Everything almost unraveled today.
With my family knowing, and my roommates now knowing my situation, I started to get a little lax with keeping up my facade that I hate so much. I’m reading to be done lying to my friends, but I’m not ready to face the reality of being known as the guy 300K+ in debt.
I have 3 friends here in Seattle that I am close with. I have not told any of them. 2 are leaving for another state in a week. I didn’t want to concern them with my issues, so I don’t plan on telling them for some time. The other…I spend the most time with. I want to tell very badly, but still want to wait until the other two leave.
My cover
My story I’ve been telling for selling the house goes along the lines of, “I’m thinking of moving, and want to be able to have that freedom”…yada yada yada.
The problem
The problem is that all the cover story/facade/lying is exhausting. So exhausting, I think, that its gotten me sick. I woke up this morning with a horrid sore throat, and feeling like poop.
I just want to get this next week over with so I can tell my other close friend and be done with this whole emotional mess of telling people and get back to businesses.
Being an entrepreneur is what I am. Granted it’s not who I am. But it is what I am good at, and truly enjoy. I love watching something that I created grow. The thrill and pride in doing something that no-one else is doing (or doing something that other are doing, but better!) is truly exciting to me. I want to be able to focus 100% on that part of my desires starting in May.
The Plan
If everything goes according to plan, I will be moving out of the house here near the end of may. I’ve begun putting some of my possessions up for sale on ebay and craiglist, and will continue to do so the rest of this month and into May. I think I can raise 2-3K from all the odds and ends stuff that I’ve accumulated these past three years. It will be well needed, as my budget is short still over 1K.
Updated Budget
Made this with budgetsimple.com
Monthly income is currently around 7K.
As you can see, I need the extra cash at the moment. Also, the budget above mixes both personal and business expenses, as that is how I have to view my finances at the moment.
Both sides of your mouth
I couldn’t bear to not let my friend know that I was at least planning on staying in the city hear (until this, she had also been hearing my “I may be moving” line). So, I told her, I had no plans to move (except for to my office…I didn’t say that!). I told her I would explain more in a week or two.
This was before we went to church, after the service, while chatting with some people, they asked what I was up too. I gave my standard front, as mentioned above. A lie.
When walking back to my car, my friend says, “you’ve got me really intrigued now…you’re talking out of both sides of your mouth”.
I know.
it sucks.
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Hey there,
Just found this tonight and read all the posts. First, let me say that it’s great to see someone my age (I’m 24) who made mistakes but is actually owning up and getting tough with himself to fix the problems. Even if you’re forced into BK at some point, you’ll know that you did everything you could to prevent it. It’s good to see and I think your attitude towards the whole thing in addition to your business acumen will lead you to a lot of success in the future.
Second: In the budget, there are probably a few things you can do to tighten up. These are just things I would do, so ignore them if they won’t work for you…
1) Car Payment: Is there any way to get rid of the car and buy something that will just get you from A to B with a much lower/non-existant payment? If you can only break even with car, could you perhaps borrow $1-2k from family to get something that’s more bare-essentials?
2) Car Insurance: If you can get the bare minimum car to get you around and not have a bank loan on it, you can drop your insurance down to what’s required to be legal. (Around here it’s liability only.) Raise your deductible a bit and then drive very carefully.
3) Home Phone: Is this necessary at all, with your cell phone? If not, cut it. Or at the very least, cut out the added services like voice mail, caller ID, etc. My provider offers a basic home phone package that’s $15/month.
4) Cell Phone: Is there an unlimited carrier in your area that offers a cheaper plan? $112 is very high for a single phone. I pay $140 for two cell phones with more minutes than I can talk and tons of features… (Verizon family plan)
5) Internet: $200 is really, really high for high speed internet. Shouldn’t it be more like $50-60 after taxes? I believe at some point you mentioned having Vonage, but still aren’t Vonage lines only $24?
6) Entertainment / Dining Out: You can probably cut these back significantly. I mean, keep them in there because you’ll need them. Forcing yourself into an ascetic lifestyle will only last so long. But still, for a total of $100 per month, you can get a Blockbuster Online subscription ($17/month – includes 4 movies at a time plus every movie is good for a free rental in the store), a night out at the movies ($10 or so if you skip the over priced junk food) and at least a few good nights of cheap chinese or mexican food. I bet if you really think about it, you can squeeze more out of $100 than you think. And the other $200 can be a good chunk towards your debt.
