The Credit Trap

Half a Century of Debt

credit trapAt the age of 16 no one should be allowed to get a credit card. But in the early 1960s in my home town, obtaining credit proved to be as easy as walking into a store, filling out a short form with only my name, address, and phone number, and walking out with merchandise charged on my newly opened account.

That’s where my trouble started. Imagine a 16-year-old with humble beginnings, and parents who struggled mightily with their own finances, suddenly being able to open an account in a clothing store. This became the beginning of a downward spiral which ended last December with the filing of Chapter 7 bankruptcy.

The paying jobs I had growing up in Nebraska didn’t pay much and part time jobs were all I wanted because as a junior and senior in high school, my social life took priority over everything else. I sometimes babysat for $ .35 an hour. A hotel waitress job on Saturday mornings and during the summer paid me $ .17 cents an hour plus tips. Of course, in 1960 the amounts weren’t as paltry as they seem now. Comparatively, gas cost $ .25 a gallon, cigarettes were $ .25 a pack, movies cost $. 50, some new cars could be purchased for under $2,000, and a pretty good home could be found for under $20,000.

My first excursion into having a debt that I couldn’t pay came when I turned 17. I had a half-day job at a court house as part of a work study program in my senior year and that got me experience but little else. I had been charging clothing for awhile and eventually had to admit to myself that I couldn’t make my payment. I knew asking my parents for it would be pointless because they didn’t have it. After a few weeks of being unable to pay I started to get scared. A bill came with a past due stamp on the outside of the envelope and I thanked God that I had been the first one at the mailbox that day. I imagined being dragged off to debtor’s prison. Seriously, my mind always seemed to go to the worst possible outcome and, not knowing what happened to people who couldn’t pay their bills, jail time seemed a real possibility to me.

I finally decided I had no choice but to tell my dad so I went to him reluctantly, sweating profusely, and dreading his disapproval. Before I actually got to the point of my story, he may have been pleased because I seldom shared details of my personal life. I recall being very afraid to tell him what I owed the store – the relatively huge amount of $80.00 – and after I blurted it out I waited for his reaction. He looked shocked for a minute but paused before saying anything. I expected a lecture or just about anything other than what came next. Instead of yelling at me, he quietly told me he would pay it. He asked me if I had accounts at any other stores and I admitted that I did and gave him their names. My dad paid my debt the next day, then went to each of those stores and told them never to let me charge anything again. Embarrassment at what my father had done kept me out of debt for a few years after that.

In 1963 I married and we settled into an apartment for which we paid $75 a month. With both of us working I got to feeling pretty confident about the state of our financial affairs. One day I read a magazine that advertised a course of study from a school called Famous Writers’ School. Having always wanted to write, I filled out the form and sent it in. Within a few days I received a phone call from someone who wanted to come and talk to me about the course. When the salesman arrived he convinced me that this was the opportunity of a lifetime and that I needed to sign up right then and there so as not to miss out. I hesitated only a moment and signed a contract that obligated me to payments of $75 a month for a year which included the $700 cost of the school and the interest. What a deal!

I had a vague feeling that I should not have signed a contract and an even less vague feeling that I should have talked it over with my husband before I committed to anything. But I had done what I had done and now I waited for him to return home from work. I waited until dinner to tell him and started my explanation of the day’s events with the assurance that this wonderful opportunity would teach me the proper way to write. He remained unconvinced and told me that I had to call the company and get out of the contract. I don’t recall how I did it but after listening to the angry salesman threaten me with a lawsuit for breach of contract, I somehow managed to convince him that I had made a mistake and should not have signed anything without my husband’s consent. A couple of days passed before my husband and I had much to say to each other.

Gradually over the years we took on debt, accepting it as a way to get the things we wanted and needed. Looking back I know that I did most of the spending, though I seldom bought frivolously. We had our first daughter in 1966 and I justified my spending because I had a child who needed basic necessities and occasional toys and baby things. But our income didn’t keep up with so we applied for charge cards and were never turned down.

