Hi all. I'm Croz. I set some goals going in to this year. One was to "end 2007 in the best shape of my life," and another was to "be financially responsible."

Notice the disparity? One is all "END THE YEAR IN THE BEST SHAPE EVERRR!!!!!!!!!!" The other is "be financially responsible." What the hell is "be financially responsible?" My sub-goals for that were equally weak. "Pay bills on time." Shouldn't that be a given? Unfortunately, that's rarely been the case for me.

It's April, 1/3 of the way through the year. I'm down 30 pounds and I can lift pretty heavy weights. I know when I drop the remaining 45 pounds, I'll look good and I have a plan to get there by year end.

But I'm not doing so good on the money thing. That's part of a long, stupid story that I'll get to in pieces, over time.

One thing I discovered, is that I was doing good on the fitness thing for a couple of reasons. First, you can see results pretty quickly. Usually in a few weeks of concerted effort. Trust me, when you're 75 pounds overweight, maintaining all that fat takes some serious calories. When you drop the calories, the weight goes quick.

But more importantly, I could do it all myself. I control what I eat. I can make sure I get to the gym over lunch 3 days a week. I don't need to get anyone else to 'buy in' to a plan. I don't need to coordinate with anyone else. I can't do that with money. I'm married. I have three kids (more about all of that later.) I have to make sure that EVERYONE is on the same page to make financial progress.

I also thought I was trapped. After paying all of my debt payments, and all the other expenses, there's not a lot left each month. I have no retirement savings, no emergency fund, and long notes on 2 cars. I couldn't see a way out. Once the cars are paid off, we're going to want new ones, etc.

I spend a lot of time embarrassed. See, I'm not a 22 year old college graduate making $14/hour. I'm a 38 year old professional making a six figure salary. (Just barely, but it's still 6 figures.) I work with people who take trips, buy nice cars, buy big houses, etc. And I feel just as broke as I did when I made $15,000 a year. It's embarrassing in a lot of ways, and humiliating in even more. I live an hour drive from Disney, and my kids have never been.

I'm financially fat. I'm huge. My checking account wheezes and has to rest when it goes up a flight of stairs.

And I've been that way my whole life.

Unfortunately, I've found lots of excuses for why it's not my fault. Including one doozy that cost me everything. But much like the thought process that led me to decide that I could fix my lifelong battle with weight once and for all, I decided that if I had a chance at a happy life, it was going to require me to achieve financial security. (I wasn't even thinking about financial freedom yet.)

Now I have a mechanism. I tried Suze Orman and found that interesting for uncovering your underlying beliefs about money, but it wasn't until I found Dave Ramsey, that I understood that I wasn't doomed. Dave gets a lot of flack for being simplistic, and not always using the best method, but I found a system that I could make work.

This journal is going to be about that journey. I'm not going to be able to end 2007 "IN THE BEST FINANCIAL SHAPE OF MY LIFE!!!!!!" But I'll be on the way.

Also along the way, I'll be telling stories. This journal is primarily for me. Writing things down helps me work through them. Helps me clarify, and makes them more permanent. So I'll be doing that.

I'm going to enjoy the journey. And if you're feeling doomed too, then I hope I might be able to help.

Probably should have warned you up front. I tend to be long winded...

Time for some background. I'm a 38 y.o. male. Married with three kids. My wife is 43, and my kids are 16, 9 and 7. My two younger children are special needs. My oldest also has some issues as he grew up, but he's old enough to make the decision that he doesn't talk about it. I'll respect that here.

Having special needs children is tough. Very tough. The first, brutal reality, financially, is that developmental disabilities are usually not covered by health insurance unless your state mandates it. We fought and fought for a diagnosis for our kids, only to find that once we had one, we were on our own financially.

Shelling out $40,000 a year in uninsured medical expenses is tough at any income level. At the time, it represented 50% of my gross income. That's not sustainable for any length of time. For years, I used that as my excuse for a rising mountain of debt. But the reality is, that if I looked back at all of the bills during that time period, I can say that a lot of that debt was tied to a vain attempt to continue to live a decent lifestyle at the same time.

