Ok, ok. Not my brightest moment…

Not storage, but business related none-the-less:

Yes, I’m sure most of you have seen it, and yes, it’s me.  I will say that the reports of my demise are greatly exaggerated.  (Spell check says that’s right, but it doesn’t look right to me)

Where you shop may hit your credit – MSNBC.COM

For those of you who don’t care about the inner-workings of my life and business, please feel free to ignore the rest of this post. 🙂

Ok – you asked for it.  I usually try to avoid saying anything about my financial situation but the world kind of knows now.

I answered a “Gut-Check America” posting, at the insistance of my wife.  The question at hand involved how the looming credit crisis was affecting Americans and specifically American small businesses..  As I am the picture of a small business (me and, at times, my wife) I felt I had something to contribute.

So I posted it.  Less than 12 hours later a reporter by the name of Mike Stuckey called me to talk about my email.  It was a simple response, illustrating how I’ve had to seriously scale back my business as a result of American Express closing my two business credit cards down.

It sort of ballooned from there.  Started out as background information, turned into an interview, then they send a photographer out (to take one of the worst pictures of me in the world – BTW) and I wake this morning to the frantic phone calls from my wife saying that my ugly mug is on the front-bloody-page of MSNBC.COM.  (Thankfully for web-browsers everywhere, they pulled me off the front page at shortly after noon)

The text messages started coming in “you’re on the msnbc website!  Totally cool!”, then the phone calls, and then the most horribly frightening thing happened.  One of the network admins on the customer site I’m currently engaged in came over and asked if it was me.

Crap.

Yes – it’s me.   Yes, the credit contraction has hit me hard.  Yes – it’s one of the reasons I’m doing much smaller-scale work than I am used to.  (I almost never leave the 350 mile – “I can drive it with minimal back-pain” radius these days)

No – I’m not in danger of folding any time soon.

Still not enough detail?

Long story is that six months ago I was just coming to what I thought was the end of a long nightmare credit-wise.  An ex-wife who trashed my credit by walking away from the house my name was still on and filing bankruptcy on the remaining debt, years (before that) of not really understanding how credit worked had finally been fixed and I was on my way.

American Express sold me.  They told me specifically that their accounts were “especially geared towards starting up small businesses” and that by using the cards for day-to-day purchases I could “free up capital for expansion.”

I did just that.  Bought the hardware for my infrasturcutre equipment (email/web/etc) on ebay, couple of refurbished laptops, money to incorporate and purchasing the accounting package and making sure my licenses were legit, etc.  All went through the card.  And for the first year they were absolutely ecstatic to have my business.  I ran between $4k to as much as almost $10k per month in travel expenses through my card, (which anyone who has had to book a hotel in NYC knows, isn’t a lot in the grand scheme of things) always making my payments and at the end of the first year my initial start-up debt had been cut by more than 30%.  The funny part is I *USED* to be AmEx’s best cheerleader.  I think during the year I was working I must have convinced half a dozen people to go this route.  (I’m sorry by the way.)

Enter the credit crisis of 2008.  One late payment that I called and let them know in advance was going to be late apparently triggered a review of my account, at which point they closed both my business cards.  I remember because I was in Florida when this happened and was lucky enough to have other, personal cards I could pay my bill with.

Next month I get the letter saying that a limit was being imposed on my Platinum (Personal) card.  This was the gotcha.  They said it was because of where I shopped and who my mortgage was with.  (I have a countrywide mortgage, but not a sub-prime mortgage or one with remotely questionable terms)

Here’s the kicker.  I had it under control.  I paid off one of my Bank Of America credit cards, the one with the $5k limit, and started using it for travel.

Two months into that (and I reiterate, after two months of paying the card off in full every two weeks), and *AGAIN* while traveling, BofA cuts my limit from $5,000 to $500.  The balance on this account at the time was about $900.  They tried to say it was a negative payment history – I don’t think you get much more responsible than paying the card off TWICE every month.

Ouch.

So now I’m operating on a strictly cash basis.  How has this affected me?  I’m not paying down my debt nearly as fast as I would have liked to, and at nowhere near the rate I was paying it down last year.  I keep enough cash on hand now to handle about 3 weeks of travel expenses, 2 if Air-Travel is required. What little extra money I’m getting out of everything is going back into the cash account and not on the card as it was 6 months ago.

Hopefully in about six months I’ll be able to take the big projects on again.  And the best part is that I won’t be paying interest on any of it.

And to top everything off, some producer from “The Today Show” wants to interview me on camera.  Given the picture that ended up on MSNBC.COM, I think I’ll stick to radio – I’m not nearly as cute as Katie Couric.

2 comments

    • on October 13, 2008 at 10:53 am
    • Reply

    I’m at a bit of a loss there. My guess is they’re pulling the plug on everyone with unverified income to protect themselves (probably not a horrible idea on their part).

    I’ve gotten credit extensions on several cards lately without even asking.

    • Jesse on October 13, 2008 at 11:00 am
      Author
    • Reply

    It’s possible. Though my income (personally) is verifiable (I pay myself as a W2’d employee).

    However It was a rough time recovering from the damage my ex did in our divorce so my credit wasn’t perfect, but it wasn’t bad but definitely not perfect.

    I’m hearing similar stories across the board, existing Home Equity lines cancelled abruptly, credit cards either cancelled or with the credit limits raised to 29%, it’s kind of across the board.

    The good news is that it’s forcing me into a cash basis for my work. If i can survive the transition I will be a stronger entity. I may not be able to expand as planned in the near future, but I think it will work out for the best.

    I think it’s awfully hypocritical though of American Express to continue to advertise how they support small businesses when across the board I’m seeing that this isn’t the case at all.

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