I was a straight-A student in school, but I started my financial journey with no education in how to handle money. When I graduated from college, I had zero debt, thanks to my parents and college scholarships. I also began with zero dollars in the bank, so I thought I was poor. I didn’t know a lot about finances, so dealing with them scared me. I naively thought everything would be fine if I simply kept a steady job.
My first job was a corporate fashion job that paid enough for what I needed, but not for a lot of extras. When I got paid, I would spend what I needed on the basics, then spend impulsively on what I wanted until I knew my check was almost gone. Then I would sheepishly peek at my account balance, shocked at the damage I’d done, and slow my spending down until the next paycheck…UNLESS there was something I needed like groceries, a pair of jeans that was on sale or a birthday dinner for my friend I could not miss. In that case, I would swap my debit card for a credit card, thinking it was not a big deal.
At first I paid my credit card off every month, but there came a point when the amount on the bill was more than was in my account, and I just paid the minimum payment. That’s when the debt started to grow. Within less than a year of paying minimum payments and putting overflow spending on there, I had $5,000 in debt.
To make matters worse, around that time I decided to go back to school for my master’s degree in Italy with no savings to pay for the expenditure. Between tuition and room and board, I accrued $40,000 in debt, which required payments of $400/month when I returned home. I was at a point in life in which I wanted to have a little more freedom to take some career risks, but I was unable to do so because I needed to keep a steady job to pay my massive debts. At one point, between credit cards and my huge school debt, I was paying $900 a month in debt alone. That’s $900 I could have been saving every month for a house if I hadn’t spent too much on excessive dinners and clothing.
Now, four years after cutting up my credit cards and steadily paying off debt, I am still $18,000 in debt, and I am slowly getting out of the hole.
Here are a few things you can learn from my mistakes.
1. Use your fresh start wisely. You only start out financially once, so do it wisely. Looking back, I know that a zero balance is a great starting place. At zero dollars I didn’t owe anyone anything, and although my first paychecks were meager, I could have found room to save if I had been smart. Once you start owing money, it gets harder and harder to get back to the zero balance and THEN to start saving.
2. Control your impulses for the sake of your future. A credit card can look like an amazing opportunity. I mean, think of all the things you could buy with that $5,000 to $10,000 limit! However, resist the temptation of spending on a credit card to get the pair of jeans you think you “need.” A few years down the road you’ll throw those jeans out anyway. If you put it on a credit card, there’s a chance you could still be paying for it when you do so. I still owe money for clothes I’ve long since sent to a thrift store and for dinners I digested five years ago.
My debt from mostly small purchases has kept me from saving for a house, going on vacations and having the freedom to take more risks in my career. Don’t let impulsive money decisions get in the way of things you really want in life; think about the big picture before you put that small purchase on a credit card.
3. Debt is like an out-of-control monster. Taking on credit card debt is like adopting a baby monster. At first it’s a cute little baby monster; you may even feel very adult-like having this baby monster as your responsibility. It will stay in its crib and cry out once a month for its payment. However, if you don’t get rid of the lil’ monster, it will start to grow, even mutate into a gross, gigantic eyesore of a monster. This monster can’t be controlled. It will pound its way out of the nursery and destroy your whole house. Don’t adopt the baby monster!
4. Look your finances straight in the eye. Money is a part of life. You can face it, or you can ignore it now and be forced to pay attention later when financial problems start to arise. Learn how to do a simple budget, and be honest with your natural money-spending tendencies. If you already have a credit card, look at the interest it accrues every month. At some point you will be balancing a life with a lot of bills, and it’s best to figure out how to allocate your money now while your finances are simpler than they will be in a few years. Read books on money and educate yourself so you can be knowledgeable about this necessary part of life.
5. Trust God with your money. Money is a subject God knows a lot about, and He has all the riches you need. The Bible says to give a tenth of what you earn to the Lord. Your paycheck is never too small to give a tenth of it, because God can do big things if you trust him. He’s the one who multiplied the loaves and the fishes, and He can do that with your money, too. I’ve always had trouble with this, but when I’ve chosen to trust him with my finances, He has blessed them. He’s your Dad and He cares that you are taken care of, so don’t be afraid to talk to God about money.