Yes, $20,000 worth of stuff in one year. That’s part of my story… From a young age, I had a natural desire to save. At 10 years old, I asked my mom if I could open a bank account. There were limits on the control I had. So, I couldn’t actually put the money in the bank myself. But that didn’t matter to me. What mattered was being able to save the money my grandmother was gracious enough to give me. Over those years, I’d always been told, “save, don’t spend,” “do not spend what you do not have,” etc. And I did pretty good with those principles. I avoided credit card debt by paying off my balance every month. And I saved more than I spent. If I wanted something, I understood that I had to save for it. And once I saved enough, I made sure I still had emergency savings left after getting what I wanted. So, I was doing well by listening to my mother’s advice. But all that seemed to fly out the window after I bought my first home. Here’s how it happened…
2 Things I Traded In Two things: Instant gratification and image. That’s how I ended up more than $20,000 in credit card and personal loan debt… in less than a year. And I rang up nearly half of that in about a month. I knew what I was getting myself into, but my desire to get what I want now and have it all “together” mattered more to me at the time. Before I went on my spending spree, I came up with a plan. I wrote down how much I expected to spend; I searched for ways to borrow with less interest; I wrote down how much I was earning at the time; I decided the date I wanted to pay the debt off by; then, I did the math. By then, I knew I could open up two credit cards with 0% interest. So, that’s what I did. I opened up one with 0% interest for 60 months, and I opened up another with 0% interest for 21 months. I knew I was going to spend about $4,000 on the first card and the rest on the second one. So, I calculated how much I’d have to pay on each card every month before the interest would kick in. It came out to less than $300/month in payments. Assuming the rest of my bills and living expenses would stay the same and I’d make the same income, I figured it was a good plan. Only thing left to do was go spend. So, a couple visits to a few stores, and there you have it. And less than a year later, I added on over $13,000 with a personal loan. I can tell you not one red cent of the $20,000-plus I borrowed was a necessity. I could have settled for cheaper alternatives or simply waited until I had the cash. But I wanted all those things. The furniture, the decor, the home upgrades… And I wanted them right away. I didn’t want my home to look empty. How would that look?, I thought. But I’m the one who had to pay my bills. I’m the one I was living for. And it shouldn’t have mattered how it “looked,” as long as I had a roof over my head, a place to sleep, and food to eat. Everything else would come with time.
Circumstances Now, going off of my circumstances at the time was good. I made a plan to pay off my debts over time. But what if my circumstances would’ve changed? What if I lost my job or ended up with a pay cut? What if I had to pay for an unexpected emergency? Then what? I had always known not to spend what I did not have. But there’s nothing like seeing the lesson in real life. Thank God I wasn’t put in any of those predicaments. Otherwise my “plan” would’ve been turned upside down. Thank God I used the situation I got myself into as motivation to pay off those debts. I worked hard to stay within my budget, even when I wanted to splurge. And I got rid of the credit card debt in about 16 months. And the rest? I paid that off last year. To be honest, I never had any intention of paying off the personal loan. I figured I could probably just deal with it when the time came. Until then, I’d pay the minimum. In the beginning, I knew how much in interest I’d pay over the years. In fact, if I took the 20 years my lender gave me to pay it off, I would’ve actually paid more than two times as much as I borrowed… just in interest! But still, I had no sense of urgency… until I came across a ministry that completely changed the way I viewed money and debt. (That’s not even the half of it. And I want to encourage you to check out what this ministry teaches.) Only then, did I learn what I did not know. Only then, did I learn the good way, the better way, and the best way to handle money. And I’m so glad I did. Not only was I able to use what I learned to pay off the personal loan, but I was also able to pay off my second mortgage this year. Those two combined, that’s almost $25,000. If I talked to the person I was four years ago, I would’ve never believed the words I’m saying now. It all would’ve sounded very unrealistic at the time. But sometimes, the ability to accomplish something has little to do with what “looks” realistic. But everything to do with what you believe.
My Reason Why I’m telling you my story, for a few reasons:
- It’s one of the reasons I’m now a financial coach. There’s no sense in allowing someone to learn something the hard way… when I’ve already done it. Smart people learn from their mistakes. But wise people learn from the mistakes others make.
- Nobody is perfect. We all make mistakes… Even those of us who know better.
- You can do anything, if you put your mind to it.
- You are never alone.
I don’t know what situation you’re facing right now. And I’m not going to pretend like I understand. My story may be very similar to yours. Or, it may not even remotely compare. But I do know that there is always someone out there who is going through the exact same thing you are. Money. How much we have… and how much we don’t have… It takes courage to talk about these things. But it’s necessary. No one—and I mean no one—can help you, if you don’t say something. I’ll always be looking for ways to help others with their finances. Because, to me, there’s room for us all. And someone needs to tell you that it’s okay not to have it all. It’s okay to live modestly… Because the burden we put on ourselves to “look” the part pulls us further and further away from our freedom. Our freedom to truly live life, to love others, and to give to each other. It’s better to learn from someone else’s mistakes than it is to learn by making those mistakes yourself. If you made a mistake, say it. It’s okay not to be perfect. Nobody is. I hope that me sharing this today shows you that you don’t have to pretend to be. And, if nothing else, I hope that my story will help you see that there’s someone out there just waiting to hear yours.
With gratitude,
Melody C. Kerr, MS
Writer, Editor, Financial Coach
P.S. Want to know how to avoid the mistakes I made? Ask me right here.
