My Story - Part 3

Although I thought that homeownership would be the start of a new and improved life, I found that there were a lot of negatives. Unlike living in the trailer, where we had few expenses, we really had to stretch to pay our bills, and our new $1,800/month mortgage was often a real struggle. The post-9/11 recession didn't help, and as we started to see the dot-com era come to a crashing end, we weren't able to find the kinds of jobs we wanted.

We thought that our own company would be a temporary gig until we found regular employment, but that never happened. As the months of self-employment stretched into years, we realized we'd probably never go back to working regular jobs again. Although we sent out resume after resume, we didn't get call-backs. We kept finding 1099 contract jobs, but long-term contracts fizzled, clients didn't pay on time (and sometimes not at all) and we kept struggling along.

After we'd been in the house for nearly a year, the housing market had gone up enough that we were able to refinance. By this time, my bankruptcy was old enough that my name could be added to the mortgage. We got rid of PMI, got a lower interest rate, and our monthly payment dropped by about $700/month. Unfortunately, the relief from the lower payment didn't last long. The recession continued, and we had several clients fail to pay their bills.

In the four years that we've run our business, we've had a total of four deadbeat clients stiff us for nearly $30,000. My share of the business' profits last year amounted to $16,000, which really isn't enough. The under-earning problem seems to follow wherever I go...

I majored in Computer Information Systems not because I loved tech, or because I loved computer programming. I chose CIS because my father wanted me in some sort of technology-related career, such as engineering, computer science, or mathematics and I felt that CIS was a reasonable compromise. I'd taken computer classes in high school and always managed to get an A, even though I didn't particular like the work. Job prospects were supposed to be great, so I did what a good kid was supposed to do. I tried to please my parents. Although I didn't find computer programming to be odious, I didn't really love it, either. I saw it as a way to make a living, but not a burning passion.

When I graduated college, many of my classmates were getting unbelievable salary offers. The offers I received were pretty disappointing, generally $15,000-20,000 a year less. I had terrific grades, and graduated with honors, but the really great offers just weren't there. Most of the companies interested in me were offering sub-standard deals. Since I had to take a job somewhere, I took the best of the offers I had, and things slowly went downhill from there.

When I graduated from college, I thought I had the ticket to the American Dream. I thought I'd be able to buy a home, have nice things, and put some money away for the future. I thought I'd be able to afford a life equal to, or better than, what my parents had. What I have instead is an overpriced, tiny dump of a house, junker cars, and I live hand-to-mouth every month. Cash flow is always a problem, and I frequently find myself buying groceries on a credit card because there's no money in the checkbook.

About a six or eight months ago, we spent quite a bit of time having weekly telephone consultations with a financial planner. We thought that perhaps she could teach us the money management skills we lacked. When all was said and done, she confirmed what I already knew. We weren't living extravagantly. We didn't eat out excessively; we didn't buy new clothes, fancy toys, or drive new cars. Our basic problem: we aren't earning enough money, period. Although what she said was helpful, and she certainly helped to reduce our regular fights about money, it didn't solve the underlying problem.

When I look around me, I wonder how my neighbors are making it. One neighbor has a similar house, four kids, but always manages to drive nearly-new cars. They take vacations, and their kids are enrolled in a lot of extra-curricular activities which must cost money. They seem to have it together financially. Our neighbors just a few houses down have an immaculate yard, fresh paint, gleaming new windows and shiny new cars. Another neighbor bought a fixer-upper that was a complete dump, and he's refurbished it to be a cute little house with nearly-new cars on the driveway. Our house has a scruffy yard, needs paint and other minor repairs which we can't afford, and we have rusting and barely-running cars. One of our cars leaks so much oil we park it on the street so it doesn't mess up the driveway. We are probably the second- or third-worst-looking house on our block. All of these things take money and time to fix, and we don't have either. We work and work and work, sometimes 60 hours a week or more, and seem to have nothing to show for it.

As I look back on my life, I realize that I've made plenty of mistakes, and ultimately I'm the only person who has control over what has happened. I'm nearly 40 years old, and somehow I need to figure out how to turn this ship around so that I'll be able to retire someday. Although our house has nearly doubled in value since we bought it, we have very little else to show for our efforts. We have very little money in retirement funds, no investments, and about $20,000 in unsecured debt. Most of it was money we had to borrow against my retirement account to pay taxes. Since we didn't earn enough for several years to pay our bills and pay our estimated taxes, the money had to come from somewhere.

I feel like I've become stuck in a form of middle-class poverty. Although I have a roof over my head in a seemingly nice neighborhood, there's no money for extras, and when clients don't pay on time it becomes a serious crisis. When they say that most Americans are a paycheck or two from being homeless, I believe it. It wouldn't take much for us to miss a house payment, and then I'd be right back in the same spot I was eight years ago.

I'm not sure where to start, or how to fix things, but this blog will be my journal to document my voyage along the way.

My Story - Part 2

When I left my home that November day, I stood out front for the last time. I looked at the house and remembered back to when my ex and I first were thinking of buying it. We'd walked over to the house one evening, after dark, and just stood in the neighborhood looking around. We felt this huge sense of anticipation and excitement. I remember standing there, alone, and for a moment feeling overwhelmed with grief. The wave passed, and I climbed into my truck and drove away. I didn't look back.

