My sig explained (finally..and it's a fricken' novel)

wizardPC · 02-23-2005, 09:26 PM

I was once, not terribly long ago, young and stupid.

I resisted getting a credit card until about my junior year, when I accidentally set fire to a girl's car and needed to buy her new seats without asking my parents for the $400 it was going to cost me, because they would've asked why. So I got a card, bought the seats, and paid it off within a couple months.

It was my first card, so I got a "great" interest rate of about 15% which didnt matter to me at the time because I wasnt going to use it. Then I "needed" a new computer. And some truck parts. And a new video card. And.....well you get the point. I soon had about $2000 on that card that I wasnt ever going to use, with minimum payments of $100. I was living on about $700/month so that kind of sucked.

So I got another card with a smaller interest rate and smaller minimum payment and transfered the balance, maxing out the "new" card. So I kept the old card. The new payments were about half the old one, so that was cool. I again kept the old card for "emergencies," like weekend trips to Atlanta, New Orleans, and Knoxville--in my truck with 12MPG. So eventually I had both cards maxed out and minimum payments that I really couldnt handle. So I got a third card, not for emergencies, but for necessities like food because I was paying too much for my cards.

So then I started getting student loans for way more than I owed the school. At this point (about 3 years into college) I only had about 6 grand in loans total. I would pay off the cards at the beginning of the semester and buy something nice for myself with anything leftover. I repeated this several times, including putting a new engine in my car and paying about $3800 to get my pilot's license.

So then I graduated. New apartment, moving expenses, new TV, all kinds of stuff. About $3,000 worth of "new job" expenses from July to October of last year. Ooooo....wait....no more student loans. That's okay, right, cause I gots a Masters in IT, which means I'm makin hella money right?

NOPE. If you take the money I made from my assistanship, loans, and credit cards, it equals exactly my current take home pay. Only now, I gotta pay back the cards and the loans. Cards weren't all that bad, if I only paid the minimums which would've taken, oh, 6 years to pay off that way, then I still would have enough money to buy a new 2005 Mustang GT....drool....

Yeah, so after adding up the ~$30k for loans and ~$7k for cards, I was gonna go buy me a $30,000 car that I didn't need, but I was gonna wait till june so I could afford the insurance. The last straw in my own mind was when I bought 2 36GB WD Raptors for about $225 that I absolutely didnt need.

I was watchin CSI a little while later, and Nick told some grifter that "the best way to get out of a hole is to quit digging". DING DING DING DING!!!! We Have a Winner!!!! I realized I was not going to help my situation by still buying stuff just because I could afford the payments.

By continuing down the path I was travelling, I was setting myself up for a major meltdown financially and emotionally. If something happened, even something minor like needing a root canal or new brakes, my house of cards would come crashing down in an instant. Living paycheck to paycheck is NOT COOL.

So, I shredded my cards, cancelled the ones with zero balance, and started paying hella amounts on the 2 remaining cards. In 4 months I had paid down about $3500 of credit card debt without a real plan.

For Christmas, my sister's boyfriend gave me some Dave Ramsey tapes and 2 books because he had heard that I had had enough. I am now a "Dave Ramsey Cultist" as my boss likes to say. There are a lot of "Dave Says" comments coming from me lately, and everyone around me thinks I'm fricken crazy. I make $2000 a month, and I pay $1000 a month on debts. Can you imagine that? HALF?! WTF!

So, I got lots o crap that I bought because it was cool that is now--or shortly will be--for sale. I might even get a part time job delivering pizzas just so I can get my magic number down to ZERO. My goal is to have no debt by Jan 1 2007.

That's right, 2 years to pay off nearly $35,000 with a take home pay of only $24,000. I pay for everything with CASH now, because it hurts when you lay down a twenty. I have cut my spending by nearly 40% just by doing that.

Yeah, so um, any of you that read the whole thing, I commend you

Edit: Added graph 8/17/2005

The flat spot at the beginning is where I had to hold off because I was about to move 400 miles away. The one at the $15,000 mark is because my car exploded and I had to either pay $4000 to fix it or buy another $2500 car. Figures are not entirely "accurate" until May 2005 which is when I started posting the figures immediately after making a payment.

Edit #2: It seems that finally my alma mater has deactivated my webspace. No more pictures until I find a new host.

lgbr · 02-23-2005, 09:39 PM

I read the whole thing.

