The Going Broke Blog

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The media says we’re going through some of the worst economic times since the Great Depression. Many people are losing their jobs, losing their retirement investments, and depleting their savings as they try to wait out the storm.

I’m afraid the storm has caught me, and I am in the process of going broke – my monthly bills are over double my day job income, and income from my second, self-employed job, has dried up.

For the first time in my life, I cannot pay all of my bills. For a goody-two-shoes, want-to-please-everybody worker bee like myself, that’s a hard pill to swallow.

This Is My Story

I am a 27 year old journalist, with my local newspaper since I graduated high school, and run my own photography studio on the side to help make ends meet. I’m married with two sweet kiddos, two and four years old.

I would say that I live a pretty normal American family life on the lower end of the income spectrum; I’m up early and work late, get one real day off a week, and spend what little free time I have with my family. We like to watch Spongebob Squarepants and Young & The Restless, eat out when we have a few extra dollars in the bank, take the kids to the zoo and Seaworld, walk around the outdoor mall in the big city or around our rural community, and mostly just enjoy spending time together.

We aren’t extravagant spenders, but we do live comfortably. I make about $27,000 a year from my job with the newspaper, and another $12,000 to $16,000 annually from my photography studio. We have a big screen TV, Xbox 360 and Nintendo Wii, DishNetwork satellite TV, Netflix and Gamefly accounts, and two cars. Our home is a small but quaint 1,000 square foot historical home in the country, which I inherited from my grandmother. I try to take one week of vacation each year, which we either spend at home with the kids at Nana’s house or down on the beach. Again, we live humbly, but comfortably. About as average a lifestyle as you can have.

So what went wrong?

Why Are We Going Broke?

I’ve made a number of financial mistakes in my lifetime, mostly lifestyle choices inherited from my buy now, pay later father.

My father had retired on disability before I was even born, and my mother was a homemaker, so we never had much money. But my father loved to buy stuff. He was very generous, and enjoyed few things more than watching my mother and I open presents for birthdays and Christmas which were beyond our expectations, and our means.

My father was talented at working the credit scene to “afford” what he wanted; or wanted us to have. He would take out personal loans with his friend at the bank, sign up for any credit card he could get (needless to say, his credit wasn’t the best), and gladly accept in-store financing for large purchases.

Buying televisions and cars were my father’s two favorite consumer acts. He loved going to Wal-Mart, shopping carefully, and buying the biggest TV he could fit on a credit card. My father loved used Cadillacs; the more plush, the better. He had his quirks, and he amazingly was always able keep the bills paid. Payments sometimes slipped a few months, or personal loans had to be refinanced, but he somehow made it work.

So I grew up learning nothing about savings, and all about how to live on the bleeding edge of affordability. And unfortunately, like so many others, I didn’t learn about savings, investing, or the cost of credit until it was too late to do anything about it.

Learning From The Best

When I turned 18, I got my first “on the books” job. I had washed dishes for the nearby cafe since I was 13, but wasn’t officially employed until I turned 18. I didn’t earn much, but my father helped me to buy things like car stereos on a “pay me back later” basis. He provided the funding, and most of the time, eventually “gifted” me the amounts I owed him for this purchase or that.

My father was infinitely generous, and would give the shirt off his back for anyone. But in the same stroke, he was about as bad a teacher of good financial sense and practices as they come. He never purposely taught a moral and mental disregard for the responsibility of debt; it was just the lifestyle he lived, and passed on to me.

I also received my first credit card when I turned 18, before I even had a real job. By the time I graduated high school, I was thousands of dollars in debt. I went to work full-time with the newspaper, and with a boost in income, came a typical immature boost in spending. On girls, on cars, on computers (I am an avid gamer), and of course, on my ever-growing mountain of debt.

My grandmother died while I was still in high school, and I inherited her house, which sits one lot over from my parents’ home. I also inherited the debt on her home, and made the unusually wise move to remain living in my parents’ home while renting out grandma’s house to pay the bills. The experience was a nightmare, with deadbeat renters who paid late, if ever, and bailed out owing rent and having torn up the place, but it did keep the bills paid.

My bills eventually got to the point where I could barely get by on my 40-hour-a-week paycheck. With a talent for photography and the equipment to practice it, I started doing professional portraiture as a side job to help boost my income. By then, I had taken out a home equity loan on my grandmother’s house, and was tens of thousands of dollars in debt.