My husband’s job transferred us a couple of times and with each move we needed to settle in and used our cards to help in furnishing our homes. Our second daughter came in 1968 and following her birth we moved once again. This time my health deteriorated quickly and medical bills not covered by insurance were our responsibility. I had no job because with two children under two and health issues that sapped my strength, I could not get a job. Insurance paid 80 percent but the remaining 20 percent added up to a considerable amount.

I don’t know when it happened but I started to get very depressed, probably as a reaction to my health issues. I soon learned that if I went shopping I felt better so whenever my mood darkened I headed to the store, always justifying my actions by getting things not for me, but for my children. Who could argue with that kind of thinking?

In 1969 I had a baby, complete with major medical issues, and lost him in a premature birth. Following what some called a near death experience, I left the hospital after a few weeks with new confidence and gratitude that I could return home to my two wonderful children. I had a third daughter in 1970 and two months before she made her appearance we purchased a home – the largest debt we had ever incurred.

The cycle of indebtedness continued because in making minimum payments on our credit cards we seemed farther than ever away from getting out of debt. A few years later, when housing values were on the rise, we took out a second mortgage to consolidate our credit card debts. Unfortunately and predictably, since we didn’t stop using them, our credit card balances began to climb once again. I will admit that it was I who charged things most often, but in my defense, most of my credit card use at this time and later came after medical bills or other needs became more than we could handle on the money we had coming in.

I’ve always been an optimist and despite our worsening credit situation I believed that everything would be all right. It always had been and it always would be. In 1976 our marriage started to flounder. Instead of really working on it, which might have resulted in a more positive outcome, we had a brief period of counseling and settled into old habits. In retrospect, part of the reason we didn’t continue with counseling was because we could not afford it. By this time we didn’t do much of anything unless it seemed essential. After our relationship improved just a little we decided we could fix everything ourselves. This proved to be untrue and eventually we both wanted out. In 1988 we separated and in 1992 we divorced amicably.

I can’t honestly say the debt caused the rift because in truth we had always been in debt and in better days that didn’t seem to matter. But the day to day worries, the medical bills, the constant concern about money, and living paycheck to paycheck, certainly helped take the joy out of an otherwise peaceful existence.

The divorce left me in fair condition financially and aside from a couple of college loans for one of my daughters I felt pretty secure. By now I worked full time in a medical office and my positive perspective on life served me well. I had overcome some of my depression with the help of medication and remained hopeful about the future. During our marriage we had started doing foster care but had quit doing it mostly because my then husband didn’t find it as fulfilling as I did. Unable to foster children without his help we didn’t renew our license. When he and I separated I decided I wanted to be licensed again to do foster parenting and I took the training and began taking in teenage girls, an age group I especially enjoyed.

In 1992 I met my second husband and before we started seeing each other exclusively I told him I intended to continue doing foster care. I especially wanted to go into a program that would train me to care for children with special emotional needs. A unique provision of this program made it necessary for me to quit my job so that I could be a full time mom. He encouraged me, we took the specialized training and I soon quit my job. After dating for less than a year we married in a small ceremony.

When my husband reached 65 he retired from his job, after which his Medicare kicked in. I had good health insurance until the COBRA ran out and I became one of the uninsured people that we hear so much about these days. At the time the COBRA ended I had the option of applying for and paying my own premium on the insurance I had been using for several years. Legally I could not be denied. When I applied I found that all of my pre-existing conditions would be covered but my monthly premium would be over $1500. Unable to afford this, and forced to let the insurance go, my out-of-pocket medical expenses began to overwhelm me and once again I started using credit to pay the bills. This time I really had no choice. Being in this position, after having finally recovered somewhat from my past mistakes, left me feeling helpless. After applying for a couple more types of health insurance and being unable to afford them because of exorbitant premiums, I gave up.

After retirement my husband went into business for himself and I continued to do the foster parenting. I had found my niche and happily fostered several teenagers over a period of years. Financially we were doing relatively well and the need for a larger house became evident with the addition of a sibling group of three kids. We decided we would build a new home. My husband had been an architect pre-retirement and knew many people whom he could hire to do the work. He assured me he could save us about a third in building costs if he acted as the general contractor.

