First of all let me say I am not encouraging bankruptcy, I am simply telling my story and life lessons.
I started working full-time right out of high school. Went to a local university and did the college thing for a while, nothing out of the ordinary. But the job I had required me to run customers credit on a daily basis. So from the age of 17 I had learned how important your credit score was. So I talked my mom into cosigning on a credit card for me. Yes, I was 17 with a very cute cheetah credit card in my wallet. It only had a $300 limit and for the most part I was pretty responsible with it. But it opened the flood gates.
It didn’t take long for more credit card offers to start coming in the mail daily. It was just crazy. So by 20 I probably had 5-6 credit cards and 2 student loans. 20 years old and that many credit cards… CRAZY STUPID. I can’t remember the details but they probably all had balances. Then I started playing that whole move the balance from one card to another to get that super low-interest rate. Then I used my credit cards to pay for school for a few semesters. All the while I made every payment on time and had a credit score of about 730.
At 22 years old I decided to buy a house. Not necessarily a stupid move but I should have never done it while I had credit card bills and no emergency fund. I bought the house in 2006, so let’s just say it was near the top of the market so my house payment was $1700. Between 2006 and 2008 I was making about 70k a year. I was doing pretty good for myself.
Then the ‘recession’ came. I was in sales so my commissions weren’t as good. I lost about $1000 a month but I kept living like I was making what I was before. Had I realized what was happening I could have adjusted my spending habits and avoided building up so much debt. So slowly but surely my credit card balances kept moving up. It wasn’t like I went on a European vacation and charged up 10k. I just didn’t realize how badly I needed to change my spending habits.
So now you know how I built up my debt, now let me fast forward 2 years. Now I am married with a new baby. I knew that I wanted to stay home I just didn’t know how bad I would want it. My husband and I did everything I could to make it happen. I sold my SUV so that got rid of a $500 car payment. I lowered as many bills as I could to make it work. So on paper it looked good (But most of us know that things can look good on paper and not always work in real life) I could stay home but it was going to be financially tight. A month after I quit my job my husband and I decided to short sale my house and move out onto his parent’s property. This would take our house payment from $1700 to $1000.
I looked into settling on the credit cards but one of the cards was with a credit union and they wouldn’t even consider it. There was a part of me that felt like I knew better and even though it would take a really long time to pay these cards down, I could do it. If only I had the mindset then that I have now. Especially, since I just wrote a post about finding motivation to pay off large debts. To be honest I only have this mindset because of what I have gone through.
I was young and made some really bad choices and I decided that I would use up my one ‘get out of jail free card’ and file bankruptcy and never look back. So I made the decision to file bankruptcy. I had two credit cards at the time that were rolled into the bankruptcy. All of my debt was from before my husband and I began dating. He never complained about the debt and was supportive of my decision to file. He knew that I was making this decision to help better my family and give us a fresh start. We didn’t file together because at that point we didn’t have anything in each other’s names.
Even though I accumulated debt I think I am still money smart. You can be smart and still made stupid decisions! 🙂
Now that some time has passed since I filed bankruptcy I have had time to reflect and think about the decision. Here are a few things I took away from the experience.
- There are A LOT more people than you think who file bankruptcy. Now, that is not a reason to file but if you are in a really hard spot at least you should know you are not alone!
- Since working on Dave Ramsey’s baby step program I am fully aware that I could have paid down that debt way faster than I originally thought. I would have done it and felt like a stud if I would have just bit the bullet and made a plan.
- Even though I no longer had credit card debt I still needed to get my budget under control in order to make real financial progress
- I have no regrets because at that time I thought I did what was best for me and my family. It is easy to look back and say “should have, could have, would have” But I may always question the decision.
- Filing bankruptcy gave me the kick in the butt I needed to get my financial life in line. It inspired me to become TRULY debt free from credit cards to my house. I don’t ever want to be in a position where I do not fulfill my commitments.
I never let the decision to file bankruptcy weigh on me because I know that everyone makes mistakes or simply hits a really rough spot in life and sometimes we need a fresh start. It was an eye-opening experience for me and I can truly say that I took more away from filing for bankruptcy than I thought I would have. From the date that my bankruptcy was filed I made a commitment to myself to live within my means and never use credit cards the way I had in the past. Part of it was immaturity and part of it was not having self-control. At this point in my life I think I have both of those issues taken care of.
I hope that I can teach my children about money and how to be responsible with it as they get older. Once kids turn 18 they are free game to those creditors and they are just not ready for that kind of responsibility. I can’t wait to get my hands on Dave Ramsey’s newest book. It is all about raising money smart kids. Something every parent should probably read.
I have to give a special thanks to my friend Jill who helped me put some of my thoughts to words for this post. I wanted to make sure that I kept myself as real as possible on this blog so I had to put this out there! We all live and learn and that is exactly what I have been doing.