My First Debt And A $5 Lobster
This is the humorous, embarrassing, and expensive story of how I acquired my first debt.
The story begins just a couple of months after I graduated high school. I was working at a fast food joint and although I liked my job, I was ready to start college. A friend of a friend was moving to Los Angeles to start school. He wanted to be a filmmaker and figured that schools in L.A. were his best bet. He was looking for some folks to help him move and I had a month until college started so I figured what the heck. I was tired of my job anyhow.
I had traveled before, but hadn’t done very much on my own at that point (I was only 17 years old). The trip to L.A. was going to be a long drive, but I had savings from working and a credit card with a $500 limit. I had plenty of money for a road trip!
I had been good with the credit card up to that point. I had only purchased a few things and had primarily gotten the card to start building my credit (on advice from my father, who helped me get the card when I was 16). My dad had really drilled into me that the credit card was only to be used for emergencies, or small purchases I could pay off quickly. It was just to help build my credit and nothing else.
I was excited about going on the trip. I had a good friend in L.A. that I had not seen for years and I called her up to let her know I was coming. I quit my job just a few works before I had told them I would and they said it was no problem. I was ready for the trip!
Along the way, we made several stops (it’s a couple days drive to L.A) One stop we were excited about was Las Vegas. None of us had ever been there before. We were too young to gamble, but just seeing the glitzy town was enough draw for us. Plus, we had heard that you could get steak and lobster meals for about $5. That sounded great to us!
We made our way to Las Vegas and got in fairly late. We had reservations for 2 nights at the Excalibur (one of the less pricey hotels in Vegas). We were all sharing one room to save money since none of us had a whole heck of a lot of it to spare. We were starving and wanted one of our promised cheap steak and lobster meals. We set out in search of a restaurant.
Lo and behold, one of the first signs we see is a picture of a guy holding up a lobster that’s nearly as tall as he was. We had found our place! We hailed a cab and told them we wanted to go there (I’m going to leave the name of the restaurant out of this post).
We arrived to the restaurant feeling a tad underdressed - most folks were dressed pretty nicely. Then we saw another group in there looking about as ratty as we did and figured we were dressed “well enough” for Vegas. We sat down to order.
They had a special - salad, steak, lobster, dessert, and coffee for four people. Perfect! And the price was “market price”. So that’s about $5 per person, right? We all agreed that must be it since we’d heard that’s all it cost for steak and lobster in Vegas.
We placed our order. I have a memory now - not sure if it’s accurate - that the waiter’s eyes gleamed when we placed our order. He was thrilled! We didn’t really notice or care at the time. We were just hungry.
We picked at our salads, and devoured our steaks. They were much better than we had expected for $5! Then came the lobster. I kid you not - this thing was the size of a 2 year old child! It was enormous! We were all going to share that single lobster. Looking back at it now gives me a pang of guilt because that lobster must have been ancient!
Some of the wait staff, and even some of the diners in the restaurant, came by to see this enormous lobster. We dug in but could only finish maybe a third of the thing. And that’s 4 hungry teenage boys! We were stuffed!
The waitstaff encouraged us to eat more. Repeatedly. We couldn’t eat anymore. No, we didn’t want a box because our hotel room didn’t have a fridge. Besides, it’s only a cheap meal so what does it matter?
Then the bill arrived. Without hesitation I grabbed it. I was tired and ready to head back. I don’t remember the exact amount it was (I’ve blocked that particular memory), but I got immediately sick to my stomach. I was too frozen with fear to do much of anything. I must have turned white as a ghost because my friends all looked at me. They asked what was up and I just handed them the bill. We were all silent for a good five minutes. We had spent nearly $500 on dinner!!!
The waiter must have noticed that we were panicking and immediately got the manager who stood in front of the only exit watching us as we sat around and whispered. I guess they were worried about a “dine and dash” scenario. We had no intentions of running out on the bill. We were all good kids, but I understand their concern.
After talking it over for a bit, it came down to me to pay for most of the meal - up to the $500 limit on my credit card - and the guys would piece together the rest of the money from what they had on them. Two of the guys were waiters and after we recovered some from the shock, they said we had to give at least a 10% tip. We did have great service and it seemed the right thing to do. It sure hurt though!
We had to scrimp and save for the rest of the trip. This was before cell phones and long distance calls were extremely expensive. We had enough money to make it to L.A. and back if we didn’t stop on the way back except for gas. Only three of us were making the drive back and we did shifts driving and sleeping in the car. We really didn’t even have enough money to get food on the way back. We just wanted to get home.
When I got home I told my parents the story. After their initial upset and concern, they thought the story was hilarious. To this day, I smile when I see something labeled “market price”. My parents still tease me about “market price”. Now I always ask what “market price” is.
