For the past few years, I’ve been playing the denial game with my debt. I’ve been shoving it under the rug and pretending it doesn’t exist. I’ve been paying off my credit cards, then maxing them out. I’ve been ignoring my large medical bill that’s now in the scary hands of a collection agency. I’ve been defaulting on my school loans, putting them in forbearance, and trying not to think too hard that I have a five-figure debt I need to take care of.
I’ve mentioned before that I didn’t grow up in a home that valued money. It feels harsh to say that, but it’s honestly the truth. My dad gambled his paychecks away. My mom tried to support a family of four on a preschool teacher’s salary. I knew about things like bill collectors and evictions long before I should have known about them. I know what it’s like to stress about money, to wonder if your parents can afford groceries or rent or electricity. It’s a scary world and because of that, I was never taught how to use money effectively.
But I’m also 26 years old. I’m an adult and I can’t blame my parents for my money habits anymore. I have to own up to the fact that I never placed a priority on learning proper money management tactics, and that I’m in debt – major debt – and I have to change my money habits now. I have to take action now.
At the end of December, I read the book The Total Money Makeover by Dave Ramsey. I should start off by saying I don’t really like Dave Ramsey. There’s something about him that rubs me the wrong way, possibly because he seems to place being rich over anything else. I’m honestly not looking to become rich. Or a millionaire. Or even living completely debt-free. When thinking about my ideal money life, the key feeling I have is comfort. I want to be comfortable with my money. I want to handle it in a wise, controlled way. I want to be able to pay my bills, save money, and have a decent-sized disposable income to use for entertainment, travel, and shopping. And, of course, I want to be mostly debt-free.
(I say mostly because I am perfectly fine with having a car loan for the time being. I am planning to trade my car in next year for a newer model + better car payment, so I know I’ll have a loan for a while.)
I’ll be honest: I didn’t learn a ton from Dave Ramsey’s book. I found his tone brash and condescending, and it was hard to relate to many of the personal stories that were scattered throughout the book. All that said, there were some key thoughts roaming through my head while I read the book.
First, I need to reevaluate my money habits and change the way I view money.
I don’t spend my money wisely. I make a budget and I don’t stick to it. I eat out way too often and spend money on way too many unnecessary things. I’m living paycheck to paycheck, even though there’s no reason why that should be the case. I have to completely change the way I think about money. I have to build a better budget and get super strict with my spending habits.
Second, I need to begin working towards an emergency savings account ASAP.
I’m not sure if you know how scary it is to have absolutely no savings. Because it’s terrifying. I have no safety net to fall back on if something happens in my life. If I need a car repair. Or I get sick or injured and have to visit the ER. Or, say, I shatter my iPhone screen and need a phone replacement. My ultimate goal is a $10,000 emergency savings fund since Dave Ramsey cautions to have a fund that will pay for three to six months of expenses, erring on the side of six months if you’re single. For me, that would equal $10,000. I figure it will take me a long time to get to a five-figure emergency savings fund since I won’t be working towards it as ferociously as my debts, but it’s an ultimate goal that I’ll be putting a lot of effort into.
And thirdly, I need to get serious about paying off my debts.
As I mentioned at the beginning of this post, I have been in denial that I’m in debt. Probably because I’ve been in “normal” debt. Credit cards! Medical bills! School loans! This idea of “normal debt” is such a fallacy that we let ourselves believe in because it’s just the way most Americans live. It doesn’t have to be this way and I don’t want it to be this way for me anymore. I want to get super serious and super focused on my debt. I want to put together a payment plan to get me out of debt and into a (mostly) debt-free lifestyle. It’s possible. It will just take commitment, dedication, and giving up some things for a few years. Like traveling. Monthly pedicures. Shopping. And even possibly delaying moving out on my own.
But this post is long enough as it is. I’ll be back on Wednesday to talk more about the nitty-gritty details of my debt and my goals to pay it off.
