A Story Of Debt

It’s ridiculous that we’re in a recession and I actually have too much work.  Despite that, I’m in a (kind of) recession mindset where I feel guilty saying no to work and everything feels unstable, especially considering my debt.   The reality is that I’m not on the most stable of ground, but the soil is getting firmer with every dollar I put toward my debt and I’m finally starting to feel that as I work on my second card.

But, the point of this post is that I recently received some promising news.  I think I’ve mentioned before that my full time job is a 9-month regular position.  So, it’s permanent, but I only work nine months out of the year and have Summers off.  Last Summer, though, one of my coworkers was on leave, so I filled her place and worked all Summer.  Looking back on that, I think, “thank God!” because I would have been utterly screwed to go without my regular pay check for three months.  I don’t know why I wasn’t more freaked out. I don’t know why I wasn’t more freaked out about a lot of things, but I guess that’s what happens when avoidance is your financial method of choice.

Okay, so the promising news is that I talked to my boss last week and even though we don’t have anyone leaving this Summer, she does think it’s a good possibility I’ll be able to work.  There couldn’t be better news when it comes to getting myself out of debt.  Continuing to work a million hours is the only way I can meet my New Year’s Resolution of getting out of debt this year.

My boss is going to talk to the director to see if this is a possibility.  I’m certainly not counting on it yet, considering how strongly the recession impacted our budget, but it’s promising at least.  Unlike last year, I’ve been thinking for months about what my job situation will look like during the Summer.  Surviving on just my second job is a possibility, but it would put getting out of debt on hold and I would probably be running a slight deficit each month.  It’s certainly not ideal, but there is something appealing to having some time off.  I’m not sure if I’m really willing to hold off on the last leg of paying down my debt, but at that point I should be halfway done and I think it would be worth considering.

We’ll see how this all works out, but it’s looking more promising and I’m glad I went to talk to my boss about this so early.

Lately I have been thinking back over my financial past and finding a lot of empty spaces in the time line.  I remember financial decisions I made my first year of college in extreme detail.  I remember how much I had in my accounts and what I did with that money.  But, thinking about just the last year, I can’t even remember how I went about paying my bills or what I thought when I did or what my minimum payments were.  I don’t remember anything.

Except for a tiny portion of my school loans, all of my debt has been accrued in just the last 3.5 years.  Since I started graduate school.  I was in credit card debt from the moment I moved down here, because, well, I moved down here with nothing and that budget I’d been obsessing over for the entire Summer was laughable in the face of reality.  But, it was just temporary.  Only $1000.  I’d get myself out of that.  Except, I was making very little money and living in California is expensive.

I’ve said a number of times that my financial method of choice became avoidance.  I went from being very diligent with my finances (from the age of 17 or so (when I started working) up until 22) to avoiding them almost completely.  I didn’t even like to look at the numbers.

Being the person I am, I several times decided I was going to get my stuff together.  I would look at everything and stop avoiding the problem, but the only way to get out of debt is to make money and 15 hours a week at my school’s library was not cutting it.  I’d bought into a lifestyle.  Not a lavish one in the typical sense, but a life where money was not what was important.  Achieving the dream was important–getting the education, having the time to study, living in the comfortable bubble of my school’s campus.

I deluded myself into thinking that either there was no problem or it would somehow miraculously work itself out (all my critical thinking skills and I actually believed this).  Of course, I did on some level know there was a problem.  In those moments of clarity, I switched from delusion to avoidance.

I’m still mystified by my Swiss cheese memory of the last three years–the last year, especially.  I guess I don’t remember what I was thinking about my finances, because though they were weighing on me heavily, I did my best not to think about them.

In November, I stopped avoiding my finances.  When I faced the numbers this time, I had things in line to really do something about my debt.  By things, I mean money and jobs (so that I could continue earning money). This lifestyle is not as comfy as my previous one where my nights were spent at home and many of my days were free for studying, but I am a lot more at peace than I was in all of those years, avoiding not just the elephant in the room, but the one standing on top of me, blocking my air.

I was shocked–and I never admit to being shocked by anything–to find that facing my debt and dealing with it was like dropping weights off of my shoulders and it made a difference in other areas of my life where avoidance had become my full-time job.  You know the way you watch scary movies with your hands over you eyes, the spaces between your fingers allowing just the tiniest peek at what’s playing on the screen?  I was walking through life that way.  And because this post doesn’t have enough metaphors already, it was like I was a cartoon character waiting for the anvil to fall.  I didn’t dare to dream, because whether or not it would work out seemed completely up to chance.

