Read an Excerpt
The Best of the Cheapskate Monthly
Simple Tips For Living Lean in the '90s
By Mary Hunt
St. Martin's PressCopyright © 1993 Mary Hunt
All rights reserved.
From Credit Card Junkie to Cheapskate
I used to be anything but a cheapskate. I would break into a cold sweat at even the thought of being considered cheap. And I was driven to making absolutely sure that a very clear line of demarcation was drawn between my world and those pitiful souls residing in the land of Cheap. I could outspend anyone and I charged my way through life feeling quite entitled because I had every charge card known to the English-speaking world.
It all started quite innocently with a promise. As a child, I was a daydreamer, a future-planner. I grew up embarrassed that I had to wear hand-me-down clothes and things purchased at the secondhand store. I, the Scarlett O'Hara of the fifties, vowed that I would never be poor and that my children would never wear clothes from the thrift shop. There! Just like waving a magic wand, I guaranteed my adult status and that of my children. If only I had been wise enough to make a similar vow regarding a way to pull it off.
Within days of my wedding, I cautiously suggested to my new husband that perhaps we should look into getting a gasoline credit card. After all, we were now in a different social stratum and every real family must be prepared for unforeseen emergencies. We needed to get with the program and stop depending on cash so much. We needed plastic! Harold went along with the idea and before I knew it we received two shiny new credit cards, one bearing my name. Wow! "Free" gas whenever I wanted! No longer would I have to dig around for loose change in order to pump a few gallons into my car. I could fill up whenever the mood struck and I knew that never again would I have to be concerned with mundane issues like the price of gas. I had clout and it felt good. Being a married woman was quite prestigious.
It seemed only logical that we should have an alternative brand of gas available (just in case of emergencies) and so we went for a second set of cards. After all, if one is good, two should be better. These came more quickly and with less effort than the first. I could feel our status soaring to new heights and I carried the proper credentials to prove it.
By the time the babies came along, the first credit cards had been canceled by the gasoline company. We had been late with our payments quite a few times and had even missed some along the way. Now who would've thought a big company with all that money would demand that we pay them back ... in full ... every month? Not to worry, though. In addition to a nice assortment of gasoline cards I had added every department store card in southern California.
It was so easy. If a particular store didn't automatically send me a preapproved set of cards in the mail, all I had to do was pick up an application in the store. It became a game not unlike collecting baseball cards. I was compelled to acquire every charge card available. You must understand that I never applied for the cards because of any specific purchasing plan, but rather for the security I thought they would bring to our lives. I rationalized that we needed them in case of emergency. Little did I know that the very things I believed would provide security were to become a catalyst for crisis.
Harold was soon promoted to middle management with a large, prestigious California bank. I could not have been prouder! One of the items in his benefit package was a totally unsolicited handy new device — a bank card with a very nice line of credit. Now, not only was I "entitled" to all the gas I could use, the department store cards and the bank card prepared me for any kind of unforeseen need. And unlike the gasoline companies, the others didn't require full payment. These companies were quite pleased to allow a small monthly payment; in fact they all but pronounced a blessing over me every time I used them.
Soon I found my life filled with many little emergencies. Often these emergencies were manufactured from my poring over department store ad magazines which would show up in the mail. My overactive mind and impulsive tendencies would join forces to convince me of an urgent need. I would become privately fixated on a certain item and be unable to relax until I found a way to get it. I felt a certain, albeit temporary, high when I bought the latest in kids' clothing or GI Joe "men" for my boys. I felt greatly justified in spending huge sums in fabric stores. I would buy everything needed for project after project, the justification being that I could make all kinds of clothes and decorator items for much less than ready-made. In reality, very few of the projects ever materialized and the goods became obsolete, eventual donations to the less fortunate.
And the best part was the more I used those cards and continued paying the minor monthly minimums, the better standing and status I had. Why else would they keep increasing my limits? When the bank card limit reached the four-figure mark I just knew they thought I was fantastic. And I was certainly keeping my promise. I was not poor and my kids did not wear clothes from the thrift store. We showed real well!
Shopping became easier in the seclusion and comfort of my home. With a phone in one hand and a mail-order catalog in the other I was able to create Christmas for myself and my children any time I had a whim. I realize now that I was attempting to go back and fix my own childhood by giving my children all the clothes, toys and attention I missed. I was trying to fill a void by giving gifts which were bigger and better than the recipient could believe. I was making up for what I lacked, fulfilling my vow that my kids and I would never be poor and that I would always have the approval and acceptance of my friends — even if I had to buy it. I lived out the only agenda I knew: External appearances are all that is important. Anything going on inside that conflicts with a perfect facade must be ignored, denied and put aside.
