This month marks nine years since I graduated from high school (yikes!) and nine years since I had a debt-free existence. That was the last time I had actual “wealth.”
I always had a job in high school, and very few expenses (a cell phone-free life, if you can imagine) so I saved a couple thousand dollars to take with me to college. I have no idea where that money went. A mini fridge? Spring break? Old Navy pajamas?
Somewhere in my first brush with financial freedom, I completely lost my financial freedom. When I got my first credit card, the one with the Monet painting on it, I swore I would pay off the balance every month. And for a few months, I did. But eventually I wanted more, so I bought more.
I loved the marathon bargain hunting trips I took with my mom growing up, but I think by the time I had my own money, I wanted to have a name brand, pay full price, buy the best version of the DVD player instead of the cheap one. I’d had enough Payless. I wanted J.Crew.
I really got to a point where I didn’t see anything wrong with the way I spent my money. I put things on credit and dealt with them later. I took vacations I couldn’t afford. I bought an expensive car on a $30,000 salary. And I guess that’s what sucks about the world – you can do all that and no one will stop you. No one will grab your arm and tell you you’re crazy. Debt is normal. People who buy things with actual money are the weirdos.
I don’t know what it was exactly that woke me up. I guess it was the fact that I had always been able to rescue myself, racking up debt and then paying it down. And then this year I finally couldn’t. I payed my cards down $3,000, and in just a few months put it all back on. I am a financial Weight Watchers horror story. It’s not my fault I had to have back surgery that cost me thousands. But it is my fault I took a vacation to Europe without planning for the cost. It is my fault that I screwed up my taxes year after year. It’s my fault that I let my money control me.
Money isn’t everything, but when you’ve handled your money in a way that gives you the freedom to enjoy a vacation, to spend more time with the people you love, to feel in control of your life, it makes a huge, huge difference.
So, earlier this year, I finally decided to stop lying to myself. I went on a financial diet, so to speak. (The comparisons to food and the problems I have with eating could be compared endlessly, by the way.) I set a goal for myself that every month I would put $XX toward my credit card. If I had more I’d put more, if I had less I’d put less, but that was the goal.
For me, skipping dessert was a hell of a lot harder than making that payment. I think I’ve done it four times now, and it was just not that big of a deal. I had to buy some clothes for work (and my expanding rear), but I bought them all at Target and saved a bundle.
So four months later I am still struggling, but I think I’ve turned the tide, and I can’t tell you how good that feels. I really did not think I could do it until I did.
I’m finding myself with a wee bit of outrage, too. Why isn’t there a mandatory financial literacy class in, well, any grade? I remember learning how to balance my checkbook in 6th grade before we went to Exchange City. But no one ever taught me about interest rates or self employment tax. Somehow you’re just supposed to know how to get a mortgage. You think a couple people might have liked to know that information?
I suppose it’s true that an 8th grader would do their damnedest to tune out a financial literacy class. Some of these mistakes have to be made before a person realizes how important it is to be smart with your money. But I really feel like I was failed educationally in that sense. And I was a huge dork – I would have at least listened.
At my current job I’ve met a lot of financial professionals who don’t fit my stereotype whatsoever. They’re laid-back, they don’t speak business jargon and roll their eyes when you don’t understand. They want people to understand this stuff, because it’s better for all of us in the long run.
I’m still far from wealthy, but I’ve done some things I think everyone can do, and if you’ve made it this far and are still reading for some reason, maybe you’ll get something out of what I’ve learned.
-First of all, find out how much you’re spending every month, and DON’T LIE.
-Move all of your automatic deductions to your debit card instead of credit. Don’t let money go onto that card without you noticing. Actually pay for everything.
-Look at things you can cut back instead of cutting out. I decided I couldn’t afford my salon, my studio yoga or the doggie daycare. I’m growing out my hair, doing a DVD at home and taking the dog for walks (which my rear also appreciates).
-Look at your calendar. If there’s anything big in the next six months you’ll have to pay for, start saving.
-Make goals. The lamest of the lame advice, but in this case it has worked for me.
-Get one of those ING savings accounts. Even a 3 percent return is a hell of a lot more than you’ll get on a regular account.
See, that wasn’t that hard. Perhaps I have a 2nd career in financial education.
It’s amazing how much just being aware of my habits has made me stop doing dumb things. Now I’m looking at what else I can cut or sell or buy cheaper next time. (Thanks to Sophia for introducing me to the wonder that is the dollar store). Unfortunately in the middle of all this I had to buy a new computer, but I had the payments taken out of my checking account automatically, and I barely notice it.
Today I paid $46 to fill my gas tank. Sadly that’s not even that much anymore. That really scares me, and I think it will be my next battle. The adorable SUV I thought I had to have? I’m about ready to swap cars with the next hatchback that rolls by.