Getting Knocked Out Financially is Easier Than You Think
/
This post may contain affiliate links. Learn more by reading my disclosure.
*** Updated 4/12/2021 ***
In my late twenties, I had personal debt that soared to over $32,000. To ease the burden of various monthly payments, that debt was rolled into a second mortgage. As things happen, I ended up divorced (my first). As part of the settlement, that second mortgage became my responsibility. I’m not bitter nor blaming anyone. It’s the way life goes and how I ended up where I am today.
I later remarried, bringing that debt into that marriage. Unfortunately, she also carried $14,000 worth of consumer debt for a combined liability of $48,000.
We made good money but lived paycheck to paycheck. It was frustrating to survive that way. I wanted more out of life but couldn’t figure out how to get it.
It was then that I discovered Dave Ramsey’s Financial Peace. Ramsey discussed his journey, how he’d found himself deeply in debt, and how he worked himself out. Many of the things he wrote about were things I felt. Stress and humiliation are two that immediately come to mind.
It took effort, but I started a budget and followed Ramsey’s envelope system. There were ones we carried most days—groceries, gas, etc. Others remained at home and touched only when necessary—car and clothing, for example. Many of the daily envelopes got beaten up so severely that I replaced them often.
The envelopes were a source of discipline I imposed on my finances as I worked to pay down that debt.
During that time, I drove an older GMC S-15 pick-up, and she drove an older Chevy Cavalier. Neither car was flashy. New vehicles weren’t possible without going deeper into debt.
It took almost two years to get debt-free. The only thing remaining was the home loan. A significant weight lifted from my shoulders, and I felt like a free man.
For about six months, my financial situation couldn’t have been better. A little money was starting to get put away, and I felt like something positive was right around the corner.
From Bad to Good to Worse
I changed jobs and went to work for a national mall developer. It was a great opportunity that I couldn’t pass up. This was when I knocked myself out financially.
As an assistant general manager for Spokane’s largest mall, part of my responsibilities was leasing. I imagined that to mean meeting prospects and bringing them to the mall.
At the thought of others riding in my truck, I became embarrassed. It felt like I was back in high school when I didn’t have a cool car.
I need a new car.
I deserve a new car.
I should get a new car.
My immaturity quickly took over. I didn’t even try to argue with myself. I wanted to look successful even though I hadn’t done a thing yet. I wanted to appear rich rather than be rich. Cool was more important than security.
I went to the local Ford dealership and test drove a 2004 Mustang. It was the 40th Anniversary edition and almost brand new. Someone owned the car previously for three months before they traded it in to step up to a Shelby Mustang.
The car was beautiful, and I loved it. I never had a muscle car before, and I wanted one so badly I couldn’t wait to sign the loan paperwork.
Soon, I was the proud owner of a new Mustang and roughly $25,000 worth of car debt.
Take a moment and consider this: With that car, I might have been able to drive a single client around, but what if there were two people? They would never sit comfortably in that car. It was a silly and immature purchase.
An immature financial decision.
But I proudly drove that car without any concern for my finances. I’d spent two years digging myself out of a $48,000 hole, and I just dug one half as deep.
Two weeks later, I received a call while driving my new Mustang.
“I need you to come downtown,” she said.
“Why?”
“I’m buying a new car.”
And with that statement, I proceeded to the car lot and signed the financing paperwork to get a new Mazda. We put ourselves $24,000 deeper into debt.
In two weeks, I went from zero personal debt to $49,000 worth of car debt. That’s more debt than I spent two years digging out from!
The monthly car insurance skyrocketed, too. The premium for the previous two paid-off vehicles was $60/month. The new amount was almost $200/month.
The monthly car and insurance payments were over $900/month. At the time, that was a small house payment!
Buying the new cars meant the implosion of the envelope system. Soon, I was eating out at restaurants multiple nights a week and buying things I didn’t need. Not a single penny was getting saved. The only positive to take away was that I no longer had a credit card.
Financial stress returned, and I soon became embarrassed at my failure with Dave Ramsey’s Financial Peace.
How Do You Keep Moving Forward?
Rocky is my favorite movie. I love it. It’s the story of a fighter who’s given an opportunity of a lifetime—a long-shot—and makes good on it. Many movies followed, some good, some not-so-good. However, there was one, Rocky Balboa, about an aging fighter looking to prove something to himself one more time. He has a conversation with his son, and he makes one of my favorite statements about success:
“It ain’t about how hard you hit, it’s about how hard you can get hit and keep moving forward, how much you can take and keep moving forward. That’s how winning is done.” - Rocky Balboa/Sylvester Stallone
It took a couple of years to realize how immature that Mustang purchase was. When it hit me, I decided to get rid of it. There was an upcoming promotion that required relocation. It would be incredibly stressful with that level of debt on my back.
Sometimes the universe delivers when you’re open to it. I took my car to the dealership for an oil change (yes, I was that guy). When I returned to get it, a salesman approached and asked, “Do you want to sell your car?”
He had a buyer who wanted to purchase the make and model of my vehicle.
I said I would be interested in an offer. He hurried off and came back a few minutes later. Their proposal was $1,200 lower than what I owed on the car! I told him if they would pay off the car loan, it was theirs. Ten minutes later, we had a deal, and I was out from under that obligation.
By the way, I never toured anyone around in that car. The reason for purchasing it was utterly selfish and immature.
I later bought a used Honda for cash. That improved my overall financial and mental position.
A few years later, I would get divorced for a second time. It’s how life goes and how I ended up where I’m at today. From that period in my life, though, I’ve learned that looking rich and being cool are fleeting feelings brought on by immaturity.
What Do I Drive Now?
At the time of this writing, my car is more than a decade old. I don’t care. It’s clean and functional. It gets me from point A to point B. What more should a car do?
My girlfriend’s car is almost as old. It’s also clean and functional.
Both are paid off, and neither are status symbols.
There are days where we want to dent the budget for the sake of some vacation or some experience for the family, but it’s never for a new car.
Our version of being cool is dinner around the table every night and playing in the backyard. It’s about building something for tomorrow while protecting today.
Each day and every dollar count.
Unfortunately, I was too immature to understand that every day and every dollar has always counted.
My net worth clicks up monthly now due to my real estate holdings. I couldn’t have made those investments with the behaviors I exhibited in my previous life. I’ve had to make conscious choices to act in a more mature, responsible way with my money.
Failing is okay, but only if learned from. I've tripped, bumbled, and fell. However, I got up, took responsibility, and moved forward.
That’s how winning is done.
Have you ever fallen financially?
How did you pick yourself up and move forward?
