How bad is it to be BROKE?

I was recently asked how I live such a rock star lifestyle. How do I afford to live part-time in Whistler and part-time in Mexico?

“You must be one of those lucky trust funders,” someone stated. I was shocked at this comment and assumption, but it wasn’t the first time I’ve heard this or witnessed the envious judgement. I get it; I lead a very different lifestyle. I live in two beautiful places and people want to know how I do it financially. What intrigued me about this conversation and all the other comments I’ve received in the past is that no one actually had the balls to outright ask me about money! But they judged or made an assumption of how I can afford this lifestyle. It made me think about our relationship to money and why we never openly talk about it!

Women talk about pretty much everything – it’s what we do. So why is it that we can talk about sex, relationships, marriage, children, abuse, eating disorders, addictions and even suicide, but we never talk about the big “M” word, MONEY! And if we do, the topic that is never, ever discussed is that we are completely broke or god forbid need to declare bankruptcy.

So how do I support my lifestyle? Well that is a whole other blog, but to be blunt, the bottom line is that I work my ass off and sacrifice a lot of luxuries in order to support myself. I have always worked like a dog but I have also made many mistakes. I have been broke, really broke, and in huge debt, so much so that I declared bankruptcy. Did it suck? Hell, yeah! But it was also one of my best life lessons and here’s why.

broke In our society we joke all the time that we are ‘so broke right now’ or ‘a little short this month,’ or I’ll hear ‘I can’t afford to do it’ but then that person does it. We will never admit that we are actually really, seriously, in the shit and fuckin’ broke! Because we are never without a way to pay, we just keep borrowing and borrowing until the card is maxed out or the line of credit will not go any higher. But what happens when there is no more credit? What happens when you get injured and can’t work to pay your bills? What happens when you lose your job?

Why don’t we talk about money? It seems to me that everyone has a different relationship with money. It has been said, people are funny about money. We are not funny about money; we avoid the topic of money. Money is the elephant in the room. It is the one topic that most couples fight about more than anything else. It can ruin friendships and business partnerships and it can destroy marriages and families. Also not having it or feeling like we don’t have enough of it prevents us from engaging in relationships and friendships because we don’t feel worthy. I know many men and women that have walked away from potentially great partners because they thought they had nothing to offer – that nothing being enough money.

What is it about money? Well to be blunt, it’s our ego and fuckin’ fear! Fear of failure; fear of losing your security; fear of losing your life. We attach our entire life, our ego, our social status and our existence to money. If we have money we are successful, we lead a fun and desirable life and have material things that make us worthy. We fear losing money over everything else; we can lose friends, family, lovers and even our health, but god help us if we lose our money! How many times have you heard of someone working their entire lives for money and wealth and then dying of a disease and regretting not spending more time with their family and friends. The person who dies with the most toys wins, but do they really win? They are dead. Or the phrase you can’t take it with you perplexes me because all we do is keep trying to take it with us or worry about what we have and what we are leaving behind.

Ironically, what we fear the most is happening a lot! Here are some stats to think about:

  1. One in six Canadians will eventually go bankrupt.  (click link for article) Why? Because we as a society are encouraged by the government, banks and retailers to use debt to finance consumption. According to Statistics Canada, the average Canadian has debt equal to 163.7 per cent of their disposable income. In simple terms, if you earn $20,000 (after tax) in a year, you have $32,800 in debt.
  2. More women are experiencing bankruptcy. Over the past 12 years, one out of 25 single women between the ages of 25-35 are experiencing bankruptcy. The top reasons for single women to suffer financial hardship are women still make less money than men, more women are separated/divorced and supporting children and student loan debt.
  3. In the U.S. an average of 1-1.5 million people file bankruptcy per year.
  4. In the U.S. the number one reason for bankruptcy is outstanding medical bills.
Well I am glad I am ahead of the curve because I have already been there, done that! Yep, 13 years ago I declared bankruptcy. It was one of the scariest things I have ever had to face and totally caught me off guard. It came up one night at my bookkeeper’s after going over my books for hours. She opened a bottle of wine and I remember the conversation going something like this . . . “Marjie, you are slowly sinking, even if you can consolidate you will be over 40 by the time you pay it off and if something happens to you and you can’t work, you will have lost it all anyway. Maybe, you should think about bankruptcy.”

