Monday, May 18, 2009

Well, How did I get here?

I was reading my blogs today and I saw this on Boston Girl’s blog (http://www.bostongals.com/2009/05/ny-times-reporter-personal-credit.html) about an economist who got into big big debt. Well I too was a business major. And still I hung myself on the rope that the credit card banks gave me - paraphrased from this article
(
http://www.nytimes.com/2009/05/17/magazine/17foreclosure-t.html?pagewanted=print)
So I thought I’d tell a little more of the story.


I looked back through all my posts and it turns out I try not to dwell on my mistakes of the past but I have focused on the future. I deem this to be a good thing. Yet I think how I got here is worth examining. Even reading back through some old posts I found evidence of my fuzzy logic that often times was the result of chaos elsewhere in my life. Thankfully I am much more grounded now.
As I read back my blog is more stream of consciousness not a book of how to get out of debt. I think that is the part of the journey that is personal. All I really want to do is get out of debt not to become a journalist. Here are a few posts that chronicle some of my journey…


Inspiration to begin:
http://travelfarandwide.blogspot.com/2007/03/change.html
http://travelfarandwide.blogspot.com/2007/03/confession.html

Some more of my journey:
http://travelfarandwide.blogspot.com/2008/07/economy-and-personal-finance.html

I have come a long way:
http://travelfarandwide.blogspot.com/2007/04/changing-times.html http://travelfarandwide.blogspot.com/2007/04/clutter.html

So those posts have some of the history of how the big debt got started, but I know the choice I made that really started the whole thing…


It is as clear as day the moment I first dug the hole. I had my first real job. I had just moved out of my Mom’s house, where I went to recover during my divorce. I was paid an okay salary not awesome, but enough to live on. I got a one bed room with den for myself and my daughter. We needed a TV cabinet. Well need is a matter of definition. I picked one out of the JCP catalog. It was adorable. I can still see the item in my mind. I was building my cozy nest. I wanted my DD to have a nice home. Never mind that I should have saved up for it and paid cash. That is never going to happen I told myself. I can’t save money. And I need to be clean and organized. I need the cabinet. So I ordered it from JC Penny’S and I was on my way to Credit Card debt. I made monthly payments. I don’t remember if they were over the minimum. I doubt it. I carried the cabinet board by board into the house because the box was too heavy for me to carry by myself. I put it together with my friend the power screw driver. It looked pretty nice. We had a living room.

Then the hole got a little bit deeper…

I remember getting the card offer in the mail. The card was Prime Option; they are no longer in business. 0% interest. What a good idea. I'll transfer the 22% interest JCP card over to this new card and after 6 months it will be only 12% interest. I can "afford" that I thought. But then I needed gas one day. So I put that on the card too, again and again and again.

Not related to Credit but related to income, I did some soul searching about why I was not happy where I was. I was alone in PA. My friends all lived elsewhere. I was an hour from my mom. Why was I still here? So I decided to move to NC. I did some research. I had taken a Microsoft course in computer networking. My brother was getting paid $50K to set up computers, I could do that I thought. (I still have yet to make the 50K salary mark!) I am going to move to NC and take some more classes and start over.
Well, the move was mostly all on credit cards. My dad did pay for the moving truck through his business. He even offered me a job, which I accepted. I took the position of Business Manager. Great at someone else’s money just not my own. Everything went on the card.

Because I thought of myself as middle class and sliding I had a certain amount of pride about what I could afford. I was maintaining a lifestyle that no one saw... Irony of ironies I am an introverted person. I have few social interactions with the parents of my daughter. Even at our church I was never approached by other parents. I bet they could not even tell you my name. And yet I was maintaining a three bedroom apt so I could have an "Office" for myself? How stupid was I? Don’t answer that I already know.

Then the denial or magical thinking really began. Credit card bingo. It is a sign that you are in trouble with debt that you shuffle balances from card to card. I looked at it as a good money manager to keep transferring money around so that you can take advantage of offers.

