How I Got into Debt

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Opening up and talking about your finances feels very vulnerable, but it’s a subject that fascinates me. I love reading about other people’s finances, especially if they’ve pulled themselves into debt and back out. It’s like a sneak peek into the things that make other people tick. I’m sure on some level it’s also about the comparisons, the ways we can say “Well at least I didn’t do that…” or “Wow! I wish I’d thought about doing that…”

The one thing I keep reminding myself, especially now that I’m writing my blog, is that personal finance is meant to be personal. Nobody is perfect and we all make mistakes. There are a lot of dumb ways to get into debt and I’m pretty sure I’ve explored them all. One quote I’ve found especially helpful to get me out of that mindset is “Never compare your beginning to someone else’s middle” – Jon Acuff.

Here are some of the few ways I’ve gotten myself into this hole:

Going to College

There is an immense amount of pressure on high school students to go to college. We tell them to follow their dreams and that everything will work out in the end, which isn’t the best advice. Do I think college is important? Yes, but I also believe the cost of attending is incredibly high and some entry-level wages aren’t really high enough to justify the cost.

At the age of 18 I wasn’t ready to move away from home and make the first major financial decision of my life. The first year of college I racked up almost $25,000 worth of debt. Had I gone on to finish school I would have ended up almost $100,000 in debt. I hope to go back one day, but I hope to be a lot smarter about it.

Buying Makeup and Clothes

I’ve always been interested in fashion and make up, but a couple of years ago I got my first well-paying job. At the same time I discovered YouTube beauty gurus. I started justifying my spending by telling myself that I deserved everything I wanted and it snowballed from there. Before I knew it my $10,000 raise went into the pockets of Sephora and Loft.

Every time I think about how much progress I could have made toward paying down debt I want to kick myself, but what’s done is done. I still allow myself a few purchases in these areas, but I mostly make due with what I have and always try to find things on sale. I’ve also unsubscribed from a lot of email mailing list to keep the temptation low.

Car Repairs and Maintenance

The number of car expenses I’ve paid for with my credit card is crazy. Since I REALLY started budgeting back in January and become obsessed with personal finance blogs I’ve read one piece of advice a number of times. It really blew my mind the first time I read it, so get ready, car repairs are not an unexpected expense.

That one piece of advice has forever changed how I think about car related expenses. We all know cars need regular maintenance and we should all be aware of the fact that your car is going to break down. I will admit this is something that I still struggle with, but I’ve made progress. I no longer have to scramble to pay for oil changes or my car insurance because I made a place for it in my budget and make it a point to save money in these categories.  (Thanks YNAB)

There are a million other dumb (and not so dumb things) I’ve spent my hard earned cash on. What are some of things you’ve found yourself regretting? Have you had any progress in making over your spending in certain areas lately? I’d love to hear about them in the comments.

 

 

 

 

Budget Busters: Dining Out Edition

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I know I briefly mentioned the air conditioner saga in my last post, but I just need to shout this from the rooftops: IT’S FINALLY FIXED!!! It took 5 weeks and a lot of phone calls to the manager to get it fixed. I had almost reached the point of looking for a new apartment since our lease is up at the end of month. I’m so thankful it didn’t come to that because it would have been such a big and unplanned expense to move out.

Lately I’ve been doing a lot of thinking about the weak spots in my budget and what I can do to reinforce better spending habits. I have a few areas in particular that I struggle with: dining out, clothes and makeup. I’ve started to slowly work on cutting down my spending in these areas and wanted to make a few posts on what’s been successful for me.

Dining Out

This is by far my biggest expense and the one I’ve had the hardest time cutting back on. In the time that I’ve been budgeting consistently I’ve spent a grand total of $1,024.07 and that doesn’t include groceries or the money my husband has spent. That is INSANE, think about what else that money could have gone toward!

There are few things that will trigger us wanting to go out: I’m tired after an 8 hour day at work, I actually have a weekend day off with my husband or I’m meeting up with a friend. Sometimes these are acceptable excuses, I’m a huge advocate for having a fun budget, but usually it boils down to me being lazy.

I’ve found a few really easy steps over the last few months that are really working for me. In fact this is probably the best month I’ve had so far in terms of cutting back on dining out.

Continue reading “Budget Busters: Dining Out Edition”

June 2016 Goals

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The weather is really heating up and the past few days have been slightly miserable while running my weekly errands and being in the house. The air conditioner in our apartment has been broken for over a month, which has led to a few really hot days and nights. Thankfully we have a portable air conditioner that we got when we were living in an apartment with no air conditioning a few years ago – it’s been a real life saver.