More income = more spending, and greater debt. I fell into the trap of seeing extra income at the end of each month as an opportunity to rack up more debt. So long as all of my bills and minimum payments were less than my income, I saw it as room to spend until I hit the limit.

And so I became a direct reflection of my father’s financial lifestyle. I rode the bleeding edge of my income until I owed over six figures in debt.

And Then I Got Married

To be perfectly understated, marriage changes things. My wife and I are perfect for each other, and my children are the light of my life; but there is no denying one’s finances are forever altered by adding a family into the mix.

I managed to hustle enough photography work to always keep ahead of the bills and even keep enough money in the bank for those unexpected life happenings – trips to the emergency room, blown water heaters, broken air conditioners, etc.

I was able to ride the edge for another two years before life handed me the financial spanking I deserved years before – my father died.

Financial and Emotional Devastation

My father was my best friend. I am the spitting image of my father’s laid back, happy, confident personality. His loss devastated me far more than I ever could have imagined. I grew depressed, and lacked any motivation to do more than the minimum necessary to get through my days. Along with the emotional crisis of my father’s death, I had to deal with the commensurate financial crises on top of it.

My father’s cremation cost over $1,500, which I had to split over three credit cards to pay for. My lack of motivation kept me out of the photo studio, so while I grieved, my income fell off and we lived on credit cards until they were all maxed out and the minimum payments were beyond what I could possibly afford.

Along with these changes, I inherited my father’s assets and debt; his own home equity loan and credit cards, along with his house and car insurance. A total hit to my monthly income of well over $1,000 per month. When your day job only pays around $1,700 a month, your second job is at the will of the market, and you were already living beyond your means, you are woefully unprepared for the unpredictability of life.

We made the decision, with my father having passed, to go ahead and sell all of my family property, our extra cars (mine and my father’s pickup), and move closer to the city and my work.

Then a global recession hit, brought on by the bursting of the housing market bubble. What a time to try to sell property!

It took every dollar of what little savings I had in the bank, as well as many 80-plus hour work weeks, to hold out as long as I did. I was able to keep the bills paid and family fed for six months, until November 2008. Thanks to the economic fears that struck the nation, my bookings for photography work went flat. While I was normally booked solid two to three months in advance, going into this month, I did not have a single shoot on the books for the first time in years.

It was four months ago today, the day before my second wedding anniversary, when I admitted financial defeat, and recognized that there was no way I could make enough money to pay even half of my bills.

GoingBrokeBlog.com

As fast as you can go broke, hitting the big financial reset button on your life is a long, arduous process.

Four months after making a lot of hard decisions about our lifestyle (Do we declare bankruptcy? Do we keep the house? Do we keep the car? What can we sell? How can we make more money? Where can we cut expenses?…), we are still in the process of hitting rock bottom, so that we have nowhere to go but up.

I consider bankruptcy to be the lowest point, financially, we can reach; not that that is a bad thing. It marks a turning point. Declaring bankruptcy is the act which states to the world and to ourselves, “We have failed financially, and this is where we start our second chance. We accept this blessing, along with its repercussions and responsibilities, with open eyes and open arms.”

Certainly, I could lose my job, we could end up under a bridge; I don’t mean to say this is the worst situation a person can face financially. But taking into account our history, my job security, what we have learned through this experience, and the lifestyle changes we have already made to avoid ever experiencing it again, I believe (and pray) declaring bankruptcy will be the low water mark for our family.

With this blog, I hope to share the stories of my experience with going broke, what I have learned in the process, and what I continue to learn to this day and forward. If I make a few dollars from Google AdSense in the process, I won’t complain; but the true purpose of this blog is to help others deal with the financial realities life can throw at you, or better yet, to avoid them entirely. I am a real person with a real voice and real experience with going broke. Anything you read here is a product of my life.

I hope you will benefit for having discovered this blog, and continue to benefit from the archives and future articles it will hold. You can help support this site through patronizing our advertisers, purchasing products through our affiliates, making a donation via PayPal, participating in the discussions here through commenting on posts, and most importantly, sharing this site with others who could benefit from it.

Thank you for your readership and support.

- James

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