June Roundup

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June has come and gone, and it’s been an exciting month, a month of experimentation. For the first time, I’ve kept good track of all my money and where it has gone. I have made a solid effort to decrease spending in my major categories. I have kept a budget and stuck to it. Most of all, I’ve explored the areas where I have psychologically been deficient and made an effort to correct those. I think the main problem most people have with finances comes down to problems in mindset. I have made frugality a game. However, I’ve also failed already. I bought a few things that, while useful, I did not need. I didn’t exceed my budget, but that is money I could be using this month to pay off some major debt.

So, let’s look at my current state. I began June with $8,486.40 in credit card debt, and ended with $8,680.16! What?! It really surprised me that since I have made all my payments on time, my balance would be higher. Totally unintuitive. However, I reviewed all my statements, did some math, and determined that there are 4-5 late fees from May that did not post until June’s statement, increasing my balance more than the minimums I payed off. Plus, I made no “extra” payments this month, choosing to get into a better payment routine over making more payments.

However, my biggest goal for June was to pay no bank fees, no overdrafts, no NSF fees. In this goal, I did wonderful, except for May’s credit card late fees seeping through to my balances. I had no overdrafts, even at the expense of digging deep into my pantry to avoid overspending. Not only that, but I have ended the month with $200 in my bank account to put towards July. It is my goal to carry a revolving balance of $500 before I make considerable extra payments to debt, because I need an extra $200 for the first half of the month anyway, and this can double as both a cushion to keep overdraft away, as well as an “extreme emergency” fund. Once I pay off some higher debt, I want to get a legitimate emergency fund going with a few thousand dollars, but until then I just need something in case my car’s water pump goes out, or something.

Overall, I think June was satisfactory, but I admit I was expecting that CC balance to start dropping. It makes me a bit disappointed I didn’t catch the late fees ahead of time. I am happy with my mental progress, as well as making better spending habits. And I am realizing this is going to be difficult work, not as easy as I expected initially.

My goals for July are simple. First and foremost, I am to maintain the lack of overdrafts and avoid all late fees from CCs too. I will be setting up automatic payment plans either with the CC or my bank. I hope to end the month with at least $500 in my account. Anything over that amount will be used in August to pay off more debt. In addition, I have a goal to do at least one or two side jobs for extra money. I will decrease yet again the amount of times I eat out (currently dropped 50%, plan to drop another 50% from last month). And most of all, I will continue to explore the areas in my mind that have a messed up view of money, and try to correct them. To top it off, I will encourage my friends who are also trying to become debt free and help them along the journey. July’s going to be a great month!

Money Myths for Young Graduates

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Looking at other people my age, I consider myself lucky to have already made the failures in finance that I have. While they are starting their first jobs, I have already learned how to function properly in the workplace. While they are only starting to come to terms with how to spend a lot of new income, I have already misspent enough to learn the lesson of budgeting correctly. While they are saying no to a 3% matching retirement plan to slightly increase their monthly budget, I made the calculations long ago to see the benefit of saving for retirement early on. While they are buying huge purchases on credit since they can obviously pay them off with the $36k they are making, well, I wouldn’t be doing this blog if I hadn’t made that mistake already and learned from it.

Don’t get me wrong, I don’t have all the answers either. But watching them go down the same roads I have already travelled gives me the opportunity to alert most of them to decisions I know are definitely bad, and hopefully save them from a pile of debt when they are 30. Knowing other 30 year olds that are worse in debt than myself makes me even happier that I’ve started now. When I am 30, I will be debt free and well on my way to a comfortable retirement.

There is no college course, or high school course, for real money management and personal finance. I find it appalling that most graduates can at least draw a supply-demand curve, yet cannot calculate how much they can be hurt by credit card misuse and calculate amortization tables to see how long it takes to pay off that new TV. Granted, the easiest way to learn is by experience, but I think we can all agree that there is far too much “experience” going on these days. Thanks to the internet, however, people have the opportunity to learn these things ahead of time. If just one young person comes across this blog, or one of the other finance blogs, and decides to be proactive about finance, it’s worth the whole thing. In that spirit, here are some lessons I’ve had to learn the hard way.