The card got paid off, but to be honest, I don’t remember how. What I will never forget is how I got the debt in the first place.
Image by man pikin
Isn’t It Supposed To Be Monday That’s Manic?
With all the months of planning I have done I wouldn’t have expected this move to affect my time, energy, and money so dramatically and in ways I hadn’t anticipated. With the closing this Friday, my stress is at an all time high in this process. It’s looking like the loan paperwork and the home itself might come down to a photo finish. That is, if it isn’t late.
The home closing process has been surprisingly difficult and we have had to call daily to make sure the items we turned in weeks ago are being located and counted as received. If that isn’t enough to worry about we have our final (yes, FINAL) walk-through with the home builder tomorrow morning and there is still a laundry list of items to be finished including freshly inflicted damage to the tile backsplash. We’re talking golf ball sized holes below the vent hood. Something tells me they won’t be able to fix that by tomorrow morning. *sigh*
We have been having trouble packing because of all the shopping and scheduling installations we have had to do this week. It is like a flood of appointments and price comparisons and budget adjustments. And on top of that, I am catering a charity event this weekend for 100 guests. Terrible timing but I wouldn’t dream of letting them down, even with everything going on.
Anyway, I’m sorry for the rant. I know it’s not very uplifting or even on topic but right now it is a bit therapeutic for me. I’m also sorry to say that I will need to postpone doing Tightwad Wednesdays for a few weeks. Now that we are in moving limbo it is becoming hard for me to work in the kitchen or even do proper cleaning. My normal routine has disappeared and my ability to write consistently has been spotty at best this week. Moving makes being able to do the Tightwad Wednesdays the way I like to do them very difficult.
But rest assured, this will not be the case for much longer. Tightwad Wednesdays will be coming back as soon as I’m able to use the new kitchen. I’m so looking forward to being moved in and getting back in the saddle again. I miss my schedule and I miss stability. But after this ordeal I’m sure I will have a wealth of stories to share. :-)
I truly appreciate everyone listening and reading and commenting and being there.
It means so much to me. Thank you.
Why I Bought My First House
With our upcoming move, I started reminiscing about the current house. I’ve been living in this house for 10 years now and I’ve got a lot of memories from this home. Here’s the story of why I bought my first home.
When I decided to buy my first house, getting one was the last thing on my mind. I was really looking for an apartment.
My brother had just moved in with me and we were living in a reasonably sized 2 bedroom apartment at the time. For just the two of us, it worked out well. The problem was that his fiancee was moving in, and with 3 of us, the place might start to get crowded.
We decided to start looking at a bigger apartment. Nothing huge, but bigger than where we were. At the time, there was a pretty bad rental crunch, and it was tough to find a place to rent. When we did find a place, it was generally expensive, and there were many restrictions on renting (longer term leases, pet restrictions, etc…).
A good friend had just bought himself a house 6 months prior and highly recommended going that route. I really hadn’t considered that idea at all (or even the idea of renting a house). After his suggestion, I decided to see if I could even qualify for a house, and how much I would have to spend.
It turned out I qualified for a Federal Housing Act (FHA) loan. I was a first time home buyer and wasn’t buying a very expensive home. This required that I only pay 3% down. Luckily, since I was sharing rent with my brother, and I had some savings. My parents were very generous and helped me with the down payment as well.
Because I wasn’t able to afford to put down 20%, I was stuck paying for Private Mortgage Insurance (PMI). That was annoying because all it really did was cost me an extra $100 or so a month and I got no real benefit from it (well, except I guess that someone was willing to take a chance with my loan because it was insured). It’s a “necessary evil” (or you can pay some more up front on the loan to get out of it but it’s not generally worth it).
I got qualified to look at homes in a specific price range (not to exceed the amount of FHA). For reference, I had already searched for large 2 and 3 bedroom apartments for rent and found that it was going to cost us about $1050-$1500 a month. Looking back I should have checked home rental prices as well but hadn’t considered renting a home. To buy a new house, I wanted it to be on the low end of what renting would be.
We started with existing homes closer to town (and work). It was tough to find something in my price range that I liked. We kept searching though, and I found homes that would work, but were not exactly what I was looking for. My realtor then suggested that we look further outside of town, and that he knew of some new home construction that was in my price range.
Immediately I found a home I liked (damn model homes - they will get you every time). I figured for sure it would cost more than a pre-existing home. It turned out, with incentives from the builder, it was actually cheaper to build my own home! And the price, after the options I selected, would yield a payment of $1120 (including house payment, taxes, home insurance, and PMI). This was on the low end of how much I was looking at for rent.
