We’re about to get real transparent in this post. What I learned from a year of being Broke. Let’s get to it.
Yes, it’s true. I really went there. For the past year we have been flat broke. Broke like we have never been in our adult lives. Broke like we would have been screwed if it weren’t for generous grandmothers and family members. It’s embarrassing to talk about…yes. Yes it is. Especially for someone who had her shit together when she got pregnant at 19 and kept it together until well… about a year ago. But I also know that we’re not the only ones. And I learned a lot from the experience – and not in the sentimental sense. I’m talking the practical nitty gritty – I know exactly how many days you have before the bank comes to repossess your car – sense.
Now, I am in no way advocating financial irresponsibility as a lifestyle. I hated every second of it. It strained my marriage, I have insomnia, and it gave me anxiety. I had prided myself on how well Josh and I did given how young we were when we had Jace and grew up. But we had to figure out how to make it work. We’re also much luckier than most people who find that they can no longer keep their head above water. We had enough equity in our house to pay off every shred of debt completely. But while we weighed whether or not to sell it – and then waited to close on it… shit got real.
We have officially sold our house, and gotten ourselves back on track since. But now I am just a fountain of financial struggle knowledge and I have chosen to shamelessly share with you. Because while I hope you never have need for this information… there was a time I would have sworn that it would never happen to me either.
Grow through what you go through, friends. 😉
1.) You Have 90 Days Before They Repo the Car
At least that’s been true for both of our finance companies. So sometimes when it’s either the electric bill in the dead of winter or the car payment… you can completely skip one. You can pay each car on alternating months. Nothing happens. Well, your credit score feels it instead of your bank account.
2.) Actually, 90 Days Always Seems to be the Magic Number
You also have about 3 months before they shut off the cable, cell phone, and internet too. In my roughest-year-of-my-life experience, you have about 90 days for all of your regular bills. Cable (we have Comcast – and they cut the tv off before the internet,) phone (we have at&t,) and electricity (Xcel in Denver,) we were consistently running almost 3 months behind on all of them. Paying a different utility each month to keep them all on. I know, SUPER fun. But I know for 100% that we’re not the only ones, and it would have been super helpful to know these things beforehand.
Of course, there are late fees for all of this as well. So, it’s basically a system that punishes you for being broke and then charges you more when you’re already struggling. Cool.
3.) House Foreclosures Take a Long Ass Time
As we rented out our house for way under market value – we paid full rental market value for our rental here in Denver (seriously google Denver real estate – it’s bananas.) We just couldn’t afford both. So we missed a couple mortgage payments here and there. And it adds up quick. But for the first 90 days you’re just in a “breach” of contract with the bank. So they don’t do anything for those 3 months besides wait for you to catch up.
Then, they can “begin foreclosure proceedings at anytime.” This part varies by state. Eviction laws are all different, but the general theme I’ve encountered – it is not easy to evict someone.
But if you were renting and said house is now empty do not reveal to your bank that the house is now vacant (they’ll ask.) It is way easier to foreclose a vacant house than one that is someone’s legal residence.
3.) You Can “Repurchase” Your Repossessed Vehicle
But you have to move fast – and it’s real expensive. You can contact your bank after your car has been repossessed and pay what you owe to get it back. + some hefty fees and towing charges. But it hurts your credit way less than a full-fledge repossession. It goes down as a “repossession-reclaimed.”
I have read that your bank can opt to not let you get the vehicle back. So I suppose that this might not always work. But considering most people owe far more on their vehicle than the bank can sell it for at auction… they would much rather collect their thousands+ from you.
4.) It’s Truly a Slippery Slope
We are so so lucky, because our issue wasn’t literally having no money, it was having no liquid money for a time. But after this experience I can completely understand how some people lose everything. It truly becomes impossible to catch up once you’re substantially behind. If not for selling our house in Florida and paying everything off – we would have been completely screwed. The car would be gone, the phones would have long been shut off, and I’d probably have some hungry children. We don’t qualify for any type of assistance because Josh makes too much (and anyone who has the income to pay rent in Denver probably wouldn’t qualify either.) The thought is terrifying and it has surely taught me a lesson in compassion.
Not everyone has a spare house to sell to remedy this situation once they find themselves in it. We are very lucky that this was just “a tough year” for us and not our financial undoing.
5.) Your Credit Score is Both Resilient and Fragile
I was one to have very good credit my whole life until now. I had only 3 credit cards that I used responsibly and only for the card perks. I owned a house by age 20 and I financed expensive cars that I traded in every other year (maybe this isn’t responsible but I like cars and my credit allowed it. LOL) Over the course of a year of being consistently behind on bills that I had responsibly managed for years, my credit only dropped about 150 points. I mean, it’s a lot but it was less than I expected.
But recovering the same 150 points is proving to be harder than losing it. Paying everything off in one fell swoop hasn’t returned my credit to its former glory. I’ll let you know if it takes an entire year to recover or not. My goal is 6 months. But some of it is completely out of my control as not everyone reports monthly. We shall see.
I hope this practical information will be helpful to someone else who finds themselves wondering how long they have before the bank comes to take their car, or how long they can skip on paying their mortgage. I hope it’s eye-opening for others who are as financially secure as I once was, because it doesn’t mean you will always be that way.
Not budgeting as carefully as I should have when we moved to Colorado was the most expensive mistake I have ever made. Lesson learned.