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.
#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
#9: The Road to Recovery
#10: What I Learned