1. Money will bring happiness.
It is often said that money does not bring happiness, but I think we secretly believe money will indeed make us happy. At least, we act and spend like it. We look at drunken celebrities and say, “If I had that life I would never act like that,” ignoring the obvious fact that so many celebrities do act that way, meaning it may not be as glamorous as we think. We buy new things and trendy clothes since the companies say that we too can be happy, like the people in the advertisements. Look at them all smiling! They’re not worried about debt and budgets! Also, we think the right car or house or clothes will make other people like us more. The truth is that material goods can make for a more comfortable life, but only the intangible things of life can bring any sense of true happiness. I have seen happy poor people, happy rich people, discouraged poor people, and discouraged rich people. Money clearly plays no role in happiness, only the types of problems that detract from it.

2. Credit is an easy way to get that happiness now.
If you need proof we actually believe money brings happiness, then look straight to the credit industry. I would love to know the ratio of legitimate credit spending to “feel good” purchases; I bet it’s astronomical. In fact, the truth on this one is so twisted that the entire credit industry shouldn’t even exist. People think credit will make for a more comfortable life, when in reality the mounting debts causes more stress, fatigue, and depression than having nothing at all does. Yet the credit card companies insist that yes, you too can have a great life, and oh yeah, they also care about you as a person, and in fact, you happen to be an awesome person! They say you can flash that plastic and make friends. In reality, every time that card goes out of your wallet you’re building a higher wall to imprison you. The creditors are your wardens.

3. It takes a large income increase to make drastic financial changes.
While more income certainly isn’t a bad thing, the reality of personal finance is that time, not income, is the major component of change. I was shocked to see that adding only $40-50 extra per month to my debt cut the entire payoff time almost in half! In the same way, it only takes a little extra money to save each month to retire with an extra million. While doubling my salary would be nice, I think finding an extra $40 in my budget is a little more realistic right now. Yes, you sacrifice a little bit now on the front-end, but the return is always worth it!

4. Rebates, coupons, and sales are great ways to save money!
This is only true if you are buying something you would have bought anyway. Yes, you may have bought a $200 pair of shoes for $20, but you didn’t save $180, you lost $20! I would estimate that about 80% of the time I have seen a friend (or myself) buy something on sale, it was not something I would have bought anyway. Really, in any situation there is a winner and loser, and I can guarantee the stores aren’t losing. Otherwise, they wouldn’t put on sales! Sure, if you can replenish your wardrobe within your budget on sales, great for you! But do not get into the habit of finding deals on things you were not planning to buy anyway!

5. If you’re renting, you’re throwing away money.
I used to believe this as gospel. After all, if I were putting that money into a mortgage, I would own a house earlier, or at least build equity for later. The truth is, if I would have bought a house when I was thinking about it, I would be far much worse off right now. The simple fact is that owning a home costs way more than renting, in terms of both money and stress. It also makes life decisions more difficult to make; it’s no longer just breaking a lease to take a new job, you have to sell a house. If you are certain you can pay the mortgage, and certain you are willing to live there almost a decade, then buying is a smart decision. However, the cost-friendliness of renting an apartment (no unexpected maintenance costs!) almost always wins for young unmarried people, and likely a lot of young married couples too. A home purchase is a serious decision, and should be well calculated out beforehand. And with the market as it is now, it is clear that you are not guaranteed to make money on the sale of your home as the advice has been for a decade now.

6. You can save money by rolling debts into a mortgage or home equity loan.
If you spend $350 on credit card per month, you can indeed save $100 per month by paying them off with a longer loan with smaller interest. However, without calculating it out, you may very well be spending more in the long run by letting the debt ride for 30 years than if you had paid it off at the higher interest rate. If you really need the extra $100 per month (if your financial situation changes or something), it may be an acceptable loss. However, long-term consolidation loans are rarely the great deal they seem in such a situation, unless the interest rate is dirt cheap. A much better way is to negotiate for lower interest rates for the credit cards and try to pay more than the minimums consistently. Drop that magazine subscription if you have to.

