My Financial Recovery

Off On Vacation

Posted on: April 30, 2009 by Matt No Comments

Well – we are currently in the car headed out to Maine for the weekend.  I will be back in action Monday morning.

Hope everyone has a safe and enjoyable weekend.

Lesson Learned The Hard Way #2: Credit Cards

Posted on: April 29, 2009 by Matt 7 Comments

Credit Card

Originally uploaded by Gizmo_F

Shortly after exhausting my inheritance from my mother’s estate I discovered credit cards. However – I had no clue how they worked or how they could effect my financial future.  The only comparable reference to how I felt that I can think of came from an episode of the TV show Undeclared (the only episode I remember seeing even).  In the scene one of the students is running back to his friends, huffing and puffing while yelling something like “Guys!! They’re giving  money!  Money they’re giving it away!“  If you have any interest in checking it out just watch the first 50 seconds or so over here at YouTube.

I think that pretty much sums up my impression of how credit worked.  I knew that the credit card folks expected to get their money back plus interest but I did not really take credit cards seriously.  So I somehow managed to secure two credit cards and maxed them both out within the span of my junior year.  I somehow managed to make a minimum payments for a while but eventually stopped making any payments at all.

Eventually I was sent off to collections for the two credit cards that I could obviously no longer use.  I stopped answering my phone and stopped checking my mail.  I was terrified that I was going to jail or they were going to track me down and send the police for me.  I really had no idea what would or could happen so I just avoided all of the uncomfortable situations.  I got to the point where I checked my mail about once a month – usually after the mail room called and left me a message that the box was overflowing.

After about a year or so the calls stopped and the mail became less frequent so I thought I was in the clear.  After a couple of years in the work force I began dealing with all of my bad and defaulted debts.  Most of the debt was student loan related but there were still the lingering balances for the two old credit cards.  I made arrangements with both companies and paid them off in full but the damage had already been done.  Luckily – the bad credit card debts have since fallen off of my credit report so the negative information is no longer listed.

I lived in complete fear of credit cards and taking on any new debt for a couple of years after my experience with credit cards in college.  The whole series of events could have probably been avoided if I had taken the time to educate myself and understand what I was getting into.  My father tried to explain but simply told me that I should not have a credit card and got frustrated when I asked the obvious “Why not?”.  He was unable to explain how credit works or how bad debts can carry on through the rest of your life.  His flustered answer was along the lines of “because it will effect your credit”.  I know he had the best intentions but the explanation seemed obvious to me at the time – I mean that was the point of credit cards right?

I believe the lessons learned here include that credit cards are not to be used lightly, not repaying debt can have serious long term ramifications on your future plans, do not spend money you do not have and communicate with your creditors.  I still work on practicing some of these items (hence my current credit card having a balance – which is going down quickly) but have worked really hard to ensure that I do not get back into yet another cycle of harassing collection calls.

Lesson Learned The Hard Way #1: Large Sums Of Money

Posted on: April 28, 2009 by Matt 4 Comments

Originally uploaded by Gnerk

Shortly after my 18th birthday my mother passed away. I had plans to head off to college about a month later and intended to go just to get away from all the old memories lingering around where I grew up.  I had very little in my bank account and all of it was probably going to be needed for books and other expenses related to college.

Later that semester I received notification that I was due to inherit my share from my mother’s estate which amounted to about $11,000. To date this was easily the largest sum of money I have received in one lump sum. I had no idea what to do with the money and was still grief stricken and in shock from the loss of my mother (I really had trouble coping with her death).  I did what most college boys probably would have done: deposited the money in my checking account and spent frivolously.  Of course the nice lady at the bank attempted to give me some advise but I wanted nothing to do with saving money or planning long term.  I more or less told her to just give me the money and shut up.

For the most part I do not remember what I spent the money on.  From what I can recollect now I can recall buying:

• Lots and lots of booze on a regular basis: I developed an even bigger drinking problem in college that I carried with me until a little over a year ago.  At this point in my life I have come to realize and accept that I am an alcoholic and can not drink.  I have been sober now for about 16 months.
• A PlayStation2 that I had to have: I was a guy and in college – of course I needed the newest video game console.
• A beat up car from my girlfriend’s (at the time) brother: This was  my first car.  I did not get my license until I was 19.  It was a little beat up but ran well and I managed to get quite a bit of mileage out of it.

