No Money Down, Up or Anywhere

Published by Laurie on Tagged Financial, Family, Life, Midlife, Anxiety

I have tried to avoid writing on the topic of finances just as I have tried to avoid thinking about them.  The absolute number one stressor in my life, are my finances, hands down.  Whenever I have to write checks for the bills, or reconcile my bank statement or even just check the balance online, I feel physically ill.  Just writing about it is making me feel sick.

Over the years I have become quite the expert on robbing Peter to pay Paul.  I used to call it financial creativity.  In the past, Peter has always had some money I could “borrow” to pay Paul and it was quite a nice arrangement.  But over the past couple of years, as the gas prices and property taxes have risen, and the home values have dropped, I noticed Peter was becoming distant, now I have finally realized, Peter skipped town and Paul wants his money. 

I used to read articles on debt reduction and saving for retirement, but have since moved onto reading articles on debt consolidation, and even bankruptcy.  That’s pretty bad. 

It’s not that I have mismanaged my money, I haven’t.  I’ve always been responsible with money.  I, just like most people, started out with a plan.  Work through college, save for a house, student loan payments, a decent car.  The whole nine yards was thoroughly planned out.  The plan worked, for a while, until a little thing called “real life” put the brakes on it. 

Looking back at what my thoughts were when I was 25 years old, I thought my plan was valid. I was just about to get married, we already had a house, a duplex that was an income producing property already.  We both were working full time making fair salaries.  We were doing everything right. I thought I had it all figured out.  I was pretty confident that by the time I was 55 I would be set for life.  Well on my way to an early retirement, I imagined children going to college, a husband playing golf , I imagined mortgages paid, and income producing properties paying our expenses.  I was following a plan. Then real life came along and knocked us right on our butts.

I won’t bore you with the details (I’ll wait for future posts to bore you with those) but there were several life-changing events in my life that came very close to destroying me financially.  The combination of irresponsible spending when times were good, unforeseen circumstances, having children, and getting divorced was the downfall of my financial security.  I had the “rainy day” savings, but I didn’t have the “Category 4 hurricane” savings that in hindsight could have saved me much grief.

I have stopped beating myself up for what I should have done, what I could have done. I have basically dug holes and climbed back out multiple times throughout my life.  And I’m sure I will this time also, but I have to admit, this ones pretty deep.  I know I could have made different decisions at many points in my life regarding vacations, purchases, etc.  But that’s all money under the bridge now.  There is no going back.  Learn and move on. 

I hate math
It’s not like I don’t know the solution.  While it seems impossible, it’s really quite simple.  It is nothing more than basic math, I know, no matter how hard I try, I can’t make 2 (my income) minus 3 (my expenses) equal anything greater than –1 (my current financial status).  Hell, at this point, I would settle for 2-3=0, but that’s not how math works.  That is an absolute fact.

We all know that finances are basically that simple.  We learned how to balance a checkbook back in high school.  You start with so much money, then you subtract your expenses incrementally.  A simple equation, if only it was that simple. 

Where I have failed, (and I think most of us do) is dealing with the circumstances (variables) that arise within this simple math equation, turning it into an algebraic horror equation (it’s that stupid  “x”. I always hated algebra)

Some expenses aren’t fixed, and others come up unexpectedly. Sometimes income ceases and expenses keep right on going, worst case, both happen simultaneously, what then?  There are so many scenarios out there that have gotten people where they are today.  Financial situations are so intertwined with life decisions. No class can teach you that.  It’s live and learn.  Some of us just learn faster than others, and some of us let emotion rule at times, and when we come back to our senses, the financial front is bleaker than before. Now as I see it, I have several options.

Option 1- spend less
Option 2 - bring in more income
Option 3 – combine options one and two

Cut down, way down
Alright, let’s start with “spend less”.  My expenses are too high, and I need to reduce them.  So, where do I start?  First, I have to ask myself if I am willing to, then figure out how much I need to cut, then, I need to figure out where I can cut.  Seems easy enough, OK, let’s get a little more complicated.  Let’s say that you’re moving along quite nicely, then an unexpected rise in your expenses comes up. If you can catch it early, and the disparity between income and expense isn’t that great, then you’re in good shape.  There’s lots of ways to cut back, you can start by being more aware of your utility bills, turn off lights, use the A/C less, cancel the daily newspaper, blah , blah ,blah. Pretty basic.

