Wednesday, April 15, 2009

How to Bounce Back from Bankrupt Street-Facing Your Own Shortcomings

As part of my ongoing series of how I’m bouncing back from bankruptcy, this post partially tags onto my Monday post of my expensive, but very worthwhile, experiment with friends and money.

Once you get your discharge spend a few days, weeks, what ever time it takes, and look back at your experience with money and credit and think about what went wrong to lead you to this place.

Part of recovery from Bankruptcy (or serious debt) is sitting down with yourself and or your spouse/partner and looking at to what really got you to where you are now. I’d love to blame it all on the evil credit card companies and say Boo Hoo, pity me, but that’s not realistic.

Hey folks, I’m an adult, I got credit cards, I used credit cards, as I have posted before, I have to take some responsibility here. I blame the credit card companies for running rampant with the lovely Universal Default clause they oh so nicely tucked into their ever changing terms and conditions and cranking my interest rates through the roof. I blame myself for not fully understanding what the Universal Default clause was/is. I blame my self for making some bad decisions that contributed to my fiscal hell. I blame myself for staying underemployed for far too long without a back up plan or second job.

Part of my bouncing back was to take some blame for my financial situation and to understand how it contributed to my bankruptcy. The Universal Default clause was something I never truly comprehended until it started making my credit card payments shoot through the roof and made it darned near impossible to make any headway in repayments. The other part of my Bankruptcy was just this insane string of bad luck and bad fiscal decisions spun out of my control that followed on the heels of the ever increasing credit card interest rates making my life hell.

Here are a few key items that I discovered about myself:

1) I am not an aggressive saver. After I left a job with a 401K, I stopped contributing to a retirement plan because I was lazy and not disciplined enough to do it on my own. Thus my savings and 401K are almost non existent. When I needed savings, I did not have any savings to draw from.

2) If there is cash in my wallet or account, I somehow manage to spend it and yes I COMPLETELY admit I can justify almost any expense well enough to even fool Suze Orman (almost).

3) I tied up far too much of my own personal identity in my ability to have credit and my ability to spend money with friends on shopping, life experiences, etc. I allowed myself to have too many personal obligations and never sucked up the courage to detach myself from those personal obligations until this past winter. This means learning to say No and No is something I struggle with my personal obligations. That cost me money, time and energy. Mainly money.

4) The only one who can change the above and really help me bounce back is me and me alone. It has astounded me who has unknowingly supported me through this situation. And I am eternally grateful to those people for their support, love and friendship which has and is enabling me to bounce back. They don't know who they are, but they are various people in my life who took this glitch in my life in stride and dealt with the crazed me almost without question.

5) I have to go back to trusting my gut instincts.

Numbers 3, 4 and 5 I will address in another post.

Some of you may be saying Hey, it took you this long to realize these things-OK, at times I am a slow learner I will admin that. Plus having to deal with a Bankruptcy can really devastate ones personal esteem. Mine was at an all time low for a long time for a variety of reasons, the BK was just the icing on the cake. I should bitten the bullet and gone to therapy, but did not.

Part of my struggle with the BK is coming to terms with my own short comings and how to overcome them. I’m not an aggressive saver, so I’ve set up a direct deposit to my E-Fund so at least some money each month goes right to it. I got an account at the credit union that does not have a debit card/ATM access making using the money difficult. I have to drive 20 minutes to the CU to take out money. Non cash deposits I can mail in if I have to. I just don’t carry a lot of cash in my wallet, I don’t. If it is there, I spend it. I try to keep no more than $25 at any given time and I don’t go tripping to the ATM unless I have to. I’m working on the spending justifications in all areas, food, hobby, needs and wants and what really constitutes an emergency and the need to dip into the Efund.

Personal obligations are a little harder. What is a personal obligation? If you read JW’s old blog Need to Be Debt Free, his personal obligation was tithing to his church. Grace at Graceful Retirement funds her granddaughters college expenses. My personal obligations are related to some people very near and dear to me and for some causes I chose to support, a cross between Grace and JW. I don’t want to go into too much detail, but what I can tell you is while I don’t begrudge the personal obligation to my budget, I kick myself for not setting firmer guidelines and boundaries about one of the personal obligations when my money problems, ah, got serious. When push came to shove, I was not willing to “lose face” and forked over cash that should have stayed in my bank account. I have slowly reworked this personal obligation so that I as able to bow out of most of it without losing face and still keeping a decent relationship with the others involved. OK, I chickened out of just saying no and let it drag on about a year longer than I should have because I did not have the balls to say No I can’t do this right now. Remember that low self esteem? I am sooo spineless at times….
We all have our own demons we need to face. Bankruptcy is supposed to give people a fresh start/clean slate. In my opinion, in order to make that happen, you have to acknowledge what contributed to your own personal BK, both what was in your control and what was not so you can then proceed with a clean slate. You then have to see what you can do to not let history repeat itself. In my case, I’m working on a savings plan, I’m working a second job to make up lost income, I’m reworking my spending plan and my priorities in life, I’m being more proactive about worthwhile projects, and I’m shedding the toxic people in my life.

If you did not have an EFund, establish one, if you had a problem with credit cards, learn how to live on a cash budget and not on Master Card. Learn how to have a staycation at home instead of trips Disney World, New York City or Las Vegas, downsize your car and your home, learn to live on cash, eat more meals at home. If a job loss contributed to the BK, hopefully you are re-employed and earning a salary. If it was illness driven, I hope you are getting healthier or doing what you need to do to get healthier. I make sure I pay my bills a week early, I check the fine print, you know, the things many folks already do or take for granted.

The light may come on before you get your discharge, it may come later. For me it came a few months after the discharge as I was sorting out my relationships with people, money and my relationship with myself. My pride was wounded and I was slowly working on the healing. Getting a car loan for the new to me car was a big self esteem booster. It proved I was not a total fiscal failure, just in a fiscal mess and at least I was sorting it out.

In my opinion, once you have "made peace" with what lead you to Bankruptcy, you can move forward. As I said, you can't blame it all on your credit card company, you have to take some responsibility and then move on from there.

My next post- I am so much more than a donation to a cause.


Obsessional Confessional said...

Bouncing Back,

Just a general comment to say that I really enjoy your blog - I discovered it through various other PF blogs (I think it was initially through GMBMFB). I love your posts- always thought out and honest.

keep up the good work

Bouncing Back said...

Thanks! I try to keep it real!

Anonymous said...

great post, thanks very much for sharing.

Revanche said...

I definitely hear you on the personal obligations business. Of course! :)

People don't usually understand that once you're in something like that, it takes a lot of work and soul searching to figure out a graceful way to remove yourself. It's much much easier to say no in the first place than to say no after a period of time.