Too Smart to Live Like This

My “lay of the land” posts are intended to sort of set the baseline of where I’m at. Right now, nothing is “failing harder” than my finances.

Right now, not including the balance on our mortgage, we have debt totalling about $40,000 US. Notice I say about, because I’m not sure. This is a common theme, as you’ll see.

Growing Up

Growing up we sat squarely in the middle class. My father made decent money, we had a nice house in a good neighborhood. My parents will speak back on those times and say that they had some very tight times, but they did a fantastic job of not letting it affect my sister and I. My parents seemed frugal, but not cheap or broke.

When I was younger my mother, who had grown up in near poverty, always pushed us to save any money we got. There was a sort of half-buried disdain whenever we, the kids, spent money. I remember one incident very clearly. I was about 12 and had received a few bucks in a birthday card and wanted to spend it on a poster at the Mall that showed the cockpit of a 747. It was uber geeky, and I had to have it on my wall. When we bought it, she gave me a bit of that semi-subtle mom-attitude. After I bought it, I fretted the rest of the day.

My mother had seemed so disappointed. I was the sort of kid who could handle “angry”, but “disappointed” cut me like a knife. That night as I lay in bed, I knew my parents were laying in their beds reading. I actually got out of bed and walked to my parents’ bedroom, where I apologized to my mother for buying the poster. She gave me an odd look and told me to go to bed.

The funny thing was, I wasn’t sorry that I had bought it, I felt bad that she was disappointed. In an odd sort of reverse-psychology, instead of relating spending with disappointment, I related controls on spending to it. Granted, this is all a bit of post-justification pop-psychology, but it makes a perverse sort of sense as I try to make sense of my life.

First Credit Card

I can actually remember the day. I was in college, and had fallen into one of those trap booths they set up on college campuses. Fill out this credit card application and you get a water bottle, or something similar. Several weeks later, home for the weekend, I got the mail on Saturday and found a shiny new Citibank VISA card addressed to me. Balance, $300.

So, just like my “away from home” problems with food, I was now able to “stretch out” monetarily, and buy all sorts of goofy stuff I didn’t need. There was the computer upgrades (which in 1988, a computer was still a hobbyist toy, for the most part.) There was the 30 gallon freshwater fish tank in a dorm room! Any random crap that was shiny enough to catch my attention was snatched up.

Citibank was joined by Chase, and then $300 became $500. All the while, I’m a college student with no income, who is burning through about $6000 in savings at the same time. Payments started to be missed. Angry letters sent. Cards shut down.

Married

In 1992 I met my wife, and we married in 1993. If there were ever two people worse suited for each other, from a finance standpoint, I haven’t met them. She and I continually brought out the worst in each other, financially. She spent, I spent, we got more and more credit cards. We were married and trying to live on about $25,000 a year total, without reining in our stupid spending habits.

When times got tough, we did the easy, and stupid, things, instead of the smart ones. An $800 tool set was bought from Sears on a sears card, then returned at a different Sears for cash. In the months after our wedding we returned, for cash, nearly everything on our wedding registry. When we found out that her student loans - you know, the ones you don’t have to pay back right now - could be borrowed at an amount above tuition costs, we took every dime we could get.

Bankruptcy

Sometimes worse is wrapped up in a disguise that makes it look like better. By the late 90s the dot-com bubble was inflating like mad, and I managed to hitch onto a company out of San Francisco that was dumb enough to pay its Cincinnati employees bay area money. High bay area money. I suddenly had more money than I knew what to do with, literally.

We bought a house we couldn’t afford. At one point we had an extra car that neither of us ever drove. It was sheer chaos. At one point I received a payment of $75,000 for selling off an internet business I had tinkered with, and by the time that cash was gone, I had literally nothing to show. Money had made us even stupider and lazier than ever.

And, as expected, the bubble burst. The dot-com folded and I took a 40% pay cut doing a job I hated. Instead of regrouping and trying to adjust, we continually outspent our means in a sort of sad denial. Spending to make ourselves feel better, damn the consequences.

The wolves were closing in, and we had zero in savings. In a desperate bid to try to keep our house, we declared Chapter 13 bankruptcy.

Eventually I was laid off from the job I hated, and couldn’t find another job for six whole months. One of the requirements of the bankruptcy system was that we maintain our house separately from the bankruptcy payments themselves. This became impossible and we ended up losing the house to foreclosure, and being booted out of bankruptcy, bringing the wolves circling again. Now, of course, we had nothing of worth to lose.

We did work to bring things under control, and did a halfway decent job. I ended up paying off my car, which promptly died. Things were not great, but at least we seemed to be treading water.

Right Now

Today the story is angry debt and seriously hosed up cash flow. Amazingly, our debt doesn’t include a single credit card. We simply havent had one for years, as nobody would ever give us one. Our credit report reads like a rap sheet.

Bad credit means that when you do get something, like a car loan after your car dies, you’re paying absolutely obnoxious amounts of interest, and you’re probably in some dealer “program”, meaning a limited collection of cars you’re sure to overpay for. So our crappy Ford Explorer costs us $438 a month. Student loans are nearly $600 because they went into default and we had no choice but to agree to their payment plan.

And, of course, the most evil, usurious bastards on the planet got their hooks in us as we fell back on old habits and looked for the easy fix, Payroll Advance.

In the past month our electric has been turned off, our water has been turned off, our internet has been turned off (the internet I need in order to do my job and make an income). Each time we found some elaborate monetary shell game to get them turned back on.

The path upward.

If all this reads like a woe-is-me surrender, it’s not. If anything, writing this has helped me clarify some things that will be helpful in the future. I’ve got a list of what we owe and to whom. While I still don’t know how I’m getting to the next paycheck, I’m at least partially encouraged, as I know the lay of the land now. This is the bottom, and we’re going to bounce back up to respectable “grown-up” level sooner, rather than later, you can take that to the bank.

I’m too smart to have finances like this.