We’ve all heard of Chapter 11 and millions of folks have lived through chapters seven and 13, but where is this bankruptcy book where these chapters come from? From what I can tell, no one has ever read the entire tome. I know when I asked for it at our local library they looked at me like I was a few fries short of a Happy Meal, or one taco short of a combo plate.
Here, for the first time, are some of the missing chapters from The Bankruptcy Book explaining many of the ways you too can go broke:
Chapter One: Bike Broke- As a kid I mowed lawns at fifty cents a whack, picked fruit and dusted furniture in my Grandpa’s furniture store (the worst job I ever had) all so I could buy a Schwinn Continental 10 speed bike. I knew I needed to save up $64 to buy one but by the time I’d acquired that much cash that model was now $79. This was my first experience with how the ravages of inflation can break you. I had to settle for a Schwinn Varsity which only had eight speeds. This was like getting a letter in high school for playing on the golf team or marching in the band, while all the girls were interested in were guys who got their letter playing football.
Chapter Two: Scrambling Your Nest-Egg- The easiest way to go broke is to get divorced every ten years and keep giving half of everything you own to someone you don’t like who wants custody of all the cash.
Chapter Three: “Never a lender or borrower be.” After the photo of me and my first Grand Champion Steer appeared on the front page of our local daily newspaper my status in high school immediately went from “that farmer kid” to “most popular rich kid on campus.” Kids with cars were hitting me up for loans for gas money while I was still getting around town on my Varsity eight-speed. By the time I’d sold my second Grand Champion I was making more money per year than my father, and my mom regularly used me like an ATM. I learned the hard way that you should never loan money to friends, strangers, or relatives. The moral to this story is the closer one is related to you, the less chance you’ll ever have of ever seeing your money again.
Chapter Five: House Broke (Not the dog variety)- This is going to be hard to believe for everyone under 50 but the interest rate for our first house was 10%. Conventional wisdom at the time said it was better to keep paying this exorbitant rate than to pay off your house because you got to deduct the interest on your taxes. Such thinking drove many into the poor house.
Chapter Eight: Keeping Up With the Joneses- I have an acquaintance who makes a quarter million dollars a year and yet he has no savings account. He spends his entire paycheck every month getting daily deliveries from Amazon. Mostly he spends his dough on guns, tools, motorcycles and expensive rope horses. He has a Rolex, a 60 inch TV screen in his live-in horse trailer he pulls with a Peterbuilt, buys shirts with the little jockey on them and paid $3,500 for a tool chest from Snap On instead of $350 for one from Harbor Freight. (Because it’s dark inside the tools don’t know the difference.) He also has maxed out a couple credit cards and despite making $250,000 a year he has a negative net worth. In other words, he’s dead broke.
Chapter Ten: Overeducated Broke- I simply can’t believe that kids these days are going in debt to the tune of one or two hundred thousand dollars for a fine arts degree in World Religions or Art Appreciation and then are getting a job working part-time at Olive Garden to pay it off.
Chapter 12: Land Rich, Cash Poor- Anyone involved in agriculture knows this chapter. They drive ten year old trucks, seldom eat out, only take vacations to bull sales, every member of the family has a job in town, they eat beans, pinch pennies and shop at thrift stores and yet the land they own is worth ten or twenty million bucks.