I kept spending, and kept refinancing. All along the way, I didn't worry about the rising balances. So long as I could keep the payments the same or lower, I'd keep going. More and more debt got moved to the house. During the first years we owned the house, the value kept going up and up. The last straw was the 125% mortgage we took to build a therapy room in the basement for the kids.

Then the bottom fell out. We owned a newer home in an old neighborhood, which in our town, was the hot trend. That's why the price of the home kept going up. I figured at some point, the value of the house would keep going up until we were no longer upside down. Then a large builder bought a reclaimed train yard down the street and started mass producing neighborhood style homes at rock bottom prices. That sound I heard was the value of my home dropping like a stone.

No worries. So long as I could keep making the payments, eventually it would all get paid off. We were just trapped in the house, right?

Wrong.

A few months before the disaster, my bank had sent me a check saying that an escrow review determined that I had an escrow surplus. That check evaporated into the black hole of our expenses. Then they sent me a letter. They had made a mistake. They shouldn't have sent the money. In fact, they should have sent me a notice that I had a shortfall that they needed to raise my payment to cover. They put my shortfall into the computer as a surplus, so I was doubly behind. My house payment was going to do up over $300 a month.

Then two of my credit cards changed their policies, and my monthly payments were going up significantly as well.

Suddenly, I had too much month left at the end of my money. I no longer had the income to cover my expenses. I was going to fall behind in my budget by hundreds every month.

We decided to go to an attorney to talk about our alternatives. Some friends had spent their way into bankruptcy a year earlier, and they kept saying it was the best thing they ever did. We didn't want to go bankrupt, but we knew we needed to do something to get this problem solved.

The attorney told us that the bankruptcy laws were changing. In a few months, full discharge bankruptcy would not be possible for us because of my income. The new laws required repayment plans for anyone over a certain income level.

The entire time we were spending so much to take care of the kids, I knew in the back of my head that bankruptcy might be in my future. But now I was being forced to make a decision. It was now or never.

We owed $215,000 on a house that was now appraised at $150,000. I also had over $25,000 in credit card debt, and almost $60,000 in car debt. I could spend years in a repayment plan on a court mandated budget to pay that debt off, or I could go through bankruptcy and walk away. Get a "fresh start."

I chose the 'easy' way out, and we filed for chapter 7 bankruptcy. Thirty days later, my company downsized and I was laid off.

It's easy in retrospect to say that under that financial burden of the kids disabilities, and then the layoff to say that I did the right thing. I "didn't have a choice." I told myself that for all of the intervening years. But now I'm not so sure. I let life take over and rather than trying to find ways to do this within my means, I took the easy debt and kept going like I knew what I was doing.

Problem is my personal integrity keeps getting in the way. I "stole" $300,000 dollars that I borrowed and didn't repay. The value of the house kept falling and it was eventually sold for $120,000, but that still puts my on the negative side of the balance sheet for $180,000. I told people I was responsible enough to borrow money, but I really wasn't.

I can't change that. You can't really pay the money back. I have to live with that for the rest of my life. It would be easier if I had used that fresh start to do it 'right' this time. Live without debt, and live within my means. But I didn't. Everything I read told me that I had to get debt and start re-establishing a credit history. And trust me, even after you declare bankruptcy, they are ALWAYS ready to loan you more money.

It all started back over again. We tried to do some things the right way, but we continued to make bad decisions.

That has to change. Starting now.

Just reading your entries and giving you some applause! Wow. That is a long row to hoe there.

I also want to commiserate about the weight lifting vs the financial fitness. I lift and you are right. There is instant gratification in it. Even it is just the sore muscles or the sweat on your brow or the 5 pounds added every month. The hardest thing I have had to learn about debt repayment is this: NOTHING HAPPENS if you are doing it correctly. I now make a drip noise in my head to symbolize the accrual of my wealth. Every day I don't spend my money it still has all of its potential. It is a new way of thinking for me but so worth it!

Hang in there.

Probably should have warned you up front. I tend to be long winded..

That's okay because you write well! It does mean that I have to set aside larger chunks of time to read your stuff, but I'll do it. I'm eager to see how you tackle your "financial fat". It sounds as if you have some challenges. Remember: when you don't see immediate progress with your finances, tell yourself you're getting rich slowly...