I didn’t want to admit to myself that I’d made mistakes, but what I really didn’t want to do was put in the hard work of fixing those mistakes.  I’d never been afraid of hard work before, but grad school alone had me feeling overwhelmed and my debt is even more overwhelming.  I never thought about it this clearly, but the great fear, I guess, was that I was going to have to give up on my dream.  I was going to have to quit school or at least slow it down, which was scary to me, because I didn’t know what else I would do (not that I’m not capable of anything else, but I didn’t want to do anything else).  Of course, what’s ridiculous is that I was avoiding my great fear by making it an even bigger possibility.  That’s the problem with avoidance.  You’re too scared to face your problems, so you avoid them long enough that they grow legs and scary fangs and finally makes themselves impossible to ignore.

I mentioned a couple weeks ago that my bank was offering a deal to temporarily reduce my APR.  After reading all the fine print three times through, I made a plan to save up as much money as possible before March 5th when the offer expired.  I had to wait until the last moment to make the call and accept the offer, because I got paid again today.

I called this afternoon–actually, they called me today–to accept the offer and made a payment of $1000, which in addition to the payments of $500 and $300 I made earlier this month, reduced my balance to $5325.  The deal was that you could get your APR reduced depending on how much of your total balance you could pay off with a one time payment (the earlier payments ended up counting too).  My payment was large enough to get me a reduced APR of just 6% for the next 6 months (at which time it will return to what it was before: 19.24%).

This will save me $50-$100 a month in interest.  That’s huge and it gives me even more motivation to keep paying down the card. I should be able to pay off the entire balance within the 6 month period.

The progress meter in the side bar of this blog is finally showing some, you know, progress. This Visa is my longest standing credit card; it was my first ever.  Much of the balance on it is old, so seeing it get so low is really cool.

When I was younger, I don’t remember ever thinking much about how people spend their money.  In the years when my mom was single, money was obviously an issue for us, but she worked hard and did everything she had to do to make sure we had what we needed.  As they got older and more financially stable, I remember noticing that my parents lived like poor people even though they made more than all of my friends’ parents.

Later, I grew judgmental of people spending irresponsibly.  I remember when I was working at Bed, Bath, and Beyond as a freshman in college and a coworker told me she had $7 in her banking account.  That was inconceivable to me.  I had thousands of dollars in my banking account and I was still nervous about money.  As a student, I was sometimes resentful that I had to work so much more than the other students I knew, but working was an important part of my identity and I wouldn’t have quit if given the option.

When I got to grad school and quickly started accumulating debt, I became much more aware of how the people around me spend money.  Mostly, I was just very confused about how my fellow grad students supported themselves.  It’s still a mystery to me.  I mean, some of them don’t work at all.¹

As a person in debt, I for a long time believed I was all alone.  Then, I began to suspect everyone was secretly in debt.  Now that I’m a person getting myself out of debt, I sometimes watch people who seem to be good with their money, realizing they all have the same conservative habits, but more often I am focused on my own efforts.  I spent too long worrying about what other people were doing with their money, assuming that if they were doing okay, if they weren’t worrying about money, then I should do the same.  This journey has been about personal responsibility for me and it’s changed my focus on money inward.

1. I’m talking about the grad students in my program where few get tuition completely covered and no one gets a stipend. [↩]

There’s this book out by the author of The Millionaire Next Door called Stop Acting Rich.  I have not read either book, though my understanding of author Thomas Stanley’s philosophy is that millionaires live frugally and that’s how they grow and maintain their wealth.  This reminds me of the only millionaire I’ve ever known–an old boss of mine.  He drove a Honda only a few years newer than mine, wore a watch he must have purchased at a drug store, and worked all the time.  He matched the profile of most self-made millionaires.

My goal in life is not to become a millionaire, but deciding to get out of debt changed the way I look at my financial future, and living well below my means even when I don’t have to certainly appeals to me as a lifestyle if it means a secure financial future.

But, really, I need to take a step back.  Even just the title Stop Acting Rich is something I needed to hear a couple years ago.  Compared to others, maybe I never did live like I was rich.  I’ve never purchased a new car or even a pair of jeans that cost more than $100.  In hiding my debt, though, especially from myself, I made several bad money decisions, pretending that money was not a problem for me.  Just little things even.  Buying makeup and nail polish, because oh the pretty colors and I have to have it.  Replacing an iPod way before it should have given up on me, because taking it in to be fixed seemed like too much trouble and that shiny new Classic was just irresistible.  Agreeing to additional medical tests, though I didn’t think they were necessary.  Buying a new laptop, because I’d wanted it for so long and, hey, I work hard and maybe it will help me write that novel (really stupid; but, I did finish my first novel on it).  Buying an iPhone, because I just landed a new job and maybe I haven’t started working yet, but I will soon be bringing in my biggest pay checks ever  (Apple gets me in a lot of trouble apparently).  Agreeing to plans I wasn’t that interested in and knew would be too expensive, because I didn’t want to be the one to say something.

