Being broke sucks

It’s been a loooong time since the Beard family has lived “paycheck-to-paycheck.” I’ve pretty much always maintained at least $5k in savings somewhere. There have been times when we faced a big expense that we weren’t quite prepared for, but we always at least had credit to cover those shortfalls.

Basically, I’ve always had money or easy access to money, so I’ve never fretted over how to pay for my next meal. Until last week. Last week I faced my first real experience with being broke, and let me tell you: being broke sucks!

How to be broke with $30,000 in available credit and $20,000 in liquid checking and savings accounts

Nothing about our financial situation changed last week. In fact, we’re balling with our net worth up significantly last month. I’ve got $20k in cash sitting in a combination of checking and savings accounts easily accessible with zero foreign transaction fees. I have $30k in available credit across three credit cards, and probably plenty more if I just made a phone call.

How the hell did we go broke?

The traditional definition of broke:

ADJECTIVE

Having completely run out of money:
Dr. Beard is broke because he doesn’t have any money.

For a few days, we were literally broke if you expand the definition just a little. Instead of completely running out of money, we completely ran out of access to money.

As the loyal Beards & Money readers know, I’ve been getting paid to travel around Europe for the past four months. We’re living in Prague, but only temporarily. So most all of our spending has been funneled through our Capital One 360 account for two reasons:

  1. I can deposit checks from my European employer with a picture, avoiding costly wire transfer fees, and
  2. They charge zero foreign transaction fees, so all of my purchases with the debit card are “free,” whereas all of my credit cards charge 3%.

Our expenses charged in US currency (such as AirBnB rentals, the online homeschooling curriculum we’re subscribed to, etc.) are charged on one of our credit cards.

Well, the first month here our Chase Amazon Rewards card got hit by some bozo in California. First a small charge at a convenience store for a few bucks and then attempts at bigger stuff. Chase was pretty awesome in that those purchases never even made it to our statement. I received a fraud alert immediately and the card was suspended.

On the phone, they offered to send me a new card FedEx’ed to my location here in Prague. I decided not to worry with it, since we were planning on shutting that card down soon, anyway. That will turn out to have been a mistake.

Second month, the same thing happened with our Hilton Honors card. Uhhhh, WTF.

Last week? Our Capital One 360 debit card got hit.

Now, I am either the most unlucky bastard on the planet our there is something going on here to cause fraud on every card, pretty much at the same time of every month, in sequence.

I keep pretty close track of our expenses, so a day doesn’t usually go by without me knowing exactly what’s in our accounts. I’ve been pretty obsessed about it lately.

The Hilton Honors and Amazon Rewards cards got automatically shut off by Chase fraud detection algorithms.

For the debit card, I noticed a bunch of small $10 pending transactions from Google one day. The transaction codes indicated that they were for some businesses services provided by Google. Hmmm. I do have an AdWords account, but I haven’t run a campaign in years. Are my kids buying Google Apps? Nope, that wasn’t it.

I’m pretty sure scammer assholes were using my card to buy domains and sites through Google to set-up scam websites to scam other scamees. Why spend your money setting up an illegal scam website when you could just use mine? $10 transactions spaced out enough also weren’t setting off fraud alarm bells.

And if I was you’re typical American that paid little attention to the transactions in my account so long as there was money, then I might not have noticed for months!

So … that debit card got shut down, too. For those keeping score, that’s 2 credit cards and 1 debit card. I still had a credit card left, but it’s American Express. Not very useful in Central Europe. Only the Flying Spaghetti Monster knows what in the hell my PIN number is for it, too, so no cash advance.

I’m pretty sure the database for the online homeschooling curriculum we use was compromised. The fraud always happened immediately after the payment for that subscription was processed. Then, the card would get shut down, so we’d change payment methods for the subscription. Next month, payment processes, and then fraud begins on the new card. Repeat.

We’ve ended that subscription.

So being broke? How’d that happen?

Spendypants and with no access to more money

What I did before phoning Capital One 360 during the last fraud event was run to the nearest ATM and get as much cash as I could! I then made the call, and now the only money I had access to was the cash sitting in my hand.

Capital One FedEx’ed a new debit card to me, but it takes a few days to process, and then about a week to get here. We went through one full week and two weekends with only the cash I pulled from the ATM.

The first weekend was fine. We went along our merry way living a lavish European lifestyle. We visited the Kozel Brewery. We took the kids to the Museum of Historical Chamber Pots and Toilets (yes, that’s a thing). We went to see the Battle of Nations, a Medieval fighting tournament. We ate some good food, and basically lived a fairly spendypants lifestyle.

We bought groceries, too. For those of you that have never been to Europe, they have tiny refrigerators here. That combined with the fact you have to carry your groceries on public transport means we go to the grocery store a few times per week. This has actually been pretty awesome. Fresh bread and pastries every morning is a luxury I’m quickly getting used to.