Thanks guys. I appreciate the support. I'm really committed to this.

Murphy visited last night.

Dave Ramsey said as soon as you start down this course, Murphy will visit, and something will go wrong. He stopped by last night.

My wife was in the laundry room and asked "Why is the floor squishy?"

Never a good question.

Apparently, the water that condenses in the A/C unit is leaking out under the furnace, hitting the concrete floor and seeping under the vinyl flooring in the laundry room. The flooring was getting soft and puffy. I carefully peeled back a corner, and it's wet and rotten.

Fortunately, it's concrete, not wood. So i need to fix the furnace, remove the vinyl and do something to make the floor look pretty. Or at least pretty enough that we don't feel compelled to do something expensive.

I will, however, do it debt free.

I had the same thing (or close enough, mine was the water heater leaked) happen to me about 6-8 months ago in my old house croz. I peeled up the lino, scraped the floor smooth, painted the floor with those sprinkles to provide some grip in case it gets wet and put up new rubber baseboard trim. It ended up looking good and cost about $25 and my time. And then $600 for a new hot water heater... but that I couldn't scrimp on

Thanks lostmind. I hadn't thought of doing that epoxy concrete treatment. That would work great in there. When we bought this house, we had to rip all the carpet out, and we decided to stain the concrete. Looks great, but it wears terribly. I'm forever touching it up so we don't get driven to charge some new flooring. I was going to do that in the laundry room, but was dreading it because I knew that every time I had to pull out the washer or dryer, the floor would scratch. Doing an epoxy treatment might cost me $45, but it won't scratch up terribly. I'm going to have to look into that.

Fortunately, I'm pretty handy with this stuff, so I'm reasonably certain I can fix the furnace.

The thing that really pisses me off about this, is that we had a home inspection. He said the furnace was great, but we started to have problems with it right away due to poor maintenance by the previous owner.

The joys of home ownership!

I've been thinking a lot lately on how we'll manage to stay focused on our debt snowball over the few years it's going to take to get everything paid off. (I'm doing all projections based on NO RAISES or increases in income of any kind. I have a bad habit of assuming an always increasing income and spending before I have it.)

One thing I've figured out is that if we're going to be frugal, without feeling deprived, I'm going to have to do things to make our stuff last longer so we don't feel compelled to buy new. Keep the cars clean and waxed, keep them maintained, repair rather than replace, etc.

Unfortunately, some of our stuff is nearing it's last legs. Our living room furniture is over 5 years old, and has taken a real beating. Mostly, the couch and one chair have rips in the decking, and springs poking into the bottoms of the cushions. I'm going to try these: http://www.improvementscatalog.com/home ... avers.html to see if they help the sagging couch. Not quite as severe as my grandfather's old "plywood under the cushions" method, but close enough! At $17.00, it's worth trying!

My current project, though, is the vacuum cleaner. We bought a good vacuum about 8 years ago. Now it's getting beat up. It doesn't stay upright, one of the extension tools cracked, and the little cord winder thingy's are broken. It drives us nuts because it keeps tipping over as we try to vacuum. My wife has been saying she wants a new one.

So I got the model number, and went online. I could get all the parts I need for $18.00, shipped. If $18.00 and a few hours figuring out how to fix it keep me from having to pay $400 for an equivalent vacuum, then I'm all for it! I'll let everyone know how it goes.

Success!

The vacuum is now fully functional, clean and completely repaired. $18.00 and about 60 minutes work and it's back to 'like new' status!

On to the furnace!

That's awesome Croz!

Thanks Lostmind. While the vacuum was really a small victory overall, it represents something bigger to me: a change of mindset.

My old mindset said, "I'm far to busy to be bothered with something like that. Time is money, you know. Better to focus on things that can make a big difference."

The big difference is that I'm post bankruptcy, and still broke!

So the vacuum is fixed. I diagnosed the furnace / A/C unit yesterday. I'll be fixing that Saturday morning before it gets hot. (I have to shut it down for a few hours.) I made a list of all of the annoying broken stuff around the house and what it will take to fix them. Each will get budgeted and done. I'm replacing the temporary happiness of getting something new with the extended happiness of knowing I made something last.

