How I woke up to a R78,000 credit card debt – Part 2

In the previous episode of Ben’s financial crisis…

I explained why I initially obtained a credit card, how I obtained the credit card and what I spent my first few thousand rands of debt on. In this post I will expand on how, over a period of three years, my once innocent credit card habits (i.e using my credit card on unnecessary purchases and clearing the outstanding amount at end of the month) eventually spiraled out of control after I left my job in October 2015, in order to focus on running my business full-time.

 

The irony

On Tuesday morning, 30 October 2018, i.e the period of time in between me publishing part one of this post and writing part two of this post, I received a call from my bank, asking me if I wanted to upgrade my Titanium Credit Card to a World Citizen Credit Card. During this call, the consultant explained that the reason for this complimentary upgrade was because I had been doing a lot of international traveling recently and the bank felt that I deserved to be upgraded to their top of the range Credit Card, i.e the best of the best, the finest of the finest, the creme de la creme.

So what are the benefits of this card you ask?

  1. Flight discounts of up to 35% on Emirates.
  2. VIP lounge access at airports.
  3. Rental car discounts.
  4. A reduced interest rate.
  5. *Insert many other random, unnecessary perks and benefits here*

During this call, the consultant explained that the upgrade would be seamless and that all I had to do was verbally agree to the upgrade over the phone and then my new credit card would be delivered to the nearest branch within a matter of days. He stressed that the reason the bank was doing this was in order to save me money, because they cared about me, their valued customer. However, at no point did he mention that by virtue of agreeing to this upgrade, my monthly credit card fee would essentially quadruple. Nor did he bring up the fact that, at the time of this call, my credit card account was clearly in disarray.

Why would you offer a customer who is clearly struggling to clear his debt a new credit card package? And why would you make it seem like the reason for the upgrade is to save the customer money? How is quadrupling my monthly fee and offering me an even higher credit card limit going to SAVE me money?

Needless to say, I declined the upgrade and politely asked him to get back to me at a later stage.

Screen Shot 2018-11-03 at 10.38.52 AM

A bit of background: My personality

Before I delve into the nitty gritty of how I ended up in this mess I think it is worth explaining a few characteristics of mine that have played a massive a role in my propensity for risk, recklessness and unintentional self-sabotage.

 

1. Money isn’t a thing for me

 

It feels a bit weird for me to say this because I didn’t necessarily grow up super wealthy. I had a great childhood in The Kingdom of Swaziland (aka Eswatini) and I went to top quality schools from preschool all the way through to university, but my parents never really made it rain on me. The majority of the Swaziland population lives below the poverty line, so I was certainly relatively privileged, yes, but I was definitely not spoilt.

I remember very vividly one incident in primary school where I had a soccer festival coming up and I needed a pair of real soccer boots in order to take part. I told my parents about it, and they gave me R100 to go and buy new soccer boots. Mind you this is at a time where even just a decent pair of soccer boots cost at least R900. However we clearly couldn’t afford R900 soccer boots, so I made do with what I had, went to PEP and bought a pair of black and red striped Grand Prix soccer boots (I think this was a rip off of Adidas). They didn’t fit me perfectly, they didn’t feel great, and they definitely were not going to get me in the circles with the cool kids, but I wore them, I attended the festival and I could still kick a ball. This is a story that essentially sums up my childhood. I never had the most fashionable clothes, I never had the most expensive gadgets, I never received a lot of pocket money. But I was always taken care of, loved, and provided with the best education that my parent’s money could buy.

So I am not sure if it is because of this or in spite of this, but as the young adult that I am now, I am extremely generous and liberal when it comes to money. I have no problem dipping into my savings or using my credit card on a whim to spend money either on myself, a family member, a friend, or a stranger, regardless of whether or not it is in my budget.

 

2. I have always believed that I am going to be extremely wealthy…eventually

 

This is a combination of my deeply rooted entrepreneurial nature (both my parents have started and run multiple businesses) and the multitude of information that I have been consuming on a regular basis from a very young age, be it self-help books, business books or unicorn startup fables etc. I have always had a knowing that I will be extremely wealthy and successful.

It is hard to read up on the stories of Bill Gates, Steve Jobs, Elon Musk, Vinny Lingham and the rest of my fellow software pioneers, without convincing yourself that you too will end up like them one day. This may be a delusion brought about by the social indoctrination that the middle class is subjected to in order to keep us motivated and engaged in this lopsided economy, or it may be an unwavering element of inner determination, belief, and will-power on my part. The outcome shall be revealed soon enough.

 

3. I am an optimist

 

I am a realist, yes. But I am also an optimist. I am that ‘everything will be OK‘ type of guy. And this is definitely one of the many traits that were passed down to me from my father because he always gave the impression that everything is OK, even when it was not.