Keep at it! I've had to be careful myself, and I only use debit cards. Don't let this kind of thing knock you down.

I remember a while ago you said you had a problem with your O2 sensor and that you needed a new car before you moved since it couldn't be fixed. What happend to that?

nappyjim · 02-23-2005, 09:39 PM

your right, paying for everything in cash saves you ALOT of money, cause when your throwing down $50 on same new game it doesnt seem like much when your swipin you card.

But when you need to pull out 2 20's and a 10, it seems like so much more.

The most I have had is 6k, but it wasnt because of errant spenindg. It was actually had it down to 1,000 and was about to make the last 1,000 payment when my engine took a **** and i had to spend 5k on a new one.

Now my current debt is like 4k, buut i got 3k in the bank and when i get my taxes back, i will either have it all paid off or <$500.

Scouse Monkey · 02-23-2005, 09:40 PM

All i can say is well done on getting yourself sorted to pay it off - you are doing the right thing. $33K is a lot but at then end of the day it is only about £18K. I have a student loan of £15K i owe the government. It is different admittedly though as th way our students loans work is the interest is prtty much the rate of inflation so i have a little bit of it saved (about £2K) which is getting more interest than i am paying. The plan originally was to invest all my student load but having a good time and my G/F (now ex) drained my resources but i think - "hey what the hell - i can enjoy it when i am 80!".

I can only slightly know how it feels to have such large debts to credit card companies though. My total debt is just under £3k on cards but that is on 0% at the momnt, some is invested and i have not been paid properly yet so i have money coming to me - but i still hate being in debt as i have never owed anyone money before. I have learned this year jus thow easy ti is for debt to spiral out of control.

Good luck with paying it all off and don't let it worry you. keep cool and to your plan and it will be so nice when you have paid them all off.

wizardPC · 02-23-2005, 09:58 PM

Quote: Originally Posted by lgbr

...I remember a while ago you said you had a problem with your O2 sensor and that you needed a new car before you moved since it couldn't be fixed. What happend to that?

I still have that car, but since I still live in Mississippi it's a non-issue because they don't have smog tests here.

ChaCha · 02-23-2005, 10:05 PM

Congratulations on "getting it" as quickly as you did. There are a lot of people much worse off than you who have been walking a financial tightrope for decades. Imagine the added stress of having to take care of a family, children and planning for retirement. People are VERY unrealistic about how easily one can end up "upside down" in a transaction. Worse yet, bankruptcy is closer than most people want to admit.

Even though this has obviously been a painful lesson for you, I've found that the more painful a lesson is, the more I learn from it and the less likely I am to repeat it.

Keep the course, pay off your debt, and **** credit cards. The only debt really worth getting into is a mortgage or student loan, where at the end of the day, you actually have something to show for it. As you've learned, yesterdays must-have-it-can't-live-without-it toys quickly lose their luster when you're paying interest and fees in order to have them. Kudos bro!

rushnrockt · 02-23-2005, 10:14 PM

Quote: Originally Posted by nappyjim

your right, paying for everything in cash saves you ALOT of money, cause when your throwing down $50 on same new game it doesnt seem like much when your swipin you card.

But when you need to pull out 2 20's and a 10, it seems like so much more.

The most I have had is 6k, but it wasnt because of errant spenindg. It was actually had it down to 1,000 and was about to make the last 1,000 payment when my engine took a **** and i had to spend 5k on a new one.

Now my current debt is like 4k, buut i got 3k in the bank and when i get my taxes back, i will either have it all paid off or <$500.

I have another way of controlling that urge to spend. I am not big on cash carrying, since I never seem to have enough for the occasion that I need it. My credit cards like me (for a student anyways) so it would be easy to charge them and you know... end up $33,000 in debt.
Last year after I got my paid internship I was a little frivolous with spending, but I also got Quicken, and after seeing my monthly totals the first time, where I spent almost $400 on going out... and the expenses bar barely kept up with income bar.... That got me thinking pretty damn quick. Building a budget there also helps you understand how well or how badly you are going to be doing after the next paycheck.
So yeah, I recommend some sort of financial software to keep track of everything. Especially with more than once credit card, bank account (I got 3 and 3 respectively, plus PayPal). Good luck with paying it all off!

jcdillin · 02-23-2005, 10:33 PM

Yes, congrats man, i'm only about 4K in the hole myself but i've been working on getting out of that hole. Just takes time and eating raman noodles

Bugbyte · 02-23-2005, 11:08 PM

Bravo wizardPC! You learned your lesson early, not after you had to declare personal bankruptcy and wrecked your credit. Oh sure, you can still GET credit but you'll get screwed on the rates and it doesn't change your spending habits.

