support treatment, it can be difficult to finance. However, most centers will work with those paying out of pocket and will provide discounts if the person is dedicated to treatment. Just ask.

Finances can be stressful and a trigger for some. How can people in recovery productively approach these stressors?

Rehab and recovery are long processes. It takes a year to remove the drugs and alcohol from the system, and then sometimes two years to retrain your brain. This second step is part of relapse prevention and is essential to long term recovery. We focus on training your brain to react better to situations.

Finances, jobs, and bills can all be situations that can push someone back into an addiction. It’s important to recognize the need to set yourself up in the right environment. If you have a job in a bar and you have issues with alcohol, you’ve set yourself up for a relapse. If you have coworkers, roommates, or even family members who do drugs, you need to remove yourself from those situations to stay clean and sober. Some of these choices are hard, but it’s key to avoiding a relapse.

Are relapses common, and what should people understand if they have tried treatment but have a relapse themselves?

Almost everyone relapses once. They try to test it. We don’t focus on the relapse. We focus on what you learned. You should learn something from every relapse. For example, what was your trigger? When you learn that, you can train your brain to react differently next time.

A former addict once told me the relapse starts the year before the actual relapse. You start to think one little thing differently. For example, I’ll just go check on my friend and see how they’re doing and be okay, even if you know that friend has access to alcohol and drugs. Eventually, that small action puts you in a situation to relapse. Just thinking about it puts it in your head. That’s why meetings and support are important. It helps keep your brain in check.

The first relapse isn’t a concern for seeking treatment. Rehab centers will treat multiple relapses, which is common. As far as payment, once again, it depends on your insurance and employer. If your employer is still supportive and you can keep your insurance benefit, most will cover the additional treatment.


Resources for Financial Accountability in Recovery

From finding treatment to counseling after rehab, there are multiple, reliable resources available to help you on your journey to long-term recovery.

Drug and alcohol recovery is a brave, challenging and rewarding process. It is essential to take the small steps that lead to significant changes. Thankfully there are several affordable resources available to help you on your journey to recovery.

Everyone needs help, so reach out to friends, family, community organizations, and the resources above. State and federal agencies have experience helping people with addiction and get you started in the right direction. Rehab can be affordable with the right approach, and you can continue your recovery with financial stability.

Author Bio

Danielle Kiser is passionate about sharing stories that impact our lives and communities. After more than a decade as a journalist, she is now a freelance writer providing accurate, informative and inspiring stories for fellow Money Geeks.

Sources

DEA. “2018 National Drug Assessment.” Accessed February 28, 2020

NIH. “Principles of Drug Addiction Treatment: A Research-Based Guide.” Accessed February 14, 2020.

NOLO. “How Much Does a First Offense DUI Cost?” Accessed February 27, 2020.

Surgeon General. “Recovery: The Many Paths to Wellness.” Accessed February 12, 2020.

SAMHSA. “Recovery Housing: Best Practices and Suggested Guidelines.” Accessed February 18, 2020.

SAMHSA. “The National Survey on Drug Use and Health: 2018.” Accessed February 12, 2020.

US Census. “Who files for Personal Bankruptcy in the United States?” Accessed February 20, 2020.