I think Santa is going to bring me a bucket of coal. I’ve been a bad, bad girl. (Fiona Apple, anyone?)
I’ve been MIA from the blog this week and not without some regret. The intention was there, but every time I sat down to write, I didn’t want to admit the truth. Things in writing seem so permanent, so determining.
I wasn’t ready to accept some things.
Remember how a few months ago, at the age of 28 I got my very first credit card? Well, it hasn’t worked out so well.
Let’s back up and remember why I thought having a credit card was stupid: Why buy something if you can’t afford it? Why not just pay with cash, to ensure you can afford it? For so many years, I never understood it.
For 28 years I was diligent with my money and cash flow. There were times it was tight, but never once have I relied on a credit card for anything. Because of my love of travel, I thought having a credit card that earned miles would be a good idea.
Everyone says that as long as you pay off your credit card each month, you’re good. And I did exactly that. At the end of each month, I diligently paid off my credit card and saw those miles accumulate. It was exciting and I felt responsible. I can do this, I thought.
But I became a statistic. I did exactly what people expect. I spent more money using the credit card than I did with my debit card. Even though I was able to pay it all back each month, I ended up spending more money than I usually do.
It’s all pretty simple. Credit cards allow you to alter your cash flow. With a debit card, if I didn’t have the money, I couldn’t afford it, therefore I wouldn’t buy it. With a credit card, I said, “Oh well, I can pay this back at the end of the month, when I get paid!”.
I would say for the past two months my spending has increased 25%. Some of it was for Thanksgiving travel, some of it was necessary, and some was indulgent fun. Last month my credit card spending was ridiculous and this month I am paying the price for it.
I’ve “only” been able to put $900 towards debt this month, compared to my goal of $1500. I’ve had to transfer some money from my pathetic savings account just to get through the rest of the month until I get paid again.
I’m also becoming acutely aware of how much my side hustling has really helped me survive. The past two months have been slow. I’ve made $200 in extra income the past two months, where most of this year I averaged $300-$400 per month. So it’s been a bit dry and coupled with my credit card fail, I’m feeling pretty low.
I know this is merely one moment and I am acknowledging the issue. I am resolving it by only buying my groceries with the credit card. I think I subconsciously wanted to spend more because I knew I was getting miles and it would get me closer to a trip.
Although the past two months were bad, I have to keep focused on the bigger picture. The bigger picture helps me keep perspective. My goal this year was to pay off 15k in student loan debt. When I wrote that in January, there was no way that was possible. I was making 12/hr and my job was going to end in four months. But I got a new job, hustled and I put $16,660.29 towards debt in 2013!
Bad news? Almost 3k of that went to interest so I currently owe $43,913.55. I cannot wait until I am under 40k! About 35k of that has crazy high interest: 6.8%-7.9%. The rest is my undergrad student loan, chilling at 2.5% interest. I will be super excited to get my grad loan in the 20’s and my overall debt in the 30’s. That is much more manageable than 50’s or 60’s and the total 81k (with interest probably closer to 100k 🙁 ) that I’ve owed. I’m almost half way there (and I’m living on a prayer).
In the next week or so, I will attempt to get out of this funk, forgive myself, keep to a spending freeze, not touch my credit card and hustle for work. I have big plans and big dreams for 2014. Although I am feeling low now, I never thought I’d be able to accomplish what I have this year. It literally wasn’t possible before.
I need to remind myself that your failures are not your future, and your present is a work in progress. I am ready for a fresh start.
Have you had any setbacks lately? Any end-of-year disappointments?
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20 comments
Dont’ kick yourself too much! $900 is GREAT, even if it isn’t exactly the right amount.
Take this as your lesson- whether good or bad and get ready for January to begin! It’s a whole new ballgame and a chance to be better.
The sad thing is $900 is the minimum for my student loans! I am ready to start fresh and new.
It was that “paying the price” because of credit card use that put me in a difficult financial situation. Admittedly, I am one of those who share a sad tale about credit card. Luckily it was a manageable situation and a great lesson was learned that now I am doing my best to be frugal about almost anything. You know, once burnt, twice shy?
Yeah, it’s tricky! I am going to think twice and be careful with credit cards moving forward.
The key to effectively churning credit cards is using them to buy budgeted items. I’m still working on that myself but it’s not something my husband seems to get. :/ WIP.
