Knocking Down Debt Doesn’t Have to Be Dramatic or InspirationalPosted by Cap on November 6, 2008 |
You know, if you read financial blogs and related websites, you’ll occasionally see those stories about how a family or an individual dig themselves out of massive debt after years of hard work and due diligence.
They’re usually good stuff. Sometimes they can be dramatic: after losing a loved one, John Doe fought the insurance company, restored his family name and wiped the family debt; sometimes they can be inspirational: after losing her job at the local company, debt started piling up for single mom Jane Doe, but she continued to work hard and eventually found financial independence.
The truth is, debt reduction and elimination doesn’t have to be a news story, blog entry, or topic of the week. If you’re anything like me, you simply realized your debt got a little bit out of hand, readjusted your lifestyle and worked towards getting rid of those nasty bills.
That’s mainly the reason why I haven’t written about my debt all too much on this blog — it was caused by stupid reasons, and it came as easily as it went.
I don’t mention this now as to brag about how awesome I am in getting rid of $10,000 of credit card debt. Far from it. I mention this because if your life situation is anything like mine, you can most likely get rid of whatever debt you have within a reasonable amount of time too.
Here’s the story: I was about 19 year-old. I had an online business selling car parts and I worked part-time at Bank of America after school hours. Despite an income of about $30,000 per year (after tax), I quickly racked up a credit debt of about $10,000 when I was 20 year-old. I wish I can blame it all on tuition but I had Cal Grants covering my state university cost and portion of my rent. Heck, I even shared the apartment with two other high school buddies.
So what happened?
I simply lived beyond my means. I frequently ate out, went on trips, and lived the lifestyle of a bratty college kid. It was all fun and chill until I woke up one day, looked into my checking account of about $24.85, saw the credit card balance over $10,000 and realized I have a slight problem on my hand.
Months later, Cal Grant cuts back dramatically on the amount I was awarded with as the tax filing came rolling in, and Bank of America closes the department I worked at and laid everyone off. With less income to combat the sudden rise in financial responsibility, it was a classic case of getting screwed by your own stupid decisions.
So what did I do?
I moved back home and opted for the hour and half commute. Rent was the same, but you’d be surprise how much you can save if you stop living the “lavish” college lifestyle. As I glance around my room, I saw the massive amount of crap I had amassed (especially obvious after a move) and literally stopped buying crap — hence the stupid blog name.
Gone are the days of eating out each night, and taking trips I couldn’t afford. I made a simple budget, figured out my credit standing, transferred my balances to lower promotional rate offers, ditched the poor credit card usage habit, started piling money into the highest interest debt — and within a year I was credit card debt free (still had the car loan but that went its way a few years later).
My situation is of course easier than many others that may be in debt. Although I lost about a third of my income from the Bank of America job, I still had a pretty decent income for a 20 year-old. Beyond rent, school tuition, car payment, and car insurance, I didn’t have other financial obligations. And so as mentioned earlier, I made a conscious decision to live within my means and soon the debt went away.
Looking back, the real difference and turning point was my attitude with regards to money. I had this silly notion that I can always make more money “later” and it’ll all be peachy. But when things started getting tough, it quickly became apparent that I’ll never get ahead if I continued being financially irresponsible.
If your situation is anything at all close to mine, if you’re a college student seeing an increase in your credit card balance and a lower amount in your savings account, it may be time to look at your financial standing to see if something is amiss.
Don’t worry, I won’t get too preachy about how you should change your financial lifestyle — after all, it’s really up to you to make a conscious decision to bring about change. If you’re already on your way to getting rid of your mundane debt, more power to you. If you don’t think you have a financial problem (even though you might), eh, maybe you’ll realize it years later. Maybe not. Its your life and you know it best. As with many other things in life, we learn best from our own personal experience.
For those of you with the simple consumer debt, know that it can go away as easily as it came. Take heart in that these aren’t debts accumulated due to life changing situations such as medical emergency, serious job loss, or the loss of a family member. Know that you don’t have to make a dramatic shift in your lifestyle to get rid of the debt. If you make a conscious decision to combat the debt, the debt reduction will happen — and before you know it, you’ll be picking up healthier financial habits along the way.
photo credit: mjpeacecorps
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