In Which I Learn A Painful Lesson

I'm feeling a little discouraged today.

Have you ever had to admit that you were in over your head and you needed help?  Then help arrived and you felt relieved at first, but then you started feeling really, really discouraged because you couldn't do it on your own?

So, I like pretty things.  I like sparkly things.  I like colourful things.  I like things that are soft and fluffy.  I like things that are expensive.  Things you can read.  Things you can wear.  Basically, I like things.  Any amount of things, things of different shapes and sizes, colours and textures.  Things make me happy.

Spending money makes me happy. 

Money for me has always been a means to an ends.  I want this and I need money to get it.  Seems pretty simple, right?  It is.  Until big bad credit card companies start promising you a world full of things and then when you're not looking they 'up' your limit.  All of the sudden, things are everywhere and money is nowhere to be found. 

When you're spending money just as fast as you're earning it, you never have anything left over for a rainy day.  Whether that rainy day involves new brakes for Rosie (yes, I named my car.  You haven't?) or a root canal, you can always be sure that unexpected rainy day is super expensive and puts you so far behind you forget what ahead looks like. 

This has been my whole adult life.  Never getting ahead financially.  Always, always behind.  I had a visit with the credit counselors a few months back, and they had some pretty helpful tips (which you can find here). Unfortunately, for me, I was far more attracted to the lure of the almighty *thing* than I was the almighty savings account.  

To be clear, I'm not poor.  I'm not exactly rich, but I'm by no means poor.  I make a comfortable income bossing people around all day (as nicely as possible, of course).  I don't live lavishly either.  I own one Coach purse and almost choked when I bought it.  I never pay over $50 for a pair of jeans.  I only ever dream of Loubotins or Jimmy Choo's.  I prefer silver over gold.  The thing is, you don't have to be rich to live in debt.  You also don't have to buy expensive things to be in debt.  It kind of sneaks up on you while you're buying nail polish and groceries and clothes for a growing boy and paying bills and getting your hair all done and eating out here and there and here and there and a Starbucks latte here and a Timmies double double there and body lotion and that cute summery top that was on sale and the gorgeous silver converse that were on sale and the trip to Costco....and before you know it you're $10,000 behind.

$10,000.  To some it's pocket change.

To me...it's a sentence.  A life sentence.

So, this credit counselling company is going to take all my credit cards away, take away the interest payments, and consolidate all this into one low, low monthly payment that I will be paying for the next four years.  The only hitch is that for the next four years I will not be *allowed* to have a credit card.  Or credit of any kind for that matter. 

At first I felt overwhelming relief.  This was a fabulous freeing feeling.  I was free from the interest that was eating up my paychecks every single pay day.  I was free from the taunting from the credit cards, 'use me, use me, use me'.  I was given useful tools for how to budget and how to save my money.  I was admitting defeat and learning from my mistakes.  I was growing.  This was going to be a fabulous thing I was doing.

That feeling didn't last very long.

Because then I remembered that I couldn't do this.....

 Or wear these.....

Or get a manicure like this...

Or buy a ring like this....

And then I realized this was going to be no walk in the park.  This was going to be hard work.  What on earth am I going to do with my free time if I cannot spend money?  I mean, all kidding aside...my hobby is shopping.  Not window shopping...actual, let's spend some money, let's buy something shopping.  My clothing budget for the year is $360.00.  I've budgeted to spend $10 a week on coffee.  Yes, you read that right, not $10 a day, but $10 a week.  I have a $10/month budget for books.  Uh....hello?  Do you know what this means?  This means I'm going to have to *gasp* get books from the library.  I can't buy anything on Ebay for 4 years.  I can't book a flight online for 4 years.  I cannot buy anything on Etsy for 4 years.  Technically (eye roll) I can't do that now, either because my cards are all maxed out.  But 'technically' never really sat that well with me anyways. 

Realistically, these are skills I'm supposed to be learning for a life time....not just the years until my debt is paid off.  But my vision goes all blurry (eek!  No laser eye surgery for 4 years), I get ringing in my ears and I feel a little faint when I think of just how drastically my life is going to have to change, and how little say I now have on the topic.  That might be the worst of it...I have no control over it.  Some gal named Linda does.  I don't even know what Linda looks like, and she's got all my credit cards.  Sigh

Some lessons in life are a little more painful than others.  I guess this is one of them.

Get Outta Debt (aka...stop having fun?)

Isn't it so pretty and colourful - Canadian Money!!

For me, money has always been a means to an ends.  Unfortunately, that motto has created nothing but debt.  I have had the same $10,000 in debt for the past ten years, at least.  It's not a lot, I get that.  Of course, there have been many set backs - becoming a single mom, getting laid off from one job or another - but there comes a time when all those things just become excuses.  My debt is pocket change for others.  But it just sort of lingers.  Every time I pay some down, I spend it on something else and bingo bango...I'm back up to the same ten grand.  My credit cards are at their limit, I'm always in overdraft, and I impulse buy All. The. Time.

They say that the definition of insanity is doing the same thing over and over and expect a different result. 

I'm going to pause a second while that sinks in. 

Think about it...how many times do we do the same thing over and over and over and expect the outcome to be different than it was before?  I've been doing it for 10 years with my finances alone.  Not to mention my weight issues (yet another story for another day).

