NOTE: This post was included in The Carnival of Personal Finance #158 hosted by Mrs. Micah. She did a great job hosting!
“Hey Chris, whatcha got there?” asked Matt.
“Oh it’s a T-shirt from those guys at the tables in front of the Rec Center. They give one away to everyone who signs up for a credit card,” answered Chris nonchalantly.
“A credit card? Dude, you don’t even have a JOB. You can’t qualify for a credit card!” Matt exclaimed.
“Already did–DUDE–with a $1,500 limit.” Chris turned his nose up and said, “Those of us with a credit card are headin’ over to Bennie’s for a few beers. We ‘might’ let you come if you promise to behave…” He laughed as he couldn’t keep up the act any longer. “Heck, I got a credit card, might as well use it.”
Chris was relatively careful to not buy more than he could reasonable expect to pay off in a couple (or three) months. Making regular payments eventually increased his limit to over $5,000. He never planned on using that much credit. That is until he met Lisa.
She was awesome. She was also sweet, cute, and playful. Chris was pretty starry eyed as his and Lisa’s relationship blossomed into a full fledged romance. Her birthday was coming up in March and he wanted to get her something really special.
“I don’t want to get her a ring…just yet,” he told Matt one day while they were heading to their communications class, “I’m thinking about some diamond earrings.”
“Dude, those are expensive. Besides, she doesn’t wear that kind of expensive stuff. The earrings I see her wearing look like they came from Claire’s in the mall.” Matt was about to step over the line.
“How do YOU know what she likes?” Chris retorted, “Besides ‘dude,’ I’m able to pay for them and she deserves something nice for having to come to our ratty apartment that you never clean up.”
Several months, then a couple of years passed. Chris and Lisa soon began talking about “future” plans as graduation from State College rapidly approached. Chris purchased a beautiful 1.35 carat solitaire engagement ring from a jeweler in the mall and was able to finance it for 60 months since he had such great credit. The payment on the ring, along with the increasing credit card payment, was eating quite a lot of his take home pay from The Yogurt Shoppe where he worked 4 nights per week. But, soon, he and Lisa would be graduated and they would get really good jobs and those payments would seem like nothing. He joked about how they would get married and “pool their poverty” in the early years of their marriage while they saved money to buy a home and eventually have some children.
Then graduation day came. It was a glorious day in May when Chris and Lisa walked down the graduation aisle together because just one week later, they planned to walk down another aisle together.
At first, Chris took the first job he could find to get some income rolling in for them. The job was a “manager trainee” for a fast food restaurant. He was making about $18,000 per year while Lisa worked as a personal assistant to an interior decorator, making about the same salary as Chris. Their little one bedroom apartment was in a relatively okay side of town, but both sets of parents worried about them.
Chris also decided that he and Lisa needed more than one car since they both worked in different areas of town. He leased a new Ford Focus for Lisa and was able to buy a 2 year old Chevy Impala for himself. He financed it through the dealer and was able to secure 72 month financing at a pretty high interest rate, but at least the payments were pretty affordable.
They never set up a savings account because they didn’t have anything to put in it. They were spending every dime they made.
Four months into their marriage, they both received some official looking envelopes in their mailbox. One was for Chris and one was for Lisa. Both letters were from the Commission on Higher Education. Their student loans were coming due.
Chris felt like he had been kicked in the stomach when he saw how much he and Lisa would have to pay each month. “How are we going to make it? We have almost no disposable income as it is after car payments and insurance and the credit card!” Lisa tried to calm him down and told him that “things will work out somehow, they always do,” but Chris was inconsolable. “I’ll just have to get a better job, besides, I’m tired of coming home smelling like a Mexican cantina.” He was exasperated.
Chris turned in his 2 week notice, but the area manager told him that wasn’t necessary. Chris thought, “Good, I’ll be better able to search for a job now anyway.” He got the local paper and scoured the Help Wanted section. Nothing. Nothing good anyway. He DID spot an ad for an employment agency and after a call to them, he set up an appointment for that afternoon.
The office was sparsely decorated but looked busy enough. Chris was ushered into speak to a Mr. Oscar Elliott who reviewed his college activities, his major, and his brief work history. “I think you should take a look at a job we have as an insurance agent. The company trains you on their products and gives you a base salary until your commissions are built up. The great thing about insurance sales is that you’re paid renewals every year on sales you made previously. That means you’ll receive commissions on products you sell for years to come. Work once, get paid for decades!” Chris was very, very interested.
“Now the company doesn’t pay the recruiter’s fee, so we’ll need to work out some arrangements on that,” Mr. Elliott added.
“Oh…how much is it?” Chris asked apprehensively.
“Our fee for this position is only $3,750 but we take credit cards or you can authorize a bank draft over 12 months,” Mr. Elliott countered.
“Well, the bank draft is out of the question. My student loans just came due and I can’t commit to making a $300 plus payment,” Chris said. He couldn’t divide $3,750 by 12 in his head that quickly, “and my credit card is pretty much maxed.” It looked like this one was a no go.
