Getting Back on Track After a Financial Train Wreck
This is a guest post from The Stoic Investor who blogs at the site of the same name where you can find him giving advice ranging from stock selections to working abroad. Stop by and say “Hi”.
Let me start by saying thank you to Steve for giving me the opportunity to do my first guest post. I thought www.moneyinfant.com would be a great place to share my story as I could really relate to Steve’s story. You see even though I’ve turned things around in my financial life over the past year and half, it took a failed marriage and bankruptcy to finally open my eyes to how ignorant I had been in my financial choices over the past eighteen years. The following is a deeply personal story of how I got my act together and charted a radically new course to financial peace.
Three years ago in 2009 my wife and I filed for divorce. What preceded this was several months of stress and arguments originating from (can you guess?) money problems. We both were responsible for the lifestyle inflation that occurred after we married, but I have to assume a larger degree of the responsibility because I entered our marriage with a significant amount of my own debt. I had every kind of debt you can imagine: car loan, mortgage, student loans, back taxes, and personal loans. I had managed these debts for most of my life and somehow managed to balance the debt payments with current needs. However, with the increase in loans from a new truck and camper along with that of increased housing expenses from a larger house, our collective expenses were consuming all of our income and then some. We were in a situation in which our expenses were surpassing our earnings and we were both feeling the stress of this unsustainable situation.
My ex-wife had tried to persuade me to file for bankruptcy for about six months leading up to our separation. I fought against it because like most people I really didn’t want to default on my debt. I felt that it was I who had been irresponsible with my credit and I should take responsibility for repaying it regardless of how difficult it might be. When my ex-wife and I first separated I realized things were serious and I agreed to file for bankruptcy. It was a Chapter 13 filing which means most of the debt was simply restructured and a plan to repay it was accepted by the court. My ex-wife and I got back together to see if we could make things work with the relief afforded us by the bankruptcy. However, changing a family’s finances is like steering a large ship. You can make big changes that will ultimately change the course, but these changes take time, just as a ship doesn’t turn on a dime. Sadly, we didn’t make it through the adjustment phase and a few months later we divorced.
I was now broke, bankrupt, and divorced. I can say without hesitation that this was the lowest point in my life, but the greater sadness is that I still had not learned my lesson. Enter life after the fall.
I knew I needed to make some changes, but I didn’t realize the changes needed to be within me. I decided that working overseas would be a good idea and my first foray into international travel landed me in Afghanistan working as a government contractor. I spent a year dealing with the almost daily occurrence of RPG and mortar attacks and living in a tent with eighty other guys. On the financial side of things it was great. I had doubled my salary and had zero living expenses, food and shelter were provided, and the only bills I had were the bankruptcy payment and student loans. I could have left that year debt free and with money in the bank. The reality was I left with zero savings and had reduced my debt by only a few thousand dollars. Pathetic right? It’s ok to agree. I look back at that guy and don’t even recognize him.
When that assignment ended I realized I wasn’t ready to return home. How could I? I came overseas with the plan to eliminate my debt and returning with some savings to start my new life; I had done neither. I lined up my next assignment and ended up in the Middle East and again making good money. When I first arrived I had plans of getting a new car, new furniture, big screen TV with surround sound, etc. Same old stuff I had wasted my money on in the past. For some reason, of which I’m still not completely aware, I decided I needed to save some money. Then I stumbled upon a few minimalism blogs and decided I really didn’t need much stuff. As the months went by and I continued to curb my consumption my savings started to grow. I read Your Money or Your Life and became hooked on the idea of paying off my debts and having some savings to show for my efforts at work. I then read Thoreau’s Walden and that reenforced the frugal and minimalist tendencies that were growing stronger. Then the discovery of personal finance/investing blogs. It was here that the concept of financial independence permeated my mind and how it could be achieved by consistently saving and investing. I was sold.
My transformation has been nothing short of miraculous. I don’t say this to boast, but you really have no idea of how different my financial habits are these days compared to just eighteen months ago. In that time I paid off the bankruptcy a full two years early, paid off 32,000 in student loans, and built a net worth that was (-)13,400 in February of 2011 to one that is now just over 91,000. I routinely save greater than 70% of my gross income and I’m well on my way to financial independence. This has been accomplished by a complete philosophical shift in how I orient myself to the world. I’ve learned that financial responsibility is not just a means to an end, it is a lifestyle choice that gives one greater freedom in this life.
