Monday, August 17, 2009

B is for...

I’ve been putting off this post.

I haven’t wanted to write about it. I mean, I’ve wanted to, but didn’t know quite how. Well, I’ve been afraid. Afraid of saying it out loud. Of seeing it online. Of documenting my ‘failure’ for all the world to see. Of opening myself up for potentially massive judgment and the harsh critics on the internets (as my friend Jackie would say.)

So I’ve procrastinated. Wrote about other things. Waited. Until now. Because the whole point of this blog is to tell it like it is. Right? Yes. The point is to tell it like it is in order to hopefully make a difference for someone else in a similar situation. To be open. Honest. To accurately document our experience in the housing crisis and the great economic recession. Our view has always been that we are not victims. And that our present hardship is the fertile soil of our rebirth. This is our chance to be born again, so to speak. Our new savior? Simplicity. Financial responsibility.

Tell it like it is, Stephanie. Just own it. Do it.

Okay. But how? Well, just stick to the facts. In March I wrote a post about the facts that make up our lives and how we found freedom in relating to them as just the facts. Without adding anything.

So, to take a lesson from that post...

At this moment in time, these are the facts:

-WE are ‘camping out’ in my mom and stepdad’s walk-out basement.
-WE are moving in October to the San Juan Islands where we will live for 2 years rent-free taking care of someone else’s house (that story is here.)
-WE are no longer homeowners.
-OUR credit score is 511
-WE have just filed bankruptcy

There it is. Ouch.

Did you miss it? Should I say it again?

We have just filed bankruptcy.

We are insolvent.

We are bankrupt. Lacking in a particular desirable attribute (money.)

The letter of the day is B. And B is for Bankruptcy.

I know.

I know. Please don’t look at me like that. Like that! Oh, you’re not? You just had something in your eye? Well, the thing is that I am making an effort to relate to these facts as just facts and nothing more, but I’m not there yet.

Why?

Well, I guess because I’m afraid of what you will think. I'm embarrassed! It’s hard to confront the overwhelming extent of our debt and how we got there let alone how everyone else will now categorize us.

Let me be clear:

This is NOT where we thought we’d end up.
This is not where we wanted to end up.
This IS where we have ended up.

In Bankruptcy.

The B-word.

There are a lot of facts that led to the fact that we’ve filed for bankruptcy. And we are using all the facts to learn, to grow. The challenge is to not use the facts to beat ourselves to bloody carcasses. What good would that do? I see no upside in that.

When we first met with our bankruptcy attorney he said, in so many words, be good to each other.

"If one of you drinks or eats or is short with the other, just know that it’s probably because of this. Bankruptcy. Because most people have a conversation in their heads that says, I’m a loser. Don’t listen. Just ignore it. It’s just a conversation."

He said all of this with extreme intensity. He wanted to make sure we heard what he had to say.

He said that bankruptcy is hard on marriages because, he pointed at Bob and said, “He wants to build you a castle," he then pointed at me, "and you want a home that’s safe."

He let that hang for a beat. Simple. But true. The truth of that simple statement hit us between the eyes. "And when that doesn’t happen," he continued... clear that he had our attention, "you think you failed. A lot of couples end up in divorce court next and I hate seeing that happen. It doesn’t have to be like that. Okay?" Okay. "Good. You're going to get through this."

And with that he handed us our marching orders. It was a relief. We were so afraid of that meeting. Of acknowledging that this is where we've actually landed. Of the embarrassment! But once we did, it wasn't so scary.

And we could have just gone about our business and never told a soul. Started fresh. No one would have to know. Except for the fact that I have this blog and I feel an obligation to be as truthful and vulnerable as possible. And our commitment to peeling back the curtains for the benefit of others. Which leads us here. To this moment. To me sitting in a coffee shop in my hometown on my day off work typing out the facts.


Photo Credit: Cookie Monster Wallpaper - deviantART by Elmhoe

Now that the cat is out of the bag, I’ll be writing a lot more about the process of going through bankruptcy and its effects on us and what we’re learning. I expect questions. Ask away. Please.

I have questions too.

First of all, do YOU live on a strict budget?

What tools do you use to track your spending?

Comment below or e-mail: loveinthetimeofforeclosure@gmail.com


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35 Comments:

Anonymous said...

Great job Steph! I'm proud of you for being willing to put your neck out. It does make a difference for other people.

