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Friday inspiration: Facing an ugly reality and making changes

Friday inspiration: Facing an ugly reality and making changes

This is part of a series of interviews with people who are either working to improve their financial situation or who have already reached their goals. This week’s interview is with Bruce a.k.a. the “taxguy”, who writes the taxguy blog. He and his wife have just begun working on their financial issues.

Could you tell us something about yourself?
Aside from being a tax preparer, I also have a Class A CDL (I can drive a semi). I am a history buff to some degree, focusing on taxation (not just American but from the beginning when a wife of a leader said “make the people pay for it”.)

In what way have you turned your financial life around? (Or what are you working on changing?)
My wife and I were living paycheck to paycheck and decided we needed to do better. I got a second job to help catch things up. It didn’t seem to help so we decided to make a drastic change. With almost $12,000.00 in credit card debt and still not making it other than paycheck to paycheck we stopped paying on those credit cards.

Can you give a little bit of background on your story? What were things like for you pre-change?
My wife and I have started working on our money issues just recently. Not going about it 100% as we should be, but it is a continuing work in progress. On top of a home business, I have a full time job that has anywhere from 10 to 20 hours of overtime a week and my wife works overtime at her job whenever she can.

We both spend a lot of time in our own business. We got into trouble thinking the business would take off immediately. (We thought we had it made. Despite no advertising, and being new to the area. The seconded year we experienced a 98% client return and a 198% client increase. Even though there were all those great numbers, we were wrong.) Anyway we spent way more than we should have and used credit cards to do it when we shouldn’t have.

Then the world took a downturn and the economy went with it. When things first started to go bad we continued to pay credit cards. We missed a few car payments and were going on a second missed house payment before we realized we were doomed and could lose everything.

How much progress have you made?
We have our house caught up as well as both our cars.

How do you feel about your financial situation right now? (Or how did you feel after reaching your goal?)
We still aren’t happy with things as two ½ months have gone by and we still aren’t able to work on our credit cards yet. All the while our credit rating is deteriorating, harshly. Although we can see things improving there is still a long way to go for us.

What was the catalyst that caused you to take action?
We are both just in our 40s and this is our first home. Our home is also the business site (home office). We had missed two house payments and were about to skip a third when we received a notice explaining that we could lose our house. That would have ruined us, completely.

Did you have any setbacks? If so, how did you deal with them?
The set back was in the beginning of the realized trouble and trying to make sure we were able to keep the house. Along with not paying our credit cards we had to change our spending habits, after years of buying things we wanted or thought we needed, it was hard to stop suddenly. We don’t go out to eat, we grocery shop frugally, we don’t buy DVDs like we used to. All hard to deal with but we are able to communicate our feelings to one another. We support each other.

What has been the hardest part of the process?
I am not sure. Knowing our credit was going to end up being destroyed just terrified the both of us. Sometimes it seems harder for us to have to tell the other no on a purchase.

The easiest?
This is sad as of right now we have found nothing easy about any of this. Both of us are educated adults and my education is of a financial nature, so we should have never found ourselves in this situation. If I had to pick something about all this that was the easiest, it would have to be the blame or finding the cause. We both stopped watching what was happening and ignored the warning signs.

How long has it taken?
This is a work in progress and has only been acknowledged by us to the point of a plan of attack for about three months.

What will be your next step?
Our next step is to get through things until tax season begins. This also will be a difficult time because I will be leaving the “steady job” to put 100% of my time into my “at home practice”. Both our cars are almost paid off and with the upcoming tax season we hope to pay them both off.

With that done we are hoping/planning on my projections of this year’s business increase (this time more realistic and educationally calculated/estimated), to also set aside the years (2009) worth of house payments. When tax season ends, I plan to find a part time job and take my practice a bit further by offering bookkeeping services. With the added income from those we will be giving everything we can to get our credit repaired.

What’s the best financial advice you’ve received?
Growing up I continuously received financial advice from my grandmother on my mothers’ side (a self made aristocrat). It took a few years to sink in but “plan for retirement early in life”. Given today’s issues in the market her advice for me to “save 15% of your gross earnings on top of your 401k and or IRAs” now is very sound. I wish I had listened 27 years ago when she first mentioned this to me when I started my first job.

What inspiration could you give to someone in a similar situation?
I would hope that no one would be in a similar situation as we are. Yet I know our situation isn’t unique by any means. So for those of you in my boat or one that is similar know that you aren’t alone. You might be living by yourself but there are tons and tons of us who are willing to help by suggestions and/or examples. We don’t have to know each other to know what it is like.

My wife and I have a plan, it may not work, but we have one. We can see things getting better by following this plan. You may not see the end yet but it is there and this bad time shall pass.

* * * * *

Special notes: Bruce suggested that I note that he wouldn’t recommended going about things the way he has. But I disagree, because I once did the opposite. I found myself unable to pay both the house payment and the credit cards, and chose to pay the credit cards because I could pay more of them. I don’t know if this is always the case, but for me paying late on the house was worse credit-wise than paying late on the credit cards would have been. And if worse had come to worse, I’d rather know that I’d paid on my secured debt first and had a place to live.

If you would like to be interviewed via email for a future article, please email me at c o m m e n t s (without the spaces) to let me know you’re interested.

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