June 13, 2008

My Top Five Financial Blunders

Posted in credit, debt, life, personal finances tagged , , , at 6:00 am by otherdeb


Ron at The Wisdom Journal wrote about this recently, and, while I was not among his taggees, it seemed like a good topic to reflect on here. Thanks for the opportunity to play, Ron!

1. When downsized, not cutting back on spending or expenses. When I got downsized, I received the highest rate of Unemployment Insurance the state I had worked in offered. However, instead of cutting expenses, I spent a lot updating my presentation because I figured the better I looked the better my chances of getting a job at a similar salary. Also, I was trying for positions at the level I was training for when I had been downsized, and felt I had to dress “up to the position.” A year later, when I had gotten no jobs and no temp work at all, I was forced to take a job at about 1/3 my former salary, to which I could wear tee shirts and jeans. I was left with huge credit card debts, and the clothing got passed on to a friend who had just gotten a corporate job.

2. Depending on friends/loved ones/relatives to bail me out. It’s nice to know people are there for you, and turning to them to help instead of doing it yourself is real seductive. Having to turn to them all the time, though, sucks rocks in the long run. For one thing, you totally alienate the very folks who are your biggest support system. Worse, you feel more and more powerless as you keep handing bits of your ability to handle your own affairs away (unless manipulating others is your thing, and that’s a whole different kettle of fish). But each little blow to your self-esteem takes a real toll.

3. Spending more than I earned, even when I was making a good salary. This may have been the actual worst blunder. It’s a long-standing issue that I have only begun to come to terms with over the last two years (and, yes, I still backslide sometimes) when I was forced to become the financial “adult” in the household. I was one of those folks who had to have the newest and best toys, and the clothes, and all the stuff that my contemporaries did. If a book interested me, I bought the hardcover. If I went to a concert, I had to have really good seats. I took cabs everywhere, when it was not necessary to do so. I ate out six to seven times a week. When I cut down on the overspending (and I will, one day, get it eliminated altogether), it made a huge difference. I was able to start paying off my debts, begin an emergency fund, and begin to lessen my dependence on others.

4. Ignoring creditor calls/pretending the financial mess would go away on its own. A huge mistake, although perhaps not my actual worst. All this did was allow the situation to fester to the point where I not only still had to pay back the money, but had the stress of fighting some of the real bottom-feeders of the debt pond: the guys who buy your debts at a discount, then proceed to harass you with threats of legal action, tell you it’s your fault for being in the position, and generally don’t give a damn about following the rules set out by the Consumer Protection folks. Yet, even these idiots, once I began to rebuild my integrity by keeping my word, began to work with me. I ended up being able to get a lot of the ridiculously high interest that was accruing wiped out, but I still ended up paying a lot more, both financially and stresswise, than if I had not hidden my head in the sand for so long.

5. Moving in with someone who is worse with finances than me. Okay, this was not so much a decision as a corner I backed myself into, by making the above blunders. It turned out to be my wake up call, and an opportunity to put my life back together, but I still would have been a lot smarter to ask more thoroughly about my roommate’s financial difficulties before I moved in with her. Had I known that her difficulties were a pattern that had run her entire adult life, and that her mother had been bailing her out for decades, as opposed to the temporary downturn she represented them as being, I would have been a lot more wary.

I am by no means done with this process, and I am sure I will still make a blunder or three along the way. The main thing I have learned from all of the above, though, is that even a huge stumble does not mean I should give up the fight.

Folks say I’m persistent (well, the nice ones do, the others call me a stubborn witch). I think I’m finally learning to use that to make positive changes in my life, instead of being hell-bent on self-destruction.first

Taking a long, hard look at your financial blunders is one of the first steps in fixing them. Are you willing to take that look?

