Debt, Credit Card & Consolidation Current News Digest

For a long time, I’ve wanted to host another contest here at Get Rich Slowly. Not a “leave a comment to win” contest (those bring hordes of random people from across the internet, which means the winners aren’t usually actual GRS readers), but a contest that rewards folks for doing something cool.

Well, now seems to be the time. To celebrate the upcoming fourth anniversary of Get Rich Slowly and the imminent release of my first book, Your Money: The Missing Manual, I’ve decided to do something a little scary and exciting. We’re going to have a video contest.

GRS readers are awesome
The reader stories I’ve been featuring every Sunday seem to be a hit. And, in fact, I’ve always maintained that what makes this site so awesome has nothing to do with me and everything to do with you, the readers. Your tips and stories and suggestions are what make this one of the best places on the internet to discuss actual personal finances.

As proud as I am of this site’s growth, of the income it has provided, and of having now written a book, I think my favorite achievement came last year when The Wall Street Journal wrote: “The strength of [Get Rich Slowly] is that, along with plenty of advice from financial experts, he opens the site up to input from readers so they can learn from each other…Much of the value of the blog comes from readers’ comments.” Amen.

Well, it’s time to get open this site up for even more reader input. Here’s how it’s going to work.

The Get Rich Slowly video contest
I want you to create videos of under two minutes in length that provide personal-finance info in one of two categories: Personal Finance Tips or Success Stories. You can use anything you want to record the videos, and you can be as creative (or non-creative) as you’d like to be.

Since I’m the judge for the contest, I’ll tell you right now that although content is king (meaning the quality of your tip counts for a lot), I’m going to be pre-disposed to hands-on, how-to type videos: “Here’s how to change your oil”, “Here’s how I use coupons to save at the grocery store”, and so on.

Here’s a sample of what a video in the Personal Finance Tips category might look like:

And here’s an example of what videos in the Success Stories category might look like:

As you can see, your videos don’t have to be anything fancy. While you’re certainly welcome to get creative, what I really want is for you folks to make something by hand. I want you to take risks, get creative, and share your ideas with other GRS readers. I think it’ll be awesome!

Prizes!
What’s a contest without prizes? For the 2010 Get Rich Slowly video contest, we’re giving away cold, hard cash. The winner in each category — Personal Finance and Success Stories — will receive $500. And ten runners-up in each category will win an autographed copy of Your Money: The Missing Manual. That makes 22 prizes in all!

How to enter
If you’re over 18 years old and this contest is legal in your state (sorry, this contest is for U.S. residents only), you’re invited to submit an online video no more than two minutes in length. To do so, follow this procedure:

• Make your awesome video.
• Upload the video to your YouTube account.
• Head to the video contest page and click the “submit your video” button.
• If you have any questions or have problems submitting your video, email videocontest@getrichslowly.org.

You can submit videos in two main categories: Personal Finance Tips or Success Stories. (You may submit one video in each category, for a total of two possible entries.) And, as mentioned before, if you have a website, you can flag your video to be entered in the bonus Website category.

The contest is open until 15 April 2010. I’ll announce the winners on 01 May 2010. Once submissions start coming in, you’ll be able to view the most recent entries — I’ll post the place to view them on the video contest page soon. (Plus I may highlight a few videos between now and April 15th.)

Join the fun!
It takes guts to put yourself out there on video. Trust me, I know. But please don’t be afraid of looking like a dork. Be enthusiastic, share your knowledge, and have fun! (And if you’re worried about the juvenile YouTube commenters, simply turn off comments on your videos.)

What are you waiting for? Pull out your cameras and start recording. I hope you join in the fun, not only for the possibility of winning a prize, but to also share your stories and ideas with others — and to make something by hand.

—
Related Articles at Get Rich Slowly:

• Contest Deadline Approaching!
• One-Millionth Hit! Contest Winners Announced!
• One-Millionth Hit Contest
• Site Updates: My Wish is Your Command
• Reminder: Enter the Get-Rich-Slowly Holiday Tips Contest

It took Mary Schreiber about an hour, and just a little moxie, to save $300. You can do it too.

After reading about the Red Tape Fight Pledge last month, Schreiber took a hard look at the $129-per-month cable and Internet bill that had been nagging at her, and decided it was time to do something about it.

"The Comcast bill was crazy expensive, and I have really just basic TV and Internet," said Schreiber, 58, a technical writer who lives near Denver.

Saving money has become a top priority for her since she was laid off 11 months ago.

Mary Schreiber

Her string of bad luck actually began 10 year ago, when she thought she'd found her niche as a technical writer for a high-flying telecom company named MCI WorldCom.   But by the time MCI WorldCom CEO Bernie Ebbers took the Fifth before Congress about accounting irregularities, Schreiber was unemployed. 

