Why Can't We Pay Our Bills? Part One

Alicia Morgan asks a good question - Why isn't anyone asking why some people can't pay their mortgages now? She wants to know why no one is talking about that. And you know, she's right. No one is talking about this. Every story is a little different, there are as many variables as there are families, I suppose, but if you wanted, you could likely boil those details down to a few simple themes.

(1) Bad borrowers
(2) Bad lenders
(3) Changing circumstances
(4) Increased expenses

Our story hold elements of each. I'm going to break this into four posts to make it easier to wade through and digest. And frankly, it will make it easier for me to write. If I had to examine all this at once, I might just go downstairs and drink what's left in the gas can we had to fill up this morning when we finally found some gasoline to purchase.

Part One - Bad Borrowers
That's us, MathMan and me. We have been bad borrowers stretching all the way back to our early days as a married couple. We took out a car loan from Toyota without shopping for better rates at banks. Then there were the student loans for jobs that would never be terribly lucrative. Don't forget the $4,000 on a credit card for periodontal surgery that had to be done immediately back 1990. The list goes on and on. Clothes, medical care, furniture, home improvements, stuff, school supplies, appliances, gifts, groceries, gas.....

At some point, we started using credit cards to cover the last week and a half of the month because our paychecks weren't stretching so far. Then we were stretched so we were making minimum payments. Sometimes those payments were late or missed because it had been an especially expensive month. Interest rates crept upward until we were paying over 20% on half our cards and over 30% on a couple of them (dear WAMU, I guess those 31 and 32 percent interest rates you were squeezing us for didn't help so much, did they?)

I also made the mistake of playing the teaser rate game. We had a couple of high interest rate cards with high balances (between $1 and $2K). I got those mailers for 0% interest for balance transfers. So I applied for them,paid the other cards off or way down and put them away - not to be used. But then something would happen. Within two months, both the washer and the dryer went out. Then one of our cars needed some expensive repairs. Gasoline prices shot up. Before we knew it, we were using those zeroed out cards again to keep things afloat.

It added up. Minimum payments weren't cutting it. We kept cracking balance limits triggering extra fees and interest rate increases. The worse it got, the less I wanted to deal with it.

Of course we could have waited to purchase some of those things until we had cash saved up, but other expenses were immediate needs, unexpected, but undeniable. We'd never been able to save enough to cover a month's expenses (explanations for that will be in a later post). We were always behind so when we had a little extra, we threw it at the debt or lived on it to keep from using the plastic.

And underscoring it all was that stupid, stupid belief that if we had to, we could draw on the equity of our house. It was a cushion, I guess, that we thought would keep us from feeling too much pain when we hit the wall.

How I wish we'd done things differently. But here we are.