7) Charity: As much as I hate to say it, you probably should be putting your money elsewhere. I guess this is touchy. Personally, I’d stop my charitable contributions until I got out of the hole and then once I was on stable ground, double up to make up for it… That’s a personal thing, though.
9) Payroll Expenses: What functions do your current employees perform? Is there anything that can be consolidated without causing harm to your business revenues? What happens when these employees get full time summer jobs? Do you hire new people for the summer or go it alone? If you’re going it alone, why don’t you do that now? I know you probably feel an obligation to them, but if they’re college or high school kids, chances are they can quickly find other sources to make the $200-300 your paying them per month.
As for telling your friends, my advice is this: I’ve recently been dealing with some stuff that I did not want to share with anyone. I thought that if I kept it all to myself, I could work it out and no one would have to know. When I finally got to the point where I had to talk to someone, I found that my family and friends have been far more supportive and understanding that I ever thought and it’s given me the strength to face things head on. Your close friends and family will be there for you. Anyone who doesn’t fully stand behind you %1,000 was likely not a true friend to begin with.
We are all just human, no more and no less. It’s not only normal that we’re going to screw up (sometimes royally), but it’s expected. What makes the difference is how we handle it. From reading this blog, it looks like you’ve got the character to work through it and be a better man for it.
You should have my email from this post. I’d be interested in knowing what kind of business you’re in. It seems to be something web based. It might be good to exchange contact info in case we can ever help each other out in the future.
Sorry for the long post. Hope it helps.
I agree with above. Not to sound sanctamonious or anything, but $7,000 a month is actually a decent income! Unlike Casey over at forclosure who’s constantly looking for “sweet deals” and the next get quick rich scheme, it seems like you’re in [relatively] good shape. Be as it may, some of the expenses on your budget that do look like they could be tightened a bit. (see above) If you cut a little here and a little there, it could definitely go a long way towards making up the 1000+ deficit that you’re facing. Keep your head up buddy.
I wanted to echo DM’s advice on the car. I dropped my car awhile ago, and got a scooter. Its even better than a car and insurance is cheap, so is gas.
I’d ditch the car, theyre money drains
And I think DM, he’s rolled personal and corporate expenses into one, so I dont think he can cut out phone/internet that much
DM – I think debtkid’s budget shows business and personal (i.e. health insurance covers both employees and himself, internet is actually hosting of his business). I think myself this is a mistake – split the two… It means that DK can cut right back on his personal stuff while continuing to grow the business etc…
DM ~ I’ll look into a different health plan. For alot of your other suggestions, the reason the #’s are high is because they are business expenses. ie, internet expense is business comcast + web hosting + misc. expenses. My budget sheet only has so many spots!
My cell bill is for two lines. I share a plan with my brother.
DC, the scooter sounds like a “sweet” ride.
I’ve actually thought about dropping the Mini cooper and getting a Vespa now that I live in an area where everything I need is within 5 miles of me…
DK, the internet expenses are totally understandable. I thought it was just for an internet connection. In that case, you’d better have some hella fast d/l speeds! Shoot, I’m about to plunk down a few hundred a month for a dedicated server. If I can get it set up and it will meet your needs, I might be able to work out some free hosting for you.
Also, I didn’t mean to come across as know-it-all in my first post. I’m not exactly the picture of perfect finances. I guess is easier to see things from the outside. I do hope that it was genuinely helpful in some small way. You have every bit of respect from me for facing it head on. A great example for anyone who’s ever made a mistake or three…
Hey Debt Kid:
Though not in your EXACT shoes, I know what it is like to be 24 and in debt. At your age I had started a new job with a PR firm – just after I was diagnosed with Cancer – the medical insurance company my employer used didn’t cover the condition (nasty people – there was a pre-existing clause and the cancer was diagnosed two weeks prior to the company’s medical insurance taking effect. So, I had huge medical bills, as you can probably imagine.
It took me a while, but I was able to manage and pay off the doctors and hospitals.
I note you list rent at $800 – this must be for your office space. That seems reasonable. However, I firmly believe you should not attempt to live there and find other accommodations (i.e., you could be in lose your lease agreement because of code and zoning violations).
