Saturday, March 11, 2017

Debt-Free (soon) - and how just $4,000 almost broke me, and almost turned it all back around again

I was debt-free at the end of my 20s. I'd paid off my student loans. I'd paid off my car.

And then I moved to Seattle to pursue a career in the Arts.

Needless to say, I am no-longer debt-free. I've worked really hard for the past 9 years. I've accomplished a rarity - I've managed to scrape together a living in the Arts, without having a regular, year-round, 9-5 job. Oh, I've supplemented with waitressing here and there, and I've been hemming pants for a retail store for 7 of those years (you never know how many pants there will be in a load, but overall, it's paid rent each month). I started an Etsy shop, that brings in a steady trickle. I've been a Nanny. I've put clothes on almost every other actor in Seattle. I have been paid to act several times at the "big houses" - in the ensemble!

But I couldn't keep ahead, completely. The recession hit, and my husband (then fiance) was laid off while we were dating. Temp work was helpful, but often my income had to stretch for both of us, with little warning. Without being able to afford health insurance, one emergency room visit blew through half of my wedding savings, so the reception went on a credit card. And here and there, a theater wouldn't be able to pay me on time ... and my little bit of savings was blown through each time as I paid bills and hoped that the money would show up before I ran out. And there was a year that I had to stop working for a theater for their ethics violations....and suddenly lost $4,000 of income in a single season. And that same season, several theaters in a row weren't able to issue budget, or didn't pay on time, so budget from the next show had to sit in my checking account, covering for the theater that didn't pay me on time....while purchases for that show maxed out my business credit card....and those credit card balances just kept creeping up, as more and more of my monthly payments went towards interest on the debt, instead of paying down principle.

(This gets good, eventually!)

This season, things turned around, without much warning. I was called into stitch in a Costume Shop for one of the "Big Houses" - which gave me 6 weeks of steady income at a time when I would normally be scraping by on a couple of design gigs. While that was happening, I caught wind of a chance to be a dresser for a Christmas Show at another "Big House." It paid really well over the Holiday (last year's Christmas had been miserable - I'd just lost income, and scraped by all year long), and I knew I could at least easily cover my husband's geeky wishlist without stress. And then, I was chatting with a friend who works at a third "Big House" - and got a quick week of work during my gap between gigs, which led to my being hired again for a 5-week assignment AND being paid to costume their touring school show. Which paid $4,000.

That's it. Just $4,000 - that made all of the difference this year.

I'd already been working at it. In 2016 I'd already decided to take my Etsy shop sales, which are steady but sporadic, and divert all of my sales into Credit Card Payments (usually in $20-30 bits, which wouldn't break the bank, living expenses-wise, but at least would allow me to start chipping away at some principle between payments). Any time I was making steady pay, I would send another 10% of my paychecks towards my credit cards as well. This 2016/2017 Season, I decided to put all of my design fees/acting stipends directly towards principle as well (Anywhere from $250-$1,000 at a time...don't get me started on how many hours of work went into some of those stipends!! Welcome to the Arts!).

But that unexpected money - when my bills were already covered, and my grocery needs were met - allowed me to pay off one card, and one small business tax loan....which allowed me to take one payment I was already making, and add it to my sewing machine loan payment, to pay it off 4 months early (on a zero-interest for 12 month deal, so yippie! - because that company sets up a minimum payment, which "surprise" won't pay off the card in time, and you'll be suddenly hit with 12 months of compounding interest)... which allowed me to add another $100 to the last of my credit cards...which I've now got well below the maximum, and heading towards the halfway point. At the current time, if I only continue rolling one payment into the next payment until they are all paid off, I will have paid off my final credit card in 12 months.

For lack of $4,000 - my credit cards maxed out, my bills mounted, and I was completely frazzled and struggling for the better part of a year. That $4,000 of missing income led to $12,000 of debt load (I know- it's incredible that so little missing money can compound into a so much bigger problem so quickly!)

With $4,000 - I was able to quickly dig myself out of the hole, pay everything back off, and my credit score, which had dipped to "fair" - will be back to "good" with 6 months of work.