In business school your studies are all about the analysis of others behavior. It is never a focus on you. It is not discussed to gain an edge by never taking out a car loan, or not having to pay credit card interest. It is implied but not explicit. The thing about that is you get cocky. I was really really good at floating money from month to month. I took that as skill at manipulating the interest rates not a sign that I would have t o pay that money back some day.

Then more magical thinking I had some money in an investment. It was equal to the amount on my cards... So I could pay them off at any time right? (or so I told myself) But I didn’t want to. And I kept thinking my career will pick up any time. I will get a job that will pay off all my bills. I will magically have a big check to pay it all off. Getting out of debt takes step by step perseverance. I never had that. I learned it mostly when I met my husband. And slowly I have improved it my ability to focus and finish a task.

Now as I move forward It is even more important to get to the goal. To finish what I have started and to live my life debt free.

Monday, May 11, 2009

Month end and looking forward...

There were not a lot of posts for April. And I now that I have done the numbers not much progress either. All things considered though it was not too bad. We did go on a family vacation and I still paid $200 to debt. I can live with that. It may make the progress slower then I would like and I know I chafe at the pace of my progress but when I look at that number I am really happy that I dont owe 39K any more. I am able to think of owning a home which 1 year ago It would not have been possible. CC#2 has a balance of 2162. I made a payment to if in May for $400.00 so I know next months numbers will be better. My DH has been paying ALL of the child care so I can continue to pay down my Credit Cards. He is a wonderful man. I will keep forging ahead. We'll see what comes. One day at a time.

Today I plan to go to the library and check out how to purchase a home for dummys so I can start getting smart about the biggest purchase of our lives. I am excited. We are hoping to be able to make a home purchase before the end of the year. It is a little ambitious but we'll never have the same low interest rates and $8,000 tax credit again. I think we can do it.
If you have any good sites for the process leave them in the comments I will be sure to check them out!


I am not a financial professional. If you are looking for financial advise you should seek it elsewhere. If you would like to join me on the journey, walk with me for a while and be my friend......

Monday, May 04, 2009

Debt Details

Excessive Debt is bad. I dont want to put anything on my credit cards anymore. However. I just got a letter from CC#1. I worked very very hard to get rid of any outstanding balances on that card. This bank card was a very bad one. I at one point asked them to lower the rate (24.99%) and they said "NO, you are using this like a long term loan". Well DUH If I cant get a lower rate then It will take FOREVER to pay it off. AHHH now it has a 0 balance. I transfered some of it to 3.9% offeres and I paid off the rest. If you have tracked my progress you can see that I have slowly made every effort to be out of debt. This card had a crazy available credit of $24,000. I dont need that nor was I ever going to put a single dollar onto this most hated card ever again. EVER. So When I opened my mail today It surprised me that I was sad that they have "re evaluated" and lowered my limit to $12,500.

I am actually happy that the limit is lower. I still felt a pang of "Oh no" when I looked at the paper. Isnt that silly? I have considered closing the account. If for any reason any of the banks I have cards with suddenly change how much I owe because the bank has changed hands I wanted options. I do get 8.99% offers from them all the time. Of course as I get $0 and 3.9% offers from other banks, I would not consider using this card unless one of the other banks went out of business. Like I said I want options.

So why does it bother me? Well I dont want it to look like I did something wrong. I paid off that account fair and square. I want it to be the truth, the change is a reflection of the bank's choices. BUT what will it do to my credit score? We are talking about buying a home so dont say it should not matter. It will if we were to go for a mortgage in the next few weeks. One step at a time.

All things considered this month I thought it would be tighter then it turned out to be. We made it through April and I still made payments to my debt. I will be debt free someday.

$15,236.09

Good job girl.
I have been neglecting my desk but it turns out that I am still somewhat on track. I will get out of debt. I will I will I will.