The $109,332 Lesson

Melanie - Arlington, Virginia
Entered on November 2, 2008

I believe personal bankruptcy is one of the best things that ever happened to me. Between May 2005 and August 2008, I repaid $109,332, most of it in credit card debt.

I didn’t start out life that way. In grade school, I saved most of my 50-cent-per-week allowance. I put myself through college, other than some scholarships and $600 from my parents. When I married in May 1984, I had a few hundred dollars in savings, an American Express card and one Visa card with a balance of a couple hundred dollars.

But my husband and I hit some bumps in the next 20 years. In my case, one employer went through bankruptcy and temporarily cut all wages 25 percent. Another fired me in a reorganization. Yet we kept traveling, visiting 15 European countries. We bought houses. We always had at least one new car. And those credit card offers kept rolling in. The credit card bills kept rolling in too, but we went on our merry way, traveling less but buying another house. We even managed to refinance at a lower interest rate when my husband was unemployed.

It wasn’t until I was fired again in July 2003 that I got it. I wanted to try life as a freelance editor for a year. That was when I finally understood our total credit card debt was more than $200,000, and our retirement funds had been severely depleted. The answer seemed clear: I had to get a federal job. I could build up a decent retirement in the working years I had left, and get some space to decide what to do about the debt and my marriage.

It took me less than seven months to find that federal job and leave my husband. It took me more than another year to screw up the courage to file for Chapter 13 bankruptcy. It was a humbling experience. I spent most of one day with trustee’s staff hearing about stuff I knew in grade school: don’t spend more than you take in, pay your essential bills first, don’t eat out or buy expensive toys unless you can afford to do so. I vomited after my appearance before the bankruptcy judge.

I can count on one hand the number of days I didn’t do at least some freelance editing during the repayment period. Back when my wage garnishment began, my monthly take-home pay from my day job didn’t even cover my apartment rent.

But I learned a lot. I returned to church for the first time in decades. I figured out what is really important to me-setting aside retirement money vs. buying a new car; putting money in the collection plate vs. buying expensive clothes; watching my sister’s DVD rentals vs. going to the movies. I developed discipline in my work habits and budgeting.

I relearned, albeit late in life, the joy of being a saver-and of believing in myself. And that’s worth far more than $109,332.