Finding a job at age 50 can be a challenge, but Schreiber landed on her feet, this time with a multinational software firm named Mincom, based in Australia.  As a single woman, the $3,000 in take-home pay, along with decent benefits, provided her with a good living.

Then, the floor fell out from under her again. Last May, Mincom laid her off. Now 57, she knew her prospects were dimmer than last time. The $1,700 in monthly unemployment checks she began to receive would be considered generous by many state standards, but she still needed to learn to live on about half the income she previously had.  And she needed to find health insurance. So she started doing a series of small things to lower her monthly bills.

Still, finding a job "is a full-time job," she said, filling out applications, keeping up with government paperwork, applying for various insurance subsidies, etc.  So while she did some things to cut back no costs, others were neglected.

Click to take the pledge

When she read about the Red Tape Pledge last month, she realized she had let her TV and Internet costs soak up too much of her budget for too long. So she used a technique we've talked about a lot in the Red Tape Chronicles:  She called competitors and got bids for her business. 

First stop — Qwest, which had been mailing her promotional offers for months.  A Qwest operator told her she could get Internet access for only $35 per month. Then, she called the Dish satellite TV network, which offered a comparable television package for about $30 a month.  She knew there would be extra taxes and fees, and that these were promotional offers that would expire. Still, she now had hard evidence that she was overpaying, and she had a backup plan when she began her negotiations with Comcast.

Her intention all along was simply to talk Comcast into giving her a better deal. Switching services can be a hassle — users often need to change e-mail addresses, for example, and sometimes have to wait for installers and so on.  But Schreiber was staring at $50 or more in savings each month.  So she placed the best kind of phone call any consumer can — the no-lose phone call.

"I told Comcast I would rather stay with them, but I had to do something. The bill was just too high," she said. Then, she rattled off the offers she had in hand.  It worked like a charm.  The operator offered her TV and Internet service for $77 per month for six months, and she accepted on the spot.

"I could have saved a little more, but really I'd rather stay where I am," she said.

Comcast spokeswoman Jenni Moyer said the firm’s prices are “competitive,” but added that it will work with customers on an individual basis “to make sure our customers are getting what they want.”

“The key thing is we do offer a range of choices for customers so they can find thepackage and level of service that works for them,” she said. 

Schreiber says her job prospects still aren't good, even though she said she's willing to move for a good job.  In fact, she suspects she won't ever work again as a technical writer, because many firms have learned they can outsource technical writing tasks to low-wage overseas employees. 

"Like any classic unemployed person, you have to force yourself to get up every day and go out, even if it's just to walk around the mall, as long as you don't spend any money, you have to get up and go somewhere," she said.

But she did put that Internet access to good use.  She recently learned about a program that will help pay for her to go back to school, and help pay for her health insurance.  In July 2009, Congress expanded the eligibility for Trade Adjustment Assistance, a program that helps U.S. workers whose jobs are shipped overseas.  Schreiber will start school next week with the intention of earning system administrator certification for Microsoft products.

"You just really need to spend time exploring what's available out there, but you have to put in the time," she said. 

Sounds like the same challenge consumers face who want to save money and beat back hidden fees and unfair charges. There are ways to save money, they just take some time. 

But unemployed or not, can you afford to pass up a chance to make $300 with one hour's work?

You too can make the Red Tape Fight pledge by joining this Facebook group, where you can discuss the progress you are making or the obstacles you are encountering with other members.

You can also become a Red Tape Chronicles Facebook fan or follow me at http://twitter.com/RedTapeChron

Note: I’m afraid this post is long and rambling and doesn’t have much of a point. So sue me. I’ve been meaning to write about this subject for a long time, and finally felt moved to do so. This article may be amateurish, but that’s kind of the point…

My father was a serial entrepreneur — he was always starting businesses. But more than that, he was a serial inventor, a master of DIY, an amateur everything.

When I was a boy, my father:

• Built a windmill to supply some of our electricity. (The windmill blew over during a freak windstorm, and lay on the ground behind our property for many years.)
• Built his own boat. I can’t remember what kind of boat it was, but I think it was a small sailboat. (I was very young at the time, but I remember the library books he used to teach himself how to build the craft. I couldn’t help but remember them; he checked them out in 1972, and we still had them at home during the early 1980s!)
• Built his own telescope — or tried to. Again, I can’t remember if he ever finished the project, but I know that for years, he had a huge (12 inch? 15 inch?) and heavy hunk of polished glass the top drawer in his dresser.
• Wrote his own accounting software to manage his businesses. Dad bought an Apple II when I was in fourth grade (so late 1978?). Using the built-in Integer BASIC language (and, to some extent, the machine’s assembly language), my father taught himself how to program whatever he needed.