7. All credit is bad.
Now, everyone is entitled to their opinion on this, but I personally believe that not all credit is inherently bad. If you have student loans at 3.5%, it is sometimes better to put any extra money into a 4.5% interest savings account and earn a little extra on it. Sometimes, peace of mind is more important and you might want to pay everything off first. Credit, when used wisely, is not always bad. The unfortunate reality is that credit, as used by the majority of people today, is indeed a bad thing. But if you have control of your finances and a stable income, and are paying rent anyway, taking out a mortgage is not a bad thing, as long as you’re purchasing within your means. Be pessimistic about your financial situation whenever credit comes into the picture (i.e. assume you will be making less next year, not more).

8. Having a very detailed budget is necessary to control spending.
I’ve seen a lot of support for this view out there, with hundreds of Quicken categories and microanalyzing every small subcategory of a budget. However, as a mid-twenties guy who procrastinates, I can say with confidence that normal people will give up if the budget is too difficult to handle. I personally use a 5-category budget, and am trying to figure out a way to get it down to four. Realistically, there are only a few things that change from month to month, and only a few things you’re flexible in. Why bother microanalyzing every little thing? It’s much easier to sit down and sort into 5 categories than 50, and takes less time. At first, consistency, not detail, is the key. Work on being consistent with 5 categories first, and then start getting creative with how you analyze. This is why I love systems like Wesabe or hopefully Mint will be, as they allow for tagging expenses to whatever you want (giving you organizational flexibility).

These are just the major lessons I’ve learned thus far. What are some major financial lessons you learned, that you wish you would have been taught in high school?

Whatever It Takes

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This week has become a real test to whether or not I am serious about this. This is not the first time I have tried to reduce debt, which is why I’m blogging it now; if I fail, it’s in front of many people this time. It is not that public opinion drives me to do things, but at least if I fail this time I can’t do it quietly where nobody sees.

Tuesday my bank account went to about ten bucks, due to the mistake of budgeting monthly and not bi-weekly. Now, I will fix this mistake for the future, but that left me 4 days of having to eat and get gasoline. On ten dollars.

I had enough fuel on Tuesday to get me to work 2 more days. This meant that yesterday, I had to take the bus in. The bus route from home to work (25 miles) has six (6) transfers and takes right under 2 hours to make. Crazy, no? I’d love to ride the bus more often if it didn’t take so much longer (30 mins to drive). That’s Atlanta for you. The bus only costs about $1.50 each way, which is probably half of what I’d pay for gasoline. Also, have you ever went to the bank to withdraw $3.00 in cash? I got some pretty funny looks. It was only slightly embarrassing, but I had the upper hand (it was my money, and those tellers are probably deep in debt doing nothing about it anyway).

Now, this left me $7 to eat on for 6 meals (I had breakfast covered already). One meal was covered via an old (I mean old!) TV dinner in the freezer. It was nasty, and I’ll never do it again, but it sufficed. So, I was left with $1 per meal for 6 meals. This was difficult, but not impossible. I had frozen hamburger patties, chicken broth, mushrooms, and milk in the pantry. I bought some egg noodles and some canned vegetables with my $6, and made an extremely faux beef stroganoff that has last me well. I have two meals left of it, enough for today, until I get paid tomorrow.

But the thing is–I could have, and in the past would have— put food expense on a credit card that wasn’t maxed out. But that one little step is a step backwards, and one I am determined not to make again. I had to endure 3 days of not the greatest food, but it worked out. If I wasn’t motivated before, I am now. I’m not used to having to sacrifice much, and this was a good test, one which I passed. Granted, there is only $0.56 left in my checking account, but I know I can do it from now on, even if it means sacrificing a little. I know I can do whatever it takes.

Note: For those interested in how I made a faux beef stroganoff out of minimal ingredients for cheap, I’ll post a comment about it.

Navigating a Close Call

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Today I had a close call. Historically, I have had 2-3 overdrafts in that period between my first and second paychecks each month. It has always bothered me because looking at a whole month my budget always added up. I’ve always had a budget, but these fees have pretty much rendered it useless over the past year or so.

