I opened the door to see a deputy waiting for me.
“Are you Nathaniel Rifkin?”
“This is for you,” he said, handing me an envelope. “Don’t worry, it’s nothing bad.”
I thanked him, closed the door, and immediately opened the letter.
A lawsuit had been filed against me
By the state of Colorado.
“This IS bad,” I thought to myself.
Their reason for suing? Failure to pay taxes, amounting to over $7,000. They made my options quite simple: I could fight… or I could call a number and pay or set up a payment plan. I chose the latter. It also involved signing a document of which I don’t remember the specifics, but I’m sure it involved signing away any shred of innocence.
Just another event in my saga of dealing with debt collectors. In this case, the state of Colorado had contracted with a private company that took the reins of cases involving deadbeats. At that point in my life, when it came to credit cards and taxes, I fell into that category.
Over the years, I’d gotten plenty of letters, thick with breakdowns of bills and return envelopes to send in payments. Mostly from credit card companies.
They’d grow in piles on my floor, usually unopened
Later, I began receiving letters from private debt collection companies. Here’s how that worked:
Let’s say I had a credit card with a limit of $3,000 and I maxed it out. In fact, did exactly this (it was from Wachovia, if you care to know). Wachovia would then send me regular bills… then overdue bills… and if enough time went by for them to cry uncle and decide I was a lost cause, they’d sell my account to a debt collection company. Probably for a few hundred bucks. The company would then “own” my debt and could legally attempt to collect on it.
As you can see, Wachovia loses money in this transaction. But they’ve figured out selling a debtor’s account for pennies on the dollar is better than collecting $0. I remember one credit card company sent me an overnight envelope via UPS. Inside was a simple letter, saying something to the effect of, “Why have we spend the money to send you a letter like this? Because we want your attention and we want to help you. Call us…” It was a fantastic strategy, and I’m sure worked well for them… but I didn’t call.
But the thing about debt collectors… is they’ll call you. I stopped answering my cell if I didn’t recognize the number (and, with certain companies that called often enough, I didn’t answer because I, in fact, did recognize their number).
Their game was simple
If they could just squeeze a couple payments out of me, they’d profit. And I’m sure both the credit card and collection companies have some precise and sophisticated algorithms to determine whether or not a deadbeat is too dead to pursue.
So how could I let myself spiral into a hole like this? It wasn’t because of some sudden disaster, or an insurmountable financial obligation. It was a dis-eased mindset. Actually, several of them:
- On the surface, I genuinely believed that if I kept pushing forward with my business fast enough, I could “outrun” the debt and pay it off later with profits.
- I believed that putting even a little bit of savings away would hurt my ability to invest in my business
- I believed success was right around the corner, therefore I could hold off more sensible financial planning until “after.”
- Like any addict, my awareness was shut down. My brain simply wouldn’t conceptualize even bonehead-simple stuff like paying the minimum of a monthly bill.
What’s interesting about the first three reasons, is they’re all warped versions of genuinely healthy financial outlooks. The fact is, many businesses require borrowing in order to afford ignition and growth. Which literally requires taking on debt. And diverting cashflow away from a business does technically hinder its growth, if more cashflow is required. And we’ve all heard stories of business “hail marys” where the founder lobbed his last dollar into the fray, trying to make it work…and succeeding.
Today, I understand I distorted these mindsets with desperation, the stench of need, and lack of conscious awareness.
There’s a big difference between strategic debt… and convincing yourself you can simply make it up later
Plus, having the discipline to save rarely chokes off the growth of a business.
There was also my financial illiteracy, which is epidemic in this country (and the world). I remember the shock of doing my taxes after my first year in business. Every penny had been either reinvested, or spent on food and rent. Yet my tax bill was for several thousands of dollars.
“WTF?!” I thought. “How could I owe this when I’m broke now, and am barely making enough to get by?”
(Later I’d realize; business owners don’t have the luxurious illusion of automatic withholding.)
Another cause was, I believe, a serious screw-up in the root “wheel” of my energy body.* Most of my childhood was marred by fear because of financial instability and lack. Back then, I vowed to become rich so I wouldn’t suffer as an adult, but my drive was not supported by a knowingness of abundance. A good visual would be: I had the impetus and ability to leap forward towards riches, but my vibration was like black ice on a road.
I was stuck in place no matter how I writhed and wrenched my body
At worst, I slipped and slammed my knees against the hard, cold ground.
Getting a high four-figure tax bill I couldn’t pay was the first slam. There would be many more.
For years, I managed to make enough money to pay off the worst debt. More than once, I had to call my cable company, credit card in hand to finally pay, when my TV and internet switched off. Cards declining at the grocery store, post office, and restaurants were regular occurrences. So much so, that sometimes I’d duck out of sight to call the credit card company just to make sure I had enough available to pay. To this day, I occasionally feel some anxiety when my card’s being swiped.
In early 2012, things changed. Although I had a full-time job, my business income had dried up. And while I was paying $50 a month to a debt collector here, and $100 there, as well as the minimums on a couple cards that hadn’t given up on me… the mathematics guaranteed something had to give.
For a long time, I’d thought about bankruptcy.
I assumed my life would be ripped apart by the courts and my creditors
However, as I began to research, I realized there could be some strategic value in going through with it.
It’s been almost four years, and I still shake my head when I think of what a strange experience it was (actually, I shake my head when remembering just about anything involving that period of my life). Coming soon, I’ll give you the insider’s look of what actually happens when you go through a bankruptcy.
(*In some spiritual traditions, it is believed the human body has several energetic “wheels” located in specific parts of the body, all of which are associated with certain aspects of life. And, if you’re screwed up in one, that’ll lead to dysfunction. One wheel located in the perineum area – imagine sitting on a bicycle seat and that’d be it – has to do with financial security.)