That Time I Declared Bankruptcy at 30 Years Old
There's this stigma around money when you live in New York City. Everyone just assumes you have it. And they should because NYC is fucking expensive. I always made decent money yet in my 20s/early 30s, the struggle was real to pay my monthly bills. I can't tell you how many times I decided to charge something basic—like groceries or a frozen yogurt run—so I'd have a positive cash flow in the bank for other essentials, you know, like rent.
Truthfully, those money woes were more about paying my bills WHILE keeping in financial step with my friends and colleagues. I couldn't understand how they could afford $200 dinners several times a week or jet off to weekends in the Hamptons while still enjoying luxuries like subway fare and shoes. And, I'm not talking shoes with red bottoms—just the basic ones required on your feet if you want to be a functioning member of society. I barely could afford stilettos from Payless. I was constantly stretched financially. I had just enough (most months) to pay my bills, never enough to "live life to the fullest" and zilch in savings.
Now, that's NOT where you want to be if you lose your job. And that's the exact financial spot I found myself in when I lost a job that I knew was doomed back in 2008. It was a toxic and draining work environment—I only got through it with anti-anxiety meds and a prescription strength dose of Alleve. And, yes, of course I desperately searched for another job—but, I was backed into a corner. I dreamed of pulling a Jerry Maguire and dramatically quitting by walking out with the proverbial goldfish. But, I couldn't go there and not because I lacked the desire or chutzpah. I couldn't do anything to jeopardize my steady paycheck as I had ZERO savings and a mountain of debt. So, on the day that I lost the battle and finally lost my job, I knew in my gut that I only had one option.
I declared bankruptcy.
Full disclosure? I'm freaking out that I just wrote that sentence. This is the first times I've ever admitted that publicly—and I can count on one hand those who do know. So, welcome to my inner circle!?
Anyway, I wish I could tell you that declaring bankruptcy at 31-years-old meant that I had a collection of Birkin bags and a passport filled with stamps from exotic vacations to show for it. But, the nicest bag I owned was a hand-me-down Marc Jacobs and the furthest I’d traveled was Los Angeles to sleep on my friend’s couch. My debt was 100% from making stupid financial decisions when I should have been scrimping and saving.
Here's the deal: NEVER live above your means. Yes, of course I know that's easier said than done. BUT DON'T DO IT.
I get that fitting in and keeping up, especially when you’re first starting out or in a career where image is everything, feels like life or death. But, I’m a cautionary tale for why you MUST pay yourself first before even thinking about charging a dinner you can’t afford or giving into that little voice that insists you need a $500 pair of shoes to fit in at work. Or adopting that cute—yet very expensive—dog that puts you in direct violation of your lease so you can network at the dog park (sigh, yes, I'm guilty of that but that's another story for another post).
But, if you learn one thing from me, learn that you simply cannot dictate your career choices based on what ISN'T in your bank account. Sometimes jobs aren’t a good fit—it happens, it's expected and it's okay. It’s way better for your psyche if you can comfortably leave a job you're not meant for on your own terms instead of suffering for the paycheck. That financial and mental drain is debilitating and never ends well. Why do that to your professional reputation?
I should know. I was trapped and couldn't quit. I had almost $20,000 in credit card debt and was paying at least $500 more a month in rent than I could afford because I Iived alone in a one-bedroom apartment. I just couldn't bear roommate drama adding to my stress. My debt got out of hand during a freelancing stint after Inside TV—(bonus points if you not only remember it but bought an issue)—folded. I was the deputy features editor and really did love my job. Inside TV was a TV Guide clone, I mean, spin-off. There wasn't room on the newsstand for two TV Guides, so Inside TV lasted maybe six months. When we folded, I went freelance for the first time in my career. I was surprisingly good at picking up work—but terrible at creating a consistent income out of my assignments. I was horrible at riding out the lean months and refused to leave New York City—so I used credit cards to get by. And the occasional check that my credit card company sent me. And a bank loan here and there. . .
I couldn't take the sinking feeling every month when my bank account plummeted under $100 and my minimum, monthly credit card payments tripled. Every time I thought I was in the clear, another bill landed in my mailbox—draining me of my money, dignity and freedom.
I quickly discovered that there's nothing more stressful and nothing more liberating than declaring bankruptcy. I needed a lawyer (which cost money), I had to plead my case in front of a judge and I had to take money management classes and tests online. But, it forced me to get my finances in order, relieved me of squandering money on credit cards I don't even remember opening and helped me understand that it was better to decline invites to dinners out for no special occasion other than it was Tuesday than worry if my nearly maxed out credit card had the bandwidth for a $50 order of chicken satay.
Because here's the deal—nothing leaves a lasting impression like needing a potential colleague to spot you after a very annoyed waiter makes it known to an entire restaurant that your card has been declined. Nothing feels worse than admitting defeat and begging your parents for any little bit of money they could send your way. And nothing is more empowering than knowing you can choose how to spend your money. If you work hard to essentially give your money away each month to cover your debts and avoid going into collections—it sucks and makes you bitter, angry, resentful and likely to make terrible financial decisions you'll ultimately regret.
LET'S GET REAL:
I'm NOT advocating declaring bankruptcy. I am still ashamed that I got there and my ten year anniversary is coming up and my finances are in great shape today. Yes, it was a chance to start over financially while lifting a huge weight off my shoulders. Yes, it cleared the decks so I could make smarter choices moving forward and focus on my career without my bank account calling the shots. But, it's also a black mark on my credit that I had to explain away to every potential landlord (and even select employers) for years. It was a black mark on my ego, making me feel incompetent and un-adult. And, it was tough to undo those years of bad spending habits where I used credit cards as a crutch to get through money droughts. It was like a security blanket was ripped away from a toddler.
But, you know what? Bankruptcy taught me how to set financial goals and priorities and drilled the importance of saving into my head. Years after, I was laid off while SIX MONTHS PREGNANT. While I flipped out and it rocked every facet of my world—I didn't panic (as much) over the money piece of things. Even though my husband and I had no idea how expensive that third mouth would be to feed—we were debt free and had a hefty savings. That never would have been the case if I hadn't declared bankruptcy.
So, use me as a cautionary tale. Do whatever it takes to get your bank account under control so you can have freedom in your career—and of course your financial life.
You'll thank me for it, I swear.