• Later wrote an entire suite of applications to run the box factory. When my father founded the box factory in 1985, he bought a new Atari 1040 ST computer and wrote all of the programs he needed in BASIC. He wrote programs for box layout, accounting, and more.

• Designed an electronic, timed sprinkler system to run the irrigation in his failed nursery business.
• Designed, built, and marketed a line of wheat grinders and food dryers. Doing so, he built his first successful business, Harvest Mills. After five stressful years (and many gained pounds), he sold the business in the late 1970s.
• Created a second successful business, Custom Box Service, which he started in 1985. As I mentioned, he wrote all the computer software for the company, but he also built all of the manufacturing equipment by hand. Today, 25 years later, that equipment still powers the family business.

When Kris and I decided in 1993 that we wanted to start our own vegetable garden from seed, my father helped me build a small greenhouse. We didn’t use any blueprints; he was the blueprints. One long Saturday, we bought lumber and nails and plastic sheeting, and he stood around watching me, telling me what lengths to trim the two-by-fours and at what angles. He didn’t sketch anything out on paper — he just told me what to do and I did it. That greenhouse is still standing.

But all of these things barely scratch the surface. These are just the things I remember, and mainly his successes. My father did more: He wrote poetry (mostly bad poetry), played guitar, drew funny pictures, spent a couple of summers raising 40+ acres of wheat, flew airplanes, sailed boats, and more. When he contracted the cancer that eventually killed him, he bought a microscope so that he could draw his own blood and look at his dwindling supply of white blood cells.

Made by hand
So what? What does all of this have to do with personal finance? I’ve already written a lot about how my parents — especially my father — were poor at handling money. (In fact, all of Dad’s extensive and expensive hobbies surely played a role in our family’s poor financial standing.)

Well, I just finished reading an uncorrected proof of Mark Frauenfelder’s Made by Hand, which is due to be published in late May. In the book, Frauenfelder — who is perhaps best known as the co-founder of Boing Boing and editor of Make magazine — chronicles his experience dabbling in the world of do-it-yourself (or DIY). The book includes chapters describing how Frauenfelder (intentionally) kills his lawn, grows food, raises chickens and keeps bees, brews tea and coffee, builds musical instruments, carves kitchen utensils, and, most of all, learns how to learn.

The book isn’t a practical guide to anything. You won’t learn how to keep your own bees or carve your own kitchen utensils in Made by Hand; instead, you’ll get the pleasure of watching over Frauenfelder’s shoulder as he does these things. And, if you’re like me, you’ll be reminded of how much we, as a culture, used to do ourself.

For good or ill, the United States has become a service economy. We pay people to do all sorts of things we used to do ourselves. In some cases, this makes sense; “outsourcing” can free us from work we find drudgery, allowing us to pursue our passions. But sometimes this reliance on professionals and experts makes us more detached from the things we ought to know about. (As a hypothetical example: If you pay a financial adviser, you may think there’s no need to know about asset allocation and diversification and all that boring stuff — but there is.)

Frauenfelder believes — as do I — that the DIY ethic is only partly about the things you produce. It’s also about learning how to learn, about connecting with others who share your interests, and about taking pride in your accomplishments. (Look! I built a personal-finance blog read by millions of people every year!) There’s a reason Get Rich Slowly has a DIY category, even if it’s seldom used: Doing things yourself is a great way to save money and increase happiness.

In praise of the amateur
After reading Made by Hand, it occurred to me that much of my own personal philosophy is about finding ways to do things myself. I don’t (and can’t) do everything myself, but I get the most pleasure in life when I’m producing instead of consuming. I also thought of other folks I know who do stuff. My father was one of these, but I know (or know of) many others, such as:

• My wife, who cooks and cans and bakes like crazy. (One reason I struggle with my weight is that Kris is always making terrific food.) But she does other creative stuff, too. Sitting next to me at the moment is a little stuffed animal that she made by hand.
• Bloggers of all stripes. I love seeing others write about cars and flowers and painting and chemistry and more. I think it’s great that blogs have served to level the playing field, allowing non-professional voices to be heard. (My favorite shelf in my library contains books by bloggers.)
• Chris Guillebeau and others who produce top-notch e-books on a variety of topics, earning good money while bypassing the traditional publishing industry.
• Courtney Woolsey, who started out singing for a few hundred folks on YouTube and now has a recording contract.
• My friends who play musical instruments. I love that Rhonda took up piano in her late thirties. Over the past two years, I’ve watched her move from rank beginner to competent learner. And I hope to see her progress even further.
• My friend Craig, who is a DIY master (though he probably wouldn’t call himself that). He’s remodeled his house (slowly), built raised garden beds and a chicken coop, constructed his own vineyard, built a mud oven, and is one of the best DIY cooks I know. (He and I and another friend were going to make our own bacon together for my upcoming birthday, but it’s too late now…)
• And, most of all, our friends’ children. Craig’s son, Albert, for example, loves electronics. His parents have fostered this, giving him all sorts of stuff to build and take apart. Other kids we know love to write, draw, do science, and more. It’s great to see children innately drawn to DIY before they grow older and more complacent.