The root cause was that a few things are debited that I did not know about. I own about 23 domain names total, for various people and purposes, and when one expires, I get renewal fees debited. I reactivated my World of Warcraft account a few months ago, and that one gets debited the 10th as well. There were a few miscellaneous fees also debited that I was not expecting. The total cost wound up dropping my bank balance to $230, which is only bad because my car payment of $249 is debited the 12th of each month. Looking at my accounts over the weekend, I knew it would overdraft yet again. Even after my post on the joy in frugality, I was getting pretty down; it was a small failure.

I was saved by Quicken, and not the way you may think. I bought Quicken 2007 for Mac a few weeks ago, but hated it. It wasn’t as functional as the Windows version, nor did it have the “Mac Experience” UI. So, I asked for a refund, which luckily was applied this morning before my car payment! No overdraft, even though my balance is cutting it close.

I’ve noticed that in the first two weeks of each month, I bring home $1100 and expenses are around $1300. The second two weeks, my income is the same, but expenses drop to $600 or so. Basically, I am going to have to either change due dates to later in the month, or try to keep $200-300 at the end of each month to float the first two weeks.

So, it was indeed a close call, as a $35 overdraft is $35 I don’t get to put toward my debt at the end of the month. This time, a little bit of good luck and timing kept it from happening, but I have to be more proactive in the future to keep it from happening again.

Mentioned On Carnival of Debt Reduction!

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It has only been two weeks or so blogging here, but I’ve already received a great honor! I posted my last article, Finding the Joy in Frugality, to this week’s Carnival of Debt Reduction. Not only was it accepted, but the host, NCN Podcast, gave some excellent comments and additions to it. If you do not have NCN (both the podcast and blog) on your RSS feed reader, it’s a great read/listen, and I highly recommended it.

One thing the host mentioned is something I alluded to, but never explicitly stated. There is something true about sacrifice in the present creating success in the future. Spiritually, this is along the lines of “store up your treasure in heaven” or “he who is last will become first”. Emotionally, this is along the lines of my article. A few years of sacrifice right now will help my marriage in the future, and living below our means then will help my future children begin their lives as well as making our future retirement pain-free. There is simply something true to the notion that temporary sacrifice almost always leads to a better situation years down the road. And that is where the joy comes in, really.

And, to clear one thing up from the podcast, this is indeed a new blog, but I’m a long time blogger. I have a software related blog that I’m starting back up again, as well as a few personal blogs I maintain for family and friends. However, I’ve never really had something great to say or a reason to say it until I decided to take charge of my finances. I do hope my experience, and walking it out online, will be a help to someone along the way.

Finding The Joy In Frugality

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Though it is still quite early in my progress to becoming debt free, it has already been a hectic ride! It has been little more than a week, and already my life has been full of making calls to creditors, finding tools to help me budget and plan, cancelling services I don’t need (or can find a free substitute for), and trying to squeeze every last nickel out of my budget. And yet, completely contrary to my initial assumption about debt management, it is actually fun!

Despite how fun it is to save, I know that to make this a permanent lifestyle change, my attitude about finances has to shift. To some degree, it is about growing up. As a child, I was shown that money brings gratification. I would browse the toy aisle, knowing that just a few small bills was enough to get me the toy I so desperately wanted. As a teenager, I knew that money allowed for me to go on dates, and watch movies, and go on trips. As a college student, money is what got me “good” food, nice road trips, cool electronic equipment, and new books instead of used ones. All throughout my childhood and adolescent years, money was equated with gratification.

The problem is that money alone cannot gratify completely. It’s a hackneyed statement for sure, but it is so true. Nobody would be in such terrible debt if a $500 credit card could truly bring happiness or comfort into our lives. So we spend more and sometimes even justify it by putting legitimate needs on yet even more credit, but the conclusion is always a pile of bills and more stress. The vicious cycle continues, forcing us deeper and deeper into the hole. Now that I’m on the “other side”, or at least in the process of switching to the other side, I see an even greater happiness than acquiring stuff: living without being overshadowed by debt.

