Being Thrust Upon YNAB, Part Two

alex-smilingI’m going to present you with two words. Just a bunch of letters arranged on a page. Nothing inherently harmful in them. But because of the meaning we attach to them, they’re powerful enough to send an arrow of fear straight into most people’s hearts.



Yeah. Scary stuff. These two words are what brought me back to YNAB in 2012 with a big old *snap*.

Foreclosure. The first time I heard the word from my credit counsellor’s mouth, I cried. It felt like the ultimate failure. I envisioned our furniture on the lawn and a red-lettered sign on our door for all the neighbourhood to see.

We had separated. We owned a four-bedroom house (well, the bank owned it), and even though it had a legal suite, the mortgage was enormous. Neither of us could manage it alone. Neither of us could manage the house’s upkeep. And neither of us had the heart to stay in what had until then been our family home.

But the Victoria market had softened in the four years since we’d bought. No matter what we did, the loss was going to be crippling.

We ended up foreclosing. It took us a long time to make the decision, but once it was made, I was surprised at the relief I felt. I still give thanks that we live in Canada, where you can swallow your pride, press a button marked RESET, and start all over again. There are no armed thugs waiting to exact full payment. Nobody’s going to shoot your family or sell your children for unpaid debts.

In the end, the loss was crippling. By the time the process was finished – post-inspection, post-cleaning, post-sale, post-legal fees – the shortfall on the house was $92,000.

By this time, I had bought myself version 4 of YNAB and was back on track, monitoring my income and expenditures and living on what I earned. It gave me a feeling of control during a time when so much was out of control.

I looked at that $92K, as well as the other debt (including a whole whack of federal tax – a result of the previously alluded to communication breakdown), and realized I was looking at packing around a lifetime of red ink.

As a newly single parent (and a freelance writer at that), it was a devastating load. Even if I could pay it all back over the course of fifteen or twenty years, I would be shorting my children as a result of my and my ex-spouse’s fiscal choices. Their entire upbringing would be a story of their mother being too broke to support school trips, camping, music or swimming lessons.

I agonized. Should I declare bankruptcy, file a consumer proposal, or slug it out? My ego was very much afraid: What would people think if I declared? And how would I feel about what people think?

There’s something so terminally scary about losing your credit. People speak of it in whispers. Had I not been living the YNAB way, I would likely have gone along with the pressure from my (traditional…and very much in debt) parents to do everything possible to avoid damaging my credit rating.

But my desire to provide for my kids trumped my need to look like I had it all together. I’m not a fan of sweeping it all under the rug to look like things are fine, just fine.

And, I reasoned, if I’m living the YNAB way, my credit rating shouldn’t have to be my number one concern because, well, I’m not supposed to be buying things on credit anyway.

And so I threw it in. Declared bankruptcy in mid-2012. YNAB supported me every step of the way. Even when the thumbscrews were down tight as I repaid a portion of the debt (and yes, even if you declare bankruptcy, you still pay some back), I knew how much I could spend in each and every category. I stretched every possible thing, à la Amy Dacyzyn’s Tightwad Gazette. Bars of soap down to slivers. Robes and slippers instead of heat. Noodles.

I was discharged in early 2013, and I haven’t looked back. I don’t eat out – even at Denny’s – and when I’m in the vicinity of Linens & Things I just keep driving. The new 4Runner was out-reasoned by a ten-year-old Escape (4cyl). And my entire apartment is a sunroom now, because it faces west. All one bedroom of it.

I got myself a Capital One MasterCard – it’s funny how fast they come knocking – and you bet I’m paying it in full every month. But I paid cash for my truck. For the kids’ bikes. For the Apple TV. For the dining room table. And when my poor old laptop wheezes her final stalling breath sometime this summer, I’ll have $1300 set aside in my MacBook Air category.

I love giving each dollar a job. Because damn, they work hard when a few of them get together. And I love YNAB. Because it makes this kind of little-by-little saving possible.

So now you know. I’m living proof. There is life after debt.

23 Responses to “Being Thrust Upon YNAB, Part Two”

  1. Amy

    Hear, hear! For me the bankruptcy and foreclosure were a few years ago, and the discovery of YNAB came only a few months ago, but YNAB has definitely made my life a lot easier and less stressful.

    • Alex

      I’m so glad you’ve found YNAB, too, Amy. It is such an empowering tool.

      Best of luck!

  2. Maiya

    Thanks for sharing your story Alex! Starting fresh and committing to living within our means is truly liberating! it took me years to pay off my debts, but trudging that road made me clear I never want to go back! YNAB has now become a great tool for me to stay in reality and build my savings.

