Friday, September 14, 2007

Might As Well Get It Over With

This is the first of a three-part series that will be the hardest post for me to write. Anything that happens after this story is told should be a piece of cake. This is where I take ownership of the biggest mistake I ever made...twice.

Really, I should rephrase. I don't look at bankruptcy as a mistake, simply because Shane and I have learned so much from it. I see it more as a very unfortunate event that we could have avoided had we not made a lot of smaller mistakes. A lot of people think bankruptcy is shameful, but I'm not ashamed of it, either. We made mistakes, but our behavior wasn't wrong. We did the best we could with the knowledge we had. Had we been better informed and educated about personal finances, it may not have happened. Why we weren't better informed is probably a subject for another post.

The first time I declared bankruptcy I was 27 years old. I had divorced my first husband four years earlier, and while I was actually financially better off than we had been when we were married, I was struggling to raise Jean, who was six at the time. I had a job that paid a decent wage and had better-than-average benefits, but as a single parent, I couldn't afford the added daycare expense needed to take on a second job. As it was, Jean was gone from the house for 12 hours a day at school and daycare. I couldn't bear leaving her with a sitter for another four or more hours a day, even if I had been able to afford it.

I had a small amount of debt, only about $10,000 or so, that I'd amassed over a few years' time in the most foolish of ways, primarily by making international calls to an unfaithful boyfriend who was stationed in Okinawa. I had no credit cards, but along with the phone bills were a couple of utility bills from a previous address that hadn't been paid and the remaining three or four payments on a car that no longer ran and I no longer owned, also thanks to that same "boyfriend". I had absolutely no assets at that time.

The first thing I did was to finally get rid of the boyfriend.

Then I contacted Consumer Credit Counseling, who actually advised me to file for bankruptcy. Although the amount was small, they said, it looked as if there was no way for me earn enough money pay off the debts, and that because of late fees and such, I would actually get deeper in debt.

I hired an attorney recommended to me by a friend, and luckily, he was a good one. His fees were low, his work was good, and the entire process took only a couple of months. Then I began sleeping better at night.

I continued to work, my wages increased a little, and after about five years, I was able to get a couple of low-limit credit cards, one to a national department store and one to a fuel company. I charged a few things, paid them off in a timely manner, then quit using them. Two years after that, I had the income, job longevity and good enough credit to buy a starter home. The house I bought was in a quiet neighborhood, but in one of the less popular suburbs. I was able then, in 1997, to buy a 4BR, 2 bath, ranch home on a half-acre lot (no garage or basement) for $56,000 at a decent interest rate. It was a 30-year mortgage, of course, but I didn't mind. My payments were only a handful of dollars more than I'd been paying for rent on a 2BR apartment. I was so happy to have that house; I'd noticed it years before and thought to myself I would like to own it someday. It went up for sale just as I starting house-hunting. I was the only person to even look at it when I made my offer.

A year later, my car had the last breakdown I was willing to deal with, so I bought a truck. It was a small truck, just a year old, but my credit still wasn't where I needed it to be, so the interest rate was huge. But it was the first really reliable vehicle I'd ever owned and it was worth every penny I ever spent on it in reliability alone.

Shane came into the picture a year after that. During the months we lived together, but before we got married, we split all the household expenses, but each took care of our own car payments and any debts we had as single people. Our relationship progressed quickly, and we never really had a dating period before he moved in. So during this time, we went out to eat a lot, went to movies, went dancing, bought each other gifts and generally enjoyed the fact that each of us was feeling a bit of a financial break by splitting our living expenses. We could have been saving this money or paying down our debts, but we didn't.

After we got married, we joined our bank accounts and debts and looked at the situation as more of a joint venture. I know that some couples choose to keep their bank accounts separate, but pooling our resources seemed to make more sense to us. Then we decided, mutually, that it would be better if I worked part-time instead of full-time, which reduced our income. But we were still doing just fine, and still spending instead of saving or paying things down.

I don't want to give the impression that we were spendaholics. We weren't. I've never been one to want or need a lot of new things, and while Shane was "spendy-er" than I was, it wasn't to excess. I'm just saying that we could have been more responsible with our money.

Now Shane is a builder. A fixer. An improver. He said we could do this to the house. Should do that to it. Might be happier with it if we changed x, y and z about it. Soon enough, the house I'd fallen in love with years before was no longer so enchanting to me. Shane could make the improvements, no doubt, but the house had already been added onto once and we were afraid that if we did much more to it, it would take on a "cobbled up" look instead of looking better. And it would never have the basement or garage we wanted.

So we put it up for sale, ended up selling it to some good friends...

and bit off more than we could chew.

(Part 2 tomorrow.)


DadGuy said...

Looking forward to part 2.

Annie Jones said...

Dadguy: Yeah, it's kind of a train-wreck sort of way.