Growing up as a child, regardless of the situation that we were faced with, he had never publicly displayed any signs of stress, anxiety, concern or discomfort, at least not while I was around. So whether I was being sent home from primary school because we had not paid school fees, whether the water was being turned off at our house because we hadn’t paid the water bill, or whether we were getting the front door of our house removed, because we had not paid the last three months of rent (we went through a rough patch ok, don’t judge). In whatever situation, he would smile, joke, laugh and still make it seem like everything will be ok.

One thing that he continuously did, which I will remember until my very last day on this Earth is when he would look at me straight in the eyes and say: “Big Man, We are Winners!”. With the first term, ‘Big Man’, being often interchanged with either ‘Big Head’ or ‘Noodle Head’, alluding to both the physical size of my head (it is much better now, I grew into it over the years) and the high level of intelligence that he attributed to us Mmaris. By doing this my Dad continually made me feel and believe that I was smart, that I was special, that I was different, and that I, Benjamin Jacob ‘Big Noodle Head Man’ Mmari was a Winner. How can one not take risks, when such an overly optimistic, achiever mentality has been repeatedly ingrained in you throughout your childhood, by the individual that you idolize as a young boy.

And it is for this exact reason that in December 2015 when I attended my father’s funeral in his hometown of Sanya Juu, in Moshi, Tanzania, and stood over his grave with my extremely short, weird looking 3-month old dreadlocks, my barren bank account, and the subdued background stress regarding how I was going to pay the following month’s rent as a self-employed man, that I was able to comfort myself during a time of loss and immense grief with the fact that I knew that I was making my Dad proud. I had obtained a degree in computer science as he did, I had started my own business as he did, and I was forging my own path in life just as he did. So on that fateful day, some of the tears that I shed were of sorrow and sadness, while others were of joy, pride, and happiness because I knew that his life and his death were not in vain. He told me that I was a winner, and I firmly believed and still believe that, and no job, no company, no individual, no economic climate and no financial limitations can ever get in my way, or stop me from living out my heart’s ambitions. Not now, not ever.

 

4. I have a few traditional masculine-oriented perspectives on life

 

Leading on from my previous point, it is evident that I never saw my Dad display any form of weakness whatsoever. I never saw my Dad sad, I never saw my Dad cry or buckle under the pressure. Not even once. I don’t even know if I ever saw my Dad sick, and if I did, then over time, in an attempt at self-preservation, my brain has sheltered my conscious mind from accessing those contradictory memories because it doesn’t fit into the superhero narrative that we have of our idealized, perfect, flawless parental figures.

This masculine aversion to weakness and other factors involved in my upbringing brought about by the male influences that I had in my life growing up, lead me to develop the following perspectives on life i.e:

  • Rule 1: The man must pay for everything.
  • Rule 2: The man supports himself and his family.
  • Rule 3: The man runs the household.
  • Rule 4: The man does not admit defeat.
  • Rule 5: The man never struggles.
  • Rule 6: The man never asks for help.
  • Rule 7: The man must always appear to have everything under control, even when he doesn’t.
  • Rule 8: The man confides in no one.

Obviously, hindsight is 20/20, but at the time I had no idea how much of a role the mental music that had been playing on repeat in the background of my psyche would eventually pan out in my life.

The saga continues…

So back to where we concluded in the last post.

It is December 2015 and my money is quickly running out. Quweza the business venture, that I had actually quit my job for had fallen apart due to an unstable product direction, shaky business prospects, and founder misalignment. My recently registered company, Simplimantis, is only a few months old, with no portfolio, no clients and most importantly no revenue. On top of this I need to find a new place to live because my younger brother, Isaac, is moving to Cape Town for University and of course, I had to make an unplanned trip to Tanzania in order to attend my father’s funeral.

At this point, I can already foresee my financial demise approaching steadily, so I start scouring the web looking for Software Development contracting opportunities. As an optimist, I was still a firm believer that everything would work out, but as a realist, I also knew that these opportunities will not magically fall onto my lap. I knew that I had to actively look for what I desired and I was extremely particular with the type of work that I wanted as well. Getting a full-time job would completely defeat the purpose as it would just put me back onto the hamster wheel, the same wheel that I had just departed. So I needed something that would bring in money and still provide me with adequate time to focus on my own ventures. Around this time I was also looking for apartments around the Southern Suburbs of Cape Town because this was close to where Isaac would be attending school.

Thankfully I managed to find an ideal part-time opportunity and the interview was set for January 2016. In addition to this, I also managed to find an ideally located three bedroom house, for Isaac, my business partner Masharty, and myself. Masharty and I decided to move in together because we believed that it would have a massive effect on our day to day communication. We had been exposed to enough business/startup literature to know that actually staying together would allow us to maximize on the time we spent working, discussing, planning and strategizing, which is extremely necessary, especially in the early stages. And to be honest this was probably one of the best business decisions that we had ever made.