Also, my brother and his fiancee were going to be living there. Instead of paying rent, I let them cover the costs of groceries and most of the utilities. We had plenty of room, and I was even able to offer a room to a college friend who helped out by paying the rest of the utility costs. Overall, I think we all paid less per month than we had while renting. It was a great situation. Especially for me of course, because I now have quite a bit of equity in the house that will help out immensely once we move.
My “renters” moved out after a few years during the dotcom bust and I decided to refinance the house because interest rates had fallen so much. I got an Adjustable Rate Mortgage (ARM) (yes, looking back that probably wasn’t the smartest idea but at least it did work out). The rates had fallen at that time down to 4.5% for that 7 year ARM (that means it adjusts after 7 years - I think that’s at least 2 years off). When I switched to the ARM, I also decided to put an additional $100 per month toward the principal (less than what I was saving on monthly payments due to the refinancing). It really helped bring the principal down.
So now here we are, about a week away from moving out, and seeing this current house go. I do have a lot more memories about the house other than the financial ones I’ve mentioned here, but because it came down primarily to money on why I chose to buy my first house, I thought the numbers would be interesting to see again. Looking at it again I realize I made the right decision at that time. I hope I’ve set us up for the right decision in our new home. We’ve done all the work we could to make sure it will work out, but only time will tell if it was the right decision to move now. I’m hopeful that it will be for the best!
Image source tofslie
The Good Feeling Doesn’t Last
I heard this great quote the other day. It really spoke to me and describes how I’ve felt about new cars and many other purchases.
The quote is from Professor Barry Schwartz. He’s talking about the feelings we get when we purchase something we’ve desired for a long time. You know, the stuff we believe is the “absolute best”. In this case, it’s a Mercedes convertible:
The good feeling doesn’t last. We get used to having the Mercedes.
It’s spectacular. It’s better than sex the first week.
It’s better than a meal at a great restaurant the second week.
It’s pretty damn good the third week.
And after that it’s just your car.
To me, this spoke volumes. This quote has to do with a lot more than just cars!
Imagine, if you will, how much more you could save if you had just bought a car instead of a fancy car with all the trimmings, especially when the good feeling usually fades. Is spending thousands of dollars more to get that car you’ve been dreaming about worth it when, in the end, it’s really just going to become “a car”?
To some folks, it may very well be, and I see no problem with that. If it’s been your dream to own a Mercedes, and you honestly feel it’s a smart financial decision, then it’s important to try and realize your dreams. I know Melissa still loves the knives she has even though she could have gotten cheaper versions for the same job. Perhaps they aren’t as exciting now as they were at one point, but she still loves her knives, babies them, and they are critically important for her cooking.
I think the moral of the story here has more to do with keeping in mind that something that may seem exotic or unattainable, or something you’ve attached a lot of desire to, can become mundane after a short time. Personally, I’ve had this feeling with regards to things other than cars. My first DVD player I went all out and got a very expensive model that could take two DVDs at once and had a lot of features that I thought would make for a crisper picture. In the end, I’d probably have been just as happy with a plain jane model. I would have saved a lot of money, too. It didn’t really play movies any better than the cheaper DVD players.
You have to do what’s right for you, but I think the next time I consider an expensive purchase that I’ll think whether or not it’s worth the money to get the bells and whistles (or prestige) in the long term, not just the short term. That will come in handy as we continue to find more things we need for the new house.
Image Source: Mike Babcock
The Carnival Review #12
Oh my gosh, I completely forgot to do my carnival review during the week. I suppose that’s because everything has been a little late this week. The holidays sure throw a wrench in the schedule. I wasn’t able to spend as much time as usual at the carnivals but they were still good as always.
Here are some of my favorite posts from the carnivals this week:
Overcoming My Fears: Canning @ The Motherload - I completely understand her fears of canning. Knowing that if I mess up I could make someone very sick has kept me away from canning. Yet people can food all the time and humankind lives on so I guess I need to try my hand at it.
Year-End Checklists for Flexible Spending Accounts @ Mighty Bargain Hunter - This is a useful list for people who take advantage of FSAs. We signed up for next year and it will mean big savings for us.
Saving Money When Shopping Online @ One Frugal Girl - She goes through her steps in order to find the best deals online. This could come in handy this holiday season!
20 Ways to Save Money at the Library @ Frugal Journey - I had no idea that libraries offer so many cost-saving alternatives.
Carnivals from around the web:
Carnival of Personal Finance #127 - Wonders of the World @ Moolanomy
Festival of Frugality #101 - Highway To Frugal Living Edition @ Rather Be Shopping
Make It From Scratch #40 @ Bean Sprouts
Carnival of Money Stories #35 @ Living Off Dividends
Image Source: PJLewis
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A Penny Closer is for those of us who want to improve how we spend, save, and invest. We want to be able to manage our money so that we can use it to enjoy our lives today while still saving to reach our dreams tomorrow. Read more about us here...
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