I wasn't exactly sure where to go, so I decided to head for one of the county campgrounds. Since it was winter, they allowed campers to stay for 3 months. During the summer, they only allowed a 14-day maximum stay unless you worked as a camp host (which required 20 hours/week labor in exchange for free rent) so I knew I'd have to find another place.

My bankruptcy was discharged in January of 1998, and I remember feeling oddly empty when I received the discharge letter. I didn't give it a whole lot of thought, though I was relieved at being able to start using the credit cards that I'd been able to keep through the bankruptcy to buy gasoline for my commute. It made me nervous to go to the ATM after work, and I didn't like carrying around a lot of cash.

The following February, my aging Toyota truck started giving me a little trouble. It had over 181,000 miles on it, and it was slowly dying. It wasn't being helped by the fact that I was frequently towing a heavy trailer around, so on a lark I called a local auto lot. I was curious to see if it were even possible for someone in my circumstances to buy a bigger truck. To my surprise, they said yes, and I ended up with a secondhand full-size pickup. The loan terms were terrible at 21% interest, but I paid extra every month with the idea that I would pay it off early.

I ended up staying at the county campground for the full three months, and the ranger even offered me the opportunity to work as a camp host. I couldn't figure out how to juggle my full time job, plus the responsibilities of camp host. Truthfully, I wasn't too keen on the idea of cleaning public restrooms every day (and this was part of the job) so I thanked the ranger but declined. As it was, the move turned out to be necessary. That year was the winter of some very severe storms, and I couldn't make it in to work for a couple of days because of road closures. The power was out in the campground for nearly a week, and my trailer was narrowly missed by a falling tree during one of the storms. Fortunately, I had been looking the entire three months to look for another parking space, and I found another spot that didn't require a credit check. I moved in, and for a trailer park, it was actually pretty decent, since it mostly catered to tourists, but allowed a small number of long-term residents.

When I moved into the trailer, I always figured it was going to be a temporary arrangement, but things kept happening to keep me there. Almost a year after I began my trailer odyssey, a tree that hadn't been properly trimmed dropped a giant branch on my roof in the middle of the night. It totaled the trailer, causing more than $11,000 worth of damage to a trailer that was worth perhaps $5,000.

Although I'd expected that living in the RV would help my post-bankruptcy recovery, in some respects it made things harder. I couldn't get a loan for a replacement trailer partly because my credit sucked, and partly because I didn't have a "permanent address." I still wasn't able to rent an apartment for the same reason. Fortunately, I discovered I could borrow money from my 401(k) plan at work, which I'd been funding to the max. With the money I got from the insurance payoff, plus money I borrowed from my retirement account, I was able to buy another, slightly bigger, secondhand trailer. I also paid off the loan for my secondhand pickup, since the interest rate was much lower.

Every few months, I'd try to look into apartments, but never did manage to come up with anything. The apartments that might be willing to talk to me were in terrible neighborhoods and wouldn't accept my pets, so I kept living in the trailer. One month stretched to three, which stretched to six months and then a year. At the 18-month mark, my current partner decided to move in. Things were definitely cramped, but we were both working, so it wasn't too bad.

Things were going along fine and we were starting to build a little nest egg when I was unexpectedly laid off during the summer of 1999. It took me three months to find another job, and I had to take a $12,000/year pay cut. A few months later, my partner was laid off. We ended up at the same company, where we worked until the end of 2000. Then we both lost our jobs when the company started having financial problems. We ended up starting our own custom software development company since one of our former employer's clients had some web programming they wanted done. Our former company wanted out of the custom software business, so we were on our way.

We ended up living and working in that tiny 22' travel trailer for nearly a year before we got to the point where we couldn't stand it any more. We were fighting constantly because we were so cramped for space, and our dining table was cluttered with laptops and a printer so we could work. We had a server on the floor in front of the refrigerator, and reference manuals piled everywhere. I started calling apartments again, and this time they had three reasons not to rent to us: 1) We had a dog (my cat had ended up moving in with my father since my partner turned out to be violently allergic); 2) I had a previous bankruptcy and they looked at both our credit histories; and 3) we were self-employed and couldn't show steady self employment for two years. We were stuck.

I called around to all the local homeless service agencies to see if they might be able to issue us a referral for housing. Although we technically met their requirements for being "homeless" since we didn't have a permanent address at the the trailer park, and the RV technically wasn't designed for full-time, year-round living, they couldn't help us because we were considered single adults. The homeless problem in our county was so bad that they would only serve single mothers with children. Couples (married or not) or single people weren't eligible for assistance. The best they could offer us was a cot in the local homeless shelter, which was a step down from where we were living.

After nearly four years of trailer living, I was ready to give up on the nomadic lifestyle. After nearly three years of trailer life, my partner was just about ready to kill me! We mentioned our dilemma to a friend, who happened to know a "friendly" mortgage broker. It turned out after a certain about of finessing (translation: lying) on the application forms, my partner was eligible to get a no-doc loan for a honest-to-goodness real home. We'd applied together, but at the last minute we had to withdraw my name from the application because it turned out the only bank willing to loan on a self-employed, no-doc loan was the same mortgage company that had taken it in the shorts on my mobile home four years prior. They were, understandably, still holding a grudge.

