Experiences, Priorities, and Too Much Debt

posted 14th September 2010 Written by: Doniree CATEGORY: Doniree, Life Lesson, Money, Season 3, What I've Learned

budget, debt, finance, money, planning, Responsibility

The money post. I had two directions I wanted to go with this. One was about money and limiting beliefs and abundance and manifesting millions of dollars. The other was about running myself into credit card debt in college and the hole I had to dig myself out of to learn what “financial responsibility” actually meant.

I went with the latter, because I know that debt in and after college is an all-too-familiar story, and I hope not only that my lessons (I learned the hard way) can help encourage someone else in that trap, but I also hope for inspiration and advice from this beautiful and savvy community for smart money-management from this point forward.

I should’ve learned financial responsibilities when I was a kid. Middle school, even. I had an allowance – not much, mind you. A dollar per year per week, so that at age 10, I got $10/week – or was it per month? I don’t remember exactly, but I should’ve learned then to manage it.

I should’ve learned how to manage my money when I was in high school. When I told my parents I’d like a car and a cell phone, they said, “Great! Start saving!” So, I got a job and I worked and I had a car and a cell phone and enough money to buy CDs and Nokia phone plates. By the time I got to college, I didn’t really have anything saved even though I worked enough in high school that I should have.

I should have learned financial responsibility in college, when I’m on my own, doing the “practice adult” thing, and paying for life and college through some combination of part-time jobs and full-time loans. The fact is, it got worse in college because I thought loans were free money and when those ran out – there were credit cards!

By the time I graduated from college (age 22), I had 5 credit cards (Visa, MC, AmEx, Victoria’s Secret, and Express) all maxed out (not that the maxes were astronomical, but still), and all on the brink of collections because my part-time job couldn’t afford to pay five maxed out credit cards.

Go figure.

And then they were in collections and angry credit people started calling me, wanting their money. Phone calls and letters from agencies were scary, so I dealt with them the best way I knew how – I completely ignored the problem.

Until one day I didn’t, and I realized that 22 was too young for credit card debt. I spent the summer after college working two jobs until by the end of the year I’d paid every card off completely. Five years later, I’m finally seeing positive changes in my credit score.

Financial Peace

Last summer, my parents and I went through a financial planning course together. Dave Ramsey’s financial advice is solid, and I learned one thing in particular I wish I’d have learned before I left for college:

If you don’t have the cash to pay for it, you don’t need it yet*.

Broad statement, big statement, but since I was essentially forced to learn to live like that over the last five years, I learned that not only is it possible – it’s necessary. For me.

*(And that doesn’t mean emergencies because there’s an Emergency Fund for that, so in theory – I’ll always have the cash for that. In theory. I’m rebuilding this one since when I moved, my Emergency Fund became my Relocation Fund and never fully recovered. Relax, Mom. It’s recovering.)

In the last 5 years, I haven’t bought anything that didn’t come straight out of my checking account. I’ve traveled frequently, have enough clothes and shoes, moved across the country, eat well, drink well, and love toys like my MacBook more than I should.

What I learned over the last five years – and in the course we took – were these two really important things:

how to prioritize, and
how to budget.

Buy Experiences, Not Things

I have to credit my boyfriend for that little catch-phrase, but it’s really been the cornerstone to a lot of the financial decisions I make on a daily basis. I’d rather spend $30 on the experience of dinner and wine with him or my girlfriends than $30 on a pair of shoes that I wouldn’t even know how to match with the clothes I have. I’d rather spend $250 on a plane ticket than anything designer, any shopping sprees, or any additional housewares. I’d rather have a meal, share conversation, or take a trip than own things. And this is a huge player in how I spend my money.

Every dollar has a name

One thing I’m still learning is how to budget. Not “how to later look at and analyze what I’ve spent,” but how to actually plan what I’m spending. It helps to have a partner in crime on this one, so the fact that Boyfriend and I are both using Mint to track our spending, and we’re using it to actually plan how incoming dollars WILL be spent. And we’re talking about it, encouraging each other, and offering a little bit of accountability.

At 27, for the first time in my life, not only am I paying attention to where my money is going, but I’m actually creating and using a budget.

