History of a Bad Spender, Part 4 of 5

At the beginning of 2007, my mother allowed me to transfer some of my direct sales debt to a credit card in her name. It was an incredible help, since not paying on those particular cards was costing me 30% in APRs, and it afforded a little bit of breathing room necessary to begin preparing for the birth of our second son.

In May of 2007 I was put on bed rest. I was not worried about income, since the company I had worked for offered “gap” insurance, which meant that they would pay the difference between my salary and what disability paid. Not many employers do that. I was quite lucky. (Although, I did connect with a woman near me who was in a bankruptcy situation, and the company she used to work for also offered it. Probably because the company was connected to health care.)

While the mortgage payment was getting more difficult to pay with every passing month, so were the credit card payments. Several accounts had gone to collections (with the exception of my mother’s card), and I had taken measures to hide the collection efforts by forwarding all calls that went to the house to my cell phone. Then, once I had identified who a caller was, I saved the number into my contacts list and applied a custom ring tone of “Silence” to the contact, so when they called, my phone would not make noise.

At this point, we were so far in debt, and I had ruined our credit so severely, that obtaining credit anywhere in the future would not be possible. In fact, by June of 2007, I had not used a credit card in nearly 8 months because they were either all maxed out or in collections.

Our son arrived in July of 2007 with no complications. However, I did almost have a heart attack upon seeing my husband walking to the mailbox one afternoon after I had returned home from an errand. Our postal carrier was at the box, and he was talking with her, carrying on an animated conversation. Upon walking back, he’d stop, review something in the pile, then walk again, then stop . . .

I had gotten quite skillful at hiding mail (among other things) from my husband. So, seeing him carrying an armload of it was enough to trigger a massive coronary, since I had not made the June house payment.

Luck, however, was on my side that day. What he had stopped to read was a company newsletter and one of my disability checks. Christ, this was going to have to stop someday.

Meanwhile, the time I took off from work gave me some room to re-evaluate my direct sales business. I had tried earlier in the year to get back into the game after my first trimester had ended (I was horribly sick nearly every day), but then had to stop again because I was borderline preeclamptic. After much thought, careful deliberation, and a confrontation with a direct sales zealot, I decided to retire. (Much to the delight of my husband.)

I was able to short-sale some of my inventory and used the proceeds to pay the June, July and August house payments.

Then the day came that shot my anxiety into overdrive: We received a notice from the IRS regarding our 2005 tax filing – the year that I cashed out my pension and took a $50,000 disbursement from my retirement account. The unpaid taxes totaled $8,200.

I waited until the final day possible to call the IRS and ask them to arrange a payment plan, which was in November 2007. My first payment due would be in January 2008.

In the mean time, since I had not made a house payment since September, our mortgage was officially in default.

In December of 2007, we eeked through Christmas using a small company bonus I had received. There was hardly any money in our checking account, we had two kids in out-of-home care, and 2008 was looking really, really bleak. It was the first time, ever, that I had considered coming clean to my husband so that we could get the help that we needed. But I just couldn't do it.