Managing Your Money

Lesson 2: Where are you Going: Your Money and Your Character

My Road to Bankruptcy

As discussed in the previous lesson, my Money Drunk Ways, caused me to file bankruptcy in my 20s. At the time of my bankruptcy, I had mastered the inability to say no to the Money Drunk and Compulsive Spender that I lived with when they wanted to make big purchases. This kind of codependent behavior is expounded on in "Money Drunk, Money Sober". In it, there is a chapter on people who, like me, were willing to commit financial suicide as long as we could keep the money drunks we loved happy and satisfied.

My experience was similar to that of a parent giving in to a bratty toddler’s demands just to avoid a noisy tantrum. For me, rather than challenging the money drunk I lived with on an ATM withdrawal, I would ignore the withdrawal so that an argument wouldn’t erupt. I learned to suffer and sacrificed my own happiness and life so that this person could have everything they need.

As a result, I created a pattern of silly behavior (I can use myself and my experience and believe me what I did was silly.) This silly behavior made a mark on my credit history that will be forgiven and overcome, but never erased. Bankruptcy was one of the most horrible experiences I’ve ever had. However, I lived through it. It signed the ticket to my secret belief that I would never be a true success.

This is why I speak from experience when I say I can help you begin to improve your self esteem. I have spent the last 6 years improving my own. Steven Snyder’s book “Credit After Bankruptcy” defines bankruptcy as a legal remedy for previous errors in judgment. According to "Credit After Bankruptcy" “our founding fathers were smart enough to realize that there needed to be a “safety net” to catch people who attempted great things and failed, giving them a fresh start.”

According to Snyder, “Bankruptcy represents both death and life. Death, in that bad habits leading up to the bankruptcy should die. Life, in that it gives another chance to take advantage of the opportunity this great country provides.”

I will share the character traits that caused me to file bankruptcy in my 20s. If you find yourself doing what I did, then stop immediately. Pull over. Get new directions. This course will be about the lessons I learned and am learning to improve my financial self esteem. I shrank on the inside after filing bankruptcy.

When asked to give my social security number to a vendor or company, I whispered softly. I was fearful when applying for jobs that said a credit application might be necessary. I paid cash for everything and I never ever applied for another credit card although credit card companies threw offers at me left and right.

I didn’t go bankrupt buying expensive high heels. I didn’t go bankrupt by shopping and dining in New York City or shopping for designer handbags. I love love love designer handbags but I don’t currently own an expensive one. I also didn’t go broke from weekend trips to Paris or Cancun. I went broke because I wasn’t in the habit of thinking or planning for my financial future so I couldn’t see that trouble was on my horizon. I went broke because bills started to pile up and I didn’t have the money to pay them.

In the “Two Income Trap” Warren says “in 20 years the number of women filing petitions for bankruptcy had in reality increased by 662 percent.” That is a staggering statistic, but I can say I contributed to it, because I filed bankruptcy as a single woman in 1998. I was in graduate school on a limited income. I went broke because, when I had opportunities to make the right decision regarding my finances, I did not. For example, when I had school loan money, I spent it rather than saving it for an emergency fund. I remember it so vividly. There would be a sense of panic in the pit of my stomach after I cashed my Department of Education loan checks. I knew the balance in my checking account would dwindle from that moment forward and it terrified me. However, I wasn’t spooked into making different and better decisions about my money.

If I were to summarize my financial faults I would say I went broke because I didn’t realize my income wasn’t enough to pay my bills. I didn’t learn to control my impulsive and emotional purchases and I didn’t learn to say “no” to decisions that would hurt me financially, even if it meant confronting someone that I loved.

I have some tips for you. Don’t do what I did.

I ignored my bills. I could have kept a fire going for hours with the amount of paper I let sit on my dining room table. The second notices, the certified letter notices from the post office and the plain white envelopes that were from some unknown source became like a piece of furniture in my home. Don’t do this. Open your mail and throw out the trash. Write down the due dates for your bills. Better yet, write down the due date but make it due a few days earlier than what the notice says. That way you give yourself some flexibility.

I never balanced my checkbook. I won’t go into detail on this one because we all know it's wrong. Not balancing your checkbook is like cruising through yellow lights without looking for oncoming traffic.

I was too scared to make good decisions. If you need help making a decision, do what we were taught to do in school. Look for help. Go to the library and ask the friendly librarian if you have to.

I was terrified of facing the truth. Even if you are afraid of the truth, it doesn’t go away.

I, like 1.6 million other Americans do every year, filed bankruptcy covered with shame and guilt and wrapped up in a coat of failure. Bankruptcy is a stigma that has affected me in ways that I didn’t imagine. At the time, I filed because I needed immediate financial relief. In December 1997 I had an eviction notice, a notice from VISA stating that my wages would be garnished and a car repossession. It was a very bad month. Remember, the "my money is funny" comment in Lesson 1? Back then it wasn’t so funny, but now I can almost muster up a chuckle.

Now that I look back at the experience, I know I could have done a lot of things differently. I didn’t have to lose it all to become wiser about my money. With a few adjustments such as downsizing to a smaller apartment, or balancing my checkbook and recognizing my reality, things could have been different. But I say this with a clear mind and with confidence in my ability to handle money matters. I had no such confidence when I was going through my financial trauma years ago.

I think you know when you are on your way to financial trouble. If you can’t tell if you are in trouble, then assume you are and get some help. When you see your savings account balance dwindling, and you begin to use credit cards more and more, or when you find yourself avoiding mail and allowing it to pile up on your desk, in your car, on your nightstand, you are probably sleeping at the wheel and dangerously close to crashing. When you can only focus on food and having lights in the house, you have reached an extreme level.

For some of you, bankruptcy is not necessary. However, living under extreme financial burdens can wreak havoc in other areas of your life. Money problems could be ruining your marriage or undermining your health. Either way, if you see there are problems on your horizon, if you are ignoring bills and burying your head in the sand to hide from your problems, you need help. You can get help. Things can get better. Wherever you are, you can make things better once you recognize the patterns that designed what you see in your life.

Here is your assignment:

Think about your finances.

Spend some quiet time making a list of your bills.

List your essential bills, rent, mortgage food, lights

List your consumer debt, credit cards

List the debt that is necessary debt like car notes and school loans

Do you actually know how much money you have left over after paying your monthly obligations?

Do you have enough to live on if you didn’t work for 4 months?

Bibliography

Money Drunk, Money Sober - Julia Cameron and Mark Bryan

Credit After Bankruptcy - Stephen Snyder