Anyway, we very quickly started to run out of cash. We expected the new card to come in the middle of the week. It didn’t come until the following Monday.

Now, if we had planned instead of spending like a family on a Euro-binge fueled by two paychecks and a fat consulting contract, then we would have had no problem. Yeah, we didn’t do that.

So last weekend my wife went out and spent our last 200 CZK (~$8) to buy as much pasta as we could. We ate noodles with butter and whatever vegetables were left for several days.

We were literally broke. We had ZERO access to money until that debit card came.

Holy shit is that stressful!

Some people do this all the time

What’s shocking to me is that people do this Every. Damn. Week.

Some people cycle through stressful days of brokeness because they have to. They’re poor. I’m not about to judge those people, because I’ve never lived in poverty so I won’t even begin to try to comment on getting out of poverty.

But rich-ass America is chock full of decently paid people that couldn’t buy a loaf of bread on Thursday because they don’t get paid until Friday.

Almost half of the US population can’t come up with $400.

As I mentioned before, I’ve never really had this problem. I’d never experienced the stress of being penniless, just praying a paycheck would hurry up and get here.

Last weekend was one of the more stressful weekends of my life, and that was even comfortable in the knowledge that I did have a shit ton of money, just temporary lack of access to it.

What in the hell does it feel like when you count on a paycheck, and if it’s late or a little lighter than you hoped, you’re just fucked?

Basically, I’m admitting that I’m a pretty shitty personal finance guru/blogger, because it took a minor blip in the system during a fancy-pants, rich-person tour of mother fucking Europe to feel even a little of that pain others go through every Thursday.

Having gone through it, I am now just gobsmacked that people could get through it often. Do you get desensitized to that stress? Does it just become normal?

It may be “normal” in the sense that everyone is doing it, but FUCK! Stop it!

Spend less than you earn and save some money

I ramble on a lot about thinking like an expert with respect to money, and disequilibriating your way into a new money mental model. I blather on about learning to frame problems in multiple ways. But if you don’t have the basics down, all of that shit is useless.

Stop spending all of your money!

Good God, you’re going to die early from the stress of having no friggin’ clue how you’re going to feed your family Thursday evening.

What me and my family did is basically what the average American family seems to do weekly. We got some money, and just went about spending it until we ran out. When we ran out, we literally had no more money. We had to wait and be broke and pray.

If we had budgeted that money, there would have been no problems. What I pulled out of the ATM was plenty for my family to thrive during the week, but not quite enough to live the fancy life.

And this is how we get ourselves deep into credit card debt.

We get money and then we proceed to spend it until it’s all gone.

So for today, let’s forget the psycho-mumbo-jumbo and the fancy words. You go broke because you spend all of your money. The way to not go broke is to stop spending all of your damn money!

And being broke sucks!

Being broke sucks

13 thoughts on “Being broke sucks

  1. What a crazy story, Dr. Beard. And of all places, the home school curriculum database is the likely source of the data breach? Wow. I’m just as dumbfounded as you are.

    In my opinion, it is one thing to be broke because you don’t make significant (or in some cases, any) money. But being in a state of self-imposed brokenness seems to be the norm for way too many Americans.

    In your journey abroad, are you noticing that Europeans are less spendy than Americans? When I was in Germany several years ago, savings lots of money and spending only a small portion of one’s income was the observed norm. It was practically a no-brainer.
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    1. Dr. Beard says:

      I don’t really talk about money here with my colleagues. What I can say is that the average salary is significantly lower in Czechia. I did a talk for teachers on the US educational system where I mentioned the average salary of a US teacher and they all just about fell on the floor. Cost of living is lower, but they generally seem to do well with less.

      My observations, that I may write a post about sometime soon, is that the older folks that lived through communism drive older cars, wear older cloths, don’t have fancy phones, etc. The young folks here in CZ are exactly like the US young. Fancy cloths, expensive cell phones, maybe not fancy cars because we’re in Prague with one of the best public transport systems in the world, but much more outwardly spendy.

      Side note: at a restaurant in the Czech Republic, the beer will be significantly cheaper than the water. Priorities.

  2. That’s actually pretty scary to have access to your mulah go dry all at once due to some dbag thieves.

    The observation you end this post with is spot on. Reminds me of this equyally solid advice from Saturday Night Live: Don’t buy stuff you cannot afford!

  3. Dr. Beard-

    Nice to meet you. This is my first visit to your site. Good stuff.

    That’s a scary situation you describe. I can imagine a little bit of panic starting to set in.

    I know it’s expensive, but if you have relatives or friends somewhere, they could wire you money. I know that sounds like an internet scam!

