I always hate telling people this, but I filed for Chapter 7 bankruptcy at only 23 years old. I got my first credit card the minute I turned 18 and went off on a fun-spree. When my live-in boyfriend and I broke up at the age of 23 and I started using credit to live, that's when I crossed the line into trouble territory. I thought that filing would keep me out of trouble for awhile. Not the case. I was discharged from bankruptcy five months later and the credit cards offers started rolling in immediately. Since you are not a huge credit risk (can't file again for at least 7-10 years), a lot of credit card companies are happy to give you credit. I had a new card with a ridiculous interest rate but a $3,000 limit within a month. For emergencies, you know. Right!
Ten years later, I was facing bankruptcy again. This time a Chapter 13 to deal with my condo, which had gone from a value of $265,000 to $65,000 (and the values of those condos continued to drop after auction...I heard they were down to $50,000 last year). My credit card debt was not nearly as ugly as it was when I was 23, but I was still living beyond my means. On many levels. Filing bankruptcy means you wipe it all away -- no picking and choosing who you will pay. And a Chapter 13 means I am paying back a portion of what I owe to my creditors. It also means I cannot have any credit cards for the five years I am making those payments. (I can take on certain loans with permission from the court but the bank's interest rates are so high, I'd be better off asking a loan shark for money.) So I guess I am not technically "debt-free" but I am "credit card-free." I make a $725.00 payment to the court every month to pay off that debt. I have been making that stupid monthly payment for the last two years. I have three years left. You know how many shoes and massages I could buy with $725.00 a month?!
For someone who has depended so heavily on credit for so long, going without that safety net was scary. What if my tire blows out and I need four new tires all at once? What if a really awesome jacket goes on sale and I NEEEEEEEEEEEEEEEEEEEEEEEEEEEED it?!!!!!!
Guess what...every time I've gotten down to my last dime, and I really have needed money to get by (I did need to buy those four tires all at once a couple of years ago), something happens. An unexpected check, an early payment...something. Call it divine intervention, luck or whatever you want. I continue to try to send gratitude and positivity out into the universe because it comes back to me every time I actually need it to pull me through.
I have learned a lot in the last two years. First off, I have way fewer emergencies than I thought I did. Second off, I stress a lot less about money when I don't have any.
I have learned to barter to do fun things (most of the fun stuff I do is traded for a service I can offer...no, not THAT kind of service). I have also learned that sometimes when money is tight, you just have to say no. People understand. I have also learned that sometimes you have to get over yourself and ask for help. I have taken on extra side jobs writing and doing social media with Social Sonar in order to make some extra cash. And I have not really suffered in the last two years. Especially with the economy tanking like it has (read my old blog post about that HERE), and with credit card rates being SO expensive, I am kind of grateful to be forcefully removed from the credit world. I really thought giving up credit cards would be a punishment worse than death. But I have actually found it to be freeing and am hoping when credit cards DO become available to me in three years, that I will decide I don't want one.
I really thought I was being a "good person" by going the Chapter 13 route and paying back so much of my debt. In hindsight, I may have chosen a different route. Not even because my payment is so high, but because my credit score will stay tanked for the entire five years that I'm making payments. That kind of sucks. I thought it might count for something that I was paying it back. Yeah, it doesn't. But live and learn. And ten years from now I do not plan to be filing my third bankruptcy!
I am learning that I do not need to have a lot of money to have a decent life. I am getting along just fine and having fun along the way.
For the fun of it, HERE is an open letter I wrote to Warren Buffett. He hasn't responded yet. But I think he's just waiting for the right window of opportunity. :-)