The personal lesson for me is: It sucks that I had to do this again, but it was far less debt this time around, and I'd already learned the skills I needed to pay it off quickly, once my personal finances turned around. I'd also kept up some principles from before, and have some savings and a Roth IRA this time around.

The life lesson I've learned is: When you have nothing, tiny changes in income can have a compounding effect very quickly. One medical bill, one missed paycheck, one lost budget reimbursal check, could make the difference between thriving and starving. There have been many articles about how horrible "middle class frugality" advice is for people scraping by...because most of them assume a basic level of spending power that isn't possible when you're flat broke. (It's easy to say "buy bulk" because it saves money, but what if you don't have $40 for that super pack of toilet paper, and can only afford the $2 to get the much more expensive by volume 4-pack) It's also well documented that small setbacks can have a cascading effect. Regardless of political rhetoric, it's also been well-studied and documented that the "welfare queen living off the government" happens so little, that it's almost a myth. What happens much more often is this.
I feel like a leech. I’m told by my friendly clergymen, my wonderful politicians, and by people I know and once called friends that I am a burden on society. I’m a taker. If only I worked harder. If only I wanted to stop being poor and getting handouts, then everything would turn around and I would be rich. If only I would pray harder, attend the correct church, and read an ancient book that I have read cover to cover many times in the past. Then God would just bestow His blessings upon me. Or, I should really just consider putting some positive energy out into the Universe. If I meditate and tell the Universe that I want money, money will come and everything will be fixed. The constant shouts from society’s peanut gallery telling me how the poor or worthless and damned help shape my inner dialogue and I begin to agree with them. I am worthless. I deserve the shame I feel.

I learned, from this past year (and the past 9 years as an artist), that without a social safety net, it's so easy to fall behind through a combination of circumstances. Myself, I had worked 80-90 hours per week. I'd shoehorned gigs around each other to make sure that each bill cycle was covered, and each bill paid on time. It wasn't my fault that one company suddenly couldn't find the money to pay me on time. It wasn't my "lack of planning" or "failure to think ahead" each and every time that the corporate office would mysteriously "lose" the stores invoices, requiring me to bite my nails and hound my poor store liaison to force them to find it, because corporate won't answer emails from their contract employees. And in the end, it didn't matter how hard I worked, or how much I screamed to be paid (with my contract in hand) didn't cause the money to show up quickly enough to stop the next cascade. I had overdraft protection, and two emergency credit cards, and one emergency personal loan account "just in case" - and it still didn't matter, because one paycheck, 1-2 weeks late, could start a cascade that would take me 3-4 months to recover. And I'd be met with employers, both corporate and non-profit, who would adopt a condescending smile and tell me that I "shouldn't count on this money" or "If I wanted to keep having a place to work, I should take the pay whenever they were able to give it to me."

I learned, and keep learning, that it's important to have empathy for the people in our nation that depend on the safety nets. It's easy to say "get a job" during a recession when the college-educated are taking fast-food jobs. It's easy to say "have a six month backup" to someone who can't afford groceries. Yep, it's a good idea...but when you're just trying to put out brushfires all. the. time....all you can do is think of the next bill, and there is no more after that. I learned that $5 extra for a latte makes you feel luxurious for half a second (and don't tell broke people they should save that $5 - quality of life is important, and teeny, tiny splurges are good for the soul, and won't actually do much to help if they'd been spent "wisely.")

I think it's more important than ever to fill the food banks, fund the shelters, and support social programs like welfare, food stamps, medicare, and medicaid. Those programs can literally mean life and death, digging out, or continuing to sink. The difference between housed and living under a bridge, or in a car, is a few hundred dollars.

In a time when social programs are being slashed, and a stupid F*CKING wall is being built....those of us with a little extra should please, look around, and donate our latte money that day to someone who is struggling. Find a homeless shelter, or a GoFundMe account, and give a tiny bit of relief to someone else who is struggling. And liberal, blue-state friends - perhaps one way we can show compassion in a time of anger and division, is seek out loans to people in underfunded, red states (or red parts of our own states)...and maybe leave a little note saying who you are and why. The pundits and analysts are pretty certain that those hit the hardest are going to be those who voted for the current administration. And it's easy to sit back and say "they asked for it." But compassion wins over being "right."

I want to choose compassion.