I have been so hesitant to make money an issue ever, which is silly because being frugal is nothing to be ashamed of, money is an issue for most of the people I interact with regularly, and I cannot afford not to think about money.

It’s weird being a grad student, because you have no money and usually you’re regularly collecting debt.  But, you’re not poor, because poor people don’t have enough money to pay rent and buy food and go to the doctor, and I’ve never gone hungry.  There’s more to the equation than cash in hand; there’s also available resources–like financially stable parents, available credit, and money earning potential.

It’s deceptive, though, because it made it possible for me to live for a long time in the mindset of someone with money.  At the time I decided to get out of debt, I had nearly exhausted all of my resources.  I had almost no available credit while already working full time.  Few options left but to go to my parents, which was a thought so terrifying to me that I would exhaust every other option first.

I worried that going public with my debt on the internet and with a few close friends would make me feel uncomfortable–like I was being watched and judged for my money-spending habits.  Instead it has been such a relief to bring money into the conversation–to stop pretending like it’s not a concern for me.  It doesn’t mean I never spend anything, never go out for drinks, or judge other people for their spending habits.  It just means I’ve stopped living like I’m rich.

January was rough, February was a major improvement, but March will rock.  I’m currently happy with my progress.  It is a struggle, because my debt makes me so anxious that I just want to pay it off right now! If only I had $16,897.75 in my banking account!  (An improvement from $20,500, for sure.)  So, as March approaches, I don’t feel the way I did at the start of February.  There’s no feeling of needing to get back on track.  I already am on track.

But, I was reading some other personal finance blogs and I started to think that maybe I should talk a little more specifically about the numbers.  It should not have taken me 3 months to spell out a budget that hasn’t changed much at all in that time.  A strictly numbers approach would probably be boring and it wouldn’t help me to address the irrational and irresponsible thinking that got me into debt in the first place.  But, I think this blog would be more useful if I made it more obvious how I’m getting out of debt.  Not that there’s any strategy beyond work too much and spend almost nothing, but many days pass between paychecks and I am working at getting out of debt every day.

Sometimes the not spending thing is easy and other times it is hard.  March is a long month and it features a vacation and a great deal of school-craziness.  Two things that things that bring out the financial apathy in me.

My challenge this month is to track and report all of my spending.  To the degree that my schedule allows, I will also be recording my daily thoughts on getting out of debt.  I plan to put all of this information into a weekly post.

I don’t have any new goals for the month, beyond tracking my spending more closely, but I want to be extra diligent about all of my regular goals: stick to the budget, do not use any credit (debt and cash only), build up as many no-spend days as possible, and limit all spending.  The March Challenge is to share the everyday-ness of getting out of debt.

As I mentioned in a previous post, I’ve been going back and forth about how to proceed in my journey.  It seems there are two choices: (1) continue with gazelle-like intensity, spending nothing extra. Or, (2) keep intensity high, but allow for some spending exceptions.  It seems to me now that I will take route two (already have), whether I set out to or not.  Really, there’s nothing bad about spending a little money on fun when you’re putting hundreds of dollars toward your debt every month.

The major exception I’ve been making is on travel.  Other stuff I can buy anytime, but travel comes with experiences and those are had or missed.  When I am out of debt, maybe Summer 2011, I would like to do some traveling around California.  I haven’t yet seen San Diego or San Francisco.

This year, I’ll be spending a few days of Spring Break in Arizona.  It won’t cost me much.  My dad bought my plane ticket (he insisted I not drive; I could write a whole post on my mixed feelings about accepting help from my parents).  I don’t think I’ll be paying for the hotel.  But, travel is never free and while my vacation time from the library will be paid, I will probably have to take time off from my second job and that time will not be paid.  It all seems worth it, though, to get a break from my crazy schedule and some time by the pool with my brother, sister, and Dad.

I’m still deciding whether to attend Bloggers In Sin City.  Vegas is not far away, so that’s almost no money on travel.  It’s the hotel and food/drinks/entertainment once I get there that will be expensive.  I love meeting bloggers (though meeting so many at once does overwhelm this shy girl) and I also love Vegas.  I just don’t know.  I can’t decide.  It will probably depend on what my work situation looks like for the Summer.

My parents are visiting the weekend after Bloggers in Sin City.  That won’t require any travel on my part, but it will still be a vacation.  I had a great time when they last visited.

In July, I’m going to VidCon, which again won’t require much travel, but it’s an event I decided to make an exception for.  All my favorite YouTubers in one place, plus some bloggers, and Ze Frank!!!  My ticket is already paid for.

I always go home to Washington for a week during the Summer, but that’s not certain this Summer.  It will depend if I have the vacation time and money for a plane ticket.

I think these are all valuable exceptions to the budget.  It’s the work I’ve already put into getting out debt that is making any of this possible.

