Though I’ve been blogging here for awhile now, I’ve never really shared my financial history.  I’m going to take you back to the year 2004, when my financial house of cards finally collapsed. 

The Beginning

Back then, I was living on the military base where my wife worked.  That meant no rent, but also no BAH pay, so my wife’s paychecks were small.  I was working about 25-30 hours per week, only making about $1200 per month, before taxes.  We had 3 car payments – $570, $410, and $100 per month.  One was a V8 and guzzled premium gas prodigiously, so that didn’t help either.  The $100 payment belonged to my wife’s first car – left halfway across the country at her parents house.  No one drove it, so it simply sat collecting dust, while racking up interest at the rate of 24%.

Our credit card debt stood at a paralyzing $11,000, with minimum payments being made every month.  On some of the cards, the minimum payment didn’t even cover the interest, so the balance grew every month.  Of course we continued to use our credit cards every month for living expenses – food, clothes, etc.  I ended up going over the limit on card twice, and got whacked with $35 fees each time.  Amazingly I managed to never miss a payment, or pay anything late.

A new Job

My hours had been cut at work for a few weeks, and we were very close to not being able to pay our bills.   Our checking account was nearly empty, and we had no savings.  All of my savings bonds from my youth had been cashed in to pay bills. Finally I said enough is enough, and grabbed the newspaper, and went in search of a job.  Two interviews that day, and the second one was a winner.  I crossed over to the dark side and became a car salesman.  I maxed out our last credit card to buy some decent shirts and shoes.

Instantly our financial situation improved drastically.  My first month I made just over $3,000.  My second month was December, and totally different.  I actually almost quit;because I made so little in commissions that I got paid “hours” – minimum wage based on the hours I was there.  This amount had to be paid back in January, however.   It’s really just a loan.  The next few months went great.  I ended up getting a promotion in late March – more responsibility and more money. 

We deserve an SUV

During these few months we’d paid down our cards a little bit, and life was good.  On the radio and TV we kept hearing about GM’s Employee Pricing, so we decided to go check out the GMC Yukon Denali.  After all, I was making good money and we deserved a nice car.  Well, we ended up hating the Denali, ( it’s an awful, awful vehicle ) but fell in love with the even more outrageously expensive Lincoln Navigator.  We traded in my 03 Mustang, rolled over about $7,000 worth of negative equity, and leased a new Navigator for 36 months.  Life was good.  Our car payments totaled a whopping $1486 per month.  No big deal though, we had the money, or so we thought. 

The next few months were fairly uneventful.  Lots of shopping, spending, enjoying our new car.  Except I wasn’t enjoying it, because my job required 80+ hours per week, every week.  Not a lot of fun when you get right down to it.  My wife was in spending mode while I was out at work.  And when I wasn’t, I was right there with her, spending and eating out.  Our credit card bills were beginning to pile up again, and even with my new larger salary it seemed tough to pay them down. 

Iraq

One day that summer, my wife got notice that she would be shipping off to Balad Air Force Base in Iraq.  That’s the bad part about being in the military.. sometimes you get called away from your family to work in a war zone.  The couple weeks before she left, we went crazy with money again – fancy dinners, nice hotel stay, etc.  I don’t regret that though – we didn’t know if we would ever see each other again.  That time was worth every penny.

The incredible shrinking debt

Once she finally left, it was time to get serious about money.  She was stuck on base in the middle of a desert, and there was literally nothing to spend money on.  So she was great the whole time she was there ( 4 and a half months ).  I continued to work 80, and sometimes 90 hour weeks.  No time means no spending, right?  I did move off base while my wife was away – into a small one bedroom apartment.  I rented a U Haul and had some friends help, so it didn’t cost much. This ended up helping us save money, since the rent + utilities was less than the BAH that we would now get.  I made my lunch every day, and ate dinner at home.  I spent money on nothing, except a plane ticket to visit family at Christmas, and a few small gifts.  I also refinanced one of our cars, from a payment of $570 to $452.  The term was a few months longer, but the rate was significantly lower, which meant less interest paid overall.  The old Sentra ( $100 car note ) was paid off as well.  I did manage to pay off our credit card debt while she was away, and build a savings account.  I also laid the foundation for my side business, though I didn’t officially form it until 2007. 