I never imagined that trying to live cheaply would be joyful. Nor will I fool myself into thinking it’s all peaches and sunshine from here on out! But even as I have started cooking for myself, selling things on Craigslist, cancelling subscriptions, moving my hosting server to someone cheaper, and logging every penny I let go, I have definitely found a joy in the process! There is such a freedom in being debt-free, even if it means having less right now.

Even though it sounds like an incongruity, it is something that I have heard often from the pulpit. Proverbs 22:7 alone speaks volumes, even if you don’t particularly believe the teachings of Christ (or his church) on money. It’s a simple truth; we can either be lenders or borrowers, and there is no question which is the position of both happiness and success. Today, borrowing is equated to credit, and lending is equated to investments, but the truth still rings clearly.

When I can cook a $6 meal that will last me five nights, that is just awesome. That amounts to about $6-7 per night I am saving by not ordering take-out, and the food tastes good! When it is only halfway through my pay period, my bills are paid, and I still have money in my account, it makes me feel good! Knowing that by doing this, I will pay off my credit in a little over a year, saving me thousands of dollars in interest, I am happy. When I know that by the end of next year, creditors will no longer own me, I am happy. When I find a way to cut my cell phone bill in half, saving me an extra $20 or so per month, that makes me happy. When I turn $300 in overdraft fees into $300 towards credit card balances, that makes me very happy. After being enslaved by my own wallet for so long, every small success makes me feel like I am finally beating my creditors in the game of personal finance.

There is a reason nobody sees debt victims going around hi-fiving each other. When you are buried under a mountain of debt, you feel depressed and feel like hiding it from the world. You look longingly at things like the lottery, or high risk investments, because it feels like something big is the only thing that can fix the situation. The truth is that the little, purposeful improvements are the real fix. Even though it is not easy to change a lifestyle, the joy it gives you (and knowing the joy to be found when it’s over), makes the whole process worth it! And what is life, if we cannot have joy and pass it along to others?

Finding Extra Money

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Now that I know where I am as far as financial matters go, I have to find out where I can trim down my budget to pay more towards my debt. As I said before, 28% of my income was wrapped in fees. Luckily, I know Excel very well from my day job, and was able to break down my fees and see when they were occurring. I normally get paid on the 15th, and have a cell phone bill that is automatically debited that day. My bank, Wachovia, tends to make the debit before they make the deposit, on a very consistent basis. This means that if I only have $40 left, I overdraft, and then the subway I get for lunch overdrafts, and now we’re at $70, unless a few more charges get through. Now, my bad experience with Wachovia is a story for another time, as this is just one example of the way I think they tend to make extra money (debits before deposits). Granted, I shouldn’t be living paycheck-to-paycheck, and a $60 charge shouldn’t hurt me, but I’m fixing that now.

To fix that particular issue, I had T-Mobile change my billing date forward to the 25th, receiving some of the best customer service I’ve had with a cellular provider. While on the phone, I had them review my current plan and see if I would be better served with a smaller plan. Originally, I had 1000 minutes, with an addition of a 400 text messages package. At one time, I was using both of those to capacity. However, my recent history has seen around 400 minutes per month, and 30 text messages. I was able to cut my plan down almost in half! That’s an extra $25 per month I’ll have.

I also noticed that my entertainment budget was out of whack. It was difficult to notice, because most of it is subscription based. I subscribe to Blockbuster Online and the Rhapsody music service, as well as to 2-3 magazines,  go to the movies 1-2 times per month, and regularly buy music from iTunes. I’m going to keep Rhapsody since it keeps me sane at work, but I’m going to drop the magazines since I have no time to read them anyway. My Blockbuster subscription is awesome, but it’s for 3 movies out at a time, and it’s become hard to find things I haven’t seen but want to. I changed my plan to having 1 movie out at a time, and I think it will work much better. I save quite a bit this way, and I make better use of it. I’ll likely cut down theater-going to once per month. I don’t even enjoy most movies out these days anyway. As far as iTunes, it’s time to chill on that until my debt is gone. I can always listen through Rhapsody for now and then buy the music later, or wait for good CD sales.