    • Alex

      Props that you paid ‘em all off, Maiya! Now THAT is a satisfying feeling.

      I have to say, there’s a part of me that would have had a savagely joyous victory party upon paying the last debt owing.

      I hope you partied hard when you wrote that last cheque!

  3. bethelprescott

    THANK YOU for sharing this! I am probably about to head into the process. Could we struggle along without filing bankruptcy? Maybe. But it would be at a loss of being able to provide my husband – a 100% service connected disabled veteran – with the quality of life he really should have. By which I mean a heater that works, and a roof that doesn’t leak. Serious stuff.
    And, like you, it was my husband who made most of the bad financial decisions in the past. No, not all of them … but most. Some a residual of growing up poor and not being taught how to handle money (His mother just moved when the rent was too far overdue. Not a joke.) Some bad decisions were the early symptoms of the dementia he now suffers so clearly.
    If I hadn’t been using YNAB I’d still have my head in the sand.
    But now, there’s hope. Even in contemplating filing bankruptcy. Hope. And that’s HUGE.

    • Alex

      Yes, there is hope. It is such a relief to live in North America, where this kind of option is even possible.

      I accept my share of the blame for the financial decisions in my household. Neither me nor my ex were taught a thing about how to manage money – or how serious things can get when one doesn’t take it…seriously. Money wasn’t discussed in my family as we were growing up. It’s a mistake I certainly don’t want to make with my children.

      Good luck to you. You’ll totally make it.

  4. Elizabeth

    Thank you so much for sharing your story! I have also gone through a bankruptcy and foreclosure due to a divorce and am a single mom. There were so many times I was panic-stricken and scared to death to open bills or figure out how to afford child care during the summer months. YNAB has truly been a life-saver and I feel so much more confident in my ability to handle what comes and give my little girl the experiences she deserves. Good luck to you!

    • Alex

      And here’s a digital high-five to you, sister.

      I hope your road is smooth from this point on.

  5. Kenneth

    You are courageous to tell your story, Alex. Fear not, there are more than a few even here on the YNAB forums that have done one, the other or both.

    And for those reading this, sometimes it is a pretty logical decision to do this – rather than force yourself into 20 years of eating Ramen noodles. There is a continuum of “how bad is it” and if you are far enough along the continuum, it makes sense to consider the F and B words.

    If you do go through the F and B words – my advice is to learn something from your mistakes, vow never to let it happen again, and spend less than you make and save the difference for the rest of your life.

    • Alex

      You are right, Kenneth. This has been a golden learning opportunity, and YNAB has been the driver of it. It shocks me how there was no financial literacy teaching in schools as I was growing up. It would have saved a whole bunch of Gen X (and Gen Y) from the reality we’re now waking up to…or at least the reality that many of us are waking up to.

      Not excusing my mistakes and impulsive decisions at all. Just pointing out that our education system doesn’t cover all aspects of what it means to be a fully functioning adult in this world. I believe, however, that things are changing; at least in my jurisdiction (British Columbia), financial literacy has indeed been written into the math curriculum.

      I like your idea of the continuum of “how bad is it”. That’s a really good visual.

      Another thing that surprises me is that it’s possible (in Canada, at least) to declare bankruptcy more than once. I mean, once is enough, right? At least it will be for me!! I don’t need to ride this crazy pony around the ring again.

      • Kenneth

        Yes, if I’m $2,000 in debt or underwater, with a $50,000 income, it’s not bad enough – deal with it. If it’s $20,000, it’s worse but still not bad enough – change your ways and pay it off. If it’s $100,000 or worse, consider the F and B words..

  6. Dave

    Thanks for sharing, Alex. Your story is similar to ours except the separation. A bankruptcy and foreclosure were hard to swallow but we made our repayments ahead of the due date every month and after three years were able to purchase a (much smaller, realistic) house again. That was such a long and difficult process we don’t ever want to go there again. We now have lived to learn without credit and we’re loving it. I found and started using YNAB in January and am loving assigning every dollar a job. After almost thirty years of marriage with no budget I’m becoming a budget nerd. It’s a much more proactive approach then always reacting to the moment. Had a couple of punches this past month but, hey, we rolled with them! It’s only getting better.

  7. Alex

    Wow, terrific news that you guys were able to jump back into the market, Dave. And in such a short time!

    Your comment about being on the receiving end of a couple punches this month made me laugh out loud. Keep rolling!