The only issue with this 3 bedroom apartment was that the rent was R14,700 and the deposit was R29,400, i.e two months rent. And if you know anything about property in Cape Town, you are well aware that if you don’t secure it as soon as possible then you will very likely lose it, especially being a foreigner, of which all three of us were. So given the circumstance, I made the impromptu decision to pay the deposit with my credit card account and have my to-be housemates pay me back, which they did. Obviously, I was not very liquid at the time, so this 5 digit transfer made towards the end of 2015 essentially marked the beginning of the end, as it signified the commencement of my journey towards the black hole of financial debt.

2016

After my return from Tanzania, I attended a few interview rounds at the company that I was to consult at. They were a small ICT company in the WASH (WAter, Sanitation, and Hygiene) sector, located on Long Street in Cape Town. They liked me, I liked them and we arranged to have me work 20 hours a week on an individual capacity, which allowed me to focus the rest of my time on my own company. I was to begin in February.

Along with my new gig starting in February, we were also moving into our new apartment, which by the way was fully furnished. This meant that I had to sell some of my own furniture and appliances (which my Mum had helped me buy the year before) that I had in my current one bedroom apartment located in Table View. Obviously, a part of me was selling them for practical reasons, because there is no point in moving with a fridge, a bed, a microwave and an oven to a house that has a fridge, a bed, a microwave, and an oven. But on top of that I also really, really needed the money, because I was literally on the brink of liquidation at this point.

Expenses > Income

The hourly rate that I negotiated with the company that I was consulting at part-time was lower than the hourly rate that I charged via my own company, Simplimantis. But due to the circumstances that I was faced with, and the long-term nature of the contract that I had with them, I was happy to accept it. Also, I really needed the money to keep afloat, so I figured that I could always re-negotiate rates at a later stage. The work that I was doing for them was actually quite enjoyable, I was working on mobile Android applications, IOT (Internet Of Things) devices as well as a SaaS (Software as a Service) platform. I gained a lot of experience, met some great people, made some lifelong friendships and I learned a lot, so it was definitely a worthwhile journey.

The only issue was that during this time, even though I was receiving a somewhat steady income, my current monthly expenses were still greater than my monthly income, which meant that the deficit was covered by…. you guessed it: my credit card. It was only a few thousand rands each month, which over time added up to a lot of thousands of rands. Also, at this point in time, I was literally only using my credit card account. I would receive my contracting income in my current account, and then transfer all of it into my credit card account, barring the amounts needed for any debit orders. I did this so that I could keep the balance as low as I could in order to minimize the monthly interest charges.

It is also worth noting that I have had a few health-related issues over the past few years, which had a major effect on the amount of money I would spend on medication, supplements, groceries and Drs’ appointments on a monthly basis. For some reason I had developed a lot of food allergies and sensitivities so my body would react to trivial things like bread, sugar, rice, tap water, white potatoes, bell peppers, and chicken, just to name a few, and this lead me to live on a diet of things that my body did not react to, like filtered water, sweet potato, steak, and lamb. Which obviously came at a cost.

Relationships and the Ego

I had always considered myself to be a bit of a commitment-phobe, which was definitely a result of my emotional immaturity. I didn’t really understand or value the nature of intimate relationships and around this the time my longest relationship had only been about 10 months, and this was way back in 2012, during my penultimate year of university.

Now, you would think that I was too busy and too broke to get involved in any relationships but I figured that if Elon Musk  (the CEO of multiple billion dollar companies) was able to sustain entire marriages (I had just finished reading his biography), then why should I run away from relationships? I mean, isn’t it better to find your wife when you are still on the come up? Isn’t it easier to ascertain if it’s true love if she sticks it through with you while you are at your lowest? These were the thoughts that I entertained in an attempt to convince myself that I could afford to engage in an intimate relationship while trying to build my business. Going back to my masculine traits regarding how a male is supposed to act and behave in a relationship, it is not hard to foresee how me getting into relationships during this time lead me to dig deeper into the hole of debt that I found myself in.

One particular situation that I remember is when my to-be girlfriend and I went to The Crypt, a jazz restaurant in Cape Town, an uber fancy place where you have to book in advance and pay just to reserve your table. I was still courting at this point in time, so we were not even dating yet. However, I still entertained the suggestion to go to the restaurant, I paid to reserve our seats, and I paid the entire dinner bill and gratuity tip which amounted to R720. And this was by no means an isolated incident, I could literally map out a number of restaurants that we went to and the corresponding bills that I paid over this period and this would cover areas such as Cape Town CBD, Camps Bay, Claremont, Rondebosch, and Woodstock to name a few. With the accumulated total of all these lunches/dinners/drinks easily adding up to thousands of rands.

