Thursday, December 24, 2009

Living on Credit Cards

I don't recommend living on credit cards during bad times. Responsible financial advisers recommend against it.

It worked for me.

Credit cards should never be used for consumables: things like food or fuel.

My family lived off the things for years, buying groceries, gas and heating oil.

Yes, we've even used one credit card to pay off another.

It started back in '93. Lung injuries sustained while a professional Firefighter caught up to me. I could no longer work. The retirement system had no difficulty agreeing that I was no longer able to be a firefighter. However, they claimed that my bad lungs were totally unrelated to my job. I'd never been a smoker or have a previous record of lung problems predating my employment. One would think it was an open and shut case.

It took 4 years and a darn good lawyer to win my case. That's where my faith in the system evaporated, by the way.

So anyway, we went from a good solid income to a sudden drop in income. At the same time, I incurred significant legal expenses.

My wife and I were raising three girls. Kids have needs. After the first year or two, the financially wise thing would have been to sell the house, pay off as many bills as possible, and move someplace cheap.

Instead, I decided to hold onto the place as long as possible, use credit cards like crazy, and hope to win my case.

It was a gamble. Either I'd win and be able to pay everything back, or I'd lose, and go bankrupt.

For as long as possible, we tried to keep the kid's life normal. They had things like piano lessons, and karate lessons. We went on vacations -camping on the cheap, but family vacations none the less. The kids were growing up. Every month that their life was reasonably normal was a victory. My pension, if I won, was retroactive, but my kid's childhood was not retroactive.

Two weeks before my house was going up for auction, my pension came through. Four years of back pay covered enough of the bills to be able to keep the house. I'd won my gamble.

Fast forward to today. Now my wife's out of work due to a number of physical problems. she's been out of work since the end of March. Her Social Security application has been denied. Her lawyer believes she's got a good case and an appeal has been field. In the mean time, we've taken another cut in income.

What savings we had were wiped out paying for a daughter's divorce and custody fight -something I've no regrets doing. Family comes first.

So here we are, picking up a bit more credit card debt again -slowly, but the bill is getting slightly bigger each month.

Will I gamble like I did back in the '90's?

Hell no!

Back then, I was raising three kids. Now, while we are still helping our divorced daughter, she'll be back on her own by summer. She's made huge strides getting her life back together.

If by late spring if we haven't heard anything positive from Social Security, we are going to do what we have to do to kill the debt. If the car or the truck needs a major repair that I can't do myself, it will get parked or sold for scrap. The oil furnace will be run dry and not refilled. We'll gather firewood to heat the house. We can pull the plug on the grid and go completely solar. The garden will be expanded. (located a good source of free quality compost.)

It's just going to be my wife and I. We are willing to do things we wouldn't do while raising kids. Either she'll win her appeal and we can clear our debt in one blow, or we'll pay it down a bit slower with a bit more sacrifice.

This time around the bills are much smaller and our responsibilities much less.

Now I'm not recommending you go into outrageous debt and gamble that it'll all work out. Just because it worked for me doesn't mean it will work for you. I'm certainly not counting on it working for me twice.

Still, thought you should know that sometimes the gamble pays off. (against all odds.)

You should know that back in the 90's, I'd mentally said goodbye to all my material possessions. Figured that no way could the final appeal against the retirement system work. I got to know how it feels to let go of attachments. The most important thing for me, the thing that made it all bearable -I had three great kids and my wife still loved me. I was a rich man in the coin that really counted.


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