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Rock Bottom

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After our bankruptcy was discharged, I thought we were through with financial irresponsibility. We had two paid off cars, and no debt except a 40 year 7.5% mortgage of $130,000. On a house what once was worth $125,000, now was valued at $65,000. We said we would never go back to the way it was.

Our road started off with a bang, I decided I wanted a new car. I was tired of driving the small Chevy Aero, and wanted something bigger. By then my husband had gone back to work, so we had the income for a car payment. So I thought. Because we were so close after our discharge, the bank loan came back at 18%. Yet idiot me took it. Thankfully, I got our credit union to refinance it at 3.75 within 6 months.

The credit card debt kinda of snuck up on me. Again our local credit union started me off small, and kept raising the credit limit for me. I just kept spending and spending. Sometimes, it was for luxuries that we really didn’t need, but other times, it was for the necessities that we needed. We again were living outside our means.

The House

Last summer, my husband and I decided to move closer to our jobs and to a better school district for our girls. I took 6 months, but I found a house that is 2 miles from my job, 10 minutes from my husbands job, and a much better school district. It was a for sale by owner, and what we considered a perfect fit. I’m not proud to say this, but I promised to be 100% honest, so I will admit, we walked away from the old house with the 40 year mortgage. We were allowed to as the debt was discharged in our bankruptcy. We convinced the owner of the current house to do a lease to purchase, and moved in the beginning of February . We are paying her 5% APR (she holds the note) and have a refinance deadline of November 2019. Yes this stresses me out.

A few weeks ago, I finally hit rock bottom. I had convinced my local credit union to do a debt consolidation on some of our credit cards. I swore I would cut them up, and start living like a responsible adult. I failed. Two of the cards lowered my credit limit so they are not as high, but the rest are right back where they were. I am very ashamed to find myself in such a low place again however this time its different.We are not walking away from one red cent of what we owe. We can and we will pay down our debt. It won’t be easy, in fact, I’m sure its going to be very hard. But for the 1st time, my husband and I are on the same page, and there are no secrets.

The Future

The future is now. We are cutting everything we can to have more to throw at debt. I am working on a post explaining our income and expenses. We are signed up to start Dave Ramsey’s class in the middle of September through our local habitat for humanity. I’m excited because at the same time we have our class, they are also holding a kids class that follows Dave’s class for kids. Hopefully, that will give our girls the foundation to be smarter with money then their parents are. Its something I wish I had as a kid.

Thats our full financial story. Like I said, I am working on an income and expenses post that I am sure everyone will help me whittle down. I do promise to be 100% truthful in my posts, and I have thick skin to read the responses to them.

Marie

Married mother of 4, grandmother of 4, and just trying to dig her way out of debt. One dollar at a time.

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28 Comments

  • Reply debtor |

    “We convinced the owner of the current house to do a lease to purchase, and moved in the beginning of February . We are paying her 5% APR (she holds the note) and have a refinance deadline of November 2019. Yes this stresses me out.”

    Any chance you (or anyone else) could explain what this means? I’m not familiar with this term or setup at all. What is a refinance deadline? What does that mean in terms of your cash?

    And just to make sure i understand correctly, you owed money on your last house but you were able to walk away from it bc of the bankruptcy? and so the bank just lost the money? is that correct?

    • Reply Marie |

      The previous owner is the mortgage holder. We make the payments directly to her. We have a balloon payment due November 2019. That is why we will need to refinance by then.

      And yes, we gave the last house back to the bank and they sold it at a loss. They can’t go after us as the debt was discharged in bankruptcy.

      • Reply Maureen |

        Yes, it is true that the bank cannot seek damages for breach of contract on the “old” house, pursuant to your bankruptcy discharge. However (I haven’t read all the comments here yet), the foreclosure from the old home will go on your credit history record. This recent foreclosure may affect your ability to get a mortgage on the “new” house. Lending laws dictate how soon after borrowers may obtain a mortgage after a foreclosure. Have you looked into this?

        • Reply Marie |

          Yes I have looked into it, and spoken at length with my credit union. The foreclosure will not affect getting a mortgage with them in 2019.