The thing is, these folks are all amateurs (and so am I). They’re not trained pros. They do these things because they love to, and this passion aids their performance. When they fail (as they inevitably do), they try again. (I think Craig has built his mud oven at least three times because it keeps falling apart.) These amateurs find ways to succeed, even if it’s not a success in the eyes of the world.

There are a lot of people who dislike amateur work because they think it’s poorer quality than that put out by the pros. That’s fine. I get that perspective. But for myself, I get much more value for my money when I pay five or ten bucks to see a community theater perform than when I pay fifty or one hundred to see a Broadway show.

I’m not saying that you have to choose one or the other; I’m saying there’s room for both. But for some reason, we’ve abandoned the stuff of talent shows and living-room concerts. I’d like to see more of that. I want to be awed by the stuff my friends make and do.

Action is everything
As always when I dwell on this subject, I’m reminded of Sarah Dyer’s manifesto, “Action Girl’s Guide to Living”. I’ve linked to this many times before, and nobody seems to like it as much as I do, but that’s okay. I think it’s great, especially this abbreviated bit (which I think I pulled from an actual Action Girl comic book):

ACTION IS EVERYTHING! Our society, even when it’s trying to be “alternative” usually just promotes a consumerist mentality. Buying things isn’t evil, but if that’s all you do, your life is pretty pointless. Be an ACTION GIRL! (Or boy!) It’s great to read / listen to / watch other people’s creative output, but it’s even cooler to do it yourself. Don’t think you could play in a band? Try anyway! Or maybe think about putting on shows or starting a label. Don’t have time/energy to do a website yourself? Contribute to someone else’s website. Not everyone is suited to doing projects on their own, but everyone has something to contribute. So do something with all that positive energy!

I love that. And I think it has everything to do with personal finance and happiness. (When I say, “Nobody cares more about your money than you do“, I’m thinking of Action Girl and the DIY ethic.)

What I value most
My father died in 1995, ten days shy of his 50th birthday. I wasn’t very close to him at the time; our relationship had grown strained over the last few years of his life. But in recent years, I’ve become more and more sentimental about all the stuff he knew and did.

A few years ago, I realized that nobody in our family actually owned a food grinder or a wheat grinder from the old Harvest Mills days thirty years ago. How was that even possible? I managed to track down a food dryer via Craigslist, but the wheat grinder was more elusive.

One of my father’s first food dryers, made by hand.

Then one day, we were scouring our favorite annual garage sale. And there, sitting on a table, was a Harvest Mills wheat grinder. I knew it instantly from its shape, even though I hadn’t seen one since the 1970s. It was marked at $100. Being a frugal fellow, I tried to bargain with the owner. No go. He wanted $100. That was fine, though. I gladly paid the man the money. I would have paid $1000, if that’s what it would have taken.

Like most Americans, Kris and I own a lot of Stuff. Some of it, like the computer I’m using to write this post, is actually worth a fair bit of money. But you know what? None of it is worth as much to me as my father’s food dryer or the painting of Kermit the Frog that Jolie just made for me. This computer (and most of the other stuff in my life) is impersonal and mass produced, but these other things were created by people I know.

So, please: Make stuff. Don’t just consume the things produced by others. If you don’t already, try to find something that you enjoy doing, something that you can make by hand. Don’t be afraid to fail. When you make things, you make the world a better place.

—
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• Cheap Clothing Jackpot
• The Frugal Photographer
• Ask the Readers: How to Live Debt-Free?

Trend disturbs experts: Skip the mortgage, pay the credit cards Memphis Commercial Appeal CHICAGO — US consumers are starting to look like a frugal, debt-fearing lot as they pay down billions of dollars in … and more »

This guest post from the redoubtable Tyler K is part of the new “reader stories” feature here at Get Rich Slowly. Some reader stories contain general “how I did X” advice, and others will be examples of how a GRS reader achieved financial success — or failure. Tyler is an active commenter at GRS, and never afraid to share his opinion!

Like J.D., I once had a big problem with debt. Unlike J.D., I didn’t dig myself out from under that problem gracefully.