Also, along the line of monthly fees, I am late on almost everything. This is because I’m both phlegmatic and love to procrastinate, and I wind up being late. Bam, a $30 charge here, a $5 charge there. It adds up, and gets compounded with interest. I put all my payments on auto-pay for this month. I would use Wachovia’s bill pay, but that’s another way they’ve messed up in the past. By eliminating late fees and overdrafts, I will save hundreds of dollars.

In addition, I can save money by making better choices with food. I need to be cooking more often, and when I do eat out, I need to make better decisions (both financially and calorie-wise). I also am a sucker for credit card activation sales pitches, because I’m non-confrontational. Thus, I have a few of those “credit protection” or “identity monitoring” services, and such. I need to get rid of those; I have no credit to monitor. When I get my debt under control, I’ll likely sign up with one not associated with my credit card. I know they are going to be a pain in my rear to quit them, but it will save me about $20 each month.

I’m also Craigslisting old junk I need to get rid of. Not only is it taking up valuable space in my apartment, but I don’t use it anyway, its value is decreasing by the day, and if I have to move, it’s going to be that much more of a pain. I’ve already made about $300 doing this, and expect to make about $1000 more, if my computer sells. (I’m on a Mac now, so I have no desire to keep a PC around)

The last thing I have left to do is change checking accounts. My current account both sucks and charges me for it, so it’s time to leave for something better, like the Schwab One account with Checking. That experience will likely be its own post, as it will be a big logistical move, and will actually earn me interest on the dollars I save.

Mostly, I can find extra money by changing the way I think; that’s what it comes down to. Instead of seeing a balance of $250 as something I can spend, I have to view it as something I can’t allow to be debited. Instead of just thinking problems will sort themselves out, I have to become proactive about every dollar I spend and owe. I can no longer say “Oh, it’s just $20, it won’t matter”. When I do that 5 times, it’s $100 extra per month I could be putting towards debt owed. This really is going to be as much a mental exercise as it is a logistical one.

Where I Am

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Just like the importance of history to know where you’re going, you also have to know and be honest about where you are. I was actually surprised at how little I am bad off. The payments hit me hard every month, and I was expecting at least $10k in credit card debt. The fact that I don’t know the exact number is really indicative of why I’m having problems in the first place. At any rate, I’m now very motivated by the fact that since it isn’t even as bad as I thought, I can do this.

Basically, my credit card debt totals $8,486.40, with an interest rate range from 19.99% to 32.24%. My car note is around $10,000 left, but at an interest rate of 4.9%, since it’s under my father’s name. I’ll be working on credit cards first, then student loans, paying the minimum on my car note, since it will be the least interest rate the whole way. I do not have my student loans consolidated, and do not know the total amount, but I plan by the end of this year to have them both consolidated and have a plan to repay them quickly. As I said before, I do not have to worry about them quite yet, as I’m back in school and no longer need to make payments each month. And oh yeah, not consolidating them while I was in school initially was a bad mistake.

As far as good things I’ve done along the way, I have started donating to a retirement IRA, at 3% employer matched funds. The balance is up to about $6,200 right now, which means around $60k in retirement dollars, at easy levels of return. That was a good decision. Even though that 3% would have helped a little towards my debt, an extra $20/month is not worth missing out on getting an extra $20 and starting a decent retirement cache, especially at a young enough age to really make the interest work for me down the road.

The bad things I’ve done are mostly from being stupid, lazy, or procrastinating. The main one being that as I’ve analyzed my current state, I see that fees comprise about 28% of my total income. Meaning that because of overdrafts, late fees, NSF fees, checking account fees, and so on, I have wasted several hundred dollars every month. Right now, I don’t need to focus on making extra payments to the cards, I need to focus on making the minimum payments on time, to get my budget in order. To do that, I need to cut spending, and also from analyzing my payments I can see that eating out takes a big chunk of my money.