Needless to say – I spent every last dime within a year or so. I do not regret spending it but do think that I made some poor choices.  I suppose that if I had to start all over again today I would probably look to start out by:

• Learning how to manage money: Not just large sums but also general personal finance.  I was fairly clueless, nobody had taught me anything about money management and I had not taken the initiative to learn on my own.
• Parking the money in a CD where it is locked for 3 to 6 months: Actually – I probably would have opened a few of them that would mature at different lengths of time.  Maybe break it into quarters and put 25% in each 3, 6, 9 and 12 months.  I was in no emotional state to make any financial decisions and knew little to nothing about handling money.
• If I needed money, get a job: I had limited to no income the first three years of college.  I cited having to focus on my studies as the reason for not working but the real reason was I was too busy drinking and generally slacking off.  I could have easily worked a part time job.

I do not regret spending the money or wish to change the past but do try to learn from my mistakes.  In this case I learned that having a large sum of money float into your life requires that you press a pause button and do some planning and possibly some healing.  When the inheritance arrived in my hand I was still grieving (at a point where I maybe should have put college off a semester or two) and was not clear headed.  Parking the money and forgetting it existed would have given me some time to work on healing myself.  Once I was in a better place emotionally I could have moved forward with learning how to manage money and planning.  My lesson did not have to be learned the hard way – I could have listened to the nice folks at the bank but I chose not to.   So I guess there is also a general life lesson here as well: Listen to the advise of people who specialize in a field you know little or nothing about.

Lessons Learned The Hard Way

Posted on: April 27, 2009 by Matt 2 Comments

Originally uploaded by Sarai♥WoaH Photography♥

I have been thinking a lot lately about some lessons that I have learned the hard way in life, particularly with regard to my finances.  Generally speaking, I like to think of myself as a fairly sharp guy.  I did well in school, I am good at my job and am pretty much always learning.  However – when I start thinking about some of the lessons that I have learned and how I ended up learning them I start to realize just how dense I can be sometimes.

So in the spirit of helping to prevent others from learning lessons the hard way (which in my experience means some amount of pain involved) I have opted to start a new series of posts dedicated to lessons I learned the hard way. I do not plan to limit the lessons to simply the realm of finance but to encompass all areas of life.  Of course I have learned more lessons by really messing up with regard to finances (or is it they are the most visible?) than most other area so my emphasis will be on my personal finances.

I am pretty excited about this new series and plan to start with my first lesson learned the hard way tomorrow.  I also think that a lot of us have probably learned through experience (especially negative experiences) how to better manage our lives and our money.  Therefore – if any of you other bloggers out there feel like kicking in and posting some of your hard learned lessons – let me know and I will be sure to kick back a link to your post(s) in my weekly round up at the very least.  I think it could be a bit of fun to get input from a few of us going.

Otherwise – check back tomorrow and have fun seeing the mistakes I have made and what I have learned from them.

Weekly Roundup – Looks Like A Beautiful Weekend Edtion

Posted on: April 24, 2009 by Matt 2 Comments

Happy Friday everyone!  The weather here has gone from cold and rainy to sunny and predicted highs in the 70’s and 80’s for this weekend.  I think that maybe spring is officially ready to start in the NEK (North East Kingdom) of Vermont.  Provided I can shake whatever this bug is that has been bothering me I think my family is planning on spending a fair amount of time this weekend out in the woods.  I really look forward to it and enjoy every chance to get out and about.  Lucky for me that my grandmother has about 60 acres of wooded land just up the road a ways.

Anyway – here are some links for the day for reading that I found interesting during the past week:

• FrugalDad has had enough.
• The Almost Millionaire has some tips for new bloggers.
• MoneyEnergy looks at how long it takes to make a viable side income blogging.
• The Simple Dollar gives an good explanation of what a 529 plan is.
• Lazy Man And Money has four lazy ways to save the environment.
• Passive Family Income has 18 passive income opportunities to use your tax return on.