In the LearnVest Personal Stories series, everyday people share the details of their money lives, discussing the individual choices they’ve made and how it’s impacted their financial journey.
Today, one woman tells us how using a nondescript, everyday item—an envelope—helped her transition from being bankrupt to financially flush.
Not long ago, frivolous spending dominated my life. A new pair of shoes, dinner out with friends—it didn’t matter. I spent every dollar as soon as I got it.
As you’d expect, that type of financial behavior carries you down a dangerous path. And sure enough, before I knew it, I was 27 and drowning in debt.
With no savings to my name—but plenty of responsibilities—I knew it was going to take drastic measures to save myself from the money mess I’d created.
Fortunately, my story has a happy ending. I figured out a way to better manage my money—with some help from an envelope.
Bankruptcy and Bills: My $50K Debt Story
My finances weren’t always a downright disaster. At 22, I was thriving as an office manager at a company near Watertown, Wisconsin. I was making about $35,000, and I didn’t have a lot of financial responsibility—until I got the real estate bug.
Since I’d spent my childhood in apartments, I’d always dreamt of owning a home. For fun, I started looking at properties—including a four-bedroom place that really struck me. Best of all, it could be all mine for a cool $125,000—and no money down.
This was in 2004, when banks were giving out loans like lollipops. I ignored my parents’ warnings, charging full steam ahead to become a homeowner.
Just one week later, I’d lose my job, when my employer went belly up. And to make pretty unfortunate matters worse, I had no emergency fund to fall back on. Even though I was able to collect unemployment, it wasn’t enough.
After just four months of struggling to stay afloat and falling way behind on my $1,000 mortgage payments, I decided to sell my dream house through a short sale—for about $6,000 less than the purchase price—and moved into a tiny apartment.
From there, everything tumbled downward.