Originally I was only going to use it for groceries. Then I thought, I need to get more miles, so I will use them when I go out to eat too. Except then I justified going out to eat more and having more fun. No good.
I’m sorry Melanie! 🙁 But I setback to happen to everyone. And you recognized it fairly quickly. The best thing you can do is forgive yourself like you said and regroup. I’ve had a very spendy December too…my big confession is that I’ve stopped even recording things in my budget because I know I’m so far over this month, and will start again next month. Not exactly good PF behavior. I’ve just been so insanely busy I dropped that one task from my to-do list. I also, back in October, too out money from my e-fund to buy my trip to Iceland. Another PF no-no. There is only progress, not perfection! You’ll get back on track again!
I’ve totally been there too! You spend so much money and you stop tracking, then you think, oh well, I’ve messed up and I’ll just restart next month! Setbacks happen and I still have years to go on the debt repayment so there will be more. I love that, progress not perfection. I need to remind myself of that everyday.
It is sometimes hard to admit these things, but honestly I don’t think debt-repayment is linear. It has its ups and down. By the way, I completely agree with you about the credit card thing… if I don’t have the cash (or debit) for something I won’t buy it. But if I have a credit card in hand I can just say “I’ll get it the next payday”, even though that next payday is already carefully allotted for. I personally love the idea of cash on hand because it makes it so much more real to me than a swipe of plastic (whether debit, or credit).
I’ve gotten back on track for the last month or so… but up until then, I was churning. Basically all my debt repayment had just paid for new purchases I had accumulated. So I’ve been there (and then some!).
It’s so easy to justify because you know the money is coming. But if you can’t afford it now, then why? You are so right, debt repayment is not linear at all. It throws curveballs and takes hard work, patience and maintenance.
I think December is going to be a challenging month for anyone with spending and debt repayment but you still rocked it with $900 Melanie! And your bigger picture of paying over $16K in debt this year is awesome!!! Merry Christmas to you and your boyfriend and I just know 2014 is going to be a great year for debt repayment for both of us! 🙂
Thanks for the well wishes, GMD 🙂 I really hope I can go above and beyond in 2014 and still afford some of my big goals and dreams!
I don’t think you failed at all. I just think you’re human 🙂 Look at the bigger picture you paid $16000 towards your bills HOLY CRAP!! That’s A LOT OF MONEY. Yes, I am capitalizing everything because I just got super excited and I think that’s what you should focus on. You ROCKED 2013!! Feel proud.
Human I am, ups and downs and all! Haha thanks for making me feel awesome, Michelle. You rock. I know I should focus on the 16k paid off, but I’m hard on myself and know I could’ve done better. But considering my low income and several trips I’ve taken, it’s still pretty darn good.
First of all, Merry Christmas! You have done an amazing job knocking off debt this past year. I do think, though, that you have discovered what a slippery slope a credit card can be. Instead of thinking of alternate solutions, doing without, delaying purchases and experiences etc., those old credit cards entice us to spend NOW! I have not used a credit card in 17 years. I don’t care about the miles, the perks, the rewards, any of it. Life is just more peaceful without them! Best wishes for much success in 2014!
Thanks, Isabella. Merry Christmas to you too. I really want the miles, but I think I have to restrict myself to just groceries for now and nothing else. I was getting out of control. Congrats on living without a credit card for 17 years! I hope you have a wonderful 2014 too.
Happens to all of us, alas. Don’t beat yourself up too much – just make a plan to deal with it and forge on! Happy Christmas.
Isn’t it crazy how those credit card reward milage programs get into our subconscious and get us to spend more!? That is incredible advertising.
Putting $900 against your debt is no small feat, even if it’s not as much as usual. Nice job one your accomplishment thus far.
Ah, I know that slippery slope of credit cards all too well – good for you for catching it really quickly (it sadly took me years). So proud of you for all the debt demolishing you accomplished this year – even with this small setback, $900 is awesome, so good for you! Happy Holidays and safe travels, my friend. xo
I wouldn’t get yourself too down on this, just like you said – you have to look at the big picture. And it seems like your big picture is headed in the right direction with 16K+ put into your loans over the course of this year. That’s not a small amount of money at all, and I know your pain with so much going towards interest payments…so congrats on your progress this year.
It seems like for the credit card you understand your spending increased, so I would say that’s half the battle. Maybe only use it for certain type of spending now? And just remind yourself that just because credit card has X limit your bank account still only has Y dollars for the month!