Okay, this post was filled with not-fun money talk. How about something fun to ponder in the comments? Let’s say you won the lottery. Paying off debts and saving aside, what is the first frivolous thing you’d buy? For me, I think I’d buy a brand-new queen-sized bed. Right now, I have a full-sized bed on a frame from IKEA, but it’s not very sturdy and I covet my mom’s glorious queen-sized bed.
If something ever happens between me and my husband, I’m probably screwed. He takes care of all of that stuff because if I know what money I have, I spend it.
I think your goals are awesome! You will absolutely get there – I’ve seen your determination in this blog. When you want to work at something, you do and you rock it. 🙂 Best of luck, lady!
If I won the lottery? I’d buy a bookstore. THAT is my “when I win the lottery” goal. I would so pwn the heck out of a bookstore.
!!!!!
I can relate all too well with what you’re going through. I don’t have an emergency fund either, and it scares the crap out of me. I’ve also played the denial game, telling myself that “everyone my age is in debt, no big deal.” Growing up, I too wasn’t properly educated about money management.
I’m glad we’re both working on changing our ways, though. It’s going to take a lot of sacrifice and discipline, but I know we can do it! I can’t wait to read about your plan to pay off your debt. 🙂
Good luck! I was thinking about this when I drove to work this morning – I am CONSTANTLY thinking about and worrying about money. We have barely any debt and we are pretty good about following our budget but it’s still something that is constantly on my mind. I don’t know if I’ll ever escape that. One thing I know for sure is I always thought I’d have more money when I became an adult and started working full time but all I have is more bills. The best way for me to save money/pay off bills is honestly the SECOND I get paid every two weeks I put a certain amount in a separate account for all the fixed bills, I put a certain amount in a savings account (which right now is for our trip) and I put a good remainder against my credit card and then I have an allowance for two weeks (which is usually about $50-$60 unless I have something specific to buy). By doing that all immediately the money is “used up” so I can’t spend it on useless things.
Leaving my credit card AT HOME at all times has also helped so so much with spur of the moment purchases or shopping that I really don’t *need*
I know I am very, very fortunate that I was able to go to college without having to take out a loan. I am so thankful for the fact that education is (almost) free in Germany.
I’ve never had any kind of debt, but just hearing about it from others scares me. I worry about money enough as it is, but adding the worry of paying off loans make the whole scenario that much more scary. I applaud you for really getting a grip on this. I think you’re on the right track!
Stephany, I think this is a brave post. Money is a hard issue. I was in a similar situation in that I grew up with parents who didn’t make much money, but also made pretty bad decisions with money. I too knew about collection agencies and bill collector calls before I went off to college.
However, my mom always pushed me to be different with money and better than them, based on what they had learned along the way. In college, I only had two credit cards and neither had a credit line over $600. They were for emergencies only. Sometimes those emergencies turned out to be my books for class, but I didn’t use them for anything but true emergencies. I didn’t shop a lot or eat out much because I knew my parents were doing without so many things to pay for me to go to school (and that was with scholarships and loans). Once I was on my own at 22, the first thing my mom advised me to do was to automatically direct a small amount of my paycheck directly to savings every week (I started with $25 a week). She also advised me to join my company’s 401K plan (my parents don’t have one, but they have military retirement). It seemed hard to give up all that money upfront when I was living paycheck to paycheck, but they were two of the best decisions I ever made. I also got an additional credit card or two (clothing stores), but vowed to never charge more than I could pay off in full each month. I stuck to that and still do so today.
When I was 25, my parents retired back to San Antonio. A year later I moved in with them and used the savings to pay off my school loans early, finance and pay for Lasik eye surgery in one year, buy my first new car, and finally do some real traveling (my parents paid themselves out of every last bit of their debt too without declaring bankruptcy-so proud of them). I ended up living with them for five years. I was going to move out at 30, but by then I was dating my now husband, so I just saved up for our wedding, which I paid 85% of myself (we had a pretty nice wedding in a hotel ballroom). My parents paid the other 15%. J paid for my ring, our honeymoon, and our living expenses for the first year of our marriage while I paid every last bill from the wedding off. Then we bought our first house.