  • Reply Carina |

    To be honest, I don’t think you all have learned anything from bankruptcy and this is what upsets me. There are two coworkers at my job who have also filed bankruptcy and are still buying what they want, taking off work, going in vacations, spending money they don’t have. Yet when the cable companies raise their bill $20 they’re on the phone crying about how they can’t pay that. Meanwhile I’m over here working to pay for all my bills, saying no to vacations I can’t afford, and not relying on anyone else to foot my bill in life for me. It really upsets me seeing there be little to no consequences for those who treat bankruptcy as a means to keep their same spending habits and not learn or change a thing from it.

    I’m glad you’re getting honest with yourself and finally trying to understand finances but it sounds like you’re caught up on impressing people with what you have or “wanting” things that deep down you know you have no business buying that you’re forgetting to live within your means. This is not directed towards you personally, I just feel that this society needs to get a hold on their finances quick, before you end up with absolutely nothing. My mom was this person and I grew up with nothing because she would spend it all on cars, clothes and homes but couldn’t figure out why she was so broke and had to file bankruptcy. I was the kid who was homeless when our home was foreclosed on. The kid who was made fun of because of my mom’s poor choices. So I ask that you think about the futures of everyone in your home, is a new car really worth questioning whether you can keep food on the table for them?

    Thank you for sharing your story. I’m excited to follow your journey out of this.

    • Reply Maureen |

      I can completely sympathize with many of your statements. I have practiced in the area of bankruptcy law (and other areas of law) for many years. Yes, there are the clients that know they can file every 8 years. In some ways they know the loopholes in the system better than me (sad!). I have turned away clients that I didn’t feel were truthful, etc-bankruptcy is a legal right, but as an officer of the court I also need to ensure integrity of the system. I do want to point out though, for many of my clients (more than 60%) bankruptcy was a need after a medical situation or the housing bubble burst. Some of my clients even had no credit card debt and tried to work with lenders, but had a housing situation where the mortgage company inflated the appraisal cost, and then when the market tanked, well…. I am not making excuses for my clients, I just want to put a plug in that there are bankruptcy success stories, and not all bankruptcy filers have spending and habits out of control.

      • Reply Carina |

        Nope didn’t say that they all had issues. I just said that it upsets me to hear of the ones filing who bring financial burden upon themselves by over spending on vehicles, vacations, and material items but then continue to practice the same behavior after or during the bankruptcy. Those are the situations that don’t sit well with me. A home or medical emergency could happen to the best of us and I don’t know many people who are prepared enough to shell out thousands in unforseen medical costs, so those types of bankruptcies I can very much understand the reality of.

        • Reply Carina |

          And the bankruptcy coworkers I speak of both bought big homes and new vehicles and new clothes they couldn’t afford. They have no problem divulging their financial turmoil at work, so I’ve heard the information straight from the sources.

          • Maureen |

            I get it! I appreciate your thoughts. Sometimes (not you), I feel that everyone who files bankruptcy in society’s public opinion gets a bad rap. As a result, I feel the need to sometimes articulate the story of clients that filed, but didn’t owe a cent to credit cards! 🙂

  • Reply Walnut |

    I’m not sure you have actually hit rock bottom yet. Do you have a therapist or someone that can help you unpackage your relationship with money? You have far more than just a shopping problem from what you have shared.

  • Reply Shauna |

    I think you need to be honest with your landlord that there is no way anyone is going to finance you to buy that house. This is going to sound harsh, but while I so appreciate you putting this all out there and moving toward a change, I feel a lack of integrity in the willingness to make your debt other people’s problem. Walking away from a house and bankruptcies are not victimless. And we ALL pay for it in the realm of higher costs on things to cover people who chose not to pay. I hope I am wrong.

  • Reply Kerry |

    You didn’t “give the house back.” You stopped making payments and the lender foreclosed, and the balance after sale was included in your bankruptcy. You deliberately minimize the depth of the destructive choices you make by saying, “oh they took it back.”

    Also good lord, a 40 year mortgage you were upside down on at 7.5%? You should have moved long ago and a foreclosure was inevitable. You should have never refinanced.

  • Reply Kili |

    Hi Marie,
    What cuts are you willing to make?
    What items are you willing to sell?
    Or what are you willing to trade in for an older model/less expensive model?

