Even when I’d get the ugly call from the bank, I never thought of myself as being overdrawn, I was just under-deposited!
—Mary Hunt
My pulse raced as I signed my name. What if the salesclerk called the bank to see if I had money in my account? Or worse, what if she called the police? I was about to attempt to pass a hot check, something I’d never done before, and I was sweating bullets.
Just days before, I’d arrived in Southern California and moved into the college dormitory, which would become my home for the next four years. The student handbook was filled with rules for student life and helpful hints, including information on how to open a student checking account in a local bank, which I did.
Fitting in and getting up to speed socially was a top priority, so when my roommate invited me to go to the mall, I jumped at the chance. Honestly, I’d never seen such an amazing place.
I have no idea what I bought that day, it was all so spur of the moment. The others girls were shopping, and I wanted to be cool and independent like them. Making my own decisions and getting to decide what I liked was new for me, and boy, did it feel good.
I experienced a few moments of anxiety as I traced in my mind what I was about to do. I knew that I didn’t have enough money in the bank to buy anything. The good girl in me was cautiously reluctant. The naughty girl said, just go for it. Nothing’s going to happen, and besides, you deserve what you want.
And so I wrote a check, knowing I didn’t have the money in my account. This was back in the late sixties before the days of electronic checks, high-speed computers, and instantaneous transactions. I would soon get a paycheck from my new campus job, and with any luck I’d get it to the bank before this one cleared, and all would be well.
This powerful event, in some sick, twisted way, fulfilled the promise I made to myself at the ripe age of eleven: when I grow up, I am going to be rich.
The second of four children, I grew up in a sheltered environment. Looking back now, I can see that we were a frugal family, but at the time I didn’t see it that way. My childhood perception was that we were dirt poor and poverty stricken. My mother didn’t work, my father was a pastor, and I had to wear clothes from the thrift store. It was embarrassing. I hated my life and dreamed about how things would change when I grew up and could make my own decisions and have things other people had.
The Sears catalog was my planning tool. I’d secretly “shop” and make lists of all the beautiful linens, furniture, and household items I would buy to furnish my dream house. I found my future family in their respective sections of the catalog and outfitted all of us with beautiful new clothes. I “bought” my children toys and my husband a riding lawn mower. I even bought a white picket fence. I lived in a fantasy world, creating the life I would have one day when I was old enough to leave home.
Now, seven years later and far from home in a big, beautiful department store with checkbook in hand, I felt as if I’d arrived. I could buy anything I wanted. I felt rich, and it felt fantastic.
My experience that day was a defining moment that would change the course of my life. Simply knowing that as long as I could get away with it, I could have what I wanted even if I didn’t have enough money to pay for it, changed me in ways that would all but ruin my life. We’re not even talking about credit cards here. I managed to squeeze that kind of promise from a checking account.
It’s not like I had experience with deceit or breaking rules. In fact, I’d always been a compliant, obedient child and certainly never one to flirt with dishonesty or anything else that might be considered sinful. In all of my strict upbringing, which mostly centered on what not to do, I didn’t learn a thing about managing money. Reconciling a checking account was completely foreign to me. APY? A budget? Not a clue.
To this day I do not know if my parents assumed I would learn money management skills through some kind of financial osmosis. They may have thought that one semester of high school bookkeeping would set me on the right fiscal path.
Maybe they figured I’d do what many women did in those days, marry a man who would take care of all of the money details for me.
Most likely it didn’t cross their minds to teach me how to handle the currency of life. It was simply not a topic that anyone talked about.
I did graduate from college and managed to stay out of jail in the process. Unfortunately, my financial shenanigans didn’t stop with my first hot check that day at the mall.
I came to enjoy the option of being able to spend my money before I had it in my possession. I discovered that having more than one checking account allowed me to do that more efficiently because I could buy more time. Honestly, I didn’t know that having checking accounts in several different banks and then passing checks between them in order to create more time to cover checks I’d written, a practice known as “check kiting,”[15] was illegal. I thought I’d discovered a very clever way to manage all the money I didn’t have yet. I don’t claim to have been a master of manipulation. I was pretty good at it, but now and then I’d mess up and get nasty phone calls from the bank or, on occasion, a merchant letting me know that my check had bounced. I hated when that happened.