I drove around an area I liked and found a large lot for sale. We secured financing and I remember sitting at the bank talking about our blueprints and the estimates of cost and thinking, “Wait a minute. Can we afford this?” My smart little inner voice tried to tell me we were going to have problems but I ignored her.

Three months into the build my husband had a serious car accident that caused him to be unable to continue working on the house or working with other contractors to get the building done. I had to take over and I made a lot of mistakes. I signed contracts without fully understanding the fine print and my mistakes and lack of experience cost us a bundle. We had delays and cost overruns that resulted in the bottom line being far more than we had intended.

When we first started construction, the bank that financed it told us that if we ever got to a point where we needed more money we should just come to them. When the house started to cost more, we did that and were told we would have to come up with the additional money ourselves or face foreclosure. Believing we had no recourse, we wiped out our entire savings and paid for the remainder of the construction expenses. But we still needed a washer, dryer, microwave, dishwasher, and refrigerator. Sears came to the rescue with two credit cards, both of them at the credit limit in one day.

My job remained secure and because I still had a specialized foster home and housed four teenagers at the time, I had no problem supporting all of us. But as all foster parents know, nothing is ever permanent and circumstances beyond our control affect placements and therefore income.

We moved into our new home in February of 2005. My husband had fully recovered from his car accident and our finances, though much shakier than before, were predictable. We paid our ridiculously high house payment and periodically my husband would say, “I hope we can keep on affording this.” And I would answer that as long as everything stayed the same, we would be fine. I knew how precarious our finances would be if anything changed and I also knew the inevitability of change in this line of work.

Further compounding the issue of stability came from the fact that my husband worked as a mitigation specialist for FEMA. This meant he traveled to areas of national disasters to educate people about rebuilding their homes with an eye toward preventing a recurrence of certain types of damage. The year Hurricane Katrina blew through New Orleans he had been called and served for nearly five months in Louisiana and Mississippi. The fluctuating income became less of an issue during this time because the federal government pays well. But, as often happens, when one thing is going well, something else fails. Some of the kids that I had been fostering returned to their parents – a good thing for them and not such a good thing for me. But because of the income from FEMA we managed to stay afloat. I became adept at ignoring the signs of trouble, always making myself feel better by repeating the mantra that everything would be okay in the end. I started calling this my sticking-my-head-in-the-sand complex.

My husband returned home from Mississippi and just before he did I got two more girls and once again my income stabilized. It didn’t last long. I had three kids and two of them left in the same month.

Finding another teenager needing placement isn’t usually difficult but because of our specialized status, social workers look for kids who are a fairly good fit for our family. If care isn’t taken in placing a child in the right family, the placement may disrupt and this causes chaos in the lives of everyone involved. Additionally, I am one of only a handful of homes who take teenage girls and their babies, if they happen to have babies. Because of this, I sometimes go a few weeks before another child is found for me.

The year following Hurricane Katrina, there were no hurricanes requiring federal intervention so my husband was not called for a significant period of time. I eventually had two more teens placed in my home but they were unable to stay because of behavior issues. After a series of such events our income dropped substantially and the creditors started calling, and calling, and calling. My medical problems still required my doctors’ attention, I always had to take expensive medicine, and my only relief from that would come when I turned 65 in a few months and would be eligible for Medicare. Five months before that happened I became ill and had to be hospitalized with pneumonia. Three days in the hospital cost well over $10,000 and this bill would never be paid.

By now we had missed two house payments and the bank would not accept partial payment. With no way to catch up we knew we would have to move and we put the house on the market. With first and second mortgages equaling more than market value, there were no people shopping for houses in that price range. We consulted a real estate agent who specialized in helping people in our situation and with his intervention we were given some time. Foreclosure sales were scheduled on two different occasions and both times sales contracts were presented to the bank stalling the process. Eventually they accepted an offer and this saved us from foreclosure.

When we analyzed our financial health – or the lack of it – we realized that chapter 7 bankruptcy would be our only hope for the future. It took me forever to get to the point of agreeing to it because as poor as my parents were they had very strong negative feelings toward people who declared bankruptcy. It was tantamount to theft in their opinion and I grew up with much the same mindset, believing that people who did such a thing had no character. I eventually realized we would never be able to survive financially if we did not do it and I accepted the necessity for it.