    What do you hope to get out of the Dave Ramsey class that’s not an info that’s readily available online?

    • Reply Marie |

      We are cutting things to the bone. For example, cable has been gone since we moved in February. I am selling everything we can spare, in fact I have made $130 in the past 2 days selling stuff on facebook marketplace. The cars, I honestly don’t know how to go about trading down. I did that already in march of this year to go from a van to a smaller car. I saved $130 a month on my car payment. I looked up the KBB of my car now, and I am upside down a bunch. How do I go about it?

      In regards to the class, I don’t really know how to explain it. I know the basis of his principals, and can read about it from his book and online, but I’m more of a hands on learner, so I think the class will motivate and hold me accountable. Kind of like this blog. I am laying it all out, and welcome tips and assistance with my journey.

      • Reply Corie |

        Cut the shit and take responsibility for your own actions. You didn’t give anything back to the bank. You repeatedly walk away from your outrageous mistakes because you can’t handle being an adult.

        No more cars. No more houses, not like you’re going to be able to stay in that house anyway. Move your family to the cheapest place in the area and start paying your debt for real. If its not food, utilities, or medicine, you’re not buying it. That’s life.

        Also…you’re only spending the money to GO to Dave Ramsey’s class because you’re one of those people who thinks buying things and attending “the EXPERIENCE” is what will set you straight. In reality, it is you and only you who can fix this. Sit down and spend that money you’d pay for Dave Ramsey’s class on bills like a real, functional person.

  • Reply Angie |

    I want to root for you but I don’t see any sense of accountability at all. The amount of times you said “let it go”, “gave it back”, and “I decided so I bought (without thinking it through!!!)…” is astounding. You’ve been enabled non-stop in your financial world by your father, husbands, and the government. I really want you to right the ship but its going to be extremely difficult to break all your poor habits and rushed/irrational decision making.

    My main question… Why are YOU in charge of the money?!? The best thing for you would be to download Mint, set a budget, and give all your credit cards and debit cards to your husband. Better yet, cancel them and go cash only. Also, (and I’ve never seen this suggested to anyone before) it might be a good idea to take a drastic measure to put a lock on your credit file so no one can issue you more cards or loans without having to call it in to a third party (gives you a chance to check yourself). It seems whenever you get your head above water you make a dumb decision and take out more credit.

    • Reply Marie |

      Believe it or not, I am much better at money than my husband. His theory is if the debt card works, its ok to buy. We are working on that.

      All credit cards accounts have been closed. I think locking my credit file is a good idea, I will research how to do that.

  • Reply Cam |

    I really hope during this time, and with this blog, you find some sense of personal responsibility. Never once in your entire story did you take the blame. It’s “we let the bank have the cars, we gave the bank the house.”

    Unless you see the consequences of your actions, you won’t change.

  • Reply Chasity |

    I think there is another problem in here.. I used to buy name brand everything and a few other weird quirks because i grew up poor. Ii honestly did not care about the brand other than what other people might think if they saw I had off brand items *mostly clothes* and it was me trying to feel like i measured up and a variety of other things. Understanding my problem and how to handle it is a direct result of therapy. Accountability is HUGE in therapy and money as well.

  • Reply Kerry |

    I also think Dave Ramsey will be an abject failure for you. His whole method is “sacrifice ’til it hurts, give up another 10%.” It’s shame-based. If you are trying to plug emotional holes by spending and avoid your feelings with the jolt of pleasure of new, it takes time to unlearn that coping method. When you backslide, and you will backslide, what will you do? The relapse-recovery model of substance abuse might be a better way to approach your issues.

  • Reply kr |

    I just have to say kudos to you for laying it all out there. I really hope this blog helps keep you accountable and get you going in the right path.
    I do echo Kili’s comment though, where are you going to cut back? What consequences will you place on yourself and your family to ensure that budgets are adhered to? I can’t wait to see your action plan.

  • Reply Katie |

    Tough road ahead. I think your only option is to get out of debt. I’m going to recommend another blog for you to follow, The Prudent Homemaker. That family lives on very little, which is what you will need to do to get out of this hole.

So, what do you think ?