About eight years ago, I was a college student, living in an apartment near campus, and working full time while going to school. I felt like I was on top of the world. Here I was, seeing all my friends making $6 or $8 an hour, while I was making about $17. That seemed like a lot of money. It was about $35,000 a year — not just a college student’s salary, but a real salary. I felt like I deserved to be living it up a bit, especially considering all the work I was doing with a full-time job and a full time class load.

I went overboard. I spent well beyond the $35,000/year I was making (it wasn’t as much money as it felt like). I bought a Mustang, and modified it into an amateur race car. I had the latest laptop and a desktop computer with a flat screen display (in 2001). My $35k/year salary was enough to live on, but it wasn’t enough to support spending $1500 on a laptop computer and on a desktop computer and on high-performance cylinder heads, but that’s what I did.

I bought all of them, and more.

This kept up for a year or two. I kept justifying these purchases to myself, and my credit card balances slowly rose along with my required minimum payments. A bout of bad luck exacerbated the problem. I was mugged outside my apartment, and having no medical insurance, ran up an emergency room bill. My race car was stolen, and being 21 and owning a race car, I couldn’t afford comprehensive car insurance, I had liability only. I bought another car to replace it, again with borrowed money.

Things fall apart
Eventually, I realized I was in over my head. I was gasping for air. I couldn’t make my credit card payments and also pay my rent and buy groceries. I was driven to the edge, and I gave up. I stopped paying all my credit card bills, and they went into collections. I voluntarily surrendered my car to be repossessed. I figured if I was going to ruin my credit score, I might as well go all out — I even hired a bankruptcy attorney. She managed to stop the incessant flood of phone calls from creditors, but I found I couldn’t afford even to pay for the bankruptcy proceedings, and so that process stopped shortly thereafter.

At this point, I owed approximately $30,000 on about four different credit cards, the medical bill, and the car loan, all of these in collections. My credit had been destroyed, but my creditors had been silenced by the bankruptcy attorney. I decided to get my life in order and worry about paying back the debts I owed later. It was easy to justify — I could barely put food on the table and the credit card company was still bringing in billions every year. They didn’t need an extra few thousand dollars as desperately as I did. So I let my debts ride, and worked on running my life in a sustainable way.

Turning things around
The first thing I did was give up credit cards entirely.

I decided to only spend money I actually had, and so my purchases of toys slowed dramatically. My extravagances in life dropped to going out to eat with my roommate a couple times a week, and not at particularly fancy places. I got into bicycling as a hobby, on a used, mid-range road bike — not a brand new, high-end model like I would have bought before. And there I sat, content with the computer I already had, my modest bicycle, and the occasional trip out for dinner. I was living quite comfortably on my salary with my new outlook on life. For the first time in years, I felt comfortable with myself. I actually managed to save a few dollars from paycheck to paycheck instead of spending them!

I did decide that I needed a car, though. I hadn’t enough money to pay cash for one, and I doubted anyone would give me a loan, so still being young and in school, I asked my parents to help. This time though, I was much more conservative.

I borrowed about $5,000 from my parents and created a definite plan for paying them back. I bought a nine-year-old but well-maintained Honda Accord, and I stuck to the payments religiously. This time if I were to fall behind, not only would I give up my newfound peace I’d made with myself financially, but I’d be letting my parents down instead of faceless mega-corporations.

No credit needed
Shortly thereafter, I finished school, and took a software engineering job in San Francisco. Rents were higher in the city, but my salary doubled. My brother needed a car, and I worked out a deal with my parents to give him mine, along with the rest of the payments on the loan. I wanted to get a brand new one.

I went down to the car dealership with my pay stubs from my new job, and my ruined credit score, and a pre-approval I’d gotten online for a loan of up to $26,000. I was determined to make something work. As it turned out, this was easier than I’d anticipated. Car dealerships will do anything to sell cars, and that includes selling cars to people with horrible credit and a repossessed car on their credit report. I bought this car with no money down, which in retrospect, is the stupidest financial decision I’ve made since I began my financial recovery.

Still, it wasn’t a horrible decision — I now made a salary that could justify a car like this. Sure, I got a crappy 12% interest rate on the loan, but I eventually refinanced the loan to 10%, and a shorter term, and then I paid the loan off early, about two-and-a-half years after I first bought the car. When I called the bank to pay off the first loan (when I refinanced), they were practically begging me to take a credit card from them, seeing as I’d overpaid my car loan every single month, on time, for the life of the loan. But still, I wouldn’t break my ‘no credit cards’ rule, and I refused.

Renting an apartment was another thing I was scared to do with bad credit, but it turned out easier than I thought, as well. I got my first new apartment with my ruined credit when I moved to San Francisco. I decided to share a place with a friend of a friend. We found a two-bedroom place listed on Craigslist, and went to see it. It was a four unit building, quite common in San Francisco, owned by a little old Chinese lady. She didn’t care to even run a credit check. Two well-dressed young men showed up, with pay stubs indicating an above-average combined annual salary, and job titles of ‘Software Engineer’ and ‘Accountant’. She was more than happy to rent the place to us for $1800/month.

