Debt Management Tools: The Debt That Wouldn’t Go Away


I was fresh out of college, and the job market in my city was shite. Needing a place to live, I needed a job, so I decided to start a consulting business and expand what I’d done in college, for beer money, into a living.

All was well for the first few months, mostly. I ran up my credit cards a bit, but my cash flow was good and I was staying ahead of expenses. Still, I might have been wise to look into some debt management tools.

Fast forward two years. I’d had to hire employees (I was advised to use other consultants that were cheaper, but I thought employees would be cheaper and easier to manage because I could squeeze them for extra work on the products that I’d intended to put out to mass market… Ha!), as well as acquire office space, telecom, and so forth. My company’s cash flow turned upside-down, though, when a key client decided to pull all of their information technology work in-house. Scrambling, I decided to rob the payroll tax withholding account to make ends meet; surely the new clients I’d just picked up would help make up the difference! I’ve survived longer than most entrepreneurs do! See? I’m an optimist! Look at this smile!

In January of 2006, I reviewed the books — and immediately laid off my last remaining employee, because there was no way I was going to make it. I hadn’t paid payroll taxes for the last quarter and a half. I’d managed to use the last of the cash that the company had to either finish or buy my way out of our contracts, I traded quick work or office equipment to get out of telecom and office lease agreements, I traded the shirt off my back to get my way out of the server colocation agreement, I sold the remainder of the equipment, and I fled town to live with my girlfriend halfway across the country.

This, of course, left me with close to $20,000 in debt to the federal and state governments, with $10,000 in credit card debt, and two payments behind on my car. So what did I do? Turn myself in and set up payment plans, and start working my ass off mowing lawns for the extra income? Nope. I stuck my head in the sand, the paperwork in the box, and forgot about it … for a year. In the past year, that $20,000 in debt has grown to almost $40,000 in debt due to penalties. And because it’s “trust” debt, it can’t be forgiven in a bankruptcy. (At least the credit cards are down to $3,000 and I still own my car.)

Now that it’s been a year and I have this pile of paperwork from the IRS in front of me, I’m so stressed out that I’m on two antidepressants and an anti-anxiety drug, and I’m paying a psychologist a lot of money to keep me from pulling a post-office at work… because, damnit, I need to keep my job if I’m going to ever pay this off. Not only that, but I need some debt management tools. On top of those, I’m doing a ton of consulting work (Minor Pimp: I write really cool PHP/Symfony Apps for a living) to try to pay this off before hell freezes over.

If I’ve learned one thing: The world won’t fall on you if you take responsibility for something and provide a plan to work your way out of it. No, the world falling on you is a more subtle and slow process, and it only happens when you’ve got your head stuck in the sand because you’re afraid it’s going to fall on you. It’s a self-perpetuating (and very deadly) cycle.

Train Wreck Tuesdays are a weekly post of horrible financial mistakes. They are posted anonymously. Submit your story; if you’re selected, you get a free personal finance book. The best comment gets the same prize!


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