Thursday, March 1, 2012

Two Steps Toward Freedom

Let's talk money for a minute, shall we? When I was in college, I got myself into a little bit of a pickle. Okay, maybe a lotta bit of a pickle. I was given a credit card, went nuts, and I maxed it out. My parents bailed me out and then... I did it again, but this time I had two cards. I lived in a world of constant stress as I tried to make payments until one day, shortly after I graduated from college, I hit a wall. I owed something crazy like $1200 in 4 days. I did credit counseling, during which time I was issued no new credit, my score tanked, and I had to learn to live with only the cash in my bank account. I used tax returns and extra cash and paid the debt off a year and a half early.

I don't think my situation is all that uncommon. I think it's a generational thing - we want what we want when we want it. For whatever reason, we may not understand how credit works and how to use it responsibly. We see plastic cards that buy stuff and we'll figure it out later. Even though I knew I had to make payments, I don't think it sunk in ever that I had to make more than the minimums and that the amount of debt I had would affect my future and buying power on big things like a car and a house. I think this is one of those lessons I had to learn the hard way - as a lot of people my age probably do - and it's a sucky one.

When I signed up for the credit counseling, I was told that when my debt was paid, my score would recover and I would be able to build fresh new credit. It turns out that wasn't so easy. My score has only very recently begun to rebound (and I paid that last bill almost 3 years ago), and I still can't get a card with a limit over $500. That's fine, I don't need more. I've learned to budget and pay for what I need with cash. It's funny though, because when I hear people say they'll do a short sale on their home and their credit will be fine in 7 years, I laugh. That's when you may be able to start applying for credit because it drops off your report, but it doesn't mean you'll have enough of it that anyone will trust you with their borrowed money. What is difficult is not having a safety net for things like car repairs or a water heater going out, or a medical bill. For that, I've had to rely on Dan. When Paisley got sick, a big portion of her bills went on his card. When my tuition for grad school exceeded what my company covered for a calendar year, it went on his card. When we moved into the house and had fun with some renovating and redecorating, it went on his card. I'm thankful he's credit-wise, but it doesn't mean we haven't built debt in our time together.

When I could finally be approved for credit of my own, I opened a couple small retail cards. I added another when I needed a laptop. I needed to establish a good payment history, and I finally had a true understanding of what that meant. I was careful to keep my debt ratio low and make my payments on time as well as pay at least $20 over my minimum. I've had them for about two years now and they have small balances that I make sure to manage. I'm mindful of making old mistakes. However, I hadn't ever completely paid them off.... until today.

Today, I got notice of my second lia sophia commission check, and I scheduled payments to pay them off 100%. They're weren't big dollar amounts, but they were more than my regularly budgeted payments and having that debt wiped to $0 is an amazing feeling. And it's a part of our plan - my cards get paid off, I dedicate what would have been the old payment to Dan's card. As I eliminate payments and dedicate them and lia sophia income to Dan's card, we hope to be debt free by July or August. At that point, we can contribute more to savings and do more of the things we want to do, like (hopefully) take vacations and renovate more of the house.

It feels absolutely amazing to see our plan being set into motion. It's just the first two steps, but I'm excited that those two little steps will help snowball us into achieving goals that would have taken longer to achieve without the opportunity lia sophia has provided me. And this isn't a lia sophia thing - yes, it's the opportunity I had (and you could too), but it's a matter of having a goal, working at it, and seeing the first part of the plan completed. It's the motivation I need to keep working hard at booking shows so that I can keep it going and bring us to a better financial place. It also shows me how far I've come - from stressed out 7 years ago to feeling liberated as I hit that "confirm payment" button. I'm truly proud of myself.


PinkieBling said...

CONGRAULATIONS!! I did the same thing - got a card at 18, went crazy, and basically haven't been out of debt since. I'm working on it, but I am truly horrible with credit. I'm really inspired by you!

Dee Stephens said...

CONGRATS! I never went 'crazy' per say but when I lived out West I got into an attitude of 'well, i might as well do it now'. I racked up quite a bit on a credit card traveling around and buying plane tickets to visit home.
I never missed payments or anything and my credit is stellar but I had a high balance.. like 10K.
Redic.. glad it's gone! Good for you too!

Shana said...

As you know...I was once in the same place you were...totally in debt with no clue how to fix it. And I know how much hard work it takes to get where you are now...with zero balances on some cards. It's a great feeling! I'm so proud of you...and excited for you. And I think it's awesome that lia sophia is working out so well.

(Speaking of...weren't you supposed to send me some catalogs???)

BrownEyedGirlsMom said...

Good Job Buddy!

Anonymous said...

Way to go!