With the heat and Memorial Day last week, summer is definitely here. I know summer isn’t typically seen as the time of year to start fresh and start working on goals, but I’m looking forward to starting a monthly goals post so that I can keep track of whatever progress I may (or may not) be making.

Over the last few months I’ve been working on paying down debt and keeping an up to date budget (which I do using YNAB) and have been trying so hard to stay determined. Something I’ve come to realize now that I’ve tried to take steps toward quickly paying off debt several times is that I need to be able to reflect on my progress. It helps to remind me that what I’m doing is for the greater good and will help stop me from breaking my budget. Continue reading “June 2016 Goals”

My 4 Steps to Pay Off Debt

Okay, you’ve all seen how much debt I have, now I’m going to go over my steps to pay it off. I’ve been thinking about this for the last few months and have decided to rely on advice I’ve come across while reading various websites and at least one of Dave Ramsey’s baby steps.

One thing I do want to mention is I’ve already made some progress before starting this blog. I finished paying of my smallest medical bill at the beginning of May, which had a monthly payment of $56.25 that I was doubling in order to get it paid off. I’m planning on putting at least that much extra ($112.50) toward the debt I’ll be paying off first along with its minimum payment.

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Step One: Set up an emergency fund with $1,000 to get started

I’ve been working on this for the last few months by putting $100 or more into my savings account from each paycheck. I’ve had to withdraw from it recently because of a car repair that I budgeted too little for, so even though it sucked that I budgeted poorly, it’s already come in handy.

I currently have $500 in my savings account for this and June is an extra paycheck month, so hopefully this will be fully funded soon.

Step Two: Stay organized with paying off my debts

I’ve been paying off debt using the debt snowball method for a few months now, but in the past when I would put extra money toward a bill it would be whichever one was causing the most anxiety. This would make me feel discouraged and would inevitably cause me to stop putting extra money toward debt and make me get into a downward spiral of spending.

I think I’m going to change it up a bit and start using the debt avalanche method until my highest balance credit card is paid off. This method has you pay off the debt with the highest interest rate instead the one with the lowest balance. My Capital One card is the debt that is making it the hardest to pay things off, it has the highest monthly payment and is accruing more than $50.00 worth of interest a month.

For now the order I plan to pay off my debt is:

  • Capital One credit card
  • Discover credit card
  • Medical Bill #1
  • Medical Bill # 2
  • Local College
  • Citibank Loan

This may change in the future, but for now I feel comfortable paying them off in this order.

Step Three: Save an emergency fund that covers six months of expenses 

This step honestly seems so far off that it seems dumb to even be thinking about it now, but if I don’t think about it now I risk having it be thrown to the wayside. Maybe it will start take shape once I’ve reached my $1,000 goal and I decide to save a little more, but for now I’m fine with not having a clear picture of how this will look.

Step Four: Plan for the future

Thinking about my future is the whole reason I started seriously thinking about starting this blog and starting to aggressively pay down my debt. I want to own a home, a newer car, and to be able to travel, but most importantly I want to be able to retire and be comfortable. I’m currently saving 3% of my income in a 401K, but I would really like to open a Roth IRA and be able to max out my contributions for the year. I really don’t want to be 65 and still having to work because I can’t afford to retire.

Writing these goals out has been on my mind for a really long time. I sincerely hope that getting them out there will help me stick my plan and inspire some of you to start writing out your goals too. Leave me a comment below with what your future plans are, I really look forward to reading them.

 

 

 

 

Hi, my name is Sara and I’m a Debtaholic.

I’m not great with money, I haven’t been for my entire adult life and now I sit here with almost $25,000 worth of debt feeling like I’m never going to get it all paid off. So today I’m going to start making changes – I’m going to actually make a realistic budget and do my best to stick with it, I’m going to stop spending on frivolous stuff, I’m going to cook more dinners at home and I’m going to make change happen.

I’m so tired of feeling like my money isn’t my own, so here we are. I’m going to lay all of my debt out for the world to see to help hold myself accountable and to help me build better spending habits.

As of today, here is a breakdown of what I owe and a chart, because who doesn’t love a good chart?!

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Medical Bill #1: $493.45
Medical Bill #2: $727.39
Discover Card: $834.65
Local College: $2405.58
Capital One: $3950.91
Citibank Loan: $15319.48

As you can probably tell I’ve gotten myself into a real mess here with schooling (that I never finished) and good ol’ credit card debt. In total I have $23,731.46 worth of debt. I’m not proud of it, but I am ready to stand up, look it in the eye and clean it up. I’m done paying hospitals, banks and credit card companies for my stupid mistakes. I’m taking back my money and making it my own.

My next steps will be to lay out a plan to start getting this paid off. I hope to have it done within the next 2-3 years, hopefully some of the smaller bills will start to go soon.