My instruments of entitlement were not limited only to credit cards. I had a checkbook. While I considered credit card spending to be long-term deferment (like hundreds of years from now), writing checks was short-term deferment. Often I would neglect to record checks I wrote. It was safer that way because Harold couldn't track my spending. His unobservant temperament became my ally. I could all but redecorate the entire house and he wouldn't notice.
I worked under the philosophy that somehow by the time the check was ready to clear I would magically come up with funds which I could sneak into the bank. Of course it never happened, but still I would write checks, often with reckless abandon. One of two things happened over and over again. Either I would overdraw the account or bring the balance down so low that when Harold went to paybills there was no longer enough to get us through the month.
Writing rubber checks is bad enough, but to add to the mess, Harold was the bank manager! Let me assure you that this kind of behavior from employees is not looked upon kindly by your average financial institution. Imagine his embarrassment and rage when one of his staff would have to sheepishly advise him of the situation and suggest that he make an immediate deposit. The phone calls I would receive during one of those incidents are not among my most pleasant memories. And you think your blood runs cold when the bank calls!
More than once Harold's job was in jeopardy, and still I couldn't stop my outrageous behavior. I was not making enormous purchases — we're not talking new cars or even new furniture. I was five-and-ten-dollaring us to death.
Inwardly I felt frail, weak and insignificant. The act of spending gave me momentary sensations of power and strength. I would temporarily feel cared for and nurtured. These were wonderful feelings and I made sure I experienced them often. As time went on things were getting pretty sticky, especially around the first of the month. I had incurred such heavy consumer debt (all those credit accounts pulling down interest rates of 18 percent and up) that our monthly expenses exceeded our income. Fortunately for us, or so I thought, we were benefiting greatly from the real estate booms of the seventies and eighties. Each time we got too far behind we would just refinance the house, pulling out our precious equity, plunging ourselves deeper and deeper into trouble. And of course the higher mortgage payments would eventually put us right back where we had been. We bought into the debt consolidation theory: Take out one big loan to pay off all the small ones resulting in one smaller payment each month. What a terrible mistake that was.
Our difficult financial situation prompted Harold to consider a career change. An ordinary man would have considered something quite different, but this extraordinary man refused to give up on me. An opportunity came along to try self-employment and he jumped at the chance. He said goodbye to the bank and his paychecks and we took another financial plunge.
Together we made some crucial blunders. We were driven by the fantasy of getting rich quick and we went into a business about which we knew nothing, doing so with borrowed funds. It is no wonder that in four short months our first entrepreneurial attempt ended quite abruptly with a devastating business failure and the loss of all the money which had been temporarily entrusted to our custody. (Isn't that a lovely way to say "loan"?)
Our debts were enormous and our income nearly nonexistent. We were both unemployed and the pain became unbearable. I was terrified because I could see no way out. I had run out of ways to deal with the emergencies. We had all of the elements required for a divorce — bankruptcy, loss of our home and destruction of our family. I was desperate. It was only when I hit absolute rock bottom that I was willing to consider a change.
I vividly recall that Saturday afternoon in 1982 when I was alone in my mother-in-law's kitchen. I fell onto my knees, begged for God's forgiveness and made a new promise: I would stop my totally irrational spending and debting and would seek a means by which to climb out of this financial pit. I had to change. There was no other way. Ashamedly I realized that I had much more control over my spending than I had ever wanted to admit. I no longer had to convince anyone, including myself, that I wasn't poor.
I needed to start making some major financial contributions to this marriage partnership. I had made far too many withdrawals. Willing to do anything, (fear is a great motivator) I accepted a full-time job. Now this was no ordinary job. With my real estate license I was able to combine property management with sales providing a steady income plus commissions. Good thing too, because Harold decided he needed to stay home for a while and become the newest "Mr. Mom." I became the breadwinner. What a turn of events! We immediately cut out all daycare costs. Two little boys got to spend huge amounts of time with their dad and I was relieved of the pressure that many working moms experience because Harold took over the household. We switched roles and it was weird. Believe me — I adapted quickly. Being scared witless was probably the best thing that could have ever happened.
Sure, we had to teach ourselves about frugality. It didn't come naturally by any means. We were shocked at how much we were able to cut back. But the most amazing thing is that no one really noticed — including the kids. It just goes to show that others are not nearly as impressed with our artificial life-styles as we think they should be.
