Friday, March 18, 2011
Let's Talk About Debt, Baby
When I initially decided to make my debt reduction process a staple blog topic I never really intended on revealing exactly how much money I owe. Keeping with the Salt 'N' Pepa theme I have going here, I was of the mentality that the sum of my bills is "none of yo' business." But if being completely honest is something I intend to do in writing, and the result of which will, hopefully, connect me to other networks of support/camaraderie in the blogging community, I say what do I have to lose?
But we'll get to that later.
I intended on this post being about be about how I journeyed into financial ruin, but stopped short of hitting the publish button. It's not worth publishing and sharing because there's nothing unique about it and, quite frankly, it reeked of self-importance without at all being interesting. But for a point of reference, here is the drastically abbreviated version:
Received my first credit card at age 19--a shiny silver Citicard Visa with a $2500 limit. The lonely, sad and irresponsible f*&k that I was, I ran it up along with six other cards opened over the course of six years (more than six if you count balance transfers and accounts I closed). Now payback has come due.
I mean, really, that's the gist of it. So rather than go into more detail about how I filled an emotional void with shopping (eh, whether it's relationships, sex, food or narcotics, it's the over-told tale as old as time), I thought I'd focus on the more worthwhile aspects of the story: the lessons I've since learned from my financial mistakes.
Lesson 1: It's especially stupid to charge sale/clearance items that you're only purchasing because said items are on sale/clearance.
While it's unwise to charge anything you cannot afford, it's unwise-er (hah) to charge things you can't afford anyway and are only purchasing because it's marked down. It's pretty common to be lured into purchasing something you wouldn't pay full price for because the mark down is so great (i.e. "Wow. I can't believe this M Missoni dress is on the clearance rack! I don't really like spaghetti straps, but how can I pass it up for 75% off?") We've all been there. Lord knows that's how some pretty unflattering, so-so or downright fug-on-my-figure clothing has found its way into my closet. Kudos (I guess?) to you if you paid for those items in cash. Shame on you if you're like me and paid with plastic. Guess what? With accrued interest, I've probably paid over full price (and still am paying for) items that ended up in the donation pile. Painful.
Lesson 2: If you're young, remember you have your entire life to acquire nice, expensive things
Granted I'm probably considered young (just shy of 26), but especially for those young ladies out there still in junior high/high school/college, the designer bag/dress/pair of shoes you're lusting after isn't worth the blood, sweat and tears you sacrifice to obtain it--or pay it off.
I'll be the first to admit that it's hard. Now more than ever, we're inundated with imagery of fabulous and expensive things. Naturally, we start to want them.
About the time I obtained my first credit card, I also became involved in online fashion forums. Things I never knew existed were added onto my wish lists. Designer names and brands stared to really mean something. Shopping solely at The Limited and Express just wouldn't cut it anymore.
The idea of "investing" in my wardrobe became an obsession. I convinced myself that buying the Coach purse was worth it because I'd use it for years to come. I yearned for a pair of classic Manolos that I would last me a lifetime.
Reality check time: I'm certainly a believer in purchasing the best quality you can afford. Especially in the case of shoes and handbags, there's often a noticeable difference in comfort and longevity. However, even if your "investment" gives you several years return on wear versus a lesser expensive item, it's technically not an investment and will eventually become worse for wear.
Whatever the case, I get it. There's nothing wrong with wanting to buy a quality handbag that will last you five or ten years. What makes me sad, though, is seeing or reading about teens/young adults who, like my 19-year-old self, become so fixated on acquiring expensive things that it takes precedence over enjoying their youth. I see examples of it all of the time on fashion forums I visit. In one case, it was a high school girl trying to figure out how many hours she'd have to work over the summer to purchase a Chanel bag before school started in the fall. In my case, it was coming back to work in my home town every weekend throughout college so I could make money to pay for things I'd already charged (all while I continued to shop and charge more), giving up social opportunities and experiences.
My lesson learned? Enjoy being young. You may think the bag/shoes/whatever is something that will last you a lifetime right now, but chances are your tastes will change and you'll be on to something else five years down the road. No summer vacation should be given up for the sole purpose of acquiring an expensive hand bag. While it's admirable to work hard and save for something, it's not exactly the kind of experience memories are made of, especially when you're young.
Look at it this way -- you have the rest of your life to shop at Saks and Neiman Marcus, but it's actually the opposite for stores like Forever 21 and Abercrombie & Fitch.
I'm not on a soapbox here. This is just my opinion based upon my financial experiences.
Lesson 3: Don't Charge Takeout
For the love of all things sacred, say no to purchasing takeout on credit. The charges aren't the only numbers that add up (excessive calories, anyone?) So while you're digging yourself into debt via burritos or heavenly Chinese takeout, you're probably also packing on some pounds.
Lesson 4: Don't Mindlessly Shop
This one is a bit obvious. The way I shop today is a complete 180 of how I used to shop. It used to be about purchasing/consuming. Clearance racks and sales lured me into retail establishments with wide eyes. I wouldn't leave without buying. Nowadays, 90% of the time I enter the store because I specifically want or need something. Shopping is much more about needing to find a flattering dress for an event versus needing to fulfill the urge to consume.
Mindless shopping and browsing leads to mindless spending, which potentially leads to mindless debt accumulation. Take up a hobby and save yourself the troubles.
Lesson 5: Take other peoples' advice, but live your own life and learn your own lessons
Talk is cheap. You're still reading this, but it doesn't mean you have to buy into any of it.
When I first obtained credit cards, I had numerous people telling me to be careful and use it wisely blah blah blah. Precautionary tales and overbearing words of wisdom flew at me left and right. Did I listen? No, of course not. If I had, I'd be sitting on a rooftop deck right now sipping champagne and living the good life instead of chipping away at my mountain of debt.
Here's the thing: you have to experience things for yourself in order for it to stick. Nothing anybody tells you has as much weight in truth as living it firsthand. So maybe my life would be in less shambles had I taken some of those words of wisdom and choked them down, but there's value in figuring things (or life) out for yourself. Talk is certainly cheap, but you can't put a price on an important lesson learned.
Or maybe you can.
Mine currently costs about twenty grand. But I'm working on it :)