Shortly after my twenty-second birthday, I made a big life decision I knew would fix my money problems and move me closer to my goal of being rich.
I got married. And I don’t mean that I just got married. I got married to a banker. I was madly in love, of course, but it didn’t hurt one bit to know I was marrying well.
It was shocking to me to learn after we’d been married for a few months that as a management trainee, Harold did not make the insane amounts of money I’d always associated with the banking profession. And it took even less time for that banker to discover that his new wife had, shall we say, a little problem with spending.
To say that I was a prime target for the consumer credit industry is putting it mildly. In my heart, I knew that a checking account was never intended to be a financing tool. It took a lot of effort to make that work. But a credit card? Now that was something completely different, and exactly the instrument I needed to kick up my buy-now-pay-later financial habit more than a few notches.
Companies were falling all over themselves to give me credit cards because, of course, they discovered that I was so creditworthy. (This was before the law was amended to make it illegal for companies to send out their credit cards unsolicited.) Even better, they trusted me with a lot of money (read: credit), which elevated my opinion of myself. After all, if they thought I could handle thousands of dollars in available credit, apparently I could. And wasn’t that a pleasant surprise?
I began collecting credit cards the way some people collect baseball cards. It was fascinating to see just how many I could get. I didn’t intend to use them, but I loved the sense of security I had just knowing they were safe in my wallet.
It didn’t take long, however, for me to find plenty of reasons to use them. After all, I had emergencies. And since the reason for having the cards in the first place was to be prepared in case of emergency, I found it perfectly reasonable to use them in that way.
My modus operandi was simple: spend money until you run out, then spend credit to cover the rest. Or, use your credit to preserve your money. My method for handling money on any given day depended on how I was feeling at the moment. I would often default to the “if it feels good, do it” method, which was closely related to “if it’s on sale, it’s a sign that God wants me to buy it.”
The arrivals of our two sons, Jeremy and Joshua, gave me new reasons to need more money, which meant chasing ever-increasing amounts of credit. What began as monthly balances that we could pay in full soon turned into only the minimum payments required each month. The debt grew little by little at first. It didn’t seem like a big deal because the monthly payments seemed affordable.
It took no time at all for the line between Harold’s income and our available credit to blur to the point that I lived as though credit was the same as income. Just one big pile of money with which to make the best life possible for my family. And when the pile would evaporate, I’d find more credit.
I learned quickly the various stores’ and banks’ credit card rules: use them often, pay the minimum monthly payment, and view credit limits as if they are gold stars on your character and personal worth. And if you need us to increase your credit limit? Just call!
Being a good consumer and playing by retailers’ rules was like getting regular raises. While I didn’t dwell on it, somewhere in the back of my mind I knew the debt I was amassing would have to be repaid. Someday. In another time and place, far, far away. I believed that it would all work out. Like magic.
When we’d been married for about 12 years, I begged Harold to quit the bank so we could start our own business and become rich entrepreneurs. I knew that his banker’s salary would never cut it. Finally he did leave his job because he wanted to make me happy, and we became the newest independent distributors with a group that promised us that we would become rich.
We committed the two fatal errors of self-employment: we got into a business we knew nothing about and we did it with borrowed funds. Within four months my dream turned into our collective nightmare as we lost our business and walked away with nothing but more debt.
I didn’t intend to ruin my life. But gradually, over time, I came this close to doing it. I made a horrible mess, one that put our home into threat of foreclosure and left us unemployed.
In the fall of 1982 my world came crashing down. I had no idea how much debt we had, but I knew it was a lot. There were even accounts and debts that Harold didn’t know about. And that day, I found myself flat on the floor on my face. I’ve never felt so alone and afraid in my life. I had no more options, nowhere to turn, and no idea what to do. I was completely out of hope. That day was my turning point. Lying there on the floor, I knew that my only option was to look up, and that’s when I had an amazing encounter with the God of the universe. For the first time I saw the ugliness of my greed, and what it had done to my life was almost more than I could bear. I wept in remorse for what I’d done. It wasn’t my rotten luck, my husband’s underpaying career, or any of the things I blamed that landed me in this pathetic place. It was me. I’d been demanding, self-serving, manipulative, and deceitful. I was in the worst jam imaginable, and I had taken my family with me. I had no idea what to do, except to call out to God and ask him to forgive me. I asked for another chance and an opportunity to pay back the debt and change my ways.