“Well, Chris, what we offer is unprecedented in our industry. You see, if you don’t like this job, you can use us to find another one free of charge for up to 12 months. Your satisfaction is guaranteed!” Mr. Elliott was very convincing.
“But my card is maxed out. What do I do?” Chris asked, pleading.
“Call the number on the back of the card right here in the office and ask for an increase in your limit.” Mr. Elliott seemed to have all the answers. “If you’ll explain why you need the increase, they will give it to you 9 times out of 10.”
Chris made the call and sure enough, the issuer was more than happy to increase his limit after verifying his address, phone number, his wife’s work number and his parent’s address and phone number. That seemed a little odd, but HEY, they gave him the increased limit.
Chris started his new job the following Monday. He didn’t like it from the very beginning. He felt a little slimy as he was trained to use some almost unethical scare tactics to get senior citizens to buy some little “long term care” insurance, or some Medicare supplement insurance, or life insurance on a grandchild. His sales manager, “big” Phil, knew just what to say no matter the objection. Chris thought that many of these people probably didn’t need the products they were selling, but it was HIS job to sell them. Big Phil told him story after story about how he convinced people to pay their insurance premiums instead of their rent, how he even paid a few months of premiums for them if it kept them on the books until his commission account wouldn’t take a hit and of how he would stop by a cemetery to look for “recent additions” to contact the relatives about life insurance. “They’re really vulnerable and thinking about it then,” he explained.
Chris didn’t like the pay structure either. His commission account was up and down. The company started him off the first month with $3,000 and he could draw up to half of it that month. But to increase the amount he could draw, he had to make sales and those weren’t very easy when he didn’t really believe in what he was doing. He hadn’t made very much…at all, and he and Lisa were falling further and further behind. They had borrowed several thousand dollars from both sets of parents already. The stress of their finances was beginning to put a strain on their marriage. And the payments on their student loans, car loans, credit cards, and store accounts were taking every last dime they could scrape together.
Chris decided to quit after three months and he went to turn in his notice. Thankfully, big Phil wasn’t there that day so Chris just left him a note in his box. Phil never even tried to keep him on board.
Chris drove over to see Mr. Elliott. After all, there was a guarantee, right? When he arrived, there was a different receptionist and the chairs in the waiting area were different, too. Mr. Elliott was very busy, but agreed to see Chris on short notice.
“So insurance wasn’t your cup of tea, hmm?” asked Mr Elliott.
“No sir. Not me at all. It was a learning experience but I need to get something with a steady income.” Chris was trying to be positive.
“Chris, let me be honest with you. You’ve had two jobs in seven months. It’s going to be difficult for me to help you but I’ll see what I can do. Can I reach you at the number on your original application?”
“Sure,” Chris responded. He hoped the phone hadn’t been cut off for non-payment.
Three days passed with no word from Mr. Elliott. Chris tried the phone number on Mr. Elliott’s business card, but it was…disconnected? Very concerned, Chris drove down to the strip mall where the office was located. Empty!
“Oh no,” he thought, “What am I going to tell Lisa?”
In a daze, he drove around the city for three hours, just trying to think. He stopped and bought a cup of coffee with some change that was on the floor of his car. When he noticed that he had less than an eighth of a tank of gas, he turned for home to his and Lisa’s little apartment.
“That’s strange,” he thought. Her car was in the parking lot and as he climbed the metal stairs he saw some light blue and pink balloons taped onto the outside of the door. He opened the door, slowly.
Lisa was sitting on their hand-me-down sofa with some soft music playing and some candles burning. Chris walked up behind her. “What’s all this? And what’s the deal with the balloons?”
“Oh honey!” she exclaimed, tears of joy streaming down her face, “We’re pregnant!”
To be continued . . .
Welcome to life. If you don’t plan for it, life will rock your world. Life doesn’t care what you “wish” would happen. Life “just happens” to those who don’t plan.
Where did Chris go wrong?
1. He signed up for a credit card to get a free t-shirt. Then he started using it to play.
2. He ignored his friend’s admonition to avoid credit cards.
3. He ignored his friend’s advice to buy Lisa something less expensive.
4. He financed an engagement ring.
5. He failed to plan his finances around paying back a student loan.
6. He leased a new car.
7. He bought a used car through dealer financing at a high rate and for a long term.
8. He quit his job without having another one lined up.
9. He paid a “recruiter” to find a job for him, again using his credit card.
10. He never researched his employment options.
11. He borrowed money from relatives.
12. He found himself working at dead end jobs just to make payments to his creditors.
13. He’s now in need of health insurance for his growing family!
14. He never saved any money and never established an emergency fund.
Life DOES come at you fast. You better prepare now. Better yet, what could Chris have done differently? I’ll write another post tomorrow with a very different outlook on how Chris and Lisa’s life could have been different.
[tags]life, money, credit, debt, job, career[/tags]