In my last post, I alluded to the state of my finances in the first decade of the 21st century.
How bad had my finances gotten?
Well, at their worst, I can remember something along the lines of this somewhere in the neighborhood of 2005:
- About $20,000 in student loans (already consolidated at “record lows” around 7%; I was basically stuck here as interest rates continued to drop, as these loans could not be refinanced, again.)
- A car loan around $12,000 (I would buy a Lexus Rx300 in 2006 for around $25,000. Then, I would follow that up with another car purchase in 2010; a used Volvo C70 that got $70 oil changes, took premium gas, and seemed to literally EAT TIRES.)
- Credit card debt that was a little over $40,000.
- I probably had one of those personal loans that the credit card companies offer you to “help you” as you transfer debt from your credit cards and start making “one easy payment”. I don’t remember what the amount was for. I just ended up running my credit card balances back up.
I can vaguely remember looking at the net worth calculation in my financial software, at some point, to see that I was a little over $60,000 (aka: more than my annual salary, at the time; and, the reality might have actually been worse) in the hole…including the money in my 401(k). In financial notation, a negative amount like that looks kind of like this:
($omething is really wrong)
But, I was lucky. I had a good job with a good salary, a nice bonus opportunity to go with it, and, to top it all off, I worked for one of the few companies that still offered a pension (and, I was vested). I had also bought a house in late 2004, and real estate was doing very well in that “fog the mirror; get a mortgage” age.
So, I could take my time handling this little debt thing. Right?
RIGHT!!! I mean, so what if gas prices are over $4.00 per gallon. I’m still…good…kind of.
And then, in 2008, I would return from my trip to Zambia to a very down day at the stock market.
The first signs of the financial crisis and what would become known as The Great Recession had begun to show themselves.
Still, my financial gears didn’t really start grinding at a quicker pace until my employer’s bottom line started getting hit. Things would get bad enough that an early retirement opportunity would come with a caveat that there might still be some additional reductions (pronounced “layoffs”) needed afterwards. And, the severance on those additional reductions would not be as lucrative as for the early retirement opportunity. (Basically, everyone was told to take the early retirement if they qualified in “corporatese”.)
Even though the early retirement thing seemed to take care of everything in my area of the company, I still had to do the math on the “lose my job” scenario (I gotta be me!). As it turned out, even the money I likely would have gotten, if I were to leave the company and take a lump sum from my pension, would not have covered all of my revolving debts (to say nothing of the car and house).
Oh, and the nice bonus I was eligible for? Maximum bonus reduced…almost cut in half.
At that point, my cubicle felt a bit like a prison cell.
Don’t get me wrong; I like my day job. But, at that point, I realized that I HAD to be there as much as I wanted to be there. It is a tremendously uncomfortable feeling.
The changes I would need to make were going to be difficult, and they would take some time. Of course, I’d also still trip over some of my old mistakes from time to time (see my run of car purchases above). It would be another 5 years before I started feeling at all comfortable with my financial situation. In 2017, revolving debts would be gone, and I would begin investing outside of a 401(k) for the first time in a long time. And, in late 2018, I would finally get out from under my mistakes with auto purchases, and began living without a car payment for the first time since 2004 (that Ford Escape is ALL MINE).
Would you look at that? A happy…middle…to the story.
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