I continued my life living the way I had since I’d given up on my debt a few years ago, but now on a much larger post-college salary. I bought few toys, aside from the car and some furniture. I’d go out to eat with friends sometimes, or I’d go out for drinks occasionally with my new coworkers. I actually found money piling up in my checking account because I was making it faster than I even wanted to spend it. I had nothing I needed to buy.

After a year, my roommate took a promotion that had him moving from San Francisco to Denver. I decided that I wanted to get my own place, but $1800/month was too much for me to spend by myself. The little old lady who’d been our landlord actually asked if we’d reconsider staying, and if I could find another roommate, as we’d been such good tenants, but I told her I had to leave.

I was questioning my ability to get lucky with finding an apartment a second time, but figured I’d done it before, and I could do it again. I looked at one place I like, and decided to take it, but was turned down by the rental agency due to my bad credit. I found another place a few blocks away that actually ended up being nicer — It was an old Victorian house divided into two units, one upstairs and one downstairs. The family that owned the place lived upstairs and rented out the downstairs.

Wary because of my bad credit and previous rejection, I wrote down my story, and gave the owners my bank statement showing the money I’d accumulated in the last year I’d spent living below my means, and the phone number of the landlord that’d asked me to stay in San Francisco. In light of this information, they rented to me regardless of my credit score, and they too ended up extremely happy with me as a renter.

The road to recovery
Several years after I’d given up on my credit card bills, I was finally contacted again by one of my creditors (or really, the collection agency to which they’d sold my debt). They demanded, in a rude and threatening manner, payment in full of an outstanding debt over $10,000.

My girlfriend (now my wife), who worked at a law firm, asked a co-worker of hers to help me out. He was an attorney who had previously worked in this specific area, representing clients being sued by creditors, and had no sympathy for a threatening collection agency. With a single phone call on my behalf, he had the collection agency offering a settlement of about half their initial demand. I paid it in full from the surplus I’d been accumulating.

Slowly, over the course of several years, my other creditors would contact me, and we’d agree on a settlement like this. Eventually, the statute of limitations for them to collect on the debt through legal channels expired. After that, all I needed to mention to creditors was that I knew it was too late for anyone to sue me, and I’d have a reduced settlement offer.

Now, at the beginning of 2010, it’s been nearly seven years since this whole mess started, and these old marks are due to start dropping from my credit report soon. Surprisingly, I’ve found in the intervening time that I haven’t been impacted much at all by my poor credit — certainly not as much as you would have thought, given the emphasis the financial media puts on credit scores.

• I paid maybe 5% more than market value for the car I financed, not a huge deal.
• I was turned down for one apartment rental.

I’ve since rented one other place, where I live now, in a manner similar to the second — it’s a privately-owned little house with landlords that live next door.

I told them my story, showed them my bank statements and pay stubs, and they were happy to rent to me, and I love it here. Aside from the lousy car interest rate and a single apartment rejection, I haven’t even noticed my poor credit score. Employers haven’t cared. Cell phone companies haven’t cared. The electric company hasn’t cared. For the most part, nobody but myself has even looked at my credit score for the past six years.

While all this has been happening, my life otherwise has been going fantastically. My career has progressed well, I make roughly four times what I did when the story started. I got married. I moved back to my hometown, which I love. I’ve been traveling a bit, to five other countries and various places in the US. My life is going as well as I could hope.

Strangely enough, I’m not sure that any of this would have happened if I hadn’t given up on those debts years ago. That began a change in lifestyle — a focus on experiences instead of things, on making do with what you have instead of needing the latest and greatest. Those lessons have shaped my life since then, and I don’t know if I would have learned them as well without going through that experience.

Final words
I was originally hesitant about sharing this story. I was afraid of being judged for the method I used to pay off my debts. I’m not proud about having done this, but at the same time, I don’t feel bad about it.

These credit card companies were willing to do everything in their power to make a profit off me. They had teams of actuaries calculating the exact interest rates and credit limits that would maximize profits from their customers, and they had the legal system at their disposal if they thought it would have been beneficial. I used the same tactics. I was never sued and in the end, I came to mutual agreements with my creditors that satisfied both parties.

Was it an ideal solution for either party? No, but once I was in in over my head, there wasn’t a realistic ‘ideal solution’. The situation was eventually salvaged, and now, years down the line, it’s water under the bridge.