There comes a time when we all wake-up to the folly of our ways. It took ruining my marriage and the destruction of my credit to finally get me to realize that the way I was managing my financial affairs was unsustainable and would likely cause me more grief in the future if I did not change my ways.
Even though the lessons came at a great cost, I’m thankful for having a second chance to set my financial house in order and prepare myself for a better future.
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Wow, great job on all the changes you made in your life! Does your job limit you at all from posting blog posts?
Thanks for comment! I stay away from posting anything about who I work for as well as being a little vague as to what I do. This keeps me out of trouble at work.
Wow – what a great story. Well done for turning your life around.
Thank you Savvy Scot.
You’ve made big changes in your life – obviously successful ones! Sometimes it takes hitting bottom to find the will to make the changes.
Thanks for the comment! I’ve been lucky to have the chance to make things right. I would have rather learned this lesson the easy way, but sometimes it takes drastic events to motivate one to make drastic changes.
This is a powerful story, and I personally want to thank you from the bottom of my heart for sharing it. Your journey from fiscal confusion to financial growth is a great rags-to-riches story that I’m sure all of us would really appreciate. Great job, and keep at it, my friend.
Anthony, Thank you very much for your kind comment. Honestly, I was torn on whether I should share such a personal story. I decided I should because I think it provides an example that no matter how bad things may seem, and they did seem bad, if a person is willing to make drastic changes they can change the direction of their life.
Wish you the best in your own journey.
It takes a lot of effort and self belief to turn one’s life around. It came at a price but life is one great big roller coaster of ups and downs. I look forward to following your journey. Great Job!
Gareth @ Investment Road to Freedom
Thank you Gareth, much appreciated!
Hey what an amazing story! That sounds like one tough situation to be in. One that i hope to never fall in myself. Good job staying positive and fighting through it.
I couldn’t imagine how hard that could have been. Life is is full of up and downs and in order to be successful you must stay position in tough situations. Therefore, i give you a lot of props
FMT– Thank you. I certainly had my ups and downs during the past few years. What helped was being grateful for what I have now and knowing that someone, somewhere had it just as bad as me if not worse.
As the saying goes, ” Life is what happens when you’ve planned something else.”
Congratulation on turning it around. So many people are stuck in the vicious cycle. It’s amazing what you accomplished in 18 months. We were always savers so we didn’t have much debt problems, but lifestyle inflation is still difficult to avoid.
Thanks Retire by 40. It has been the combination of a high salary, frugality, and dedication to purpose that has allowed me to accomplish as much as I have in such a short amount of time. I wish I had always been a saver, it would have saved me a lot of grief
Wow! That is some wonderful dedication once you got started, and quite the story of how you transformed yourself. Great job.
Thank you.
Thanks for sharing your story! It shows that if there is a will, there is a way. Glad you stopped making excuses and got things right on track!
Thank you. I’m glad I stopped making the excuses as well. It was long over due.
your story made my day. I think you would reap more and more benefits of your financial awareness with years to come.
All is well that ends well. cheers!!
Thank you for the kind comment. I’m hoping that things continue as they have, but one thing is for sure, I’m much better prepared to handle any storm that I may face in the future.
Wish you the best.
I would like to say a big “Thanks” to The Stoic for approaching me with the idea of guest posting and sharing his story here. I too found it inspiring and full of lessons for all of us. We all have choices no matter what happens and can turn things around dramatically when we make the right ones. Thanks Mr. Stoic!
Thanks again Steve for hosting my first guest post. It has been a good experience and your readers have been most kind.
Looking forward to following your story as well. Wish you and your family the best.
I echo the other comments when I say “wow.” Impressive transformation. Great job.
Thank you!
You are an inspiration! What an excellent learning experience. Congrats!
Thank you Dannielle.
Congrats on your transformation! Money can either control us or be controlled BY us and it’s completely up to us which it is!
Very true Dollar Disciple. A lesson I have finally learned and it has made a huge difference in my life.
Hi Steve and Stoic,
I have included this post at my website weekly roundup #2
Wow good work getting your life turned around. Also, kudos to you for sharing this personal story online (where mean sharks lurk everywhere).
Sometimes I contemplate if folks truly take time to write something original, or are they only just dishing out words to fill a site. This surely doesn’t fit that mold. Thank you for taking the time to write with awareness. Once In A While I look at a page and question whether they even proofread it.Fantastic work with this article.
The down side to this is you buy nothing the economic system fails. Our entire financial system relies on the purchase of goods and services. If we all took your advice our financial system would fail.