Updated on 11.10.06

The Road to Financial Armageddon #8: Meltdown

Trent Hamm

Yesterday, I detailed the impact of a baby on my downward financial spiral; suffice it to say, the finances were not good. Everything was set up for a collapse and I inched up to the precipice, largely oblivious of how close I was to the lip of Mount Doom.

The most fundamental problem was that I was completely unprepared for the unexpected. A couple months after the birth of my son, several things went wrong at once: my truck was severely damaged, my wife returned to work (causing our child to go into daycare), and some severe family issues occurred all at once. I had absolutely no reserve funds for dealing with these things, so I literally maxed out credit cards covering these demands on me.

As the bills kept rolling in each month, including absurdly high finance charges on my credit cards and the weekly cost of daycare, I quickly found that maintenance costs were eating up almost all of my monthly budget. Between the new bills, housing, food, vehicle maintenance, and so forth, we were having some difficulty keeping afloat.

In truth, I was paying out more each month than I was bringing in, even as I was literally being forced to curb some of my extravagant spending. I was literally ordering bills such that I could pay them as close to the due date as possible (or just a day or two late) to avoid having any checks bounce.

Even worse, my pride kept me from doing sensible things to fix the problems. If I had sat down and evaluated things, I would have realized that I could consolidate a lot of my debts by doing credit card balance transfers and student loan consolidations with automated payment plans. These options would have helped me fight off the debt for a while, but the change needed to come from within me, and my pride wasn’t letting that happen.

The core problem was that I put my own immediate wants in front of my family’s long term needs. I believed that by buying things and spending money, I could introduce happiness and security into our lives, but the actual truth was that each dollar I spent brought more stress and insecurity into our lives. I would buy more things for that short rush of joy and safety that a purchase would bring, but I would be awake at night realizing that things were just about to completely collapse.

So, what finally happened? One night, I came home from work and found five bills in the mail that added up to more than I had or would have for the next two weeks. I literally didn’t have the money to put food on the table at that point. I walked into the house and down the hallway to my son’s bedroom, where I saw my infant son bundled up in his bed taking a nap. I looked at him and realized that everything that I was doing was setting things up to make a very difficult childhood for him, not the wonderful one I wanted. I was worried all the time about money and I had learned that all he really needed from me was my love and attention.

I looked at him and I decided to change things, right then and there. What did I do? Tune in tomorrow to find out.

Want to jump quickly to the other Road to Financial Armageddon posts? Here’s an index to help you out.

#1: The Earliest Mistakes
#2: Early Profits … Lost
#3: Cash & College
#4: The First Taste of Real Money
#5: Love & Marriage
#6: The Yuppie Years
#7: Here Comes Baby
#8: Meltdown
#9: The Road to Recovery
#10: What I Learned

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  1. BigBuddha says:

    Wow .. this series of posts is excellent … and it really shows a true to life journey of a “financial armageddon” waiting to happen … thanks for sharing this story, I think the more people who get to read this will definitely have a hard look at themselves and their situation and be jolted into action .. goodwork keep it up.

  2. Jennifer Ward says:

    Let me start by saying that I really enjoy reading your post every morning. Between your values, sincerity and extenstive knowledge, as well as your frugality, I thought maybe my husband was keeping extra busy at work writing this post himself:) This is “our way of thinking” as well. I love it! Anyhow, your above story really touched us and I felt compelled to write. Our brother in law, Craig committed suicide in March. He was in extreme debt (over $300,000. worth in credit cards and a second mortgage on existing house, as well as their previous home, medical bills, etc…) and he had not been working since January. He was living a lie. He would get up and get dressed every morning and his wife, my husbands sister, Becky, would think he was going to work. He could not tell her that he quit, so he would not have to fire two individuals with families. He did not have the heart to do it. He would spend his days (we later found out) at their old house they were trying to sell, looking for work and going to interviews. Craig did not want Becky to know that he had “failed” his family. He tried to take a life insurance policy out on himself in late Jan., just to be denied in early March due to pending medical tests from his neurologist. Craig was a great father and committed husband. This truly looked like the “Norman Rockwell” picture family. They have three beautiful children together, ages 10,(that weekend) 7 and 4. I never would have guessed he was depressed! He felt like a failure as a husband and father as he was unable to provide financially for his family; even though he had so much “to bring to the table”. He was a great and very likeable guy. That day in mid March he went to their old house, like he did, except this time with duct tape and a charcoal grill and a plan. He taped a note on the outside of the door that read “Caution, Carbon Monoxide” He taped the door on the inside and turned the grill on. I am not sure how long it took, but I am sure he had several hours to think. I cannot even imagine what filled his head that day. He left a note, simply stating that he was sorry he could not take care of her and the kids and that her family could take care of them better than he ever could. We never did find out (yet) if he had something wrong with him physically…quite possibly he did. However, we believe most of his depression was from his debt. He would take out loans and cash advances on credit cards and deposit into their account, which he solely handled to pay the monthly bills.He was getting deeper and deeper in debt, of course, by doing this. They lived well above their means, but he wanted to keep up as if nothing had ever happened. Now not only does she have to contend with his death, the love of her life, and their kids growing up with no dad, but now she has to file bancruptcy and she is not sure if she can even keep her home!
    I applaud your for writing this post,as you never know how you may touch someone somewhere that needs it. I am sure you did. I believe what comes around goes around…one good turn deserves another, however you say it, you touched me. Thank you.

  3. Chris says:

    This is a truly touching post. I’ve just made the decision to aggressively attack my debt whilst saving for a house. We are planning on having a family, and I think you hit the nail on the head. The cost to those around us is much more than the cost to ourselves, dollars mean nothing to the security of a happy future.

  4. Great post. Having 3 kids myself, I really connect with what you say about giving them. Time flies, so make sure to love your family, spend time with them, and figure out how to provide for them in the long term. Back to work :)

  5. Florida Girl says:

    Please remember before you spend down the road to meltdown: My dad could not afford to take us on an expensive vacation, we lived in a house with a bathroom 1/2 floor down, that was shared with one of the other apartments. ‘Us’ – that is my mother and I, not a big family. Here is what I do remember: We went camping…most our vacations were spend in a tent, I loved it!!! He spent time with me, he gave me responsibility, the ‘don’t climb up that tree’ was not an empty warning,…I really did fall down and he let me. This year he died twenty years ago and I hope I can be to my daughter what he was to me. No expensive toy can replace that

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