Glossary
Key terms and definitions used across Sober Wealth.
- 90-Day Financial Reset
- A structured three-month plan for stabilizing finances after addiction, typically covering budgeting, debt triage, and opening a bank account. It provides a manageable timeline that aligns with early sobriety milestones.
- ACA (Affordable Care Act)
- Federal legislation that expanded health insurance access, including coverage for substance use disorder treatment and mental health services. It ensures people in recovery can obtain insurance even with pre-existing conditions.
- Bankruptcy (Chapter 7 vs 13)
- Two forms of personal bankruptcy: Chapter 7 liquidates assets to discharge debts, while Chapter 13 creates a repayment plan over three to five years. Understanding both options helps people in recovery choose the right path when addiction-related debt is overwhelming.
- Credit Score
- A numerical rating, typically between 300 and 850, that represents your creditworthiness based on payment history, debt levels, and other factors. Addiction often destroys credit scores, and rebuilding them is a critical step toward financial stability in recovery.
- Credit Utilization Ratio
- The percentage of your available credit that you are currently using, ideally kept below 30%. Keeping this ratio low with a secured credit card is one of the most effective early credit-rebuilding strategies in recovery.
- Debt Avalanche
- A debt repayment strategy that targets the highest-interest debt first while making minimum payments on everything else. It saves the most money over time and is often recommended for people in recovery facing high-interest debts from their addiction period.
- Debt Settlement
- Negotiating with creditors to pay less than the full amount owed, typically in a lump sum. It can be a viable option for people in recovery with old addiction-related debts that have already gone to collections.
- Debt Snowball
- A debt repayment strategy that targets the smallest balance first to build momentum through quick wins. The psychological boost of eliminating debts one by one aligns well with the milestone-based mindset of recovery.
- Emergency Fund
- A cash reserve set aside to cover unexpected expenses without going into debt or financial crisis. Building even a small emergency fund is a critical early recovery goal that prevents relapse triggered by financial stress.
- Employment Gap
- A period of unemployment that appears on a resume, often caused by treatment, incarceration, or instability during active addiction. Learning to address employment gaps honestly and strategically is essential for rebuilding income in recovery.
- FAFSA
- The Free Application for Federal Student Aid, which determines eligibility for grants, loans, and work-study programs. People in recovery can use FAFSA to fund education or vocational training, though past drug convictions may affect eligibility.
- Financial Amends
- The process of acknowledging and repaying financial harm caused during active addiction, often connected to Step 8 and Step 9 of twelve-step programs. It involves creating a realistic plan to address debts owed to individuals and institutions.
- Garnishment
- A legal process where a portion of your wages or bank account is seized to pay an outstanding debt or judgment. People in recovery may face garnishments from debts accumulated during addiction, and understanding exemption rights is important.
- Half-Life Credit Impact
- The principle that negative items on a credit report lose scoring impact over time even before they fall off after seven years. This means credit rebuilding in recovery produces compounding benefits the longer you maintain positive financial habits.
- Lien
- A legal claim placed on your property by a creditor as security for an unpaid debt, such as taxes or medical bills. Liens from the addiction period can surface during recovery and must be addressed before purchasing property or obtaining certain loans.
- MAT (Medication-Assisted Treatment)
- The use of FDA-approved medications combined with counseling and behavioral therapies to treat substance use disorders. Understanding insurance coverage and costs for MAT is important for budgeting during early recovery.
- Medicaid Expansion
- The provision of the ACA that expanded Medicaid eligibility to cover more low-income adults, including substance use disorder treatment. In expansion states, it provides free or low-cost health coverage that is vital during early recovery when income is limited.
- Mental Health Parity Act
- Federal legislation requiring insurance plans to cover mental health and substance use disorder treatment at the same level as physical health conditions. It protects people in recovery from discriminatory coverage limits on addiction treatment.
- Oxford House
- A network of self-supporting, democratically run sober living homes with no time limits on residency. Oxford Houses offer affordable housing in recovery with built-in accountability and a structured financial environment.
- SAMHSA
- The Substance Abuse and Mental Health Services Administration, a federal agency that provides resources, treatment locators, and funding for addiction and mental health services. Their national helpline and grant programs are key resources for people in financial need during recovery.
- Secured Credit Card
- A credit card backed by a cash deposit that serves as your credit limit, designed for people with no credit or damaged credit. It is the most commonly recommended first step for rebuilding credit after addiction-related financial damage.
- Sober Living
- Transitional housing that provides a structured, substance-free environment for people in recovery, typically with shared expenses and house rules. Understanding the costs and financial requirements of sober living is crucial for budgeting in early recovery.
- Sober Living Scholarship
- Financial assistance that covers part or all of sober living housing costs for individuals who cannot afford them. Many treatment centers, nonprofits, and sober living networks offer these scholarships to support people in early recovery.
- Sobriety Savings Calculator
- A tool that calculates how much money you save by not spending on substances, often revealing thousands of dollars per year that can be redirected toward financial goals. It provides powerful motivation by quantifying the financial benefit of staying sober.
- Student Loan Rehabilitation
- A program that allows borrowers with defaulted federal student loans to make nine agreed-upon payments over ten months to remove the default status. It is particularly valuable for people in recovery whose loans went into default during active addiction.
- Utility Deposit
- A security deposit required by utility companies for customers with poor credit or no payment history, often ranging from $100 to $400. People in early recovery frequently encounter these deposits when establishing independent housing for the first time.
- Vocational Rehabilitation
- State-funded programs that help people with disabilities, including substance use disorders, find and maintain employment through training, job placement, and support services. These programs can cover education costs and provide job coaching during recovery.
- Wage Garnishment
- A court-ordered deduction from your paycheck to pay outstanding debts such as child support, tax liens, or defaulted loans. Knowing your rights regarding garnishment limits and exemptions is essential for protecting income during financial recovery.
- Zero-Based Budget
- A budgeting method where every dollar of income is assigned a specific purpose, leaving zero unallocated. It is especially effective in early recovery because it eliminates untracked spending that could fund relapse.