    It is a little crazy how dependent we are on credit to access our money. Ms. Financial Slacker has had a recent similar experience with multiple credit cards getting used fraudulently over a few months. We need to look into one of the subscriptions to see if there’s something going on there.

    Thanks for sharing. Look forward to spending more time on the site.

    Regards,
    Financial Slacker

    1. Dr. Beard says:

      Thank you Financial Slacker. We didn’t get quite desperate enough to start sounding the alarm. I knew I had a shiny new debit card on its way. In fact, it arrived at the office where all of my mail goes here in Prague on Friday. I didn’t know until Monday when people got back in the office that morning. Rough weekend, that actually wasn’t that bad, since there is so much awesome free stuff to do in Prague.

  4. Its been a long time since we were completely broke. Thankfully we have kept a large cash cushion for the past several years. We just had 3 large planned expenses come out of our accounts (paying cash for a chunk of land, paving our driveway and our upcoming Universal Orlando trip), then yesterday our reliable Van of 7 years threw the timing belt on the highway and the engine is done. Thanks to having a stash of cash this isn’t a disaster.

  5. “Museum of Historical Chamber Pots and Toilets” Oh my word, I’m so jealous and would love to go to that museum.

    That aside, what an unfortunate but informative experience! I worked for a cruise line for several years and the first time my credit card got compromised, I was in Italy doing a Mediterranean cruise for the summer and it was the only credit card I had. I had to borrow from a friend to get on the train back to the ship, wait for them to mail me a new card to the company address, wait for the company to ship that batch of mail to our ship and quickly applied for 2 more credit cards so that would never happen again. And I was pretty lucky, there was plenty of food to eat on the ship and I had friends who were happy to front me cash if we were going out in port. I’m so happy I never wound up quite in your situation. I’d definitely have thought having 3 cards would be fine too!

  6. It’s not nice to “lose” your credit cards and get scammed, but maybe you should look at it as the best thing that’s ever happened to you. Now you can grow a passion for finding ways to live life to the fullest while making every dollar count and not to depend on credit to access your money. For some frugal living is demanded. If the dollars and income aren’t there, the only choice is to find ways to stretch every dollar. For a few, being frugal is an obsession that borders on being miserly and limits their ability to enjoy life. Maybe you should choose to live frugally and play at being frugal as a game, take it as a challenge. Best luck to you Dr. Beard.
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    1. Dr. Beard says:

      I think you missed the point. It was my debit card getting hit that really caused problems, because I lost easy access to my checking account. My credit cards got hit only because I never use my checking account directly for recurring automatic payments exactly because of something like this happening. I was in a foreign country. There was no going to the local bank and getting cash without that debit card. I was being paid by my US institution and consulting clients through transfer to my US bank, and my Czech employer was paying me via check, that I deposited into my US bank to avoid significant banking fees that Europeans seem to love. I didn’t set up an account in a Czech bank because I am a tight ass and didn’t want to pay the fees, plus I was only in country for 5 months, and only needed 4 checks cashed the entire time. I saved a few hundred dollars in fees because I’m frugal, but it bit me in the ass.

      While living in the Czech Republic, I saved half of my regular salary plus all of my consulting pay and foreign stipend WHILE traveling all over Europe, eating at fancy restaurants, buying good bottles of wine and beer daily, and all the other trappings of a fancy life. Hell, my wife and I lived on a boat on the island of Malta for a few weeks. I’m going call that living life to the fullest while making every dollar count. Our total spending this year looks like its going to be about $50,000. We spent the first half of the year living in and traveling all over Europe, the summer on the beach in the US, and fall renovating our kitchen and buying a brand new car. That we could have easily “lived” on $25k worth of spending is true, if we were “frugal,” but … why? My net worth has gone up by $70k since starting this site in February, and I’m actually ahead of my monetary goals.

      I’m not a big fan of the word “frugal,” because it implies limiting spending for the sake of limiting spending. It’s actual definition uses the words “simple” and “plain.” I had the good fortune to win the birth lottery, fall out of the womb in the USA, have middle class parents that loved me and supported me, and enough intelligence, ambition, and luck to land a well paying career. When I was young, I was frugal because I had to be. Now, I can sock away 60% of my income for early retirement while doing all of the things I wanted to do during my early retirement, only right now.

      As I said in the post, I won’t even try to talk about what those who are barely getting by should do, because I have ZERO business telling them how to live their life. Poverty is so far out of my consciousness, that to comment on it would just be me being an asshole. I don’t even know anything about supporting a family on $30k per year. I do know that when I did support a family on $50k per year, it required frugality. Now that I’m older and earning more, I save what I need to reach my goals, and what’s left is a blessing that I use to enrich my family’s life today, while always trying to get the most out of every dollar. The big point of this post is that there are families out there that earn stupid amounts of money like me, but somehow still live paycheck to paycheck. And their money isn’t getting them anything they really want.

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