Driving home today I came to the conclusion that in order to stay diligent I needed to blog daily. One thing I feel I need to be open and honest about on this journey is my finances. They are not in a good place and this is 100% my own fault. I figure it’s best if I start at the beginning and walk you through everything so you can see where I am and how I got there. Maybe with luck someone will see this and learn from my mistakes.
I applied for an “emergency” credit card with a high interest rate when I was young, and I maxed it out quickly. No worries though it was only $500.00. I had no other expenses and I still lived at home so paying it off was easy. This is where the problems started. When you pay off your entire balance your credit card company tends to love you and they show that by raising your limit. This isn’t necessarily a bad thing. It can look great for your credit score. The problems arise when you’re a young twenty-something with no understanding of finances. That card currently sits at a balance of $2,296.70 with a monthly payment of $70.00. This was paid off once via refinancing, which was good at the time since I had my interest cut in half. The problem was I charged it back up.
Then came credit card number 2. So let’s take a step back and imagine I’m still 24 and happily employed with a financial firm. I am making double what I made in retail and paying off that credit card balance while living at home and not having a car is a breeze. So naturally my employer is raining down offers of credit cards with great perks upon my head. Credit cards that I’m quickly learning all about from my coworkers and my job. I apply and get approved for a $3,000.00 limit. I don’t max it out though. Not at first anyways. See first I get a car, which we’ll go back to. Then a few months later I get in an accident, which like everything else is my fault. So now I owe my insurance company and a rental car agency. All of this is happening while I’m in the process of moving into my first place. I run out of money really quick so I start leaning on my credit cards, which already have balances on them. I max them out quickly by not watching what I’m buying and figuring I can just pay it off. Sure. I can just pay it off I think not realizing that moving out I’ll have less money in my pocket. This card currently sits at $2,999.04 monthly payments around $78.00 to $80.00 depending on if I let it slip over the limit with interest or not.
Now we have the third credit card. This is not the end of my credit cards. That card I purchased for travel perks. I wanted to go on vacation with my cousin so of course 25 year old me said that obviously I needed a credit card that had vacation perks. The balance on that card at the time I paid it off was $2,043.00 and I was making monthly payments of $85.00. I no longer owe on this card, but I did refinance it so I owe that. It was a better decision as I was able to cut the interest in half. I destroyed this card and it has since closed out with thankfully a $0.00 balance.
Now onto card four. This card I got because it was a retail card with points. Retail credit cards can be a nightmare. This one actually hasn’t been too bad to me. The minimum payment sits under $40.00 usually as long as I don’t go over the $1,000.00 limit. Right now though I am currently sitting at a balance of $1,058.82.
Card five is also a retail card that I got so I could get computer parts at a discounted rate. At the time it was great and I did pay it off really quickly. Then I started using it to buy other things. As the debt and balance of other cards rose I started using this to purchase basic essentials I needed in everyday life. Things like food, shampoo, soap, etc. The balance sits at $1,568.80 with monthly payments of around $30.00.
The last card is card six. It is not the end of my shameful debt. Card six was attached to a spending account I had and the first few times I used it I didn’t realize it was coming from a credit card and not my debit card. I kept purchasing video games and clothes without realizing I wasn’t spending my own money on these frivolous things but a sum of funds from a high interest credit card. Currently the balance of this card sits at $1,993.60 with payments of close to $70.00 a month.
So before we move onto my other debt let’s tally up the credit cards alone. The credit card debt comes in at $9,916.96. Just under $10,000. My goal this year is to pay off all of that debt.
Now onto the next mistake. The dreaded Student Loans. I paid my way through college for my first three years. I was just about five classes away from graduating so at age 24 as I started my new job I decided to power through those five classes and pull out a student loan to cover the costs. Spoiler alert I didn’t graduate. In fact I overwhelmed myself and failed a class twice before dropping out. I never realized that even if I paid it off early it wouldn’t matter because I would still owe interest. I currently have dwindled it down to $2369.41 and thankfully only make payments of $26.00 which I managed to get down from $85.00.
Next is the refinanced loan I took out with my bank to cut down my interest rates on those two credit cards I mentioned above. On that I owe $3,731.25 and make payments of $124.00 a month.
Lastly is my car as I mentioned in the very beginning. I adore my car, but I have considered selling it to trade off for something cheaper. I refinanced this car less than a year ago and still owed over $10,000.00 on it at the time. Thanks to refinancing that took my interest down drastically I now only owe $8,878.28 and make monthly payments of $240.00 this is less than what I was paying before.
All of that debt aside keep in mind I also pay $70.00 a month for cell service, $25.00 for internet, $400.00 for rent, around $40.00 for gas and close to $70.00 for electric. Not to mention any medical fees, groceries and pet supplies I purchase. I pull in less than $2,000.00 a month.
My total debt is sitting at $24,895.90 with monthly payments around $680.00 to $700.00 total depending on if I’ve overdrawn or not. That is nearly $25,000.00 that I owe. Were mistakes made? You betcha! Am I going to take ownership and fix them? Heck yes! I have fallen behind months, which majorly hurt me. I also make over payments in an effort to chip away at it, but with the interest on most of them I just can’t make a dent it seems. I’ve started a savings account though with a whole $23.00 in it. My goal each paycheck is whatever is left over from the previous one will go into that account, and at the end of the month my credit card with the lowest payment will get an additional payment of whatever is in that savings account. This will help knock out the principle balance, and as I take out my smaller cards the payments I make on those I will begin to stack with higher cards.
Other ways I am saving money are as follows:
- I am only shopping at Aldi for my groceries until I am out of debt. I currently shop at a high end organic store for all of my food. This week I went to Aldi’s and spent a quarter of what I would normally spend for the same products also organic.
- I am picking up side hustles. I currently am working with textbroker.com and am so excited for the opportunity.
- I will begin selling things I do not need on Facebook and eBay.
- I am investing in The Happy Planner thanks to a gift card from my aunt for my Birthday. Looking at these beautiful planners that allow me the opportunity to be creative and organized in life makes me so excited.
So I invite you to join me monthly as I update you with all of my financial ups and downs! I can’t wait to be debt free, because once I am I will begin the journey towards purchasing my first home.