This type of financial crisis can lead to homelessness but we were fortunate to find a good home in a nice neighborhood and the owner gave us the opportunity to rent with an option to buy at the end of three years. We’re hoping to be able to do that when the time comes but once again we find ourselves in the position of struggling. With the weak economy, and no disasters to look forward to (I know how awful that sounds), my husband came out of retirement and has been looking for a job. It is futile because he is 76 years old and even though age discrimination is illegal, no one wants to hire an old man who is deaf. I have no foster children at the moment and though my social workers know my situation, they are bound by behaviors that don’t include trying to drum up business so that I can have a child in my home.

Once again we are in the position of possibly being unable to pay our monthly rent. We have not used credit, nor will we, for as long as we live. The cliché of “too soon old, too late smart” comes to mind.

I am, as always, ever the optimist, telling myself that everything will be okay. That is probably the one thing about me that will never change and I think it’s okay. I can honestly say that I have never been proven wrong in that philosophy, flawed though it may seem. It has kept me from giving up hope, has bolstered my faith in God and in the future, and has helped me see the positive aspects of any situation in which I have found myself. I am grateful every day for what I have and know that no matter what happens I can handle it. I don’t know who taught me that but I would thank them if I could.


Emergency Cash Loan

Emergency Cash LoanDo you need to get access to money very quickly? If you don’t have a credit card, and your credit rating is terrible, a short-term loan from a payday loan company might be exactly what you need. They offer what are called an emergency cash loan, one that is typically granted in about 24 hours, allowing you to get access to a large sum of cash so that you can pay for the bills that are coming your way. The reason that people take out these loans is not so much bad budgeting, but unexpected bills that have shown up. They are typically the result of having medical bills, or perhaps paying for your kid’s tuition at college, and running out of money by the end of the month. There are some people that borrow money without actually having a reason other than the fact that they can get the money almost guaranteed. This is a mistake because of the large amount of interest that is charged, and as long as you have a paycheck coming in that can pay it off, there will be no problems with this type of loan.

Applying For An Emergency Cash Loan

You should go to a website that offers this type of loan. They will be able to give you the money that you need. They will simply verify that you do have a paycheck coming in, verify the amount, and then grant you the loan that you have requested. The amount of money that you request should always be less than what you will receive the next time that you get paid. This way you can easily pay it off, and get this behind you, and at the same time catch up on all of your bills. You could go to a local company that offers the same service, but it so much easier to submit everything online. You will then hear back from the business in a day or two, and this will allow you to rest easy about the bills you do not have enough money to pay.

Start Your Application As Soon As Possible

Although it is easy to submit the application, many people procrastinate for too long. It is so easy to get done, there is no reason that you should wait. Go online, find one of these emergency loan companies, and start the application process so that you can get your loan.


Bad Credit Cash Loans

Bad Credit Cash LoansIf you suffer from bad credit, you should know that loan sharks are not your only option. You can actually  get cash loans for bad credit at reasonable interest rates. The thing is, the lenders will not go out and find you, you need to find these cash loans for bad credit.

That said, if you need a quick infusion of a small amount of cash, you should go to Google and search for “bad credit loans”. We’re pretty sure there would be plenty of services that would be more than willing to extend a loan to you. OF course, this isn’t something that we guarantee if you have the worst of bad credit. But it is worth checking out.

The good thing about these lenders is that using their service is really, really easy. The only thing you need to do is to send your application,  wait for your it to be approved, fax your documents, and wait for the money to be sent to your bank account.

These lenders know that people with bad credit scores are not necessarily broke, they still have the capacity to pay small amounts of money. The good thing about it is that when your loan is approved, you can see the money in your account within a matter of 24 hours. If that’s not a short time to receive a loan, we don’t know what is.

But as with anything else, you do pay for this convenience with something else, and you pay for it with higher interest rates. Really, you’ll be pressed to find a bad credit lender with interest rates that are as competitive as the banks. However, it is possible to get interest rate lower than industry standards simply by applying for a loan with at least three lenders and then comparing their interest rates.