Love,

Bob

Love in the Time of Foreclosure said...

Thanks, Bob! It's YOUR neck too! Thank you for being my partner.

Kim Hooper said...

There is zero judgment from me, and probably from most of your readers. We appreciate your honesty -- that's why we read.
As for me, I stick to a general budget. I have a rough idea of how much I want to save each month, knowing that things happen and it's not always possible. I do a "finance" check once every month to see what I'm spending on. It hasn't changed much over the past couple years so I'm not as uptight as I used to be :)

Love in the Time of Foreclosure said...

Kim, thanks for your comment. I like the idea of a monthly finance check. I've been thinking of writing down every penny I spend along the lines of 'tracking points' at Weight Watchers. The truth is I'm spending FAR less than what I used to. Obviously. But it would still be valuable to see where the money we do have goes.

A friend of mine just told me that for the last couple of years she's been putting 20% of her paycheck into her retirement fund. That is amazing to me and so exciting! I can't wait to start saving money. Saving is sexy. Don't you think?

Anonymous said...

Thank you for your bravery and honesty! Speaking the truth is liberating and I'm proud that you choose to put it out there - there are so many that are in your same boat!
We write out a budget each month, all of our expenses are listed with amounts and we calculate our income for the month. We have $$ budgeted for food/household/hygiene and that amount is set aside in cash at the beginning of the month. I can go over budget in this category so I use the cash envelope system and divide the cash into weekly amounts. Once the $ for that week is spent then that’s it – no borrowing from the next week or using a credit card. It’s made me make smarter decisions knowing I have limited amount of cash for the week – and since spending cash hurts more than a credit card, cash has helped me to carefully consider my purchases. We follow the Dave Ramsey Total Money Makeover and it helps encourage us during these discouraging times.
Holly (Anchorage, Alaska)

Love in the Time of Foreclosure said...

Hi Holly,

I love the cash envelope system. We've talked about taking out cash for the week on Sundays and doing the same thing.... once the cash is out, it's out. No going back to the ATM.

I've never heard of Dave Ramsey, but I do have a copy of "Rich Dad, Poor Dad" that I've never read. Perhaps the time is now. Anyone out there read "Rich Dad, Poor Dad"?

tira said...

This was a great post, Stephanie. I know that bankruptcy has such a stigma to it, but I think we should all remember that the point of filing bankruptcy is to say, "here, now, we are starting over, with a clean slate." At least, that was the idea, as far as I can recall. You're doing the right thing.
To answer your question -- we are TERRIBLE about budgeting, but something we have done in the past year is A) to erase our credit card debt and B) use credit cards only for emergency situations (and, then, try to pay those balances off ASAP). The other thing that we started a couple of years ago was to have two savings accounts (one for us, and one for our daughter) through ING, and we have money taken out or our checking account every month and transferred to those accounts automatically. So, I never have to remember or make excuses for the money leaving my checking account -- it just happens.

mri said...

You know you guys aren't losers and so do your readers and your loved ones.

I give myself an allowance every week and when the credit card bill looks like its going over my self-imposed limit I put a post-it on the card with some rude little comment to myself to remind me to rethink my purchase.

Thank you for this blog. It helped me when my apartment closed the same week we found out our salaries are probably getting cut and a family member got diagnosed with cancer! I'm now paying mortgage on an apartment I'm not living in while we cope with cancer treatment. But you know what? It could be worse. Thank you for reminding me to be grateful.

carla said...

steph, fortune 500 companies call it "debt restructuring". i think that fits better. i love you and we're sending our support your way! carla

Jess LC said...

My support goes out to you! I think it's very brave but also very helpful to share your story. The comment about the castle and safe home really struk home for me.

And I'm not sure if this means anything, but my new favorite mantra is "you get in life what you have the courage to work towards." And it sounds like you are working toward a great, new direction!

maxsontrio said...

Hey Steph,

It's Missy, Bob's cousin. Just wanted to say my sister's and I have been following ya'lls story. We love ya'll and you WILL see better days ahead.

My Hub and I follow Dave Ramsey, my in-laws follow him, my sister Lindsey and her Hub follow him, and some of my friends as well. He knows what he's talking about. He also has a talk radio show on during the week and a tv show as well. Look him up if you've never heard of him. He knows his stuff and he obviously comes highly recommended from MANY people. By following his ideas last year we paid off 5 of our bills and we hope to add more to that this year.

