Shira Boss

Money Envy

After high school, they got lucky. And they knew it.

Dan and Tammy, both Southerners, grew up in working-class families and married shortly after graduation. He started out at a retail job earning minimum wage but eventually got promoted to manager; she was a secretary. They lived with relatives to save money. Dan remembers Tammy being so frugal that when he offered to take her to Olive Garden for dinner, she would turn him down and buy supper at Publix supermarket instead. But self-denial paid off: In their mid-20s, when most of their friends weren’t even married yet, they became homeowners. Just a few years later, they had a three-bedroom house built in a relaxed southern Florida community. It was the nicest house on the block.

They hadn’t even finished unpacking when Dan got a call: You’re being transferred to Orlando. He’d be managing a bigger store—but to relocate, they had to sell their brand-new house at a loss.

Shopping for a new home, they fell in love with a four-bedroom place in a 15-year-old suburban neighborhood. Tammy liked that there were so many families with children; by this time, the couple had a child and Tammy had quit her job to be a stay-at-home mom. Dan liked that it was a gated community with lawns groomed like golf courses. Buying there would be a reach—15 percent more than they’d planned to spend—but Tammy convinced Dan they could afford it. They were in good financial shape overall, thanks to their great credit (they kept card balances low and paid them off regularly) and lack of car payments. The mortgage would slowly shrink and their savings would increase, they assumed, as Dan got raises and larger bonuses.

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At least, that’s how it could have gone. But it didn’t.

In their new community, Dan and Tammy encountered a crowd they’d rarely dealt with before: aggressively ambitious professionals. In one move, the couple went from the nicest house around to living at the low end in a much fancier neighborhood, surrounded by people who, compared with Dan and Tammy, had done better, gotten farther, acquired more. Their new best friends lived in a house worth three times as much as Dan and Tammy’s new nest. Another new friend of Tammy’s was married to a high-earning sports pro. Here, kids hung out at homes with pools, enormous yards, and four-car garages. Kindergartners went to tennis camp, a day trip meant Disney World, and birthday parties featured petting zoos.

Within a year of moving in, the couple yielded to peer pressure and joined the local country club. After their second child was born, Tammy signed up for a ladies’ tennis league, which meant paying for court fees, cute white outfits, and hours of child care. Many afternoons she went with her new friends to the mall, where she upgraded her wardrobe and outfitted her kids in matching ensembles. At the cash register, she got a discount on her purchases by opening store credit accounts, which only made buying easier the next time. In the evenings, friends invited Dan and Tammy to join them at expensive restaurants, where each couple would drop what Dan and Tammy considered a small fortune on dinner. But everyone seemed to do it, and eventually Dan and Tammy came to think, This must be how people live.

But it wasn’t.

Playing out of Their League

While renting their first apartment, Dan and Tammy earned a household income within a few hundred dollars of the national median. In the community where they bought their previous home, they brought in about twice as much money as their neighbors. But moving “behind the gates” put them behind the curve. Now most of their neighbors were earning more than double the national median income and living in houses that were twice as expensive.

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Although in the past the couple had always saved, now they began spending their entire income. To look her best, Tammy joined a top health club and started having her hair colored every few weeks. The couple bought a used SUV, financed through a home-equity line. On getaway weekends with other couples, they stayed at oceanfront hotels. When her friends started getting breast implants, Tammy decided to get them, too, putting the $5,000 cost on a credit card.

But no matter how much larger they lived, they could never catch up with their friends’ more exciting lives. Other people always had more impressive cars, parties that were catered, expensive furniture made of rare woods they had never even heard of. Tammy started feeling anxious about their life. Was she dressing well enough? Shouldn’t they move into a larger house? Why wasn’t Dan more ambitious?

Dan started getting larger bonuses, but the amounts were unpredictable. Tammy, who had handled the finances since their wedding day, started making only minimum credit card payments, and the balances grew larger. Instead of reining in expenses when money was tight, she simply went to an ATM and transferred $1,000 from the home-equity credit line to the checking account. At the same time, the couple started projects like installing granite counters and hardwood floors, all designed to put their house on a par with everyone else’s. My husband has a good job, Tammy told herself. We can afford it.

Then, one month, Tammy asked Dan to cash in some stock options to pay for basic monthly expenses. A few months later, she had to ask again. That’s when Dan realized something was wrong. He knew that it had been a while since his regular paycheck had covered all their bills. But since Tammy handled the money, he didn’t know the details. We should slow down, he told his wife. We can afford it, she insisted. You’re about to get your bonus.

True, the annual bonus was coming. And it was huge. By far the largest bonus Dan had ever gotten, it totaled nearly $100,000—much more than his annual salary. With this windfall, they could pay off everything and start over with a clean slate.

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But to quell his anxiety, Dan wanted to review the details. For the first time, he asked his wife to hand over their account statements. One night, he took them into the home office, along with their credit reports, which he’d obtained on the Internet. Going down the list, he noted the current balance for each card. Then he broke out the calculator. As a store manager, he was used to tallying up figures, but when he hit the Total key, he assumed he must have made an error.

Once again, he started down the list: American Express, MasterCard, Visa, another Visa, another MasterCard, Discover, Gap, Dillard’s, Ann Taylor. Again he hit the Total key—and stared in disbelief. The first figure had been correct. He felt sick. Overwhelmed. Deceived—not just by his wife, but by himself. Now he knew the truth, and it was almost like discovering that his spouse was having an affair. She had never told him how far behind they were falling, and he had just looked the other way. On credit cards alone, the couple owed nearly 100,000.

