Cash money lyric

True confessions about money misadventures and valuable financial lessons learned

I remember a time, just a couple of years ago, when everywhere I went, from a barbecue to the hairdresser's, everyone was discussing their finances. The stock market was booming. Tongues loosened by irrational exuberance were giddily gabbing about which tech funds were taking off, which on-line brokerage had the lowest fees. Folks with fattened wallets were all too happy to spread the news of their success. Funny thing, now that the whole country seems to have caught a nasty case of financial flu, those same folks appear to have come down with laryngitis.

All that money talk has died to a whisper. And that's too bad. Because if more of us were just as honest about our failures as we were eager to broadcast our successes, we could offer a wealth of wisdom about what not to do when it comes to money. Not only can we learn from our mistakes, but we can earn from them in the future by making smarter decisions.

So in the spirit of the old blues lyric that says, "If it don't kill you, it just makes you strong," I asked several smart sisters I know to share their misadventures in money management. You'll find that what they learned taught them as much about their self-worth as it did their net worth. As a bonus, there's bottom-line advice you can bank on from Glinda Bridgforth, money-management expert and author of Girl, Get Your Money Straight! (Broadway Books). Read on and make the hard-won wisdom of these women your own.

CAN'T BUY ME LOVE

Nicole, 29: "I loved a man who was having a hard time earning a living. I took his burden on as my own and eventually spent all my savings and much of my weekly salary providing him with clothes, pocket money and expensive `cheer up' dinners. I wanted to make him feel good, make him feel as if the world wasn't against him. But he soon stopped thanking me for the things I did and became resentful. He even started picking at me: I walked funny; I talked funny; I was too pushy or too insecure. At times he accused me of thinking that I was better than he was. But if I had a bad day and acted a little funky, he would make the situation into a crisis and question whether I was good enough for him.

"A while later, I hit hard times myself. I had been working two jobs to have enough money to live comfortably and put away savings. But I had spent down my savings supporting my man, so when I lost my part-time job, I was flat broke. I had to scrape, beg and borrow to take care of myself while he sat and watched. He wasn't even helpful in little ways that could have eased stress without spending a dime--like going with me for a long walk in the park! I felt desperate, vulnerable, sad and completely alone.

"Fortunately, it only took a week or two of this kind of insensitive treatment before I began thinking about what I was getting out of this relationship and what I would lose if I left him. After I cut him loose, each week I monitored my budget, and I slowly regained my sense of control. Without a leech in my life, not only could I pay my bills, but I even had a little extra to save and splurge on myself. From here on I've vowed to pursue only relationships that are based on equal commitment from each partner to bring out the best in the other. Most important, I learned that I needed to have a new and more loving relationship with myself. In hindsight, I realize that it was easier to fixate on a man and our so-called relationship than it was to look at my own flaws and deal with them. The things that troubled me about myself seemed so big, so unconquerable, that I spent my money, time and energy on something outside me, because that seemed more manageable.

"But you know what? I'm just fine now. These days, I'm paying myself first, setting aside investment money. Next I pay my bills, then I allot a certain amount to my `miscellaneous expenses' fund. Any emergency or unforeseen expense comes out of that fund. I don't dip into my investment savings for any reason. I now feel so much stronger. I can take care of myself financially and emotionally, and I'll be better prepared to know and join my life with `Mr. Right' whenever he comes along."

The Bottom Line: "Taking care of others' needs without regard for your own is a problem many sisters struggle with," says Glinda Bridgforth. "But there's no need to settle for crumbs from a relationship--you are the cake, and your mate should be the icing. I also recommend to clients that they channel their savings into at least two separate funds: a fund for emergencies and an investment fund that they simply do not touch until retirement. Saving money for a down payment to buy your own house, co-op or condo is also an important goal, even if you are single. Home ownership is the cornerstone of American wealth that too few African-Americans have claimed."

DRASTIC WITH PLASTIC

Martine, 27: "In college I prided myself on being good about money--paying bills on time, saving regularly, not running up long-distance phone charges. But after college I got lazy. I had wisely signed up for a low-interest credit card, but my problems started when I charged a big purchase--my laptop computer--and I never could quite pay it off. Rather than budgeting the largest payment I could make each month, I paid the minimum. Then I'd also charge other items on the card, so with my new purchases and accumulating interest, the total credit-card bill quickly got out of hand. Soon I was $5,000 in debt, and I had no idea how I'd pay it.

"To make matters worse, I had promised myself that I'd never pay more than $1,000 per month in rent, but I went over that limit in order to live in my own apartment--with no roommates--in an upscale neighborhood. Then I started eating out more. When I started charging my groceries, I knew I was in real trouble! Every month I dreaded the arrival of my Visa bill. The debt was like a dead weight on my soul.

"This should have been a sign to me that I was living beyond my means, even though I was finally making decent money as a film editor. After scuffling for so long, I think I just got tired of being frugal and took on the attitude, `Well, I work hard, so I deserve it.' So I decided to spend money rather than save and invest it.

"But about two years ago, I slowly started cleaning up my act. First I got a debit card from my bank so I could make purchases without running up debt when I didn't have cash on me. I also began making larger monthly offerings to the credit gods; instead of token payments of just $50 or $100 per month, I sent $300 or $400. Finally, in December of last year, I moved to a cheaper neighborhood. That was the smartest money move I've made lately--it saved me $200 per month, which I send straight to Visa.

"I still owe on my card, but it's now less than half the amount it was. I look forward to paying the debt off completely in the near future. My renewed commitment to living debt-free makes me feel more in control. And my credit record remains spotless because I am never late with my payments. Now I'm beginning to think about saving for a house and making other investments. The credit-card debt had me stuck before. Now I can move forward."

The Bottom Line: "Everyone has to find the right checks and balances to make financial discipline work for her," says financial-recovery expert Glinda Bridgforth. "Martine found she could use a bank debit card [through which you can directly charge your checking account for your purchases] to break her credit-card habit. But because carrying a debit card is just like having all the cash in your checking account in your wallet, debit-card users have to be careful to follow a strict monthly or weekly spending plan that they have worked out in advance. Otherwise you could empty out your bank account before you know it, the same way many of us pile up a credit-card debt."

High Finance

Mabel, 47: "This, for sure, qualifies as my biggest money mistake: When I was in my twenties, I dipped into my employer-sponsored 401(k) profit-sharing plan--money I had invested for my retirement--to pay for drugs. It was the late 1970's, and my coworkers and I used to get together to smoke marijuana after work. We thought this habit was just an innocent holdover from our college days, which weren't that far behind us. Then one of my coworkers added cocaine to the mix, and before I knew it I was buying my own stash from this person, only once in a while at first. Then once a week. Then so often that I depleted my savings. I had the bright idea to take out a loan from my profit-sharing plan to cover my bills. And of course some of it went to buy more drugs.