But another thing I wanted to add is that, yes, we also do the envelope system. And by that, of course, I mean any money that is regularly spent that does not go toward bills (this may differ a lil from Dave Ramsey I think but I like how it works for us.) It helps so much to literally see how much money I have to spend on fuel, date nights, groceries, and so on. It really helps visual people like me. Like the others have said, when the money's gone, it's gone. (I don't even OWN a debit card anymore. Those things are EVIL! Gah!)

And the last thing I wanted to say is that we have all our bills on auto-debit. We have our paycheck come in straight to our bank account and then all our bills set to come out at a specified date, even our tithe. Then the bank mails out checks to all these specified places. The set up for all this is a little time consuming but sooo worth it. Our money seems like it takes care of itself. One less thing for us to worry about. It has taken TONS of stress off my mind. I highly encourage ya'll to try this if you haven't before.

Feel free to message me on Facebook if you need anything. I look forward to hearing your adventures being of rent-free. What an absolute blessing for ya'll! If your travels ever have you passing through Dallas, Texas, come and see us. We have a cozy guest bedroom that'll make you feel like you've got a home away from home. And we'll all have a blast together! Much love for you both!

Jessica said...

Hum, since you managed to escape Foreclosure, perhaps you should change your title to LITTO Bankruptcy--you know, stay current. ;) Seriously though, great job staying brave and honest and open! You are sticking to your goals and probably feel better because of it. It takes a heap of bravery to be so open about yourself and your life. And that's why people read and get inspiration from you.

BTW, Dave Ramsey is great. He is kind of inspirational and has some good ideas.

I have a very detailed budget, but often find myself overspending in some categories (usually in the "household" category!). I track all my money with Quicken. I've been using it since like '97. Seeing WHERE your money goes makes it really easy to change your ways and stop spending as foolishly. I'm also big on electronic banking and automatic payments. Make life simple, and make your money work for you.

Best of luck to you and Bob!

Anonymous said...

I write down everything I spend on a spreadsheet and do a monthy spending plan balancing what's coming in and going out. If it comes up short, I cut entertainment, clothes and eating out OR see if there is a way to generate more income. I give very modest gifts for birthdays and things like that.

Also, I do not have an open active credit card. You wont believe how careful you are with your cash when you have no "emergency" card. Because there is ALWAYS an emergency - like gas or food. That has been the single best thing I have done. And yes, I have huge student loans and all sorts of things but I have never gone hungry and I have never been homeless. The peace of mind is the reward for not spending more than you earn. It's priceless.

Anonymous said...

Also, Total Money Makeover is great. Rich Dad Poor Dad can get you excited if you have always wanted to invent something, or own retail stores, but it's about living so tiny tiny tiny and working around the clock. It's not about quality of life - it's about making money. But it does identify the messages you got from home that keep you where you are. Poverty is in the MIND. Wealth is in the MIND. Many people would pay all they had to have a great partner in life. You are rich, keep that in your mind and soon the outside will reflect the inside.

EM Lewis said...

Hang in there, you two. This too shall pass, as my mom is fond of saying.

Also, know that you are NOT ALONE. You know lots of people are in economic trouble right now -- things are crazy out there. But also, lots of the people who came before you and will come after you have found themselves in economic difficulty at one time or another. I remember rooting under the mats in my car for food money, at one point. I have bounced my rent check more than once, and had to figure out how to change my bank balance to reflect what had to come out of it. I have been bailed out by my parents (luckily just once, but... there it is. I was.) Most of us don't talk about this stuff, because we're embarrassed, too. But I don't want *you* to feel embarrassed! It's happened. But you're figuring out how to step up and do better in your finacial lives. What more could the world ask of you? I am sending you love and support.

EML

Nicole said...

I forget where I heard about it, but I've been using mint.com as a way to keep track of our spending, credit cards, loans, etc. It's not perfect, but it definitely helps me visualize what we're spending too much on, where we can save more, etc. And, it also allows you to create individual budgets, too.

Obviously, this wouldn't work with the envelope system (which is definitely great, too!). I'm just too lazy to get cash out of the bank all the time.

Love in the Time of Foreclosure said...

So many great ideas and feedback! Thank you! Keep it comin'!

Karen said...

