Managing Your Money

Lesson 3: Money Troubles: Looking for New Directions

Develop Some New Money Goals

According to "Money Mistakes You Can’t Afford to Make", “about 48 million families in the United States have no more than $1000 saved in their bank account.” That was me, and sometimes it is still me. As a person who has never been interested in balancing my checkbook, I know budgeting is about as exciting as lifting weights in the heat.

But when I was laid off from a job that paid $70,000 per year and I didn’t have enough money to make it 3 months, I realized how unprepared I was. It was breathtaking to see how flawed my judgment really was. If my life were a movie, the lay off and the realization that I didn’t have any money to show for my high salary, would make my movie turn from a family friendly film to a horror flick. I lived that nightmare.

The kicker is that this was years after my bankruptcy. I should have known better. I had already lived through the bankruptcy and swore I wouldn’t make any more dumb decisions about my money, but I didn’t make an effort to educate myself. Even if you haven’t filed bankruptcy but have made some bad money decisions you are responsible for your own growth. Your decisions and behavior patterns will show if you have really changed for the better.

So for years leading up to my Chapter 7 filing, the writing was on the wall. If I had projected how much my bills were versus how much money I made, then the truth could have set me free. But my habit was to hope everything worked out. Now, what do you do?

Get Out of Virtual Reality using Credit Cards. Beginning in college and until I filed bankruptcy in my mid twenties, I used my credit card and entered what I call “virtual reality.” I remember receiving tons of credit card offers while in college and I took advantage of most of them.

According to Lim, in 1993, 3 percent of the 920 million credit card offers mailed out to consumers were accepted. The acceptance rate is lowering however, because more Americans are getting wiser about interest rates and the dangers of stretching themselves too thin with credit cards. But don’t think the banks have given up: “Americans now receive 5 billion unsolicited credit card offers each year.”

And if the banks don’t target the people who are strapped for cash and have few options for surviving from paycheck to paycheck, the payday loan places and the check cashing joints across the nation are making up the difference. Although I have never been to one of these establishments, I have family members who have been low on cash and have signed up to get a short term loan at 25% interest so that they could make it to the next pay day.

I even used some of them to get cash advances when I was short when my student loan money ran out. Ironically, according to Elizabeth Warren, “More people will file for bankruptcy than will graduate from college.” I can say I did both.

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