I was stunned. How could this be? My boyfriend and I had just bought a condo. I made good money, or at least I thought I made good money. I knew I suffered when my business partnership had dissolved but I thought I had paid a lot of money off – how could I be sinking? I remember staring at the long list of outstanding debts, the grand total was $65,000 and there was more that wasn’t on that list.

Unfortunately, the numbers did not lie. Yes, I had paid back a lot of money but I had also paid a shit load of interest and to survive, I was borrowing from Peter to pay Paul. I needed to do something and quick because I was trapped. I could feel the walls closing in. I could not move forward with my boyfriend knowing that I was broke; I did not want to burden him with my debt. How could we have a kid or build a life together plus all the crap that dreams and white picket fences were made of if I could not stop working for the next 10 years? Not only did I have to keep earning my current level of income, but according to my bookkeeper, I actually had to make more to cover the rising cost of living. That meant no holidays, no sick time, no maternity leave. Plus I was maxed as a stylist. I physically could not make any more money. I was already working six days a week, 10-hour days with a week-long wait list. I was already mentally burnt out and physically exhausted. My body was breaking down and I was starting to get neck issues and tendonitis. How the hell was I going to make more and get out of debt?

brokeThe next day I was so depressed I wanted to die. Not to mention a tad hung over from the bottles of wine with my bookkeeper. Nothing like finding out you’re broke to make you want to drink and then slit your wrists! It was that day that I totally understood how stockbrokers could take their own lives after a crash. My mind was overrun with thoughts of failure, defeat and the fear; the fear of losing my life, my boyfriend and my business. Plus, what would my friends think, my family? I wasn’t the successful entrepreneur I thought I was. I was, in fact, a loser and a financial failure. The fear that was coursing through my body was overwhelming and I was in a total state of panic. As I drove to my girlfriend’s house I was sure I was close to a nervous breakdown or worse. My girlfriend took one look at me and I started crying; she gave me a hug, pulled me inside and made me a cup of tea.

After 30 minutes of crying hysterically while she tried to figure out was wrong, I finally admitted it. I was ashamed of myself. I was ashamed of not being financially responsible. In between my sobs, the fear burst through and I declared to my BFF, “I fucked up, I have to declare bankruptcy . . . I’m going to lose everything including my boyfriend!” She just looked at me and started to grin.

“Sister, I think that is a great idea. Besides you’re not losing anything other than a whole shit load of debt and a mountain of stress. Do it, start over free and clear, and if you think your man is gonna leave you because of this, then good riddance. There will be many more serious issues in the future and if he can’t handle this then you don’t want him for the long haul anyway.”

It was at that moment that I realized I had only been thinking about what I might lose, not what I might gain by declaring bankruptcy. I wiped the tears from my face, looked at my girlfriend and asked, “But how am I going to be able to live without my Gold Card?” She laughed, “I don’t know, can you live without your gold card bill?”

We talked a lot that day about our mistakes, both personal and professional. We laughed about all the loser guys we had dated and the ones that were bad news. We were both entrepreneurs and admitted that some of our business decisions had been made impulsively or reactionary and many had been based on fear. We had also both been young, in our early twenties, and naïve when we started our businesses so we learned the hard way. Our staff had stolen from us, we had to fire “friends,” we had given too many deals to customers, and our biggest lesson was that we both started undercapitalized. But we also realized that we had made a lot of good decisions too, and that from each mistake we had learned and gotten better as entrepreneurs. Both our businesses were still successful, mainly because we worked our asses off. The hard work did show; I had a client roster of more than 400 people and was booked a week in advance. I was obviously doing something right. But, now it was time to correct the things that I hadn’t done right. The first step was to get my head out of the sand and own up to what I owed.

