A few days before my college graduation, I faced some very real fears. Having no apartment, no job and no life outside of school, I stayed awake at night terrified thinking that I went to school for nothing. Sure, I know a little more about probability and statistics but spending five years in school only to return home a quarter of a million dollars in debt was not the prettiest picture I’ve ever painted. I scrambled as fast as I could and secured the first piece of my needs … an apartment.
My very first non-college apartment was a one-bedroom that overlooked a small creek in North Miami. The rent was a reasonable $800 a month and included no utilities. The apartment was 800 square feet, had a nice balcony and was my castle. The problem I quickly realized is that money doesn’t grow on trees and even though I had a job as a restaurant manager, my debt load was just too great to keep up with. It was around the 5th month of my lease where I wrote my very first bad check.
In all honesty, when I wrote the check, I had every intention of having enough money in my account to cover it, however my paycheck was delayed that week. The day after I saw the check come across my account, I received a visit from my landlord letting me know what happened. He seemed to take it OK and the next day I was able to pay him in cash. All in all, I walked away only having to pay a $15 fee to my landlord and a $15 fee to my bank so I suppose I lucked out. Unfortunately for me, my monthly payments continued to rise and my income did not, so the bad checks became a force of habit.
Always thinking about how I could improve my situation, I decided to run an experiment. Having about $100 in my Wachovia account (this was when Wachovia was still a bank of course), I intentionally wrote a bad check for $250 to one of my student loan providers. When the check was presented to the bank, Wachovia actually cashed it rather than returning it and in doing so which allowed me to meet my student loan payment on time. Sure, the bank charged me a $39 NSF fee but in my eyes, it was worth making a payment I could otherwise ill-afford at the time. That was the beginning of the end.
Repeating this very same tactic a few more times, with a few larger checks, Wachovia figured me out and finally decided to close my account ,which at the time had a negative balance of just over $1,000. This balance was a result of two bad checks I hadn’t had the opportunity to pay back yet but it was decided by the bank that I was no longer a valued customer. Kind of a strange move when you consider I paid them more than $1,000 in fees and made good on all the overdrawn attempts on my account but that’s an issue for another time. I was a terrible customer with an awful moral compass and I couldn’t fault Wachovia at all. Now, without a bank account, how could I cash work checks or write loan and rent checks?
Bank of America, Washington Mutual, Citi and Bank of Atlantic we’re all future causalities of my business. For almost two years, I developed a nasty habit of leaving banks with negative balances but it was all I could do to make ends meet. And when I say make ends meet, I mean paying the necessity’s and forgetting about the student loans. It was only two years ago that I started making enough money to get ahead of my debt and by then the damage I had done was massive. The two biggest problems I now encounter are:
- I cannot open a bank account at any of the banks I mentioned. The only national bank that will take my business is Chase and I actually think I lucked out because Chase and I get along great. Their quick pay feature, ATM deposits and phone deposits really do save me a lot of time. According to Chexsystems, it could be up to seven years before I’m able to bank anywhere else, so I’m just grateful I still have somewhere willing to accept by business.
- My credit report is full of collections and negative information. I’ve since paid off all of my bad debts in full but that doesn’t mean much to my credit score. Few can say they’ve improved their credit more than 150 points in 18 months, but when you start at 400, it’s still not a good credit score.
Looking back, I should have sucked up my pride and simply asked for a loan from my family (who I knew would give it to me). In saving a few thousand dollars, I’ve delayed by goals of buying a house and starting a family because no bank will extend me credit in the near future. My decisions remind me of the study in which two kids were offered a nickel today, or two nickels tomorrow. As the study goes, those who delayed gratification for the bigger reward would be more successful in life, and I’m a perfect example of how true that study is.
Financial decisions are rarely about the now and almost always about the future. I’ve learned from my mistakes and hopefully you can too.