But what if that unexpected rise in your expenses is huge?  Or what happens if you have multiple unexpected rises over a period of time.  Or what if you just make a series of not-so-smart impulsive purchases? (this is where a crystal ball would have come in handy, I should have purchased one back when I had “extra” money, but, no use crying over that now.  Let’s get on with it).  What do we do now? Well, it’s either “bury your head in the sand time” or “decision time”.  I’m going with the latter.  I tried the first one once…disastrous.

This is where your circumstances come into play.  Basically, you need to decide what you can change in your current spending habits and who it will impact.  If the only impact would be on yourself, then you’re in luck.  Suck it up, suffer a bit, and seriously cut back on anything you don’t absolutely need to get by.  If you have an income, you can do this.   But what do you do if the impact of that would affect others.  They may have had nothing to do with your predicament.  Hell, depending on the circumstances you, yourself may not have had anything to do with the current situation.  But as they say, **it happens.  You have to do something.

Should your kids, or your spouse or even your pets have to pay the price for your financial crisis?  Unfortunately, the answer is sometimes yes.  Yes, you might have to give your children a pretty skimpy Christmas, your dog might have to get used to cheap dog food for a while, your spouse might need to get a second job or carpool to work.  Whatever the case may be, there’s definitely some pain in there that cannot be avoided.

Bring home more bacon
Now the next one,  “bring in more income”.  Another straight-forward solution.  Seems simple enough.  Get your butt out there and get a second job.  If you have a skill, do some consulting, if you have to, get second job at a department store, fast food joint, anything to bring in some more money.  I can do that.  I don’t have small children so you would think this would be a no-brainer. Go out and do it. But this is a tricky one.  The fact that my kids are teenagers is the reason I’m not getting a second job at the moment.  Come on, could you imagine an almost 16 year-old boy and a 14 year-old girl unsupervised.  I don’t need a crystal ball for that one.  So far my kids are pretty good kids, they haven’t gotten into any trouble, they are doing excellent in school.  If I take my hand off the trigger for a moment, the whole thing could blow.  I’ve come all this way, raising them to become successful, happy, responsible adults.  They’re not there yet.  I’m not leaving them on the home stretch.  I will let my kids go without Christmas presents, birthday presents, new clothes, whatever, but I won’t let them go without a parent being there.  Even if they say they don’t need me around, they do.

So I have begun implementing the first option. The painful one. The one where everyone around me pays.

Up to now, I’ve been able to apply band-aids (ie; Peter and Paul) to my financial crises over the years.  But there comes a point where band-aids can no longer stop the bleeding.  I need to address the bleeding at its source before it hemorrhages completely out of control.  There are some painful decisions in my future.  I’m assessing what’s really important in my life and trying to implement things to address them.   I’m trying not to make any rash decisions that could affect my family’s future.  I’m tightening up the belt as far as it will go without compromising my responsibilities to my family.  And I’m trying to find ways to bring in more income without shirking my parental responsibilities.  It’s like everything in life.  Easier said than done, but still do-able if you have the stomach for it. 

What I’ve learned
I’ve learned that the reason I have a negative physical reaction to finances is because I know now that managing your money is more that playing with numbers.  There are people involved in these equations. 
I’ve learned that personal circumstances play a significant role, turning what should be a simple solution into a quagmire of painful decisions. You really have to think things through.
I’ve learned that decisions we make today, affect countless tomorrows. 
I’ve learned that seemingly quick fixes can bring financial ruin for the future.  We need to take into account things like credit scores, and interest rates, and other headache-inducing numbers.
I’ve learned that managing money without enough money is painstakingly slow and arduous.  Most financial difficulties don’t happen overnight, and the solutions can’t fix it overnight.  It’s a slow process coming out of the financial hole.

Stumble it!

September 11th, 2007