Reminder: This is a story from one of your fellow readers. Please be nice. After nearly a decade of blogging, I have a thick skin, but it can be scary to put your story out in public for the first time. Remember that this guest author isn’t a professional writer, and is just learning about money like you are.

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We may never know why runaway Toyotas suddenly seem to be everywhere. The scariest possibility, however, is that faulty computers are driving some victims to their deaths with frightening randomness.  Suspicions that an elusive software glitch in computer-controlled throttles is to blame, combined with powerful images and harrowing tales, has tapped into our primal, science-fiction fueled fear of killer computers.

Whatever the ultimate cause of Toyota's troubles, the possibility of a "ghost in the machine" has consumers wondering about the wisdom of trusting their lives to computers — machines they know are apt to hiccup and fail. Old-fashioned mechanical linkage between gas pedal and throttle somehow seems safer than the new "drive-by-wire" technology, and this new understanding of just how much of a car's activity is computer-controlled begs the question of whether we've been too fast to trade mechanical for digital.

Or perhaps the Toyota incidents are a signal that we’ve passed some tipping point in the relationship of man to machine? Some experts are wondering if our cars have become so automated and easy to use that drivers are now too detached, unaware of the inherent risks in motoring down a highway at 70 or 80 mph and unprepared to regain control if something goes wrong.

Computers fail in unpredictable ways. What's worse, they seem to fix themselves unpredictably, too. Anyone who's experienced a surprise computer crash, followed by a reboot that seems to magically resolve the problem, understands this maddening element of 21st Century life. Perhaps an IT worker at your office will ask you to reproduce the problem — but often you can't.  So your helper shrugs and smiles and slinks away, and you go back to your tasks, left to wonder when the ghost in your machine may reappear.

It's one thing to lose a document to such a ghost, but quite another to risk your life with one.

Toyota steadfastly maintains it has no ghosts. Still, millions of Americans are now aware of so-called "drive-by-wire" technology that until now they'd been blissfully ignorant of. And they are becoming aware that more by-wire technologies — brake-by-wire, turn-by-wire, etc. — will soon put only zeros and ones between them and a potentially deadly accident.

"We are talking about this all the time now,” said Jake Fisher, senior automotive engineer for Consumer Reports.  “There is a lot of feeling that having no mechanical linkage sets up a situation where the electronics could go haywire and you couldn't control the car.”

While that may be true, it's a little late for the debate. The first drive-by-wire car was introduced back in 1988, and Toyota began converting all its models to electronic throttles in 2002. The vast majority of new cars sold in the U.S. today uses drive-by-wire.  And when new federal regulations requiring a safety tool called electronic stability control kick in during 2012, all cars will employ it.

Computers as scapegoat?

Bill Visnick, senior editor at Edmunds.com, thinks that computers are right now being used as a scapegoat in the Toyota incidents.

"For people looking for an explanation, it seems like a handy one,” Visnick said. “You know, 'Those darn things! Computers control everything nowadays.' People complain that technology has taken over our lives. Well, I'm not ready to go there just yet."

He thinks electronic throttles — which perform without incident millions of times each day — will ultimately be exonerated by investigators, but public concerns will force the auto industry to take a new look at its digital conversions.

"This will only increase the discussion about what's an appropriate level of electronic control for devices we use in our cars that are tied to our safety," he said.

Industrial design guru Donald Norman, a professor at Northwestern University, a former Apple Inc. designer  and author of “Design of Future Things,” is more skeptical of the throttles and the expanded role of electronics in cars. 

"Every company has software problems," said Norman.

The number of possible interactions is huge in a car with dozens of computers on board, so it's impossible for Toyota to be sure its cars are 100 percent clean of software bugs, he said.

"No professional software person ever says that. They say there are 'no known bugs' in the software," said Norman. 

Furthermore, because unintended acceleration incidents are rare, finding any potential bugs is even harder.  "But just because it can't be reproduced in a lab doesn't make it any less serious," he said. 

Safer in the past?

Concerns about random computer errors are justified, Fisher said, but it's important to know that mechanical linkages also fail at random intervals.

"A cable could get kinked, the springs could get stuck, the springs could break. A stuck-open throttle could happen with a mechanical failure, and did happen," he said.  Meanwhile, he noted, airplane passengers trust their lives to fly-by-wire technology every day, since commercial airliners have long since traded mechanical for digital controls.

That may be, but the idea that a crazed computer could one day send you hurtling madly down a highway at breakneck speed is enough to give one pause about new technologies.  Still, the conversion to digital will be hard to stop, or even slow. Already, designers are well on their way to creating computer-controlled automobiles that will literally drive themselves around town.

But even if electronics aren’t ultimately shown to have been to blame for Toyota's surprise acceleration problem, Norman said, the publicity has brought to light a serious problem with today's heavily-digital cars: We're only half-way to our destination.

