Money To Live

September 18, 2008

Defining Moments: It starts with a credit card

Filed under: defining moments — by moneytolive @ 5:00 am
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Defining Moments is a series about how we remember money and how it has shaped our lives.

Fellow PF blogger, Trent Hamm, tells his story of financial recovery at The Simple Dollar. Trent has shared two defining moments in his life.

Trent first took on consumer debt with what he calls “The Single Biggest Money Mistake I’ve Ever Made”:

So I got up and went to the local department store, which had the game in stock. I stood there looking in the case, mulling it over … and then I called over a clerk to get the items out for me. Not just an N64 and not just GoldenEye, but a second controller and two other games as well. I plopped about $400 on the credit card and walked out of the store.

His life changed eight years later when he reached what he calls his “Meltdown”:

One night, I came home from work and found five bills in the mail that added up to more than I had or would have for the next two weeks. I literally didn’t have the money to put food on the table at that point. I walked into the house and down the hallway to my son’s bedroom, where I saw my infant son bundled up in his bed taking a nap. I looked at him and realized that everything that I was doing was setting things up to make a very difficult childhood for him, not the wonderful one I wanted. I was worried all the time about money and I had learned that all he really needed from me was my love and attention.

I looked at him and I decided to change things, right then and there.

Trent’s story in college is so common. He wanted something he could not afford and had a credit card, so he charged the purchase. I like the story because it shows the long-term impact of such a small decision. In isolation, making a purchase on a credit card is not a big deal, certainly not the end of the world. But it marked the beginning of a pattern that led him to a difficult place.

Thanks, Trent, for sharing your story and all your tips for reaching financial security.

The mathematician in me will take this opportunity to tell you about an concept in advanced mathematics: a stopping time. The formal definition of a stopping time is very complicated, but the informal definition can be understood by anyone. An event is a stopping time if you know it is happening exactly when it happens (and it is ok if it never happens). For example, the time that the first person walks into the grocery store every Friday is a stopping time. If instead you wanted to talk about the time that the last customer enters the grocery store on Friday, this is not a stopping time. Another “last customer” could always walk in 1 second later. In Trent’s story, the beginning of his financial troubles (buying a video game system on credit) is not a stopping time because he did not know it happened until later.

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