So I'm 23, almost 24. Married. Make $7/hr, and am $9,000 in debt. Debt sucks.
Want to know something ridiculous? A few years ago, I was 22 and had NO debt. Want to know how it all got started? I bought a camera. I LOVE photography, I LOVE taking pictures. I saw a ad for a circuit city sale where the camera I had my eye on was on sale from $400 to $365. Not bad, considering some places were selling the exact same camera for $500+
I had a decent job, a ok income (certainly more than I make now...) and if I waited two or three weeks, I could have paid cash for the camera. The problem with this in my mind was that once I had the cash, the sale would be over, and it'd cost $400 for the camera. So, in order to save the $35, I went ahead and financed the camera with their 90 days same-as-cash offer. Lucky me, because I had a great credit score, I was approved for $3,000 and 120 days same-as-cash. Now, my plan was innocent. Buy the camera, pay it off. No biggie, right? Had I actually done that, no, it wouldn't have been a biggie. But then other expenses happened. I ended up letting the camera go past the 120 days, and ended up "needing" to use the credit card for other things, and ran it up to $3,000. At 18% APR. Crap. So, I opened up another credit card, this one $3500 and MUCH lower interest to transfer the balance. I now had two credit cards. Not bad, total limit of $6500. I got an offer from Chase (the $3,000 card) to raise my credit limit to $3500. What harm could that do? So I did. Oh yea, by the way, this is all pre-recession.
Next, I got promoted to $11/hr, get married, etc. In there, we start falling (the whole world, not just me) and my hours get cut from 50+ to 20-25/week. Tuition and such keep coming due, I don't know what a budget is, we shop when we need stuff, we go out to eat, I blow through thousands in our account partially by stupidity and partially by not paying attention to money. My car continues to break down, and I don't have the money to re-register it, So I go and finance a used car (which in all honesty has been a major blessing, we got an amazing deal - actually below blue book, amazing financing - 6.9% , ridiculously low monthly payment $140/month. I would do it again, I just never plan to finance anything else.) We run both credit cards to their limit, then... I get laid off in January. double double triple crap. I spend one day at home in tears, wondering what is next, how I'm going to get us out of this horrible mess I created, how we are going to buy food, how we are going to pay rent, how we are going to survive. Fortunately, by some foresight, I'd dropped out of school like two weeks before to try to save up some cash so that I'd stop financing my education.
Let me tell you. There are few things in this world that can compare to getting laid off. It feels like you are useless, it feels like you are stupid, it feels like somethings wrong with you and your bosses didn't want you anywhere close to their business anymore. Especially getting laid off from upper management (which I was)
Anyway, through some luck/blessings, I was able to find a job and start just five days after getting laid off. Slight pay cut, huge increase in commute, not a biggie. The only problem with this job was I was sharing a full time position with someone, which really hurt my hours. A month in, the recession is REALLY starting to slam into everyone, and our sales drop so dramatically that our boss is forced to cut our pay. I am now making $6/hr with $6 delivery bonuses... but that's only good if there are deliveries to make. Ouch. Dang. I just got kicked somewhere painful again. I thought getting laid off sucked, this hurt almost as much, if not more! I lost 10lbs because we simply could not afford food. Kimberly lost 5lbs. (and she only weighs 107-111!) My parents find out, and suddenly we go home with a huge box completely full of food. We ate dinner at their house and were not hungry for the first time in two or three weeks.
Because of all of this, and during it, we start a weekly ritual of looking through the ads and circling all the deals, finding the best deals, and shopping at three or four stores just to get all the steals. Kimberly is an amazing ally/leader in all of this. Because of her, our grocery trips cost about $70 and we buy about $140 worth of food. Dang.
Things improved slightly as sales went up and a couple of people quit. I was offered a position as a salesman with $7/hr and part commission (I get half the commission the other guys do, but I actually get paid hourly...) But even with all of this, our finances still suck. I start to notice how much I'm still eating out and wasting money. I also did an experiment (noted in an earlier blog) and stated saving lots of money on gasoline as a result. I sold my sports car, paid down most of the balance on one of the credit cards, and refuse to touch it until it's to shred the sonofa... (not mentioned, but very true- we have had TONS of issues with Chase credit card services. remember that camera I bought? yea, it turned out to cost closer to $1800 between the interest, late fees, and stupid charges that were tossed on their by the sly writings of the credit card agreement)
Now, I'm driving home from work one day, and happen to have my radio tuned to 570AM... and hear this guy who sounds like a baptist preacher, but he's talking about money. I'm intrigued, so I start listening the whole way home. Can we say, dang? This guy knows what he's talking about. His whole show is based off of people calling in, telling him their situation, and he gives the best advice of how to improve it. I keep listening and find out that this guy has a 0 credit score and has for the last 20 years. His theory is simple: debt is not wealth, it is slavery. You do not need a credit score, you need money. Even the most modest income can become a massive source of wealth.
From listening to him, I finally decided to break down and write a budget last night. Uh... why the hell didn't I do that a year ago?! How about two when I was making real money, had no debt, and was paying $0/month in rent?! On what I'm making right now, I figured out that I can pay off ALL of my $9,000 in debt and have $6,000 sitting in my bank account in 1.5 years. One and a half years. That's it. He suggests "snowballing" your debt, which I'm figuring out means this: list all your debts, smallest to largest. Attack the smallest with all the ferocity possible, and pay minimums on everything else. Once that one's gone, hit the next highest and so on. By planning like this, I am seriously looking at destroying $9,000 of debt in 1.5 years making $18,000 a year. That's our total income between Kimberly and I.
The bottom line is this: if you do nothing but pay minimum payments, you will literally NEVER pay any credit card off. Auto financing and mortgages are different, you will pay those off eventually, but credit cards will n e v e r go away on minimum payments.
Anyone who bothers to read this far, please please PLEASE listen: YOU are responsible for YOUR finances. DO NOT look to the government, your job or anyone else to take care of it for you. NEVER use a debt reducing agency, they don't work, and they usually end up with you taking care of the mess anyway. You don't need a lawyer or a firm to get out of debt, settle your debt or anything similar. YOU can do that.
GET OUT OF DEBT and the recession will go away. The government can't do anything but make it worse. That's right, I didn't say Democrats or Republicans. I said the government as a whole.