Ladies and gentlemen, in what world does a man who is already tens of thousands of rand in debt, continuously pay such high costs in order to stroke his severely bruised ego and come across as independent, successful and financially stable? In my world, evidently.

And the most annoying thing about this is that I didn’t even have to cover the costs on each date or any of the dates to be perfectly honest. The courtee in this example above, who officially became my girlfriend a few weeks later was more than capable of covering the costs for the both of us and I know that she would have done so gladly, had I just brought it up. But due to a combination of some of my masculine-oriented perspectives, I was under the impression that:

  • Rule 1: I always had to cover the costs.
  • Rule 6: I should never ask for assistance.
  • Rule 7: I needed to ensure that everything appeared to be under control, even when it wasn’t.
  • Rule 8: I couldn’t reach out to her and explain the dire situation that I was actually in.

One simple conversation would have lead me to save thousands of rands, but I never had that conversation, I never admitted my struggles, I couldn’t own up to the financial predicament that I was currently in. Why? Because I was ‘a man’.

So here I was silently fighting financial battles as well as my own personal commitment struggles all at the same time. It was just one big mess, a costly mess, that lasted a very long time.

C.R.E.A.M: Cash Rules Everything Around Me

I had stopped the part-time consulting gig in October 2016 in order to – once again – focus full-time on running my company. Now if quitting my first full-time job in October 2015 was regarded as me jumping ship, then this was the equivalent of me removing the life jacket.

Over the course of the first half of 2016, Simplimantis quickly picked up speed. We had secured a number of clients, we were bringing in significant revenue on a monthly basis and we were working on a variety of different software projects. However just because we were making money as a company, didn’t mean that we as directors were receiving money in our personal capacity in the form of salaries. About a full year had elapsed from when we received our first payment to when we started actually paying ourselves, and this is because we had a business to grow.

To give an example, we had secured a project to build an IOS app for one of our early clients, before we even had an Apple computer in our possession (for the non-tech readers among us: you need an Apple computer in order to build, deploy and publish IOS apps), so what we did was: we finalized the contract, I bought a second-hand MacBook Pro with my credit card, we received the deposit from the client and then Simplimantis refunded me at a later stage. We even bought our first full-time employee a brand new laptop and paid him a full salary before we had even begun paying ourselves a full salary, and obviously, in the meantime, I was just casually leaching off of my credit card, one rand at a time.

At this stage, I am already knee deep in debt and my personal finances are in a rut. However, on the bright side, our company was flourishing, and our company had a healthy bank balance, which allowed us to do many many things over a long period of time. But alas, this honeymoon phase did not last forever and over time, as many businesses do, we started facing challenges regarding cash flow, due to a number of reasons like delayed payments and clients defaulting on long-term contractual agreements, which had a severe impact on our budgeting and financial forecasts. And if there is only one thing that you need to know about running a sustainable business it is that cash is king. Cash flow is everything and even just a short period of negative cash flow at the wrong time can literally turn the whole operation on its head, pushing you to the point of no return.

A new birth

In April 2018, for financial as well as mental/physical health reasons, I finally made the decision to climb back onto the ship of full-time employment. A decision which took a lot of time, thought and intense deliberation. Thankfully I was able to find a company that matches my personality, my ambitions and my overall perspectives around work and life, something which I honestly didn’t think was possible, literally up until I started working there.

What being employed means is that I have a steady flow of income, I don’t need to spend my nights worrying about how I will pay rent, nor do I need to worry about whether I will be able to cover other monthly overheads and debit orders, and most importantly, I don’t need to live off of my – recently maxed out – credit card.

My initial plan was to pay off my credit card gradually over a period of about 18 months so that I could dedicate some money towards my savings and investments, two aspects of my financial life that have literally been non-existent since mid-2015. However, after recently reading Manage Your Money Like a Fucking Grownup, an amazing book written by Sam Beckbessinger, I have set the goal of clearing my credit card by the end of December 2018, so that I can start my 2019 on a fresh new slate, debt-free for the first time in almost 4 years. In the book, Sam stresses the importance of making it a priority to get rid of short-term debt. And at the risk of delaying the growth of my savings and investments, I would rather focus on getting myself out of this dreadful financial pit that I have found myself in and bringing my credit card balance back to +R78,000. A day that honestly could not come any sooner.

It has been a long journey and a lot of lessons have been learned along the way. If given the opportunity to relive it I would obviously do some things differently, but I would not exchange this experience for anything else, because this is the type of stuff that you can’t fully understand by reading a book, doing a course or watching a video. This here ladies and gentlemen is real life, real experiences, real mistakes, real victories, and real regrets. And as ironic as it sounds, even though I have been left with a deficit of tens of thousands of rands, this entire experience has been priceless.

#T4aM

 

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