Gradually, as we were able to reverse our spending habits, we began to get out of debt and our drastically reduced living requirements became our way of life. Things went so well that in 1985 we were able to go into business for ourselves in a more practical and sensible way. With backgrounds in banking and real estate we opened an industrial real estate company.
None of this happened overnight. And we are still not completely out of debt. We may never be free of the scars and effects of the past. We will always wonder what might have been had we not been so financially foolish. But one step at a time we are making progress. The light at the end of the debt tunnel is becoming brighter. And I am still learning that my dignity and self-worth cannot come from possessions and cannot be dependent on the number of credit cards I can produce.
We did not file for bankruptcy, our marriage has been strengthened by the tremendous challenges we've faced, and we didn't lose the house. We've learned to save money and our two sons have grown into fine young men who have learned financial responsibility right along side us.
After struggling for ten years to not only make ends meet every month but to also make significant repayments toward those massive debts I had run up, in October 1991 I became very impatient with the snail's pace the whole process was taking. My impatience drove me to try and think of some way I could increase our income in order to get this repayment thing over and done with. And quickly! We have better things to work for and frankly I was really sick of living with the pathetic mistakes of the past breathing down our necks month in and month out.
Trying my hand at writing a newsletter seemed like a good idea. I certainly had a timely topic, lots of material and having an office already established, I was pretty much set up to start another business. The writing part was an unknown but I felt confident enough to at least give it a shot. Having mastered the effective business letter, I figured a newsletter would have some of the same characteristics — just be longer.
And so on January 1, 1992, Cheapskate Monthly was officially launched. It received a surprisingly positive response from readers across the U.S. and Canada.
God has taken the unlovely mistakes and blunders in our lives and begun to weave a tapestry of unbelievable beauty. I cannot express how thankful I am.
Cheapskate? Who me??!! You bet!CHAPTER 2
The Debt Mess
Head Over Heels in Debt
No one is born in debt ... yet. I suppose the day will come when as each baby comes into the world he or she will be weighed, measured, fingerprinted, given a social security number, and assigned a right and proper portion of the national debt. Thankfully, that day has not yet arrived. Sadly, most of us have managed to incur significant debt all on our own.
If you are an average American you have four credit cards. These plastic items have become the standard passport into the vast world of shopping centers, electronic and catalog mail order, restaurants, transportation, and now, amazingly, supermarkets and grocery stores.
For some reason we have come to accept that if the application is approved, the amount of the credit extended represents entitlement. If the auto loan is approved it's as if a mandate has come from on high assuring us that this is certainly an affordable purchase! We are a nation controlled by debt. Unsecured consumer debt.
So just exactly what is "debt"? Debt is what results when one person owes money to another person, place or thing. I suppose in the strictest sense of the word, owing "a cup of sugar" or "your deepest gratitude" could be construed as a debt, but for now let's just limit it to money. Generally speaking the words debt and loan are synonymous. I, however, prefer the philosophy which distinguishes the terms as follows: A loan involves tangible collateral or security. A debt is unsecured and involves a promise, an understanding. Charging clothes at a department store incurs debt. If you fail to make a payment the authorities do not come out and repossess the articles. The debt is unsecured.
So you see, the difference between a loan and a debt has nothing to do with your honor, intent or good faith. There are certain things over which we have no control and circumstances such as unemployment or illness occasionally arise, making repayment impossible. In the case of a loan, the lender simply takes back the collateral and the loan is considered repaid. In the case of a debt, the creditor is out of luck. Your promise to pay is worthless and he is left with no choice but to come after the debtor's credit rating.
Excellent financial principles throughout the ages are like the laws of nature — universal and unchanging. To "owe no man anything" has always been the preferred way to live; the borrower is always the servant to the lender. Unsecured consumer debt places the debtor in bondage and as the amount of debt increases, the weight and power of those shackles that bind the enslaved tighten even tighter. We only deceive ourselves when we acquire goods and services through the use of credit cards and unsecured loans. We pretend that these things are liberating us — making our lives fuller. The truth is that we are just digging a pit, then jumping in and covering ourselves with the weight of the debt. While we would be quick to concur that our good sense and heart's desire is to provide an income stream for the future, we are doing just the opposite!
Excerpted from The Best of the Cheapskate Monthly by Mary Hunt. Copyright © 1993 Mary Hunt. Excerpted by permission of St. Martin's Press.
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