Debt or Alive: Uplifting Stories and Positive Solutions for Life After Debt

Afterword

Dedications and Acknowledgments

I dedicate this book to my parents, George and Annie Rahaim. Their unending struggles with money management and debt impressed deeply upon me the need to find a solution to this elusive and ubiquitous problem. I believe my Mom and Dad would be proud of this book, and of the ways we help people through the PowerDownDebt and PowerUpRetirement programs.

I also dedicate this book to my family and friends, who help me keep my balance in life. I am eternally grateful for their support, guidance and friendship.

I would like to thank the radio and television stations that have helped get the word out about Debt or Alive and the value of financial coaching. In particular, I’d like to thank deejays Jay Fidanza, Kevin Collins, Nick Danjer, Chris Collins, Joan Holliday, Jeff Tirrell and Tom Mayo for making my on-air time an absolute joy! I’m grateful to SAGA Communications, Inc., general managers Dan Guin and Dave Musante for believing in me; and to Melissa Bliven and the entire staff--too numerous to list, but highly valued--for their continuous, pleasant and professional support.

I’d also like to acknowledge General Manager Scott MacPherson and all the staff at Greenfield Community Television (GCTV), where The Money Doctor Show is produced, and other public television stations for providing an opportunity to broadcast useful and interesting information and entertainment to the public.

Thank you, in particular, to Chris Collins for his continued faith in my work and for his talent and vision as producer of The Money Doctor Show.

And thank you to Gray Bastarache, Mike Davis, Jan McCoy Ebbets, Tony Ferrero, Lana Rahaim and Terri Rice, whose generous time and feedback were essential to the completion and effectiveness of this book.

Finally, I’d like to thank all the people I work with and encounter who are dealing with debt and finding their way out. They continuously remind me that it is never too late to learn, to change your life, and to help others.

Introduction

The Stories of Debt

Debt or Alive is for people like you—real people who are caught in the vice of debt and doing their best to work their way out. This book tells the stories of their lives— how they ended up where they are, how they plan to get out, and some lessons they learned along the way.

Debt or Alive is also intended to work as a practical resource to help people in debt find financial solutions that will improve their lives. Alongside people’s stories about debt, Debt or Alive offers tips and informational chapters chock full of ways to navigate a positive financial path.

If you are feeling the pinch financially or just seeking information or suggestions about ways to save money and build toward the future, Debt or Alive seeks to give you some answers. But you may take comfort in the knowledge that you are not alone—there are countless individuals and families struggling to dig their way out of debt and build toward a comfortable retirement.

Debt or Alive tells their stories.

Every one of these stories is straight from someone’s life, the way they told it. Each of them has experienced a transformation as they’ve struggled with debt and sought responsible ways to work their way out. Some of their stories are intense and heart-rending, others are humorous and heart-warming. All the people whose stories are told in this book have one thing in common: they end in a better place than they began.

The people whose stories you’ll read in this book all stepped forward voluntarily, and it is my hope that their generosity and courage in sharing their experiences might help others through similar struggles.

I treat the stories that people share with me with great care. In respect for their privacy, we have chosen to use only first names in this book, and in some cases to change their names altogether.

It is an honor for me to share the stories in Debt or Alive. Whenever I hear people’s stories, about how they have arrived where they are—how they started out hopeful, but then struggled, denied, panicked, negotiated, stepped forward slightly only to step back further, thought about giving up but persevered and ultimately succeeded—I feel privileged. Sharing our stories is one way we help each other live better lives, by giving others a chance to learn from our experience.

The stories people tell me are focused around their financial lives—their debt in particular. And of course, every debt, purchase and transaction has its own little story. But when people share their stories with me about their debt, they are sharing their lives. For better or worse, our finances are a central part of our lives, affecting our children, parents, homes, livelihoods, and futures in so many ways.

Our stories are what we are.

I hope the stories here help convey the message that no matter where you find yourself in life—regard-less of how intractable your financial situation becomes and how impossible it seems to repair—others have been there, too. Others have felt the desperation and frustration of not knowing how they will overcome their mountain of debt. Others have struggled to sleep at night wondering how they got into this mess. And others have wished for a different life—a future of retirement, or self-employment, financial peace of mind, enough money to enjoy life.

I, and the kind folks who shared their stories, hope this book can help others work toward better financial futures and lead happier, less stressful lives.

My Story

Yes, I have a story, too, just like the people profiled in this book. When I say that other people have been backed up against the wall financially, I know first-hand what I’m talking about.

I was twenty-three years old when I filed bankruptcy.

I thought my world had ended. I grew up with a strong ethic around living up to your responsibilities, and bankruptcy sure didn’t belong in my realm. I sobbed uncontrollably when the debt counselor broke the news to me that I had no choice but to file bankruptcy. I vividly remember the sense of embarrassment and failure crushing me. For six months, I fought the debt counselor’s advice tooth-and-nail.

My problems, like anyone’s in that situation, began a few years earlier. I was barely beyond twenty, fell in love, and got married. My husband and I bought a house together, renovated it, and sold it a year later for a hefty profit. I began studying real estate, taking courses on flipping houses. Although I had no intention of working as an agent, I obtained my real estate license in a quest for more knowledge.

I always believed in the value of good credit. Even as a child, my parents instilled in me the attitude that having a good credit rating was essential in order to get ahead— for obtaining capital with reasonable interest rates, to buy a car or a house, build a business, get student loans, or sometimes just to stay afloat.

So I started playing the credit card game at a young age. You know, the game in which you charge up a credit card then pay off the balance promptly, in order to obtain a strong credit rating.

