I’ve been looking forward to getting this bill in the mail. Finally, my credit card balance is paid off – almost. I’ll start this blog by finishing a cup of black tea that’s a leftover from today’s work, and switch to a celebratory glass of wine (from a bottle!) by the end. Of the various milestones on my recovery path, this is one I’ve been approaching for years. It’s a path I started following because I am an optimist, which is what got me into trouble – maybe.
The biggest stumble in my financial history is probably My Triple Whammy. I reference it regularly because it was a pivot in almost every aspect of my life. Money isn’t the most important thing in life, but it is the most pervasive in this society. At the time it seemed like a big stumble, but one that would be definitely temporary. Bad times happen in long investing careers, and I was unlucky enough to encounter what some financial professionals have called a perfect storm of bad luck. Until then, I’d almost always paid off my credit cards every month. I was retired and my income was from my stock portfolio, a somewhat diversified portfolio that was suddenly deflated. The companies, however, were making technical progress. Surely they’d return and recover. It would be silly and stupid to sell something that was low just before it would become big, and possibly much bigger than before.
One answer, relax my stringent financial habits. Use the credit card and its credit limit for essentials for a few months. The credit limit was tens of thousands of dollars. My credit rating was in the top tier. Why suffer when I had resources that could ease ills, especially if used temporarily and prudently?
Obviously, that didn’t work. The companies progressed technically, but the investment community either abandoned or gutted them. I watched the bills accumulate, strengthened my frugality skills, energized My Backup Plans, and worked and waited. My mortgage was too expensive, yet I couldn’t sell my house. That housing hurt if chronicled in My Mortgage Modification Chronology. Dive in if you want financial slapstick episodes that are funniest in retrospect, but not at the time. Still, I had hope. I had trust in the SEC, the FTC, and my skills in the job market.
Then, the credit card company learned that I wasn’t paying my mortgage. Even though I was sacrificing the mortgage payment to make the credit card payment, the credit card company effectively halved my credit limit. With no notice, my credit score took yet another hit because my credit balance was now too big of a percentage of my credit limit, not because I’d spent more but because they dropped my limit.
Skip ahead a year or so as my consulting business increased. I paid hundreds of dollars every month to drop that balance, only to see it rise again when I had to pay income taxes. Those taxes were at an effectively higher rate than just a few paragraphs ago when I was living off my portfolio.
And yet, I made progress. Frugality has its benefits, even when income is far below the median wage. It looked like it would take years to retire the debt, and decades before I could re-retire myself.
The biggest help came about a year ago. A friend gave me a financial buffer, a substantial financial buffer. That, plus help with a new career as a real estate broker cleared the hurdle of one year’s taxes, freeing up the payments to cut the balance down by hundreds of dollars per month. Every month was a mini-celebration. Near the end of last year, I had enough to pay it off entirely, but prudence suggested caution because real estate income isn’t guaranteed. (Massive understatements available for free.)
Last month I paid something more precise than an round number of hundreds of dollars. I paid the balance to the penny. There was a small, quiet celebration, but I wanted to see the next bill before raising a glass or two – and telling you.
Today, the bill finally arrived. I knew it wouldn’t be zero. I purposely put my Hulu account on the credit card account, just to keep some money flowing through it. That may seem strange, but modern financial institutions aren’t constrained by common sense. They live in an uncommon world.
I’ve paid off my second largest debt. My largest financial debt continues to be my mortgage, which is also being paid down at a few hundred dollars per month. That will take longer, much longer. My largest personal debt is to those people who have supported me through my recovery.
Along the way, I’ve met too many others who are facing tougher struggles. The old adage goes, “It takes money to make money” which is true; yet for some reason, very few give those without money the money they need to make the money that will aid their recovery. It takes money to make money, so why is it a surprise that those without money remain poor?
It sounds simple; “Pay down your credit” which is really pay down your debts. The reality is more complicated with extra fees, dropped credit limits, penalized credit ratings, and a persistence that worsens without sacrifice. Even now, my bill isn’t simple and hasn’t necessarily recovered. Take another look at it. The balance is $8.67 and the minimum payment is also $8.67. The late fee penalty is $37.00. How about one month with a minimum payment of zero? I expect to pay in full and on time, which is now much more manageable, but the pressure persists – and so does the credit limit.
An experience like this sours the expectation of dealing with the financial industry. An experience like a threatened foreclosure reveals unseemly aspects that aren’t apparent until witnessed. It is amazing that any other industry acting this way would survive, yet they will.
I’m celebrating the relief of no longer carrying around an enormous boulder on my back. It will be easier to walk taller financially and in the real world. But don’t be surprised if you see me hop a bit. It still feels like a pebble from that boulder has fallen into my shoe, which may make me walk a bit more cautiously for a while.