I'm so glad I have found this blog. My husband and I are in "pre" foreclosure and we are just a few days from filing for bankruptcy. I feel it's okay to talk about (especially today!) but he feels he has failed us. We are not as healthy as you, I hope to find some solace in your previous blogs and your future ones. I wish for strength for all of us in this nightmare.

Marta said...

I second mint.com. We love it.

And I think C is for Classy. You guys are handling this with great dignity and your bold sharing is helping others! :)

We don't set a budget, but I get nauseated when I spend money (thanks for the money issues, Dad!) so that's a decent de facto system.

Anonymous said...

Hey Steph! I think you referenced me in this blog, right? Is it my 15KB of fame? Awesome.

Its worth noting that while I do put 20% towards retirement, my husband puts 15% and then an additional $600/mo into savings/vacation, that we have no other budget. I rely far too much on just 'knowing' when we are overspending. I'll have to check out this Ramsey person. I think we could be doing better. I realize we are farther along than most, especially for our age, but there is always more that can be done.

My advice for anyone who wants to save money is to cut out alcohol. While I am not a big drinker so this is easy for me, my husband and I estimate that we save several hundred a month by not drinking (as compared to our peers). Its worth every penny.

Megan

Love in the Time of Foreclosure said...

Megan,

Yes! I referenced you in my comment response to Kim when I wrote: "A friend of mine just told me that for the last couple of years she's been putting 20% of her paycheck into her retirement fund. That is amazing to me and so exciting!"

Thanks for your response. God you guys do make saving look sexy. Except for the cutting out the alcohol part. I do love having a glass of red wine now and again. And sometimes more than I should. But you're totally right that it's so easy to save money (and calories) when you cut out the booze.

As my grandma used to say, "Everything in moderation."

Suzanne said...

I use Quicken to track household finances. I used to use a cash envelope system, but my apartment was robbed during that time. As it turns out, renters' insurance doesn't cover cash at all! I'd recommend a debit card and Quicken as a great way to go. As someone else noticed, spending habits are fairly consistent over time, so monthly check-in is probably all you need after you get a handle on things.

Abby said...

Since I moved to Australia, I don't qualify with my visa status for an Aussie credit card, so I live an all cash life. I have auto payments set up for rent and utilities, then I take out a set amount on Sunday from the ATM and it is what I get to spend during the week. Anything left over gets put in my money jar, which I keep in the kitchen. If I run out early, I can take from the money jar but not from my bank account.

The weekly allowance is generally more than I need for a normal week, so the jar fills up with brightly colored Aussie money (pink! purple!) and once several hundred has accrued, I take a long weekend visiting some part of the country I haven't visited yet.

I think when I move back to the US, I'll stick with the process.

Crystal said...

Stephanie, it is great that you've shared this with The Internet. Thank You!

Who flippin' cares what it used to mean about someone having financial difficulty? Many of us have the opportunity to make opinions about financial struggle with facts now, rather than with stereotypes. And the reality is enlightening.

We find out that WE are the kind of people who go bankrupt. WE are the kind of people who suffer foreclosure. WE are the kind of people who are unemployed. We get crazy inspirations to find out how to live rent free and credit card free. For all the judgmental opinions I used to have about us, I realize that now - in the middle of it all - I like us!

(could financial meltdown build tolerance? :-)

Yeah, we made drastic cuts in our lifestyle when my partner lost his job a year ago. We went through stages of cuts. Each time we discovered that we could actually cut more. I recommend a ruthless streamlining of your budget every couple of months, till you're convinced you are where you want to be. The tool that helped us the most was to keep a spreadsheet of our categories of spending the money that was left over after bills (eating out, movies, post office, coffee, parking fees, hair/beauty, clothes/shoes, etc.). It was shocking in some cases to see how the actual dollar amount was nowhere near our general sense of what we were spending in a particular category.

Corinne Tippett said...

I've been following your wonderful blog since my friend brought it to my attention because I've been blogging about bankruptcy, but trying to avoid foreclosure... so yours is a nice balance on skirting foreclosure and trying to avoid bankruptcy...I put a link to your blog on my blog (www.thefreerooster.com).... it's really IMPORTANT to write about it, and brave the fallout. You and your blog ROCKS!!!!!!

Love in the Time of Foreclosure said...

Abby--
I would LOVE to see a picture of your colorful Australian money jar. Would you be willing to take one and send it to me? You can send it to: loveinthetimeofforeclosure@gmail.com

Thanks for the comments, everyone!

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