I know I’m not the only one with a credit card debt horror story. I know the credit card companies target inexperienced young folks with the appeal of all of the things a credit card can offer, but I don’t blame them for my poor judgment and irresponsible spending. I know that it took months of crazy work hours and a limited social life to pay everything off, but that – of course – it was totally worth it.

How do you budget? If you wrestled or are wrestling with debt, can you offer any advice or encouragement?

{Photo credit}

Comments (13)

591513 Responses2010-09-14+15%3A00%3A16Doniree to “Experiences, Priorities, and Too Much Debt”

Becky Says:
September 14th, 2010 at 7:16 am
My brother loaned me "The Total Money Makeover" about a year and a half ago. Seriously changed how I looke at money and what not. I've been using most of my own money for things since I was 12 and have never been good with budgeting either. The thing that sticks with me from that book is "You can't get yourself out of hole by digging more out of the bottom". (I also wrote down your boyfriend's catch phrase-I really like it!)

I should have all of my credit cards paid off by the end of the year, unfortunately I have a ton of student loans to work on next.

Sorry for the long comment, but thanks for sharing your story!
Liz Says:
September 14th, 2010 at 8:20 am
Credit cards are just so dangerously tempting. I've never gotten in completely over my head, but there have definitely been times when I spent money I didn't actually have right then. And I definitely thought about school loans in the same way.
mbreau Says:
September 14th, 2010 at 8:56 am
I highly recommend following Thesimpledollar.com – the blogger is dedicated to helping his readers save a few dollars where it doesn't matter so you have more money to spend where it does (ex. making your own laundry detergent – you'd be amazed how much it can save..).

Other than that… it's just a matter of persistence. Setting yourself goals and working to achieve them.. (which is totally where I'm at today).
Doniree Says:
September 14th, 2010 at 9:34 am
Thanks for sharing YOURS and the tip on that book! I still have student loans to go, but they're manageable and I'm aiming to have those paid off before I'm 30. Good luck with your goals!
Doniree Says:
September 14th, 2010 at 9:35 am
Oh, thanks for that link! I've been looking into more DIY-type things like that, so that's a great recommendation!
Lindsey Sparks Says:
September 14th, 2010 at 1:29 pm
I love Dave Ramsey! My husband and I went through Financial Peace. We paid off our credit card debt and built up our savings and created a budget. We're working on paying off the car and house now!
nikkiklecha Says:
September 14th, 2010 at 2:05 pm
Good for you!!! I'm signed up on Mint too – it's a great site. I definitely agree with you about experiences vs. things & I think you are SOOO on the right track!
Doniree Says:
September 14th, 2010 at 9:46 pm
Congratulations! I'm working on the savings part again – my emergency fund became my relocation fund and hasn't totally recovered yet, but it's getting there. Living within a budget is totally worth the literal payoffs that come with it!
Doniree Says:
September 15th, 2010 at 9:52 am
Thank you! Here's hoping I can stick with this Mint thing – although I think having someone else holding me accountable will help!
Alisha Says:
September 17th, 2010 at 7:22 am
Great job on working your way out of it. I can totally relate to this. I wish I has spent more time recovering from my mistakes before getting married and compounding the problem. I just hope that in the next couple of years I can figure out a way to free myself from it. Money is one of the biggest things holding me back from my dreams.
erinmakesitwork Says:
September 17th, 2010 at 9:17 am
Money is holding me back too, because I've been careless with it. Then I realized I was being careless, but I was afraid. So, now I am stuck. But I am learning…and I will dig myself out of this hole.
Renee Says:
September 18th, 2010 at 9:42 am
I love love love Mint. My husband and I have separate accounts but we use Mint to see what's fair, who owes what, etc. It's definitely helped our spending. (Or lack of spending, rather…)
Every Seven Years | Stratejoy | Conquer Your Quarterlife Crisis through Fresh Strategies for Real Joy Says:
September 21st, 2010 at 11:49 am
[...] Seven years ago, I was 20 years old, I’d finished up my second (and last) semester at Marquette University and had moved back to Minnesota. I lived in Dinkytown, didn’t own my cute little black cat yet, and officially transferred to the University of Minnesota. I definitely didn’t eat coconut and definitely didn’t know what I wanted to be when I grew up. I was on track to be a high school Spanish teacher, a high school guidance counselor, or a professional research psychologist. I daydreamed about being a travel writer. I drank cheap beer, cheap whiskey, and spent money like it was my job. [...]