Next, is your vehicle a lease or did you purchase? What are the terms of the lease? If you purchased, how much is paid off and could it be sold with a net gain? I really think, given your situation, a lesser expensive mode of transportation should be explored. There are some great lease deals out there, and the cost of the lease would be deductable as a business expense (whereas you need to track mileage if you own the vehicle). Better yet, I agree with the idea of a used scooter and using public transportation.
You could always become environmentally friendly and give up all modes of transportation except public, foot and bicycle…. and tell people you are earth friendly. Then, join “car share” for those times you MUST use a vehicle. Doing so would eliminate over $640 from your budget, plus the $150 p/mo you’ve listed for gas – a net savings of almost $800 p/mo! (However, remember that if you go this route, if you purchase a vehicle later, the auto insurance industry will “ding” you with higher rates because you were considered “uninsured” during the time you don’t have a car. This happened to me when I moved to NYC and later SF and didn’t own a car because one wasn’t needed.)
Dating “$0″ is okay. I don’t know your gender, however, there are plenty of ways to have a $0 date! It takes a little creativity, but can be done and is very fun. A little “2 Buck Chuck” some inexpensive cheese, crackers, fresh grapes make a great picnic. Spring is in the air.
Eliminate the entertainment from your budget – what is this anyway? A movie ticket? a concert? You can find plenty of “free entertainment” – again, being creative.
Again, with the other comments, eliminate the “charity” column – you are your own “charity” – take those $$ and put into a savings account that you DO NOT TOUCH.
My suggestion to you – for the next two months write down EVERY penny you spend. Everything. And, before purchasing anything (clothes, gifts, etc.), wait 24 hours.
Good Luck – you are on your way!
My vehicle is owned under my business. I’ve had it about a year and a half, bought it new (horrid! I know….now). Unlikely I could get out from it, without alot of cash outlay, but I will look into it for sure.
I have an e-mail out to my insurance broker about a lower premium plan.
I have some ideas for not trying to live in the office too much (ie, trying to avoid living there 24/7). I may start implementing them next month.
Thanks for the comments and encouragement! I really appreciate it. I guess I do kind of have a crazy life right now, might be actual interesting reading.
Wish I didn’t! (what I wouldn’t give for a boring life…)
Hey Debt Kid:
Never buy a vehicle for your business – lease. There are different tax implications and leasing is better than depreciation.
A few other things I noticed – home phone is listed – when you are out of the house, this will become a $0 item. Do you have a business phone? If so, that’s missing.
You didn’t include your gym membership – make sure that’s in your budget. (those missing items add up)
If you are going to keep the car, be sure to add the “maintenance” amount for oil changes, tire rotation, windshield washer fluid, etc.
What is your reason for lying to people about your situation? Why not just be real? Let go of your pride or whatever foolish thing is making you lie and you’ll have a better chance of succeeding. Lying to people is just bad karma.
I see lots of fat in this budget that should be trimmed given your situation. Many will think my suggestions are extreme or even impossible, but I’ve made it through this type of situation and it can be done.
Car Payment – Get rid of the car.
Car Insurance – N/A
Student loans – Can they be deferred?
Groceries – You could eat well on half of that if you avoid pre-processed and junk foods.(our family of 3 doesn’t even spend $300/month and I have 0 debt. We eat very well.)
Dining Out – You don’t need that. You can’t afford it.
Internet – Surely you can cut this down. I pay $18/month for 3.0mbps DSL.
Entertainment – You don’t need that right now.
Gas – N/A
Clothing – Do with what you already have.
Subscriptions – Cancel them. Use the web instead.
Charity – Forget that until you’re out of debt.
Health Insurance – Go without. The odds are in your favor. It won’t cause you to die. Get it after you’ve paid down the bulk of your debt.
Payroll – Can you trim some fat here and take on the work yourself?
Advertising – I bet you could trim this with no negative effect.
Not including Payroll and Advertising cuts, that’s over $1600 in savings you could apply to your debts every month.
I’m curious what kind of trading you were doing. Are you ever going to detail that? What kind of size were you trading on the forex? I’m guessing you didn’t use stops. If so, why not? Did you go flat for economic events or get whiplashed badly through them? Were you primarily trading one pair or several? Would you ever post your trade ledger?
On equity trades, what were you doing there?
How did you get started in trading? Did any of those info-mericals or scaminars have anything to do with your entry into trading? Did you dive right into it or was it something that developed over several years?
Have you considered taking on investors in your business? Maybe with more working capital you could grow your revenues at a fast pace?