I came across this quote the other day and immediately related to it (it also reminded me of Wendy’s post about letting go of debt guilt<< Read it, one of my favorite posts ever).
So much about the financial journey that we’re on is mental. We could sit around and sulk about the situation we’re in, sort of like we did for three years before getting real about it, or we could seize this learning opportunity and change our lives a full 180 degrees.
Mistake #1: Too Much Credit, Too Early
By the time I was in third year of my undergraduate degree, I had access to almost 50k in credit between my lines of credit for school and credit cards. 50k when I was making like $11.00/hr at my part-time job. This is insane to me right now but I didn’t know any different. This was also during a time in Canada where credit limits were increased without consent. I’d look at my statement one month and by the next month my limit was increased by 2k. While credit cards companies are no longer allowed to do this, you must request increase yourself and go through credit check, I’ve learned that I should have called as asked them to lower it back down to original level. I also would not have signed up for every credit card offer that came my way! Credit card companies loved me.
Going for forward we will only have one to two modest credit limit cards (maybe a total of 5-6k) so temptation isn’t there. I will teach my daughter about doing research on your first credit card and the importance of managing it responsibly because, after all, opening and maintaining your first credit card helps your credit report!
Mistake #2: No Savings
I’ve been working since the age of 15, I’ve never really saved. I thought about it a lot but I never did anything about it. It seems so stupid but I just didn’t know how. I’d save a few hundred for some trips, paid for our wedding in cash by settling a bill as soon as it came in, but I have come a long way. I’ve learned my lesson and we have some savings now, even while in debt, especially while in debt, since we can’t afford to owe anyone else money if there was an emergency!
Going forward I know how to save and it starts with just doing it! Anything to start, then make more concrete goals. I know exactly how much money we need each month to meet our goals . When our debt is paid off we will have a nice chunk of money to allocate to retirement. We have also already started a savings for our kiddo. Again, while we’re paying our debt off we start small but as our debt decreases we will be able to bump it up a little. We’ll also teach her the importance of saving when the time comes for her to start earning money. Save some money as soon as you make it and have any opportunity to spend it!
Mistake #3: Thinking If You Can’t Give 100%, Don’t Try at All
The biggest reason I was overwhelmed with our debt at the beginning was that I was totally overwhelmed with ever how to start. I thought, if I can’t pay it all off immediately, or at the very least in increments of thousands of dollars per month why bother? Just two months ago I made an additional payment of $44 and change because I could, and it felt good.
It took me about a solid year of educating myself, reading blogs and other resources like Gail Vaz Oxalade’s books (a lovely Christmas gift from hubby) but I finally know, what we need to do to make our debt disappear and the knowledge alone is enough fuel to keep me going. Ignorance is not bliss when it comes to debt.
I beat myself up sometimes for approaching 30 and just now figuring out what I need to do, like I wasted five years of my life, but i guess it’s not all wasted if I had a great learning opportunity.