That took three days and multiple piles of paper on my office floor. My boyfriend was perplexed because I shut myself off – he did not know what the hell was going on in the office and was scared to ask. Plus I was not talking about it and still ashamed. As I poured over the endless receipts the reality hit me. I was overspending compared to what I was making. Yes, my debt load was ridiculous (at least that I could justify since it was left over from my former business partner taking me to the cleaners) but I could not excuse or justify the endless receipts for restaurants, wine, clothing, and of course, shoes! When I was fat, (click link to article) I didn’t buy a lot of clothes (that was just too depressing) but shoes always fit! So I bought a lot of them and I ate out A LOT.

A week later I met with a bankruptcy trustee and when I walked into her office I had all my ducks in a row, I knew exactly what I owed and how much I earned. The two hours I spent with the trustee were the most humbling of my life, to admit failure to myself or my girlfriend was one thing. To admit it to a total stranger was another. I had to explain how I had gotten into this financial position, what I had done wrong and how I wanted to change and improve my spending patterns. Plus, I had to admit that I was scared to death about putting this debt onto my boyfriend and how I might lose him over the bankruptcy. My trustee was amazing – she helped restore my self-confidence by letting me know what I did correctly but also made me accountable for what I needed to change. I signed the papers and drove home. As I drove I felt a huge weight lift off my shoulders, a sense of freedom that I had never felt before. A feeling of knowing that even without my Gold Card, I was going to be okay. I only had one more thing to do . . . tell my boyfriend.

brokeI decided to just deal with it head on. I had no choice. I walked into the house and poured a martini. When my boyfriend came home, I opened him a beer and asked him to sit down. I just started talking, I told him everything. Everything I had told the trustee. The universe was also on my side at that time because as it turned out, because my investment in our condo had been so low, my filing for bankruptcy would not affect our condo or my boyfriend’s investment. He just listened to every word (and he also had a second beer). I talked and cried, admitting my failure and my fear of losing him and the life we were building together. At the end, he just looked at me and said, “Sounds like a good idea, babe. Do it.” Then he winked and said with a smile, “Besides, you can always use my Gold Card.” The relief that flooded through me was overwhelming; in my heart I knew that we were solid and would make it through this but in my state of fear and panic I felt so much doubt. But we did make it through the bankruptcy. I made it through. Lots of things changed: my car got sold and seriously downgraded; my spending stopped and my social life changed dramatically. I had to report to my trustee every month for nine months. But the stress also stopped. The walls that were closing in dissipated and I felt more in control of my life than ever before, because every day I knew exactly where I was financially and from that point I was able to start again.

My Conclusion

We have no control over our future financial security. Even when we save and make the safest and best decisions possible we can still end up broke. History has proven that the market can crash, interest rates can skyrocket, jobs are lost and many people get hurt and sick, making them unable to work. Financial hardship is a very real for many people. There is no shame in declaring bankruptcy or being broke. However, what is shameful, is that we don’t talk about it and we pass judgement on people who are experiencing financial hardship without knowing any of the reasons why. What is also shameful is that our government, financial institutions and retailers are encouraging us to go into debt to support our consumption.

What we do have control over is our relationship to money and what we do with it. What is your relationship to money like? Do you value money more than your relationship, your children or your health? If so, can you reprioritize your life? Ask yourself and be honest, do you really know where you are financially? Are you in debt? If so, start by accepting responsibility for where you are and then make some changes. These changes to your life are not the end of your life. They are alterations that in the long run, will give you a better relationship to money and more financial freedom.

What I learned

Less is more, I tested it out and it’s true. You can live with less, you can go out less and you can shop less. Who you are is not how much money you make; who you are is what you do and the people you do it with. Can you survive being broke or going bankrupt? Hell, yeah, but ironically you can’t live without your health. Money is not abundance. True abundance is love, friendship, laughter and the joy of nature. Money may make part of our world go round, but it’s US who actually makes the world connect. So don’t let money own you . . . try owning it and actually living your life . . . because ya can’t take it with ya!

Cheers,

Marjie Martini

Tips to organizations that can help you with debt counselling/bankruptcy

creditcounsellingcanada

bankruptcycanada