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10 Comments »

  1. Ariel Cinii said,

    Yeah, over the years I’d witnessed you doing at least three of the five, but like other adults, I presumed you knew what you were doing and that I should just mind my own business. It’s hard to tell a competent friend when they’re about to make an error becuase it puts one in the bind of appearing to try and run their life when one is barely able to manage one’s own.

    Many of us live in glass houses perched upon slippery slopes that stay intact by means of timing, luck and magic, so dissing your fellow witch’s spell is just not done. Still, we should have an acceptable means of warning that does not lead to embarassment for either party.

  2. otherdeb said,

    @Ariel Cinii: The thing is, most folks who need to hear such things usually can’t hear them. And until they are ready to, all the good intentions in the world won’t help them. It’s not a matter of finding an acceptable means of warning; it’s a matter of the person who needs the warning getting an internal wake up call and heeding it.

  3. Peter Alway said,

    “1. When downsized, not cutting back on spending or expenses.”

    Been there, done that, shouldn’t have bought the T-shirt.

    Once I was forced to reduce my expenses, it proved to be not as hard as I had expected. Oh, well. Lesson learned.

  4. I myself have been guilty of at least three of the five, and continue to catch myself doing #3 far too often. Little by little, I am trying to get a handle on how much I need, how much I spend, and rebuilding my own integrity. Kudos to you for being willing to discuss the same sort of struggle publicly and many good wishes to you for continued improvement.

  5. otherdeb said,

    @Peter Alway: Yeah. To both assertions.

  6. otherdeb said,

    @Matt G. Leger: First, love to you and the SongBird.

    Second, thanks for your good wishes.

    Third, yeah, the rebuilding of our own integrity, to the point where we can look at ourselves in the mirror is one of the most important parts of this process.

    Fourth, thank you, but no kudos are necessary. If one person reading my blog can avoid some of the mistakes I have made, I’ve done my job. Really, I’m just paying forward all the help I’ve received over the years.

  7. Adalisa said,

    My dad, who was an amazing wonderful man in every aspect but this, lived by 4. Unfortunately, that means that now he’s passed on, I’m the one who has to explain to the bottom feeders that, no, he’s not alive anymore, and that constitutionaly, they can’t force his debt on me. It’s gotten to the point where I’m offering them a shovel and directions to his grave when I’m particularly annoyed. Even when I don’t owe them money, it’s still stressful.

    My personal blunder has always been ‘prioritizing bills’. Sure, sometimes, the phone bill is not the top priority to pay, but that means that next month? It’s going to be twice as much. And so on, and on and on, and that always sets me back a lot. Makes it worse that they don’t immediately cut your services, so you end up thinking you’re safe, when you’re not.

  8. otherdeb said,

    @Adalisa: Re your last paragraph: Yeah, and what’s worse, it sets up a bad cycle, because that bill you don’t pay in January is not only doubled, but its being so means that you push off a different bill in February., and again in March, etc.

    Is there a way that in February you can pay January and half of February, and then in March pay half of February and all of March? You won’t eradicate the late fee (if any), but you will keep the cycle from happening.

  9. Adalisa said,

    Actually, and I forgot to say so, I went to the phone company and the light company (The ones I usually push back) and they told me that I could pay the bill in small payments as long as I finish paying before the next cut date, so I can make five or six small 10.00 dlls payments one each week, and not get interest paid on. So that’s what I’m doing now.

    Sometimes, companies will make accommodations, as long as you pay. They only care about the bottom line, but at least here, they understand that the bottom line might be easier to get if they’re accessible.

  10. otherdeb said,

    @Adalisa: Yes, companies here will do that, too. The problem actually lies with us, in that we tend to push off calling until we are in far too deep for either side to have much wiggle room. For most of us, we lie in the hope that we will e able to fix it “next time.” Unfortunately, all that usually leads to is a bigger mess to have to fix, which we then push off even further. Sometimes, we don’t wake up until our services are cut off, or we are being threatened with lawsuits. I wonder what it is in our makeup that doesn’t “let” us tend to things while they are small enough to handle.


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