Getting in Deeper

Dan took over the family finances. He used the big bonus to pay down the credit cards, although, after taxes, it covered only about 60 percent of what the couple owed. Nonetheless, their spending didn’t slow down. They’d been relying on credit to support their lifestyle, and now it was difficult to stop. They kept dipping into the home-equity line to pay bills, but eventually they’d used it all up. After that, they sometimes had to put utility bills on plastic.

Dan didn’t understand how anyone with an income like his could be in such bad shape. He decided they should give up luxuries like the country club. Tammy negotiated: She’d cancel the membership only if they could have a backyard pool. He compared the monthly pool payments to what they spent on the club and discovered the pool would be cheaper. So he agreed to her terms and applied for an increase in the home-equity line to put in the pool. But somehow they never canceled the club membership.

Spending money was the only thing that seemed to make Tammy happy. Dan dreaded saying no to her; an argument would often follow, and he was afraid the children would overhear. Tammy blamed him for not earning enough. Why were the other husbands doing so much better? she’d ask. Dan couldn’t figure out how they used to be happy on so little, when now she was never satisfied.

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Cash flow got even tighter. A couple of times, credit cards were rejected at the register. At a furniture store, they picked out a bedroom set and tried to put it on store credit, but the application was denied. To avoid that kind of embarrassment in front of friends, Dan would check all their balances online before an evening out, then use a card that he was sure would be accepted. Dan and Tammy knew the situation was grave but kept kidding themselves that more money would fix it. After three years of living far beyond their means, the debt had taken on a life of its own.

Bonus time came around again but was only a fraction of the previous year’s bonanza. Dan was determined to make it last—but it was gone in two months. He felt as if he were dropping a planeful of water onto a forest fire. Now when preapproved credit card offers came in the mail, he tried to accept them. But in the end, each one turned him down—and he started to realize that the spending really was going to end.

One night, Dan cashed in the very last of their stock options, for a little over $3,000—an amount that wouldn’t even cover what they owed that month. They had been putting groceries and gas on cards but couldn’t beat back the balances anymore. The life they had somehow managed to keep going was over. Dan’s mind was racing. Sitting at his desk in tears, he prayed for help—then turned to the Internet to research his alternatives. The one that kept coming up was bankruptcy. Dan considered that to be the ultimate shame, but he couldn’t find any other way out. He tried to show Tammy books on bankruptcy, but she wouldn’t look at them. I don’t want to deal with this, she told him. You handle it.

The Hard Road Back

Dan went by himself to meet with a bankruptcy lawyer. Like most people, he couldn’t believe he was there. The lawyer told him that when he’d started practicing bankruptcy law nearly a decade before, the average client had been earning $8 or $9 an hour. Now, he said, more clients were middle class, making $60,000 or even $100,000 and up. Some had lost jobs or been hit by medical expenses, but many were just like Dan and Tammy, caught in a whirlwind of living beyond their means. For Dan and Tammy, going into bankruptcy allowed them to keep their home—which was so important to their family.

The deeper they got into the bankruptcy process, however, the more isolated Tammy became. With her spending cut off, she went through what Dan saw as withdrawal. She worried that the children would be forced to give up their activities and that they would see themselves as different from their friends.

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When the lawyer told them that bankruptcy filings are in the public record and their names might be printed in the local newspaper, Tammy became petrified of being exposed. To keep their secret safe—and also because they had no money—she started making excuses whenever friends invited them out: They had other plans. Dan would be working late. They couldn’t find a sitter.

Everyone must be wondering what’s become of us, Tammy thought. She hated the lies. The cover-ups. But she felt it would be worse having friends judge and criticize them. Most Americans don’t think they know anyone who’s gone bankrupt. Yet 1.6 million families file for bankruptcy each year—a fact they don’t often share with their friends and neighbors.

Knowing this, Dan now looks at people around him in a new light. He wonders about some of their friends. Can they afford their lifestyles, or are they, too, falling behind? Who else is in trouble? Sometimes, when he thinks he recognizes the signs, he wants to say something, to tell them how he wishes he could roll back five years of his life and do it over. He wants to grab them, look them straight in the eye, and say, “You’ve got to stop! You’re headed for disaster!”

Bankruptcy put Dan and Tammy on a tight leash. For five years, they are required to give all their income, beyond approved living expenses, to a court trustee, who distributes the money to their creditors. That’s tough enough—but what really makes it hard is that they are still living in the same gated community, still mingling with the better-off Joneses, and still hearing their kids ask to go to the same summer camps as their friends.

And still, nobody knows their secret, not even the members of the Bible study group that Dan and Tammy joined through their church. The members meet once a week in someone’s home, and they all say they’d do anything to help one another. But Dan and Tammy won’t reveal what they’re going through. When it’s their turn to open their home to the group, Tammy complains that they don’t have enough space. Dan tells her to be proud of what they have, but she’s embarrassed and dreads hosting.

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While Tammy is still struggling to deal with life in bankruptcy, Dan says that he’s actually thankful for the experience because it has given him a greater appreciation for what he has. “You realize that you can enjoy doing the simple things,” says Dan. “When you spend thousands of dollars on a trip, and then it’s over, you have this depression, like: ‘Well, that’s done, and the money’s gone.’ But when you spend the day hiking or camping with your children and you haven’t spent a dime, it’s really a great feeling. And that stays with you for a while.”