Archive

Experiences, Priorities, and Too Much Debt

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

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:

  1. how to prioritize, and
  2. 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}

divider

With Freedom Comes Great Responsibility

posted 8th July 2010    Written by: Katie    CATEGORY: Katie, Quarterlife Crisis, Season 2

“I’m free to do whatever I want, any old time.” – Soup Dragons

Freedom is one of those words that you only hear on holidays that have something to do with remembering war veterans who fought for our freedom, in kindergarten when you have to sing “America” before you can get your carton of milk, or on America’s birthday. I can remember countless essays that I’ve written for classes in which I had to explain what freedom was, what it meant to me, and give examples of things and people “that aren’t free.”

In 5th grade I answered the question with: “Prostitutes aren’t free.” I had to go to the principals office.

Over the years, my vision of freedom has developed from wanting to be free from my parents (as per my old journal entries in which I count down the days until I turned 18 so I could move out) to almost wanting to sell some of my freedom back. While I understand that as Americans we’re more free to do things that other countries are not, I sometimes catch myself wishing I wasn’t as free to do whatever I want as I am. This might be part of the whole “grass is greener” syndrome.

If I didn’t have freedom, I’d want it. Because I have it, I wish I didn’t have it at times.

As a single, 25 year old self employed girl living in South Philadelphia, I’m the epitome of freedom. I can go to bed whenever I want, wake up whenever I want, do work whenever I want, take off whenever I want, watch TV whenever I want, eat whatever I want, buy whatever I want… and so it goes.  I may even go as far as saying that I have too much freedom.

Where there is no freedom, there is extreme structure. In the countries in which women need to cover their bodies, it is strictly enforced. Their structure is strong, and they don’t allow people to break the structure. On the other hand, where there is an extreme amount of freedom, there is zero structure.  Think of all of the animals who run free in the woods. There are no rules. They don’t have to be anywhere at any certain time. Everything seems to be perfect until something unexpected happens. Like when a baby deer gets hit by a car. That extreme amount of freedom was awesome until their was a catastrophe. It’s that catastrophe that I, myself try to avoid.

Those who have not enough freedom will inevitably crave more of it. And since I have an unlimited surplus of freedom, I’ve grown to dislike it.

Personally, I crave being told exactly what to do. I want to be held accountable. I want to have set schedule that I have to adhere to. I want a job that wants me to designate a full 8 hours a day to doing set tasks.   While some people do well with creating things to do and holding themselves accountable, it’s my weak area.

Imagine going into a new job and your boss just looking at you and saying “Just do it.” You have so many questions, but you’re just expected to know how to do whatever “it” is. Where do you start? When do you finish? What you wouldn’t give for a little but of guidance.

Yep, that’s how I feel basically every day.

The irony of having this self proclaimed amount of excess freedom is that I am in complete control of it.  Even saying it out loud, “I control my own level of freedom.” feels like a weight lifted off of my shoulders. It seems so common sense, but I didn’t grasp this right away.

If I want to have a set schedule, I can make one. I want an 8 hour job that holds me accountable? I can apply for one. Even so, it’s easier to have someone else tell me what to do.  However, I chose this path of life. For so long, I dreamed of having more freedom and less control from other people. I just didn’t know how much responsibility came with it.

I’m in the process of revamping my schedule and holding myself more accountable. It’s a difficult shift of power, but I’m embracing it by starting small; giving myself a bedtime, wake time, and morning routine.  I don’t want to be too controlled by society or even myself because I think then I’ll start to hate it.

Freedom is an amazing thing, but as with most amazing things, too much of it can be more than you bargained for. Especially if you’re not prepared to handle it.

divider