The golden rule I always follow is: Save your money to buy something, don't BORROW money to buy it. If you have to borrow it (schools, homes, cars aside), you can't afford it. For example - I want the new Mac Mini. I'm short about $100. I could put it on the cards. But I'll save instead. It will work just as good when I get around to buying it and who knows, maybe some schmuck who bought it as the newest, best thing will be getting rid of it and I'll get a deal.

But that's a really hard lesson to learn when you look around at everyone else who seems to be able to come up with the newest gadget, car, computer, whatever. It can feel a bit unsatisfying that you have your financial head screwed on right while everyone else seems to be enjoying their new home theater system.

I think, besides financial discipline, you also gained something else - maturity.

EsKALad · 02-23-2005, 11:18 PM

haha roman noodles...hahaha lol 4 for 1.00 4 meals for a dollar?? im there!

wizardPC · 02-23-2005, 11:46 PM

Quote: Originally Posted by EsKALad

haha roman noodles...hahaha lol 4 for 1.00 4 meals for a dollar?? im there!

Where are you shopping? They're 8 cents here!

I understand that I am VERY fortunate to have learned this lesson so early. My parents have 2 houses, 3 cars, and a boat that are all still being paid for. It got to the point last year where I had to start telling my dad to quit buying things because he had to start thinking about how my mother would pay the bills if he was gone--he's had several open heart surgeries and has been smoking for 40 years.

His reply? "I've got enough life insurance to cover all this." jeez...sometimes you just wanna smack your elders, dont you?

I saw the storm coming, but I really thought it was a summer shower instead of the hurricane it was until I listened to the tapes and read the books. This is the first month I have primarily used cash and I went from spending $300 at Wal-Mart for food and "necessities" for the last 5 months to.....wait for it....$80 this month--because I was using cash out of my "food" envelope that only had $200 in it at the beginning of the month.

I didn't really get the envelope system till this month and omg it's great. Based on my last 5 months (which I was easily able to track since I used my debit card for EVERYTHING, including buying 20oz drinks for a dollar), I put $200 for food, $100 for Gas/Cigarettes, and $60 for eating out. There's a week left and with a full fridge and a full tank, I've got $120 in the food envelope and $40 in the Gas envelope. Holy Crap!

If I consistently have that much left over, I will decrease those amounts and use the extra to pay down more debt. April is the first month I have student loan payments, but it isnt going to affect my budget because I am already paying so much against the cards.

Discover Card is going away in 6 days. YAY!

W6-Ryan · 02-23-2005, 11:58 PM

My Current total debt: $211,173.00
(mortgage, 2 car payments)

johnram · 02-24-2005, 12:26 AM

Like Dave says, if your friends don't think your crazy then your not doing it right. I saw him on 60 Minutes in November and I have been a convert ever since. I just busted my *** moving my company and got a pretty good bonus for doing so. It is going into building my emergency fund. His plan is easy to understand and implement, it just takes effort and drive. Congradulations on the good work.

It is amazing how secure you can feel by having $1000 bucks of baby step 1 in the bank. The oh **** factor really goes away.

EsKALad · 02-24-2005, 01:15 AM

8 cents?????????? **** dude.... my fam owns a grocery store and we sellem for 4 for 1.00... lol thats where i got that from.. but damn 8 cents? thats less than our cost price... go to ur local store buy them alllll and ship them to me lol jk and ill give you 5 bucks for your time lol..cut down sum of that debt!

meddler · 02-24-2005, 01:31 AM

I went through the same thing. My wife (GF at the time) an I had a total debt of $A50k (US$39k) and we were renting. My Grandmother died and we moved in with my Grandfather (not recommended in all cases!) We paid off the debt in 2.5years because we didn't pay rent and we did a budget. We stopped using credit cards. At the end of it after 3.5 years we bought a house and are now paying it off. Now if only houses were as cheap here as what they are in the US. It would also be nice if the interest rates were as low as yours too.
The point is that if you are sensible with what you spend then you will end up not having to struggle to find money to pay your bill and actually be able to enjoy life rather than worry about how you are going to pay for food this week.

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