My husband lived very frugally as a bachelor and prefers to pay for things either cash outright or put it on a credit card and pay it off the same month, so together, we enjoy a comfortable lifestyle today. Other than our mortgage and utilities, we don’t have any ongoing credit card debt and both our cars are paid for. However, it is scary to think all that could change in a minute if something happened to either of our jobs. Hard work and luck goes a long way too. A single-mom friend of mine lost her job a year ago, hasn’t been able to get another job in her field, and ended up having to clean houses and walk dogs and declare bankruptcy. In one bad year, her life went from great to a nightmare. I’ve been trying to help her because there but for the grace of God, you know?
Anyway, all of this is to say…this is an important thing to tackle and I think you are smart to apply yourself to this goal. It will only serve you well in the end, I know. XO
“This idea of “normal debt” is such a fallacy that we let ourselves believe in, because it’s just the way most Americans live. It doesn’t have to be this way and I don’t want it to be this way for me anymore.”
It really, really doesn’t. There are tons of personal finance bloggers out there who feel the same way and are working to dig their way out too! You aren’t alone Stephany, and it’s awesome that you’re making a plan to change things. (hugs)
This kind of goals get me going. I love reading about people’s personal finance goals and talking about them and being the cheerleader. I think you can do this. It sounds like you’re ready!
Oh, girl. I am right there with you. Over the past couple of months I’ve finally started to take control of my spending habits and start paying off my massive student loan/credit card debt. The good news is that living on less isn’t nearly as hard as I thought it would be. Sure, it’s been difficult to turn down dinner invites and keep a tight leash on my grocery lists, but i’m beginning to see progress and that is extremely motivating. Free books from the library and an $8 Netflix subscription have really helped out as well.
Best of luck! Once you get the ball rolling I’m sure you’ll settle into a routine/budget and be back on top in no time. You’ve got this.
I love reading about others’ personal finance goals because I am such a finance geek! It took me until my last 20s to really get my act together and focus on things like paying off student loan debt. I didn’t have debt besides my student loans and mortgage, but I didn’t really make a conscious effort to get those student loans paid off. So I think it’s great that you are thinking about this now because the earlier you start, the better.
I have some huge financial goals that I have set for myself in 2014 and they will be tough to achieve but I will make it work.
If I won the lottery the first thing I’d buy is a condo in downtown Minneapolis because that is where I really really want to be living.
I also love reading about other people’s finances. I really didn’t pay much attention to it until I moved out on my own two years ago and since then I’ve become so budget oriented. For the first year I had zero wiggle room and basically paid my bills and bought groceries. Since then I’ve gotten two considerable raises so it’s freed me up a little and lately I’ve been spending more than I’d like. I also have no emergency savings and enough student loan debt to cause me anxiety about paying on them for the next ten years. Living on my own makes it hard to really save and/or pay down debts, though I’m hoping to be able to tackle some of that this year.
If I won the lottery? I’d buy a house! And I’d start my own rescue shelter for cats. And quit my job so I could run it.
Debt terrifies me. I have been fortunate not to experience it so far, because I was lucky enough to have my college tuition paid for by my family and I am crazy-diligent with my credit card. Even though I spend carelessly, I never rack up my credit card bill past what I can afford. The idea of not paying a credit card bill on time gives me so much anxiety. That being said, I could do a lot better in the savings department – I saved a lot this year and I know it could be a lot more if I cut out more coffee/fast food trips.
If I won the lottery, the first frivolous thing I’d buy would be a new iPhone. I dream big, clearly. 😉
Ugh. Debt is the absolute worst. I wish there was a way I could help you. I’m really not doing so great these days either and this was a reminder that I’m at an age where I need to smarten up.
If I won the lottery, I’d be booking myself a ticket to a faraway country, like, ASAP haha. I’m also at that phase where I’m sick of all my clothes, so probably a nice new wardrobe. 😛 Siiiigh.