We recently saw some distant relatives at a family gathering, people we hadn’t seen for years. One asked my husband why we had moved from our big house in the suburbs to a small house in a small town.

One of the things I love about my husband is that he’s honest and direct. He simply replied, “After my industry moved overseas and I had to close my business, we couldn’t afford to live in our area any more.”

Simple enough, right? But it’s very hard to admit that despite your best efforts, things aren’t going well financially. The responsible way to handle things is to be proactive and downsize willingly, before you’re forced to sell everything just to keep the electricity on. But there’s a huge temptation to pretend like nothing has changed.

It’s dangerous to live in denial. Many people face financial difficulties in these hard times, and some actually make things worse by using credit to continue a lifestyle that they can no longer afford. Even when they reach the end of their rope, and are finally forced to downsize to a smaller house and/or a less desirable area, they may try to keep the façade going by putting a little spin on the situation (“We sold our house because we’re going to travel a while before moving to the Hamptons.”)

Being honest about your situation means you don’t have to wear yourself out pretending that nothing has changed. You also free others who are having financial challenges to be open and admit that the smart thing for them to do right now is to downsize. Your example can show them that there’s nothing to be embarrassed about and that life goes on…..a happy life, too.

Years ago, I would occasionally see bumper stickers on cars that said “Don’t laugh. It’s paid for.” I’ve thought about putting a little sign with that slogan in my yard (don’t worry, my husband would never go for it!) But we love our little house, and we’re happy with it. No, we don’t live in the McMansion anymore, and we don’t live in the suburbs, either. But I’m being completely honest when I say we’re fine with that. Downsizing our life has actually made us quite comfortable. And we don’t care who knows it.