Open Thread #2 – Extreme Money Stories

This is way too distracting for me as I try to write a proposal, so . . .

I used to live in Wilmington, NC, where the film industry is big business because they can exploit non-union labor there. Once my head shot submission as an extra got me a strange phone call: would I be willing to do a nude scene? I was promised it would be a shower scene in a navy barraks with some other fellas and I would only be shot from — uh — behind. I thought about it, polled my wife, and agreed to do the scene. We were to talk money later.

When I went for my Navy uniform fitting and haircut and asked again how much I was to be paid. The “casting director” didn’t know.

On the day of the shoot, I started to realize that my ass was gonna be out there for the world to see, and I didn’t even know how much I’d get for it.

So I didn’t show for work. And I’m really glad I didn’t: http://imdb.com/title/tt0109403/

We bought a bank repo house in 1989. A 1930′s 2 BR 1 bath home with a full basement. 1800 sq ft total. It had sheetrock needing repair and hideous orange and red shag carpet in the basement. Upstairs was nice with new carpet and paint.

It had been on the market for a year, and we bought it for $28,000, which was an awesome price even back then.

While we lived there, we redid the basement with new carpet and paint, added a bathroom down there, and did a very minimal kitchen redo. Altogether while there we spent $5000 on fixups.

We sold that house in 1993 after 2 days on the market for $59,900, nearly doubling our investment in 3 short years.

With that money we built a new home, contracting it out ourselves. Thanks to the equity from out old home and the sweat equity from self-contracting, we built a 2900 sq ft house on a $123,000 loan.

That house in 1994 had an initial value of $150,000, and currently is worth $300,000. So, double our investment again. Though this time it took 13 years instead of 4.

In college, we would camp out in lines to get our student tickets validated for the best student seating at the big basketball and football games. Each student could get one validated (free) ticket per student ID, but that each student could get tickets for themself and 19 others.

I took an ad out in the paper saying that I would be close to the front of the line and would validate tickets for $20 – letting them stay home in their beds instead of out in the 20 degree cold. Totally worth it.

What I didn’t tell them was that I wasn’t going to sleep out in the cold either. With all $380 profit (19 tickets x $20 “validation” fee), I showed up in line an hour before tickets were set to be validated and paid someone at the front $100 to cut.

19 satisfied customers and 1 awesome seat for myself, I went to class $280 richer.

Back when I was around 11 years old, I went to the mall with a friend and his family, and was given a $50 bill to buy myself a new jacket. $50 to an 11-year old is a HUGE amount of money – I had never seen a $50 bill before, let alone have one in my possession.

While at the mall, I did what typical 11-year old would do at the mall, I went with my friend to the arcade to play some video games, and watch the bigger kids play. While at the arcade, my wallet was pickpocketed, along with the $50.

At this point, I had lost every penny to my name. Really. I was given a fortune, and it was gone in an instant.

It may not seem “extreme” because the amount of money wasn’t that large, but the incident taught me some valuable lessons:

1) It hurts to lose money.
2) Other people will do bad things to get money.
3) It’s a good idea to keep your money in a safe place.

These three simple lessons have since shaped my relationship with money. I don’t buy lottery tickets (because I know that I’m basically throwing my money away), and I invest in a balanced portfolio, keeping my investments well-diversified so that they stay reasonably safe.

That $50 felt devastating to lose at the time, but in hindsight it was probably the best $50 I ever “spent”.

Growing up I never really learned to manage money well. Looking back, my family was terrible with money management. They used credit cards extensively often just asking for a higher limit when the balanced reached that point, and never once taught me the value of saving or investing or planning for the future.

I went off to college, got the requisite 3 or so credit cards they give out the first week, plus a bunch of student loans and a loan for a computer. I graduated in 3 years with more than $50,000 in debt. I was 21 years old.

In my first post-college apartment, I regularly had one or more utility shut off for non- or late-payments. Eventually I managed to get a decent job, cut down my living expenses, got my credit bills into a credit management program and started savings — for myself, for a rainy day, for retirement. Around age 24 I met my spouse who was raised in a family that did teach good money skills. He helped me learn how set a goals for myself, to save, to invest and to live debt-free. I set a very lofty goal a goal to completely pay off my debts and save $50,000 toward my retirement before I turned 30.

Well, I reached the big 3-0 I am happy to say I wrote my last check for the remainging balance of my student loan six months before and the total sum of my retirement accounts reached the $50K goal three days before my birthday (time to spare!) No small feat. I have learned a lot about saving, now tucking away a good 1/2 of my paycheck, even though that means I live more like a poor college student now than 10 years ago when I was in college.

I am really proud of myself for setting a goal and actually making it. Even if the balance hadn’t crossed the $50K mark, I can still be proud of how far I have come.

Not my extreme money story, but a one time friend’s experience taught me so much about “get rich quick” schemes, the reality of working for money and how what you do in live affects your friends and family.

My friend Mike didn’t like how things were going in college, his college job as a bank teller wasn’t paying him what he was worth (or so he told me). He decided to quit college and strike out on his own with a company called Equinox.

What is Equinox you ask? Its probably one of the most horrific MLM’s I’ve ever laid witness to. They operate in the old fashioned way of sell the product to your friends and sign them up as sellers and you’ll make XXXX dollars a month guaranteed, blah blah blah.

When Mike signed up he was 20, I was only 19 at the time, fresh in town / college and totally oblivious to these types of “jobs”.

Before Mike got with this bunch, I considered him a wonderful and reliable friend. We respected each other and had many intellectual conversations about money, the world, religion, etc…

Mike invited me to a seminar at this new “job” he had. “You are perfect for this Kelly! You need to go in for an interview!” I am an environmentalist and a good salesperson so he thought I would make a killing. I agreed to go to an interview.

Mike came with me to the “interview” which I thought was odd, but dismissed because of the enthusiasm he was projecting.

My interview turned out to be Mike, his “superior” and I watching a video about the founders of this sham and seeing this “superior” draw dollars signs in a white board with a green marker like he was on Win Lose or Draw. “The green marker represents all the dough you are going to rake in Kelly!”, “Want to retire at 30? I will!”, “The people who don’t buy this product from you are losers and will die early because of terrible health. You are guaranteed at least $5000/mo.” and so on….

When I asked him about “pyramid schemes” and unfounded estimates for sales he got beligerant and told me that as a woman this was my only chance to make more than $25,000/year. That they were being generous to me for offering me this opportunity. Needless to say the conversation degraded quickly, one thing led to another and I walked out of the meeting. I told Mike this was a scam and he needed to get out fast.

Mike wouldn’t talk to me for two weeks because he was so “embarrassed” at my actions. I didn’t hear from Mike until 2 years later. He called me to apologize. He was $80,000 in debt, had lost personal savings of over $30,000 and all of his friends because of this cult.

The icing on the cake was the extravegance the superiors would exude to temp new recruits. Mike told me of Limos, gambling debts, jewelry, flashy cars, electronics and other toys to make it look as though they were ultra successful. He played the same game and paid dearly.