Being Broke Sucks: How LAck of access to capital increases stress
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 significantlylast 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:
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 Europefor 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 360account for two reasons:
- I can deposit checks from my European employer with a picture, avoiding costly wire transfer fees, and
- 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 AirBnBrentals, 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 itlately.
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 AmericanExpress. 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 OneFedEx'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 expertwith respect to money, and disequilibriatingyour 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!