We found a very good real estate agent, and she helped us find halfway decent homes that were relatively inexpensive. When I say relatively, that doesn't mean that the prices weren't absolutely, heart-poundingly shocking. The housing market was starting to go through the roof, and houses that sold for $100,000 a few years before were now selling for double that amount. Although our friends encouraged us to take on a bigger loan, I was terrified that we'd run into financial problems if we did. We bought the least expensive 3 bedroom/1.5 bath we could find that had space for our RV. We signed a deal, I handed over my down payment to my partner, who in turn gave it to the escrow company. The loan was granted, and a quit-claim deed was filed to add my name to the title a few weeks after the loan closed. Virtually all our savings were eaten up by the downpayment, but the place was ours!

In September of 2001, right after the World Trade Center disaster and nearly four years of living in an RV, I finally had a home again...

My Story - Part 1

Eight years ago I filed for personal bankruptcy.

The summer of 1997 was the final chapter in what had been a long, slow decent into a financial abyss. I had made a lot of stupid financial and personal mistakes, any one from which could have been recoverable, but as a sum total became completely overwhelming. My seemingly-endless mistakes included marrying and subsequently divorcing the wrong person, buying a mobile home (instead of real estate), and investing a small inheritance I received in 1989 into a business that ultimately failed. My problems were further compounded by the fact that despite having a supposedly "marketable" Bachelor's degree in Computer Information Systems, I was chronically underearning. During my worst earning year, which was in the middle of the tech boom days, I earned a paltry $8,000.

About a year before I started contemplating bankruptcy, I had found a job that finally paid something. I was still being underpaid probably by $20,000/year, but it was certainly better than what I'd made during my worst year. Unfortunately, it was not enough to cover the debt service on the massive debt that I'd foolishly incurred operating my business. It was a high-tech business, with a lot of overhead, and I kept investing in it, thinking that if we just were able to get one more piece of software or tool, it would give us the competitive edge to "get over the hump." By the time I took the job, the business was failing but still open, and I was having to take $500 or more out of my paycheck pay the business' bills. At the end of the month, after everything was paid, I didn't always have enough to buy groceries...

I felt like a complete deadbeat, but couldn't see a way out of the problem. The job was 50 miles away and the two-hours-a-day commute was killing both me and my car. My life had degraded into an endless cycle of wake up, drive, work, drive, work and then crumble into bed so I could do the same thing the next day. During evenings and weekends, I worked as much as I could, trying to keep my flagging business generating at least some income so that I wouldn't have to give it my entire paycheck. Things got so desperate at one point that I had to call my father to buy some groceries because I didn't have enough to eat.

One by one, I started calling creditors to see if they could do anything to help me. Could they lower my monthly payment, or drop the interest rate? The mortgage on my mobile home (which by then had depreciated to the point where it was worth about $40-50,000 less than what was owed on the loan) plus the space rent was whopping $1,200 a month. I'd hoped that the bank would be willing to drop the almost 14% interest rate to something a little more reasonable. I was willing to pay everything I owed, I explained, but I simply wasn't earning enough money to cover it all. Even the mobile home park made my troubles worse because they required the homes be owner-occupied, so renting out the house (or even a room) was against the rules. Everywhere I turned for help, the answer was a resounding "NO!"

If' I'd managed to get a break somewhere, I might have been able to avoid filing. If the park manager would have allowed me to rent out the house, if the bank had been willing to drop the interest rate, if the housing market hadn't have gone so soft so that I could sell the home for what I owed, or if my boss would have given me a raise even close to market rates, I might have been able to turn things around.

After getting no help from my creditors, I consulted with two attorneys, a CPA and a financial planner. All of them said the same thing, "You would be foolish not to file bankruptcy." In July of 1997 I found a bankruptcy attorney, and by that September my petition had been filed. The worst day of that period was the day of my bankruptcy hearing. My bankruptcy filing was one of the largest they had ever seen, because I had listed some 1,200 customers that were receiving services from my business. The trustee accused me of deliberately ripping off my customers. "Take their money and file for bankruptcy," he said loudly. It was all I could do to hold back tears. Afterwards, I had to go back to work and pretend nothing had happened.

As part of the bankruptcy proceedings, I surrendered my mobile home. I'd tried to give it back to my ex, since it had been awarded to me in our divorce, but that didn't work out. The ex told me the house was my problem, so I gave it back to the bank. With ruined credit and two pets, I couldn't rent an apartment. In November 1997, I moved most of my possessions into storage, and moved into a beat-up 18' travel trailer that I'd bought for camping several years before.

The last night in my house I slept on the floor. All the furniture had been moved out, and I had nowhere else to go. The next morning, I climbed into my truck and trailer with my cat and dog and headed out into world of semi-homelessness. As I pulled away from my house for the last time, I felt both a huge sense of relief and regret. I wondered what would happen next...