Michelle
“Dear Steve,
For several years, my husband was doing very well for himself as a contractor and I have had a very stable government job. We began building a life for ourselves…bought a house, two “new” used cars, established some savings, and did not worry about money.
As the economy slumped, so did my husband’s business, and he went out of business earlier this year. Over the last two years we have sold all of our toys (motorcycle, other vehicles, etc) and completely gone through our savings, all the while cutting back on expenses and altering our lifestyle.
In December we had a baby who was premature and now we have a mountain of medical bills. We have been living off of credit cards since June of 2008 and now owe almost $13,000. We refinanced our house in 2008 to lower the payment. I don’t buy anything unless it’s absolutely necessary, and we do without as much as we can.
My husband got a horribly paying job (about $150 a week) but quit because the conditions were unbearable (not to mention the pay) and he has not found anything else yet.
The only reason we have been able to pay our bills the last three months is from a nice tax return we received, but that money is almost gone as well. I don’t know what else we can cut out, and the credit cards are maxed.
We have enough money to get us through one more month, and then payments are going to get behind. We have some money in stock (about $1500), a 401K from my husband’s previous job that is actually losing money due to maintenance fees (about $1200), my current 401K ($2500), and my state retirement fund.
We are starting to sell things on Craigslist just to make a few bucks. I am also working a part time job and earning another $500-700/month. About two years ago both my husband and I were able to remove some bad debt from our credit reports, so our credit is finally in good standing, and I hate to see it go bad again, and I am scared that is what is about to happen.
I have no idea what we should do; no job in site for my husband; we have more expenses than income despite cutting back on everything and we’re running out of resources.
Michelle”
Dear Michelle,
Before we get into the technical part of the issue, let me chat with you for a minute about the emotional part.
Having gone from a life that provided you with comfort and toys, to one where you are struggling to make it from day-to-day, is really, really tough.
Many people in the same situation feel angry and bitter. Those are perfectly understandable emotions. If you are living with them, I need for you to find a way to make peace with the current situation so you can start using your energy to move forward instead of investing it in the past.
It certainly sounds like you have done everything possible. And you’ve even done some things that I wish I’d had a chance to chat with you about before you did them. But it is not too late.
Selling stuff, and spending down savings or tax refunds is not a solution to the problem. It is simply an expiring lease on your old life. It leaves you without stuff or money, but with the problem. Eventually you will hit a wall, without choices or great solutions, be dead broke and in an awful panic.
You might already be there now. For me the worst moments of being in debt were not being able to sleep, distracted at work, waking up in a panic, freaked out when the phone rang, and looking into the eyes of my daughter and feeling like a failure. Otherwise known as “The Usual Stuff.”
I think the technical answer to your situation is fairly obvious, bankruptcy. But the concern is that even with bankruptcy, are you going to be able to make it?
You might be able to in your current living situation. Bankruptcy will close the door on all the financial obligations that are pushing you down, but you will need to find a way to live within your current income, to survive, as you move forward into tomorrow.
I hear you when you say the job your husband had, sucked. But it was a job. Right now it is probably very difficult for him to go from a position where he was doing very well, to working a sucky job. For me it was a really hard transition when I had to do what I could to care for my family. I went from running a large medical practice with 45 employees to my business failing to getting coffee for people at a temp job. It sucked. I hated it. I hated every minute of it. But I did it with a smile on my face.
Reality is that in life you are entitled to nothing. Not even your next breath. Everything you have and will have is a blessing and it would really help if you can find a way to embrace your life and be grateful for what you do have, today and tomorrow.
What is past is past.
Your immediate future is probably bankruptcy and I think you should meet with a local bankruptcy attorney, as soon as possible. Next, you will have to honestly face your current income and make all adjustments necessary to live within your current income.
That might mean you have to move in with friends or family till you regroup. At 31, my wife, three year old daughter, and I, had to move back in with my parents. It was a blessing they were there, otherwise I would have been homeless. We were there longer than I had expected but in the long run it turned out to be a great opportunity for my parents to watch their granddaughter grow and spend time with her.
Now it is your turn to face all those difficult choices and decisions. You’ll have to do what you need to do to provide a safe, loving and caring environment for your child.
Does all that make sense?
You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.
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