Telling the Kids

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I’ve got so much shame wrapped up in my money profligacy that I hide my new turn towards getting out of this mess from my kids. I say the reason we don’t have a pile of cash for their college is the 2008 crash, but the truth is that the money had been largely gone by then — because we had been spending way beyond our means for more than ten years.

I’ve even kind of blocked out all the details. We inherited a million bucks in the mid 1990s, by 2010 all that was left was a wee bit in Roths and SEPs that couldn’t be easily liquidated and some work retirement accounts.  I’m pretty sure that before 2008, we were down to nearly nothing else. But honestly I don’t remember. I was pretty much disasociating from the situation.  Then the market crashed. So to tell the kids the reason there’s no college money is the crash is a total lie.

We’d been milking that money for years, mostly for perfectly good things: kids’ preschool (which easily rivals college costs). Down payments on houses that, when we moved when the market shifted, we lost in the next turn. At least one terrible fiasco from a money manager. But also, mostly, there were the monthly drains of about $3,000 because we werent’t budgeting and living within the means of our income.

I feel terrible because I had taken on the job of paying the bills, and I let it get out of control, and I would have occasional binges of spending. And then I’d hide it. And then it would get worse. And then we were broke. But broke making around $200k isn’t like broke at poverty wages, so it’s easy to deny and carry on like everything is fine.

Oddly I have a kind of nostalgia for my days in my early twenties when I was actually making poverty wages and didn’t have credit enough for a credit card. I had nothing. But I wasn’t in debt either. But that was truthfully misery too.

So I am so happy that I now make the kind of money that I can get out of this mess in a few years and still cash flow kids’ college expenses. A little late to the party, but I am happy to finally be here.

We are super fortunate. But I need to remember that it could all fall apart in a heartbeat, so I need to carry on like there’s no tomorrow.

[photograph by Pat Turner]

Woke

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I feel like a drunk who just woke up in a car parked on top of a railroad crossing. My previous reality seemed so sensible. Go to a store, plunk down a credit card. Harbor a fantasy that I could easily pay for all this.

Every month when I opened the credit card statements I was in a bit of shock that all those little charges, many $10, $20, $30, could add up to thousands. And our $10,000 net monthly income never seemed to have quite enough to cover what we had incurred. So I paid as much as I could, but not all.

And that bit got added to the previous bit and folded into the next bit., which eventually added up to tens of thousands.

Clearly I’m not good at comprehending that small integers can add up to thousands.

And then I woke up on the railroad tracks.

And now I am hyper awake to every little expenditure. If feels so strange. But also it feels just right. No, I am not going to spend five bucks on some organic half and half. No, I’m not going to run off and get a manicure when I am perfectly capable of doing it myself.

I might even wake up enough to decide I can clean my own damned house.

What Not To Do #1

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I can foresee having lots of “what not to dos” so I’m numbering them. Here’s number one, which may not be of use to most people. Only people who in their young adulthood inherit 1.1 million dollars.

That was us. My husband’s parents did well with some investments and he, the only child, inherited everything when they had both passed. We were expecting a life of struggling, and then this bounty came along. We weren’t quite sure what to do, but fella had a friend who ran a big investment fund; so we put the money with him. Fella bought a BMW with cash. Otherwise we went along as usual for a year until I insisted we buy a house.

We were about 35 and about to have our first kid. The sensible thing seemed to be to get a mortgage for a $250,000 house. That seemed sensible.

Now I realize we were crazy. That mortgage came with a very long duration of interest payments.

Maybe we thought the real estate market was going to lag the stock market and this would be smart? Huh? I think we simply weren’t thinking. In any case, for the next decade we sold that house then bought another, sold it, then bought another as we moved from one state to another for jobs.

At every step we had these huge mortgage payments, which we would not have had if we had paid for that first house and subsequent houses outright. Those mortgage payments were at least 70% interest. We could have socked that money we were paying toward interest instead into investments. Moreover, the big mortgage payments — coupled with our failure to properly budget — led to us taking out $3,000 a month from our inheritance. And then in 2008, it was all gone.

Oh, stupid us.

Now I know — so let me pass this on to anyone in such a lovely situation of inheriting a chunk of cash: DO NOT take out a loan for a house; pay cash. Do whatever you can not to owe The Man any interest whatsoever. It is not in your interest. Only his.

The Talk

I just had the conversation with the fella, I mean my spouse, about the mess we are in. I’ve been the one sitting down to pay the bills for twenty years and he hardly ever asks questions about our situation. So I bear the responsibility and the guilt and the shame about the mess we’re in.

Enough.

So, hey, by the way, I need to tell you where we are, my dear. He puts his head in his hands and demands, “What?” Well, I respond, we’ve got a mortgage of $424,710; a home equity loan of $61,279;  auto loans of $35,000; parent loans of $24,000; and oh, um, credit cards of $93,403, for a total of about $636,000 in debt.

You can imagine how well that went.

Then there were rounds of recrimination and blaming and I said, okay, I made a lot of mistakes but I’d like us to decide together going forward what to do next. And did I mention that I already knocked the credit card debt down from $107k?

Anyway, I am tired. I have had enough of shouldering the guilt and all the decisions. We are in this together, down to every detail about what food we’re going to buy. I’m tired of being blamed for making beans that no one wants to eat. Let’s decide together what we want to eat and what we’re going to buy, what debts we’re going to pay off first, what we’re going to give up. What we are going to do.

This wasn’t easy. But I’m glad it’s all out there so we can pull together, together.