I decided that I was done with being insane.  I admitted to myself that I could not manage my finances on my own.  I needed help.  I admitted defeat.  I had no idea how to get out of debt on my own.  I didn't even know where to start.  I guess it all sounds simple.  Stop buying the Coach purse, the jewelry, the make-up.  But what do you do when you just can't stop?

You declare bankruptcy so you can start all over again without any consequences.

Just kidding.  Seriously.  But that is funny, right?  Am I right?  Some people just don't get my humour.

I called a credit counselor.  I started at http://www.nomoredebts.org/, a non-profit business that helps people get out of debt.  Initially I thought they would just be able to help me get the credit card companies to lower/eliminate the interest rates so I could start paying off the actual debt and not just waste my time paying interest.  The wake up call was when I got my one bill that said, "if you keep paying off *** each month you will pay this credit card off in **31 years**.  The unfortunate part of this avenue, however, is that they cut up your credit cards and you cannot get another one until your debt has been paid off in full.

Yikers.  I'd be done paying off my credit cards when I was 65 years old.  Would my Coach purse still be fashionable in 31 years?  Would pink still be my favourite colour when I was 65?  Did I even consider asking myself that question when I impulsively bought the purse on e-bay?  Absolutely not.  Didn't even cross my mind, to be honest with you. 

I swallowed the lump in my throat and made the call.  We went over my budget -

NMD:  "Do you need to spend $100 a month on make up?  Could we lower that?  What about tanning?  Is that an essential part of your life?  Could we eliminate that?" 

Me:  "I guess so..."

NMD:  "Do you have any assets?"

Me:  "Does a Coach purse count?"

NMD:  "Uh...no."

Me:  "Then no..."

She was actually very, very helpful and very, very non-judgemental.  She laughed at my silly, self-deprecating jokes, and actually understood my spending habits...

NMD:  "Did you find that when you quit smoking you started spending more money?  Because I totally did.  I would justify it as a reward for quitting...I deserve this."

Me:  "Yaaaaaa, totally."  In awe.  Even credit counselors have to fight against the desire to spend, spend, spend.

In the end, we did not consolidate or request that the interest stop on the credit cards (although that is still an option if, in 6 months, I find I'm nowhere near my goal.)  What we did instead, is set up a budget.  We set up goals and I was given helpful tools as how to achieve them. 

Here, are some very simple ideas that I had no clue even existed.  With these elementary tools (and a little bit of self control) I will see my debt vanish within the next two years. 

1.  Set up more than one account - You need a saving account that your paycheck is deposited into.  This was completely news to me.  Why would you put your cheque into a savings account and not a chequing account?  When you get paid, you automatically take out enough money to cover half of your bills and put it in your chequing account.  This way, every time you have a bill to pay, you have the money in your chequing account and you will not default on those payments (ie:  rent, car payments, insurance).  Another account is set up as a true savings account, like a TFSA (Tax Free Savings Account - I don't know what you Americans have as an equivalent) that you have no access to.  As in...you can put money in, but it is very difficult or a hassle to get money out.  Your original savings account is where your groceries come from, your gas, your essentials...head up...hair appointments are not essential...

2.  Make even, consistent payments - If I get a little bit more money (from overtime, etc) I tend to put a huge lump sum payment on my credit card.  The only problem is that I misjudge how much I will need for the essentials and then have to go back into my credit cards to pay for necessary items like a manicure, ahem...groceries.  Instead, budget (there's that word again!!) for consistent payments that equal more than your minimum payment.  For example...budget to pay $100 per month, every month on credit card A.  If you get a large lump sum of money (a tax refund, for example...kids are great for tax refunds, btw...the little dependents that they are), you have the choice to put some of it on your card, but whether you do or not...you're still making the consistent payments and you have a timeline.

3.  Still do *fun* things - You're in debt, you're not dead.  If you stop spending money completely on fun little things, first of all - your miserable, and what's the fun in that?  Budget for a manicure once every 3 months or a movie night once every so often.  What you're avoiding by doing this is a binge buy, where you just can't stand the monotony and the hangnails anymore and all that hard work is gone and your credit cards are maxed out once again.  That bonus from work?  Use some to pay off the card, use the rest for a trip to Disneyland (why thank you, I think I will!!)

4.  Put your credit cards on ice - Literally.  Put them in a block of ice.  It's impossible to use it if it's sitting frozen in your freezer.  The principle behind this is that you either have to chip the ice away or wait for it to melt to use it, and hopefully by then you've talked yourself out of the purchase.  Or give it to a family member...me, I gave it to my mother...to hold onto it so you do not spend it.  Of course, this means you have to close your paypal account and remove all on-line accounts that you could spend on impulse. 

5.  Learn to say "No" - Willpower.  Rationalize the purchase.  Do I really need this?  $250.00 can feed a healthy adult for a month, $100.00 for a child.  If you're spending much more than that, evaluate what you're buying.  Healthy food or junk?  How much food are you wasting or throwing away?  Do you need the two tubs of ice cream?  Will one suffice?

I'll continue to blog about my debt management.  Will I need to go back in six months and consolidate the credit cards and lose them all together?  Will I gain the will power to do it on my own?  Oh, the suspense is KILLING me...

Hopefully, I'm not just getting myself out of debt.  Hopefully, I'm also giving my son a healthy respect for money, and teaching him how to respect money and finances.  Fingers crossed.