My Big Mistake

You don’t think about it when you’re young and about to marry. You don’t typically analyze the one you love for his or her financial integrity, and you don’t foresee the monumental problems down the road that might result from trusting too much.

When I began acquiring credit cards, I always requested an additional card for my husband. We were married, after all, lifetime partners, emotionally and financially together. No secrets.

That decision cost me, big time.

Within a year, my young marriage turned sour. It’s not uncommon, and the details aren’t important. At that age, you’re changing so fast, two people can grow so far apart in a single year that they no longer recognize this person they married.

That was certainly true for me. The man I once loved showed a side that I never saw coming.

All those credit cards with high credit limits were in my name. He proceeded on a spending and charging spree that would raise a millionaire’s eyebrows, maxing out every one of those accounts. As the signatory on the accounts, I was the one responsible for the charges. The banks might have researched the charges to bring action against him, but they didn’t pursue it—I was making the minimum monthly payments, after all (struggling to protect my good credit score). The banks were happy.

The result: all that credit card debt fell on my shoulders—$95,000, and that’s in 1980s money!

I’m twenty-three years old, I’m going through a divorce, I have a mortgage by myself, and I’m $95,000 in debt. I felt backed into a corner, all right.

Admittedly, some of that credit card debt was truly my responsibility. After all, I had been playing the credit card game (a dangerous game, by the way, that can spiral out of control if you’re not careful). But most of that debt was not accrued by me. Didn’t matter; I was legally obligated to pay it back, every penny.

So there I was, slumping in the office of a debt counselor, crying my eyes out, and wondering how I got myself into this mess.

The counselor took a close look at my situation— my debt, my assets, my monthly income, my debt-to-income ratio—and concluded that I had no choice. Despite my ambition and determination to increase my income, I simply could not afford the payments on my house, plus living expenses and this enormous debt, too.

The word itself still makes me shudder, thinking back to that moment. Bankruptcy. When he spoke that word I nearly fell off my chair. It had never occurred to me that there wouldn’t be a way to work things out with the creditors. I felt discouraged, depressed and completely defeated. I could barely move.

The debt counselor, seeing my obvious mortification, tried to console me. In America, he said, when we don’t manage our money well, we feel like failures.

His words didn’t help.

For the next six months, I denied the debt counselor’s bankruptcy advice and threw every penny I earned at the creditors, who were calling and hounding me relentlessly. I paid so much of my income to debt that I couldn’t afford to buy heating oil. Finally, in the middle of a cold winter, when my dear friends brought me diesel fuel in five-gallon cans just to keep the pipes from freezing in my house, I realized I had no choice. I finally succumbed to the debt counselor’s advice.

I was so destitute, I had to borrow money from my parents just to hire an attorney so I could file bankruptcy.

Part of my eventual decision to file bankruptcy was a last-ditch effort to save my house from creditors, who were planning to sell it by auction to help settle what I owed them. I filed the day before the auction was to take place. Possibly the most humiliating moment was the day of the public auction. Alone in my house, I peered out from an upstairs window as my neighbors, the auctioneer and other folks gathered for the event. I slinked downstairs, walked sheepishly before the crowd and, as my attorney had instructed me, handed the auctioneer the bankruptcy filing notice. He canceled the auction, and the crowd disbursed. I wanted to crawl into a hole.

A Line Drawn

For me, that moment, when it seemed it couldn’t get any worse, marked a demarcation. I wanted two things: to distance myself from the situation as quickly and responsibly as possible; and to never have to return to that circumstance again.

Though my attorney recommended I file Chapter 7 bankruptcy, which would have forgiven all my unsecured or credit card debt, I chose to file Chapter 13 for the debts I had incurred. As opposed to forgiving all unsecured debt, Chapter 13 is a reorganization of debt, allowing a set period of time to pay it back at negotiated rates. I opted for Chapter 13 because of the responsibility I felt for the debt, and to the creditors who issued it.

I was given five years to pay back that debt, and managed to clear it thirty-four months early. I quickly repaired my credit and was able to refinance my mortgage to a lower rate based on my credit history prior to bankruptcy, and my working relationship with a local bank.

I started over. My life was beginning again.

Putting it Back Together

I share my story with you not because I am proud of the dire situation I got myself into, but rather to illustrate that, despite a time in my life when I felt trapped, desperate and lost, I’m still standing today. I worked past it, things eventually got better, and I was able to rebuild my life and learn from what I’d been through.

I sure wasn’t proud to file bankruptcy, but I didn’t have to choose the Chapter 13 option either, which required me to pay back those creditors, and I gained a lot of confidence by plowing through that debt so quickly.

The point I’m trying to make is: debt happens. For most people, it’s a part of modern American life. It’s expensive to live a decent life in our country, to have a house and maintain it, to drive a dependable car, participate in cultural events, raise kids, take a vacation here and there. If you’re not independently wealthy, chances are you’re going to take on some debt at some point.

Debt happens—sometimes more than we can handle— but with proper debt-management, it can be short term, credit-friendly, and conquered in the majority of cases.

The people whose stories I tell in this book all felt trapped by their debt, unsure what to do, some of them grappling with depression and anxiety, others considering extreme measures like bankruptcy. But every one of them is either working their way out of the corner or has already turned it around, now building savings and looking forward to the future with optimism.

The people in this book learned that no financial situation is so bad that it can’t be overcome. We dig these holes and we can get ourselves out of them. Sometimes all it takes is a little help and guidance.

My Relationship with Money

The words of a dear friend often come back to me. It was during a long walk on the beach several years ago, at a time when I was trying to decide if I should open a business helping people with their debt.

He said: If you know how to get Americans out of debt, you owe it to us to do this.

You see, if I didn’t have the experiences I’ve