  8. Ted

    If you had your house foreclosed how come you still got stuck with 92K of the house debt?

    • Alex

      The eventual sale price was $80,000 less than what we had paid for it, and there was virtually no equity in the house at the time we foreclosed (we owed the whole amount of the mortgage). The lender came after us for the shortfall, which included legal and real estate fees.

      • Ted

        Wasn’t thinking there. I would assume that everyone who has their home foreclosed would file bankruptcy. Obviously if you didn’t need to file you would have continued to pay your house. We have fire sales in US and that is what a lot of people have tried first.

        Good luck but there is no way I would keep that debt if they took my house. On the plus side here in the US it takes at least a year if not two for a foreclosure so I hope you stopped paying while they were doing that and saved that money.

      • Alex

        Wow, I would have loved a year or two living mortgage-free.

        No, our banks don’t waste a stitch of time up north; the whole deal was sealed and signed within five months. We moved out right away, too – too emotionally taxing to stay in a house we were losing – so had to pay rent and thus couldn’t save much.

        I like what Hemingway once said: The world breaks everyone, and afterward, some are strong in the broken places.

  9. Omar

    That’s a nice picture of you. I’m surprised you’re single. ;)

    And yes, YNAB helps keep your financial real every step of the way so that you think thrice before doing anything stupid with credit.

    I’m currently separated and a father of four boys and two of them go to private school, so I’m well aware of the financial acrobatics you have to perform to keep things running.

    My other half in this case was the one with the free-spirit … she came into my life with over $40,000 in debt, and I chose to be the hero and helped her organize the pay off. There came a point when she wanted to get another loan to finance something else but I insisted that enough is enough ! :)

    Anyways, we’ve been both debt free for some time, but given that we’re moving our separate ways, I’m not sure she’ll last !

  10. Alex

    Aw, that’s nice of you to say, Omar! I can’t take all the credit. The dude knows how to shoot, with all his lights and screens and “Put your shoulders this way” talk.

    Single indeed. I be pickin’ real careful-like for the second act.

    I worry about my ex, too. He doesn’t seem to have the same appreciation for the budgetary way of life. He has decent income, though, and he’s not generally irresponsible, so he should be all right.

    Four kids!! Not sure how you do it. I applaud the work you’ve done so far. Even just being a YNAB nerd means you’ve got cool in you.

  11. Dan

    I read a short news item today and thought of you. Apple just announced upgraded Macbook Air models and lowered prices by $100. You’ll be glad you waited to replace your computer.

    • akismet-8f980039ea11d844dca6b55a5f26e0ae

      AWESOME! I just looked online (and had a little snicker at the special 3-month financing option, which I SO don’t need!!). Looks like I can get one at Future Shop for $1049 (I’m sure they’re, like, five bucks in the States, right?). Thanks for the tip, Dan!

  12. jpdvm2014

    I just stumbled across YNAB, and am starting my free trial today. I just filed bankruptcy, and it is going to be discharged in June. I made a lot of mistakes when I got my first (of many) credit cards. It was a student card with a $500 limit. How much trouble could I get into? That limit was up to $10,000 before I finished college. It was a slippery slope that I slid right down. Like someone further up said, my wife and I could have struggled along, but it just wasn’t worth it. It also didn’t seem fair to my wife. The vast majority of our debt was mine, and she shouldn’t need to suffer because of my mistakes. So I took the plunge. Now I have vowed to never let it happen again, and I’m hoping YNAB can help me along the way. I can’t believe how many people were there at my bankruptcy hearing that were on their second or third time filing. I felt like enough of a failure doing it once. Thankfully, my wife has good credit, if/when we ever need it. Which I’m hoping never happens. Hopefully, by the time one of us needs a working vehicle, we will be able to buy it outright. Sorry for the long post, I just wanted to thank you for writing this article. It’s nice to know it is possible to recover after a bankruptcy.

    • akismet-8f980039ea11d844dca6b55a5f26e0ae

      Hi JP. I’m SO pleased for you that you’ve started the YNAB trial. I know funds are tight right now, but it’s the best sixty bucks you’ll spend, ever.


      My trustee in bankruptcy told me the same thing: that she has seen people darken her doorway a second and third time for bankruptcy. I think this is often related to an issue with addiction or gambling. (And then there are those people who are out to milk the system, which is a truly lame way to be in the world. After the first time, it kind of starts to seem like cheating.)

      Good luck to you. I admire your humility, and your willingness to swallow your pride and … start over. If you make YNAB your religion, you’ll never cross this bridge again.

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