Trusting the wrong people, repeatedly...

It helps me to tell some of these stories about how I got here. Hopefully, it helps you too. If I can keep one person from going through what we went through, then that's a good thing.

One of the problems my wife and I have had over the years is assuming other people behave the way we do when they say things like "Let me help you." When we say, "Let me help you," we mean it. And we do it truly to help, not to benefit ourselves.

Facing bankruptcy, and laid off, we decided to do something we always wanted to do: move from gray, cold southeastern Michigan to sunny Tampa, Florida. We were losing our house no matter what, and I had no job. I could find a job and a new place to live in Michigan, or I could find a job and a new place to live in the Tampa Bay area. I chose the beach.

My sister-in-law owned a condo in St. Pete, 15 minutes from one of the country's best beaches. The condo next door was owned by an elderly man who lived up north. He hadn't been there in 2 years, and wasn't planning to be there for quite a while. She took care of it for him.

She said she had permission from him for us to move into the condo rent free for 6 months while I found a job and we found a permanent place to live. She called storage places and reserved a storage unit for our stuff, since the condo was furnished.

So off we went.

We got to St. Pete after a 20 hour drive to arrive at a trashed condo. She had let someone she knew live there and they moved out that day and left it a mess. We spent 6 hours cleaning it the day we arrived (after a 20 hour drive). That turned out to be the highlight of the experience! The A/C was broken (Florida in July!) so she went out and bought a window A/C unit. With that running, the condo averaged a comfortable 81 degrees.

Two days later, our stuff was ready to arrive. I called the storage place to find out that she had never reserved a spot. And they were sold out. We went into a storage place down the road from the condo and the lady there, while also sold out, called every place she could find until she found a spot for us. When she originally told us she was sold out, my wife broke down in tears. She had relocated her family from Ohio a few years earlier and she understood the stress. So we had a place to put our stuff, but at a monthly cost of double what we originally budgeted.

Then the fun started. Apparently, because she was helping us, she now owned us. She basically wanted us to clear every day's activities through her. She asked us where we were going, and when we'd be back. I became her next-door tech support for any computer problem at any time of day. My wife became her constant companion, going everywhere she wanted her to go. My kids were too loud. The window A/C was too loud. The dog barked too much. If we walked out the condo door, she'd be there wanting to know where we were going, and when we'd be back.

That 2 weeks felt like the longest three years of my life. We had to get out but we had no money. I had a severance, but I still hadn't started working. Also, my bankruptcy wasn't discharged yet, so landlords didn't want to rent to us for fear we'd include their lease in our bankruptcy after we signed. So the security deposit, extra rent required, etc. would leave us cleared out.

My mother in law offered to loan us the money to pay for the rent and security deposit. We agreed to payments, etc., and she sent us the money. We moved into a rental house shortly after, and started paying rent after 3 weeks, when we had planned on a 6 month period without rent.

We tried to to the right thing financially, but relied on the wrong person who offered to help. If only we had learned from that...

When we filed bankruptcy, we exempted our cars. We knew that with a bankruptcy, anything we could buy after that would have excessive payments so that we'd be paying the same amount for worse cars.

However, my wife's car lease still nagged at us. The payment was high, and it was still a lease, so we'd own nothing at the end. What we wanted was to put her lease into the bankruptcy and replace her car with a quality used car. My sister-in-law (yeah, the same one) had sold her condo and bought a cheaper place. She had a bunch of cash in the bank. She offered to loan us the cash to buy a decent car, that we knew we could pay off in about 8-9 months. We knew it wouldn't be pretty owing her again, but she wasn't right next door anymore, so we thought we could make it for a few months.

We allowed her car to go into the bankruptcy and found a fantastic used car. It was a 96, but it was immaculately cared for, and relatively low mileage for the age. We knew we could pay it off in about 8-9 months just by using what we had been paying on the lease.

We were ready to go! But what my SIL hadn't told us, is that between the time of the promise and the time we found the car, she had gone on a spending spree for her new place, and didn't have any money left. She couldn't loan us anything.