"There’s nothing wrong with automation,” he said. “Many automated features are very safe; you never have to think about them, like fuel injection. … The problem with automation is when it's really half-automation."

For example, he said, new features in some luxury cars offer help with staying in lane, with avoiding collisions and with maintaining a constant speed.  But none of them is fool-proof, and some might be actually make driving more dangerous by lulling drivers into a false sense of security.

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 "The automation that's a problem is automation that's not quite there yet, that works fine until it doesn't work,” he said. “….These tools are not really good enough to fully protect you, but they kind of work so you start relying on them, but then they fail and you are dead."

The false sense of security is easily observed during bad weather, each time a four-wheel-drive SUV careens past you down a wet or frozen road at reckless speed.  Even though 4WD offers little help with stopping, many drivers seem to feel invincible when driving in storms. 

"You see them driving without snow tires, they don't have a sense of the road surface, and when it comes time to stop, they are the first ones to spin off the road," Fisher said.

This is a slight variation of what is sometimes called the Peltzman Effect.  In the 1970s, economist Sam Peltzman claimed that car safety devices could be counterproductive because they actually encouraged reckless driving.  While some of his claims have been discredited, it's hard to argue that today's drivers aren’t more detached than ever from the physical act of driving. That, in turn, can contribute to unsafe behaviors. Some cars make it possible to drive 90 mph while feeling as comfortable as sitting in a living room chair.

Ease of operation=hard to control

This detachment may be playing a role in the Toyota unintended acceleration tragedies, Fisher said.  For example, he said, drivers who pilot manual transmission cars are intimately aware of how to disengage their transmissions from the car's drive train by shifting into neutral, something they do dozens of times each day.  But many automatic transmission drivers have never once put their car's gear box into the neutral position and have trouble performing that task in life-threatening crises.

Newer luxury cars have even more automation and ease-of-use features. The car most associated with the acceleration problem, the Lexus ES350, is particularly automated, Fisher said. It boasts push-button starting and a neutral position that's out of the driver's normal operation range.

"It's a very isolating vehicle, he said. “That makes it incredibly easy to operate, but some things, like putting the car in neutral, are not obvious."

Norman disagrees with the detachment premise, and instead blames a lack of standardization in the new feature implementation.

"It's really a design issue," he said. "Every automobile has different ways of handling these things. … We've all experienced a situation where you are in a new car and you want to blow the horn but you can’t find it. It's the same with the on-off switch."

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Drivers who are in mortal danger cannot be expected to find and work unfamiliar controls, he said. Industrial designers have the bad habit of building interfaces for ideal conditions, and creating designs that create unnecessary struggle in stressful situations.

"When danger happens, you can't think creatively," he said.

That’s especially true if you have been conditioned to think less and less about driving, Visnick said.  Clearly, automakers are moving toward a world where cars speed up and slow down on their own, maintaining safe distances by communicating with each other.  The fact that so many drivers talk, or even text, while driving shows that many consumers would be happy to surrender control to their cars.

"They are telling you they would prefer to be doing something else," he said.

Visnick thinks the current wave of runaway car stories will ultimately be a blip on the march toward fully automated driving machines. He expects steer-by-wire to appear next (some high-end cars already have a form of electronic-steering assistance) and brake-by-wire soon after.

"I don't think anybody is going to generate evidence that the electronic throttle really is the culprit for unintended acceleration," he said. 

Norman, on the other hand, expects things will get worse as we move toward completely automated cars.  Highways jammed with speed-controlled vehicles will handle traffic more efficiently — moving cars along in synch only a few feet apart – and that will cut down on the volume of accidents, he said. But when accidents occur, they'll be much more serious, involving hundreds of cars. He compares the situation to the interconnected power grid, which is generally more reliable, but fails spectacularly when it fails because of the domino effect.

"The number of deaths per year will diminish, but when there is a crash hundreds of people will die,” he predicted.   

In the meantime, automakers need to do a better job of standardizing their designs when new electronic features are implemented, he said.  Designers should do a better job of taking into account what drivers might do under intense stress, and be slow to change current standard layouts for essential items like gear boxes.  And they should design in safety features, such as “brake overrides,” which instruct the car to let “let the brake win” if a driver – or a ghost — pushes both the brake and the accelerator at the same time.

And how can Toyota restore consumers’ faith in their cars, and in digitized automobiles in general?

“The best way to make people feel better is honesty,” Norman said.  “When the  trouble happens you admit it, make assurances  that the problems are rare and that the world's best people are attacking it. The airline industry does this. The (National Transportation Safety Board) does thorough investigations and makes recommendations, and that reassures people. … The auto industry has to learn to do that as well.”

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