I had spent the previous Thursday night filling out what seemed to be an endless questionare in preparation for our Monday morning appointment. As we sat in the lobby of the office with our six week old son, we read over the framed posters on the wall that displayed the names of numerous celebraties and famous persons that had also traveled the path we were on. Finally after an eternity of sitting in shame, we were called back to discuss our bankruptcy case with a paralegal.
I'll be honest, I don't remember much from the appointment other than feeling like a complete and total failure. I kept wondering, how did we get here? How could I have been so stupid? Looking back on this, the answers to my questions were simple. It came down to simple math. We spent way more than we made, and we did that for a long time. Walking out of that office we felt defeated, but at least we came to grips with the seriousness of our situation.
At the time we weren't behind on any bills, but we would be soon and very soon. All our credit cards and lines of credit were maxed out, there was no money left for us to borrow. For the first time we actually wrote out our expenses and compared them with our income. Come to find out that we were spending about $1600 per month more than we made. No wonder we were in the spot we were in.
About a week after our meeting we received the quote for the cost to file our Chapter 7 bankruptcy. It was only going to cost us $2939 to free ourselves from the debt we'd acquired. At the time, we were thinking we were in about $50,000 worth of debt. For just under $3K that would be discharged, we'd keep the house, both leased cars, and my motorcycle. This seemed like a plan, but we were still in trouble. Later that month, we missed our first of several payments.
This was November of 2008. We stopped making payments on nearly all of our unsecured debt and this resulted in about $1000 less in expenses per month. Now we still had a $600 per month burn rate. I'm not sure what happened or how we survived, but we did. We cruised along trying to figure out a way to obtain $3000 to file bankruptcy and get out of this mess.
In March of 2009 I received my annual bonus which was a net take home of $4100. Yes! This was it, we could finally afford to file Chapter 7! First things first, vacation time. See, my dad had been battling cancer and we hadn't seen him in awhile, and he had never met his only grandson, our now six month old son. So we traveled to Texas and visited with friends and family. If you think we'd obtained the discipline at this point to budget a trip and not spend too much, well you are wrong. So we spent that bonus money down below the $3000 we needed for our filing.
And the hits just keep on coming. We were back in the mode of trying to save a few bucks, or a few hundred. But, life doesn't wait, nor does death. About a month after our visit to Texas my Grandfather passed away, so we headed back to Texas again. This last trip pretty much cleared us out and we were again broke. Bankruptcy seemed like a far fetched dream at this point.
And when it couldn't get any worse. Life, or death rather, comes around again. Another month had passed and my Grandmother passed away. We were too broke to attend the service. This was really a breaking point in our life, May 2009. For another month, we lived in limbo. I had been listening, off and on, to The Clark Howard Show on my local AM station, but they had recently replaced it with a show called, The Dave Ramsey Show. I was upset because I enjoyed listening to Clark teach me how to "Save more, spend less, and avoid getting ripped-off". Eventually this Dave character started making some sense. I liked what he was saying and heard mention of his book several times. So, in June I ordered Dave Ramsey's My Total Money Makeover from Amazon and started reading.
I loved the plan, I loved the ideas, it was like he stole them straight from my grandparents! Spend less than you make, save up and pay cash for things, and basically don't be stupid. I was excited.
The financial goal at this point was to try to arrange transportation. We had about 4 months left on one car lease and 9 months left on the other. We had already taken a 401k loan on my retirement so we were about to have some liquid assets to purchase a car. But then I decided that silly ole' Dave's plan was probably better than ours. I mean, how well had our plans been working? Really.
Husbands, don't do the following, I was lucky, and I don't think your result will be similar. Suzanne and I were talking about the cars and what to do when I said something like, "Naw, we should use the money to buy a beater, like a $2000 car." "What?!?! Are you crazy!?!? We can't go from driving an Acura TL and a Volkswagen Passat to a $2000 beater!" (ok, those weren't her words, but that's what I heard).
From there is was a little blurry, but it was essentially me tossing the Total Money Makeover book on the floor in front of her, she was already sitting on the floor, and declaring this book to be the source of my madness. "Talk to me again after you've read this! (or at least through Chapter 4 (or whatever the chapter on getting out of debt is))" And so it was...
Over the next couple of days, she read. I waited. I waited some more, and then gently asked, "so?" And I waited some more. Ok, it was probably only a couple days until she reached a point we could have a conversation of mutual understanding. We figured what the heck, what have we got to loose?
June 2009, we started our Total Money Makeover.
... Stay tuned for part 2 as we start the baby steps ...
What was the point at which you realized the pain of the same was more than that of the pain of change? In other words, what was your "I've had it!" moment?
