I wrote recently about my money mentality.
I want to tell you how this approach led – or at least contributed substantially – to the crisis we had that was almost fatal.
I have always lived with debt but that has not been through frivolous spending, rather the occasional splurge – distinctly not frivolous or trivial. I have bought the odd Leica camera, a slightly upmarket car, and other material possessions.
Somewhere in me there is the idea that if the brown stuff hits the fan, these things can be liquidated. The silly thing is that I never do.
After a rather chequered start – teaching, volunteering and other stuff – I put my nose to the grindstone and built a career. It’s what we should all do, we were told, that 40 year job plan.
By the late ‘80s I had a large house (500 sq metres) with a large mortgage. I had followed the wisdom of the day and stretched myself. I had also made a number of structural improvements, for which I had extra finance.
Those in the UK may recall the government policy that joining the Exchange Rate Mechanism would be ‘good idea’ and lead us to emulate the German economy. The outcome was 15% interest rates on mortgages – which crucified the industry it was meant to help and also people like me who had invested in property.
Stretched was not sufficient a description – at one point mortgage and loan payments exceeded my salary. I really don’t know how I slept at night.
Then the roof fell in, literally, the storm of 1990 dropped a chimney on the roof. Massive damage, and more money spent, although some of that was covered by insurance.
I managed to sell the large house to settle a divorce (losing half the equity) at a considerable ‘profit’ during the post ERM-exit housing crash – I have always had an eye for property and will write on this later.
And I set out on a life of hedonism and irrelevance.
The trouble is that such an existence is not my style at all.
I soon met Her Ladyship and ended up buying our present house that is rather smaller – a mere 253 sq metres – but a lot nicer and it is very neighbourly. So much for hedonism!
But you will see that debt had become second nature – part of life. £10k, £20k? A snip. £30k? Well that’s a bit much but bless me – 0% transfers are heaven!
Three weeks after the purchase, my employers decided to close the laboratories in which I had worked for 20 years. Having started off on the bottom rung, I had shot up the scales and had every prospect of going further.
In my line as a researcher, I never had anyone work for me (perish the thought) but provided timely and innovative solutions to problems as they arose. Some of the results and methodologies are still in use.
In an industry where mathematical and statistical models were the main tool, I was very well placed and worked alongside some amazing colleagues – the industry was pretty much a university of engineering and I loved it (not the administration of course!).
I didn’t want to relocate as Maria’s work was local and I had moved to Manchester to make a life, not to work.
With perhaps an exaggerated degree of self confidence I struck out on my own and at least to start with, did pretty well.
Every now and again a large deposit would appear in the bank account, almost by magic.
While I had brought some debt from the previous life, I was used to it and it was not at the time insurmountable.
And if business dropped off from the main client, surely my skills would be required elsewhere, wouldn’t they?
Wind forward 8 years or so and what had been quite a well-paid consultancy ended up not getting so much work.
This was inevitable with hindsight as people move on, management changes and the pursuit of excellence begins to be much more expedient and short-term.
Most of British manufacturing industry doesn’t have a clue about quality control and frankly isn’t interested in anything that can’t be done in a click on a spreadsheet.
More fool them of course but that didn’t help me finding work.
I ended up working for a betting company although there have been the occasional technical contracts since.
I started thinking about other ways to make money and sank far too much time – and money – into two internet-based projects.
One of these frankly didn’t have a market and the other depended on large intermediaries, the market wasn’t ‘sticky’ (ie repeat custom was difficult) and frankly the updating of the information was far too time-consuming.
During this time we were haemorrhaging money, not having brought spending under control.
It wasn’t from expenditure on the ‘wrong things’ – gambling, a mistress or two, alcohol, drugs – but from accumulated debt.
Maria had been working very hard and I didn’t realise that we were drastically overspending.
I thought she really deserved far better but also I knew that she would take it very hard so I resolved to solve the problems myself.
This was a fundamental error. Instead of confronting the issue and talking it through, sharing the information with her even as early as 2001 or 2, I tried to shield her.
It is not so much to do with trust but a misplaced sense of pride and protection. Pathetic.
We carried on spending, me convincing myself that my current idea would ‘bear fruit’ and all would be fine.
In the end, interest rates started going up and the financial crunch that hit us all really came home to roost.
We ended up spending almost £2000 a month more than we were bringing in.
Eventually I had to tell her and I seriously feared the worst.
I love this crazy hooligan woman to bits and she will never know how much.
She makes me laugh and think but sometimes can be infuriating.
As she once promised, it could be heaven or it could be hell but it will be interesting. Too true!
I didn’t want to lose her, particularly – but not only – as we have a son who would have to make some sort of choice as they always do.
But it was a very painful time. For weeks – no, months – I wandered round in a daze and when such things happen I really find it impossible to concentrate on anything.
We got a consolidating loan, cut out non-essentials and brought the expenditure under control.
It is eternally to Maria’s credit that she saw that the positives between us outweighed the negatives.
The rest you know. In many ways the outcome is much better although I know that Maria still works far too hard both in her academic job and blogging.
We are trying to build something together now – before we were not playing as a team – and together we are much stronger.