Free Spirits

When she got back in early 2006 life was great – our family was together again, and we had no credit card debt hanging over our heads.  Money was no issue anymore, so we spent it.  A lot of it.  We paid off our credit card bill every month, but didn’t save a dime.  Life was short, we were young, and we had a blast.  I cut back on my hours at work to a more reasonable 55-60, which left me a lot more time for family.  Financially speaking, we could have saved a ton of cash ( and should have ), but it was a blast.  We even bought that 65″ HDTV that we’d wanted for so long.  Money began getting tight again though, and we made the ( very difficult ) decision to trade in our gas guzzler.  No, not the Navigator ( too much negative equity ), but the Mach 1.  We sold it at CarMax ( came out even with our payoff ) and bought an 07 Honda Accord Coupe – 4 cylinder.  Our payment and gas bill dropped quite nicely, and we moved on.  My wife also got a new job around this time, ( Non military ), which translated into a huge pay cut.  It meant no more trips to Iraq, so we were ok with it.  I also had LASIK eye surgery to the tune of $3300. 

2007 – A year of change

2006 ended ( with a non-plastic Christmas, thanks to my Christmas Fund at work ), and 2007 began.  Our poor financial habits continued to follow us, and keep us from making the right choices.  After months of spending more than we made, or savings account had dwindled, and was running out.  Then good fortune struck around August I believe, and my wife’s VA disability claim was approved.  They deposited a settlement retroactive to her end of service date, which put a nice sum of money in our bank account.  We sent most of it to savings, and spent a little.  It was also time for some more changed.  We traded the Navigator, it’s fat payment, and thirst for premium gasoline, and got a Honda Civic Hybrid.  We did have to pay about $3000 to get out of the lease ( negative equity ) but the math worked out in our favor. 

A new home

About this time we started talking to our realtor again, and looked at some houses.  We picked one out – a spec home.  It was 95% built, but the buyer had backed out of it.  For this reason, they gave us a discount off the listed price.  It was not my favorite floorplan, but it was very nice and very spacious.  It was also tens of thousands less than my favorite floorplan, and located in the neighborhood that we really wanted to buy in.  We pulled the trigger, financed $195,000 at a great fixed rate, and sealed the deal.  Right after we finishes closing and were handed our keys, we went back to our favorite Honda dealer.  There, we traded the Accord for a Honda CR-V – one of the most fuel-efficient small SUV’s around.   Once again, we took a negative equity hit.  This vehicle would help immensely with our move.

After tons of home purchases ( fridge, new bed for us and our son, elliptical, misc. stuff here and there ), and all of a sudden we’ve got a pile of credit card bills.  The difference this time is that the balances are all at 0% interest, and we *could* pay them off if we wanted.  We did make a few smart choices; we opened Roth IRA accounts for both of us, and also a mutual fund account.  All three accounts have small automatic monthly investments.  We are forcing ourselves, slowly, to save and invest.

Right here, right now

That brings us to today.  We now own a house with a large mortgage payment, and two fuel efficient cars.  We plan on keeping both of these cars until they are paid off.  They are Hondas so this shouldn’t be a problem.  We are slowly saving for retirement, and watching our budget much more closely.  My business is bringing in a bit more income these days, and I believe that will continue to rise.  We have moved a few of our budget items to the “envelope system” which is working out OK.  Not perfectly, mind you, but OK.  Once our 0% credit card debt is paid off ( one will be gone soon ), we will “pay ourselves” directly to our savings account.  More forced savings, something that we need.

For all of you who made it through this entire story, thank you.  I know it was long winded, and way too many words.  I just wanted to show my readers what my story is, and where I’m coming from.  I’ve had lots of cash, and I’ve been deeply, hopelessly in debt.  I am learning, and try not to repeat mistakes of the past.  My experiences show in my writing style, and now you have a little more information about me.