My goal for June is to start cooking more at home, and eat out rarely or never. I need to do whatever it takes to make my minimum payments on time. I have already enrolled in auto-payment plans with my credit cards, but in order to make that work I need to cut spending so I don’t overdraft. If I can have one month with no extraneous fees, that will be a giant step forward into figuring out how I even can budget to get rid of this debt. From calculation, it looks as if I will be able to initially put $300 extra toward repayment.

Each month I will make a new post, as well as update my debt ledger. I will also blog about the tools I’m using to accomplish this, along the way.

History

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I guess with anything in life, history is an important element. You really do have to know where you’ve been in order to figure out where to do. Since this blog is currently about my debt, I figure I need to go back to the time when debt began.

I received my first credit card my freshman year in college, 6 years ago. What did I sell my credit-virgin soul for? A school T-shirt. Granted, that was one extra day I didn’t have to wash clothes, but it was hardly worth my current agony. I sometimes wish I could view back in time to see who else was wearing that particular shirt. I wonder if they also have credit problems now.

At any rate, I was a fairly intelligent kid. Went to a great school, always excelled in book smarts. I even had a budget. However, there’s something about that little piece of plastic that can twist your intelligence, making you think “oh, I can spend $500 here, it’s only like 20 bucks per month”. And I was right, I could have paid that off. However, that $500 grows into $1,000. That’s not even too bad, I could afford it then.

The kicker was when I had a bad month, or really a bad year. I lost the scholarship I came to school with, and was forced to take loans. However, I was in an apartment, and still needed money to live on, as the loans only gave me about $400 to live on that semester. You guessed it; credit card to the rescue! And one was no longer enough; I got a 0% interest card to move my balance to. It was smart at the time, but it assumed I would be able to pay it off somehow in the next year.

That’s the assumption most people have before they have to “grow up”. I don’t claim to be fully grown yet, but I have reached the epiphany that I’m probably not going to win a lottery, create the next billion-dollar idea, or magically inherit a million dollars from a long-lost uncle. I grew up without money, nobody in my family has money, everyone I grew up around was also in debt. I think the magical money rescue is never going to happen. I may be wrong; it might happen. But I can no longer live my life as if it’s a guarantee.

Anyway, that $2k balance quickly turned into $3k, and into $6k. Before I knew it I had 4 cards and was already starting to miss payments here and there. Fees started coming, my interest rates skyrocketed, and it placed me into a position where it will now be next to impossible to easily pay them off quickly. It’s going to be quite difficult. Furthermore, it’s ruined my credit and left me in a position where if I marry soon, we’ll be lucky to get a house in the next decade.

On top of all the credit card debt I have the obligatory car loan, and student loans from the 4 years I went there. However, the car loan is less than my credit cards right now since it’s under my father’s name, and my student loans are still under deferment since I’m still in school (dropped out temporarily to work full time; the result of bad credit decisions). So, neither of those are posing an immediate threat to me. It’s the credit cards that need to go, and soon.

The kicker is that during all that, there was a 12 month period where I made about $60,000 while in school! Even after having to maintain two apartments (I was away on contract and still had an apartment back home), that would have been plenty of money to erase all my credit card and student loan debt. But, I was stupid, and used it all to eat at nice restaurants and buying a new gaming computer, an ipod, a car stereo system, things like that. It’s amazing how far $60,000 won’t go when you’re spending it on that sort of junk. The thing is, none of it is around now! Oh, it makes me sick. By now, with the money I’ve put towards credit cards in the years after, I could have a solid down payment for a house, and no car note at all if I would have paid it all off then. Not to mention no student loans haunting me now.

So, there you have it. No amazing reason I’m in debt, just the general deceptive nature credit has, and the psychology of a person who grew up without having everything he wanted. Oh, I made up for that by buying everything I desired, but quicky realized it’s not worth the stress it causes down the road. It’s totally worth living in a poopy house and going without things in order to get finances together. If I put that $400 for an ipod in mutual finds, I can buy 10 ipods when I retire. I’m a scientist and mathematically-oriented person, and those numbers make sense to me. Saving money instead of spending it at my age gives you a whole order of magnitude more money down the road. I’m just glad I’m starting this at 24. Beats trying to figure it all out after a family comes into play, and I have ample respect for those who do.