As I got up off the floor that day, the fog didn’t lift to reveal a pile of money that would fix everything. But I knew I’d been forgiven, and in that promise I found new hope that my life could be better.
You might assume that I, with my newly found determination to become money wise, together with my husband and his banking and finance background, would know exactly how to take charge of our personal finances. But you’d be wrong. Honestly, we didn’t have a clue what to do.
Within a few weeks, through what I can see now as an amazing set of circumstances, I went to work as a part-time industrial property manager. Odd because I didn’t seek that job, it came looking for me via a phone call out of the blue. A gentleman whom I’d met years before sought me out, offering me a job on terms that I could choose, to work in his family’s real estate development company. For the next two years Harold and I reversed roles as I became the breadwinner and he a stay-at-home dad.
As I began receiving regular paychecks, I realized how ignorant I was about what to do with the money. Admitting that I didn’t know it all was somehow refreshing. My heart had become tenderized, and that diluted my arrogance and pride, making me willing and eager to learn.
Compared to our bills and outstanding debts, a single paycheck was like a raindrop in the ocean. I mean, what’s $400 when you’re staring at one month’s stack of past-due bills that added up to more than $4,000? It was beyond overwhelming.
Normally, my approach for how to spend such a piddly amount compared to the amount we needed to get current would have been something along the lines: “Since we don’t have enough to pay all of the bills, let’s buy groceries and then take the kids to Disneyland.” But I’d just had a transformational experience. Even though I didn’t know what to do with our personal finances, I knew that what I had been doing wasn’t working. There had to be a change, and it needed to start now.
That’s when I sat down and made a list. Little did I know that those first few written decisions for how we would appropriate any amount of money that came into our household would develop into the 7 Rules.
Over the years, as Harold and I walked through the dark night of debt and into the bright light of solvency and then on to founding Debt-Proof Living, I’ve reworked, refined, expanded, and consolidated the rules to the 7 I’ll share with you in this book. Since making that turn on the road to financial devastation, more than a few people have expressed their shock by asking, “How could you let that happen?” My answer is simple. At several defining moments in my life (the day I stood in that department store with my new checkbook in hand; the day I accepted a credit card without telling my husband; the day I filled out the form to get my own secret post office box where I could receive statements for my secret credit cards, to name a few), I faced critical decision points, and each time I made the wrong choice.
I have no doubt that at the time I made them I could have convincingly defended those choices, but that would not have made them the right decisions. Absent a simple set of rules to follow for how to manage money well, I had no foundation on which to stand; no fundamentals to turn to.
I learned a lot from my journey back from the brink. I didn’t become an heiress or win the lottery. I worked harder than I’d ever worked in my life. The process shaped my attitudes and beliefs. As God provided the opportunities, we paid back more than $100,000 in unsecured debt. Now I find the greatest joy in my life’s work of leading others out of debt.
Through it all, the most important thing I’ve learned is this: money management is not difficult. Personal finance is not brain surgery. Anyone can learn how to apply a simple set of reliably sound rules to manage money and discover the path to financial freedom.
While I have determined that I will not live with regret, I do wonder how things might have turned out if someone had taught me simple principles for making financial decisions. I believe that I would have saved years of heartache and untold amounts of money to say nothing of lost opportunities. At those pivotal defining moments I would have made a different decision because a specific Rule would have been my guide. I would have known, almost instinctively, what to do, not come up with some wild, manipulative response in the absence of a specific guiding principle on which to rely.
I am so grateful for how God has taken the broken pieces of my life and woven them into a tapestry of beauty that reflects his grace and mercy. It is a daily testament to the way that God can take even our worst mistakes and turn them into something of value.
If your current financial situation has you all tied up in knots and stressed out of your mind, get ready for some relief. Things are not likely to change overnight, but perhaps for the first time you will know what to do to get the change started.
Wouldn’t it be nice to find out that there are simple rules of the road that can cut through all of the confusion, mystery, and misery and enable us to get our financial lives on track? I have great news . . . there are.