There was a request for this a while ago and I don’t want to keep people guessing as to how I’m able to put so much money toward my debt, but if you hear me complain about how much I work, then it’s probably not much of a mystery to you.

Here’s my monthly budget:

Income: $2900 – $3100 between two jobs.

Bills

• Rent: $800
• Cell: $90
• Car Insurance: $103
• Gas: $30
• Food: $200-250 (Try to keep it to $200, but it’s a struggle)
• Household: $50 (This includes a lot of things like quarters for laundry, TP, cleaning supplies, etc.)
• Capital One Visa: $250
• WF Visa: $200 (This is the card I’m working to pay off.)

*I also pay $53 a month for medical, dental, and vision, as well as put some money toward retirement, but that’s all substracted from my pay check, so I never count it in my income.

I’m usually able to put an extra $1300-1400 (on top of minimum payments) toward my debt each month.

Since starting my new job this semester, several people have asked me why I’m still working at the library.  I politely respond with, “Well, that’s how I support myself.  And, they pay me significantly more per hour, provide me with health insurance, and give me paid vacation and sick time.  How could I afford to give that up?”

My new job may be a better opportunity geared more directly toward my professional goals, but since taking it, I have grown even more thankful for my library job.  Even though I’m 26, my job at the library, which I started a year and a half ago, was the first I ever had with benefits.  I still marvel at them.  When I got back from a 2 week Christmas vacation to my normal pay check, the full amount there as if I’d worked all those hours, I felt incredibly fortunate.  When I talk to my uninsured or underinsured friends and remember that I have very affordable medical, dental, and vision coverage, I feel comforted.  Knowing that getting sick doesn’t mean losing working wages immediately is such a relief.

As lucky as I feel, as surprising as it still is, I yet managed to be reminded, as if I’d forgotten, of the reality that if I miss a day at my second job, that is money lost.  If a holiday interferes with working hours, the day off is tinged with a bit of disappointment, because again it is money lost.  I even regret taking time off to go out of town.  Maybe I wouldn’t feel that way if my budget wasn’t so tight that I count on those hours to keep up with my plan of getting out of debt.

I also, of course, get paid a pretty ridiculous wage, especially for having no benefits.  It’s very typical for a grad school job and for a non-profit.  And, it’s worth it for the opportunity, for the connections I’m making, and because I like the job, but it certainly doesn’t allow for much security.

I’m happy to do both, even though it means little to no free time.  When you have a good job, especially one you enjoy, you don’t give it up.  And that’s a conservative take, especially when there’s such an emphasis on the internet and with my generation of taking big risks to do the job you love–usually working for yourself.  I understand that.  I mean, I’m pursuing a very impractical career because it’s what I want to do, but I think taking big risks is only possible when you prepare the way by acting responsibly.  On top of which, I have zero desire to work for myself; I like someone else cutting me a check, withholding taxes, and keeping the business going.  It’s also important to know how you work best.

I used to write a lot on my personal blog about my love for Ulta.  It was so bad that no one could pass an Ulta without thinking of me and telling me so later.  For those who don’t know, Ulta is this amazing store full of makeup and nail polish and hair products; what makes them different from a drug store or Sephora is that they have both the drugstore brands and high end brands.  Basically, it’s everything good in this world under one roof.

Something about the feel of the store and all the rows of makeup calms me and brings me joy.  I actually hear choir bells as I walk toward the store.

But, I haven’t been to Ulta in months.  Even before I got serious about getting out of debt, I thought it was a good idea to avoid Ulta where it is too easy for me to drop $100 and walk out with a small bag full of items.  The number of times I did do that is embarrassing.  Though most of the money I’ve spent at Ulta in the last year or two  was actually money I had in my bank account and not credit, that was money I should have been putting toward my debt.  I spent enough to keep myself exactly where I was.

I have plenty of makeup and an entire drawer full of nail polish (a big drawer), so I don’t generally feel deprived not to be spending a bunch of money shopping every week. Sometimes I even enjoy shopping among the items I already own.  On top of which, I don’t have the time to go shopping, so it’s not a regular temptation for me.

Oh, but sometimes I still think of Ulta and it calls to me.  I think of just stopping in to get the Ulta experience, but not walking out with more than $10 in makeup/nail polish.  That would be reasonable and well within my budget.  I will do this at some point, I’m sure, but there’s something to be said about avoiding it completely.  It’s easier not to shop when you don’t know what you’re missing.  Also, my past experience suggests that the lights and smell of Ulta have a direct effect on my decision-making abilities.  Makes it easier for me to rationalize ridiculous purchases.

So, for now I will keep resisting.  It’s better for morale that I avoid the store that represents the worst of my association of personal well being to materialism.  But, Ulta cannot be denied forever and I hope we can one day have a healthy relationship.