So now we needed a car, but would have to finance it. Great. Problem is, that when you are post bankruptcy, the bank rightfully decides that you are an irresponsible person. If they are going to loan you money for a car, they want to know they will have something worth while. So we had to buy a car that was less than 4 model years old, and had under 45,000 miles. Our new payment (at 18% interest) was now exactly $25 a month less than the lease we gave up.

In the meantime, my MIL loan went south. She had put the money she loaned us on a credit card, and we were making the card payments. We were going to pay extra on it when we got back on our feet. My wife had just gotten a new job after being a stay at home mom so we could try to get everything caught up.

For some reason, my MIL decided to pay off the card out of her savings. So she did. Then she called us and told us she needed the entire balance right away. We didn't have it, because we had agreed to a repayment schedule. She called me all sorts of things on the phone and hung up. We haven't spoken since. (It's been over a year)

So what did we learn?

Number 1 lesson: We dug the hole ourselves, we have to climb out ourselves! This time, we're doing it all on our own without relying on whatever anyone else might promise us.

Number 2 lesson: Murphy lives. Things will go wrong in spite of your best plans. Promises will be broken at the worst times.

Number 3 lesson: Unfortunately, not everyone does everything for the same reasons. We took offers as honest offers to help. But the real motivation for the offers came from this competition between my SIL and MIL over who could 'save us.' They were offering to help not because they wanted to, but to make the other look bad.

Number 4 lesson: While you can't pick your family, you can pick the type of relationship you have with them. And our Christmas budget is a lot smaller now.

Debt limits freedom.

That thought has been on my mind a lot lately. I work for a small startup in high tech. I've done the startup thing before, so I know the good and bad. Right now, it's bad. Problem is, I see some structural problems that I can't change, that indicate to me that it's not likely to get good anytime soon.

What does that have to do with debt? A lot, really.

If I were debt free, and had a fully-funded emergency fund, I'd have a lot more options available to me.

1) I could stick around here, and ride it out hoping that it would turn around, knowing that I'd be OK for a while if the worst happened.
2) I could take a slightly lower paying job somewhere with a lot more promise and potential.
3) I could move across the country if I wished to chase my dream job.

As it is, I'm not in the shape right now to weather ANY kind of financial storm.

To protect my family, I have no choice but to start looking for a new job. Because of the debt, some interesting jobs I've seen so far are likely not options, because their salary ranges are too low.

So my options, and therefore my freedom, are limited. All because of debt.

Congratulations on that large victory! I agree, that's a major change of mindset and a key to success. It seems to me like you're taking responsibility for your choices. We're cheering you on.

squished

Yesterday, we completed our first monthly budget. We had always looked at each month's expenses and income to figure out when we were going to pay what bills, etc. But this is the first month where we listed every income source and amount, and every expense (down to the last detail) to figure out where the money was going.

The first rule of budgeting is: Income - Outflow = 0

For us, Income - Outflow = -$200.

We had a lot of unplanned expenses this month. Well, they weren't really unplanned. We knew they were coming. We just didn't plan for how to pay for them. Now they hit.

Everything will be fine. Part of our monthly expenses are the amount we put into a savings account each month to cover homeowners insurance and property taxes. I can easily manage to reduce that by $200 this month, and put in an extra $200 next month. But our goal will be to find another source of cash, or somewhere else to cut so that everything is covered THIS month.

To get our mini emergency fund up and running, I have a ton of things going up for sale in the next few days. I used an informal rule. If it was on the bubble of sell vs. keep, but it was purchased with a credit card, it's getting sold. If it was purchased with cash, I can keep it. We decided to keep all of the kids. My 16-year old was on the bubble, but we decided we couldn't get much for him. Who actually wants a teenager? Just no demand for them.

We also made a final decision to sell my wife's car. We have a warrantied repair that we're taking it in next week to fix, and then we get rid of it. While we'll have to take on some unsecured debt to cover the upside down portion of the auto note, we should still be able to reduce our overall debt load by $15,000 - $20,000. More importantly, it will free up some room in the budget for paying down debt and better budgeting for other expenses like home improvements, Christmas, etc.