Mid-March 2013 Debt Balance Update

credit card

In January my credit card debt was maxed out at an all-time high of $30,340 on one card. How can someone still in school (grad school) with no assets or collateral be given a limit of over $30,000? That’s a good question. Someone should call Citibank and ask them.

As of March 16, my current credit card debt now stands at $24,998.  I’ve been throwing all the money I make from selling my stuff at the balance as well. Now that I now longer have to subsidize the rent on my old apartment, I should be able to really throw everything at this debt. It feels as though the debt is being reduced so slowly. With a balance this high and a 19.99 interest rate* I’m paying over $500 per month in interest alone. As I get more principal paid down, my interest paid will be lower each month as well. More and more money will go to principal and my debt snowball will be at full speed.

*I’ve never been late or missed a payment in all these years. My rate is so high because just before the Obama Administration passed the Credit CARD Act, banking institutions everywhere jacked up interest rates preemptively.  Those of us with high balances who could not pay them off or move them elsewhere were stuck with these inflated rates. Not that missing a payment means much to me now. I’m done being a good little profit center, making minimum payments and making rich people richer.

I got my annual reminder that my Amazon Prime account was going to automatically renew. The old me would have approved it, but the ‘Get Out of Debt’ me quickly blocked it. I used to buy something from Amazon once or twice a week, but this year I’ve only bought a few things that I needed like ink and paper for my printer.

My second job starts next week. I’ll keep you updated and let you know how it goes.

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“Debtor’s prison is real, and opportunity cost is a bitch.” (DDSW)

Locked Up USA: Student Loan Edition

Every once in a while when I have a spare hour among my three jobs, I like to stream an episode of Locked Up Abroad.  (Record scratch sound here.) Yes, Locked Up Abroad.

locked up header

I started watching the show when I was still in my pricey apartment. Initially, I thought I was drawn to Locked Up because of my interest in seeing representations of exotic locales and the basic drama of the program. But as time went on, and I began to make plans to move and downsize, I realized that I was drawn to deeper aspects of the storyline.

Those of us making sacrifices to get out of deep debt often see ourselves in a metaphorical debtor’s prison. For many of us, while watching Locked Up Abroad, we  can see the parallels  in our own financial lives.

lua worried woman

In Locked Up Abroad, a relatively good person gets into a tough financial situation. Sometimes this financial need is real, but most times it is perceived. Next comes the inevitable bad and life altering decision. For some of us, this may have been the need of a college education, and the bad decision to attend an expensive university with big student loans.

We enjoy the fruits of our clever moves for a little while. The expensive college environment, an off-campus apartment, the smell of ivy and textbook glue. We allow ourselves the luxury of dreaming of a future life that will be better than what we came from. With the right effort, we expect to experience upward mobility. We dream.

lua - having fun

But we can’t stay in dreamland forever. After a while, it becomes apparent that it will be time to pay the piper soon. We get a wake up call when we see the loan debt we have accrued so far. We start getting cold feet. ‘Can I go through with this? Maybe I should stop now. But I can’t stop now. If I stop now, I’ll have nothing to show for all that I’ve done so far. I have people back at home counting on me to finish this.’  Next, ominous looking student loan notices start showing up at the door. We are becoming fearful for our future. But we buy into the sunk cost fallacy and decide to continue with everything despite the deep risk we now realize that we are taking. Reality is sinking in.

lua -woman with smugglers

We have now graduated and are likely underemployed. We are barely paying our bills, just squeaking by. Perhaps we realize that with all the debt we have, we’ll never have enough cashflow to buy a house, or start a family, or take a vacation that we see everyone else enjoying.  Meanwhile, either our loans are due after the six month grace period, are coming off of forbearance, or we simply have an unexpected financial expense. At this point, we have crossed the event horizon. We have passed the point of no return.

LUA - squeaking by

Around now, we experience a reckoning. Our bad decisions have caught up with us. We’re caught and exposed. There is no place to run. There is no place to hide.  We feel embarrassed. We have to pay. We hit rock bottom. That’s when we begin to do  hard time in debtor’s prison.  On the show, it is the prison segments that really strike a chord with me. Now, living in my small 10 ft. by 10 ft. old rented room with three pieces of salvaged furniture, I sit and think about all the decisions that I could have made differently to avoid my current situation. With roommates, I have little space and little privacy. This is not the life I envisioned having at 38 years old.

lua - cell

The show  helps me to see how they coped and survived their imprisonment; not knowing when or if their ordeal would ever end.  I can relate in some small way. I would never try to compare my situation to theirs, but watching the show helps me to cope when I need it; if only to keep in mind that many others are facing much harsher consequences for their poor decisions than I am.

LUA - hope

Even in the face of uncertainty, those of us in deep debt must stay hopeful. We must stay focused and disciplined when it comes to what we do with our money. We must protect it. The longer we stay on good behavior, the more of our debtor’s prison sentence will be reduced.

Remember that the prisoners on the show eventually regain their freedom, as will we.

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“Debtor’s prison is real, and opportunity cost is a bitch.” (DDSW)

And here comes the real world…

I’ve moved into my new digs – a 10ft X 10ft room in an older home out in the boondocks. It’s a big change from living in the heart of downtown, but I don’t miss the fancy apartment nearly as much as I thought I would. There is a bus stop right across the street from my new place which takes me to town and to my workplace. (I have no car, so this is awesome). Even though very few people my age would be willing to do what I’m doing and live how I’m living, I wake up every morning thinking of how much money I’m saving each month and it makes it all worthwhile.

My family, of course, thinks I’ve gone off the deep end.  Giving up a great apartment, selling everything. They talk to me with concern in their voices. They know that I have debt, but they have no idea how much. And I’d like to keep it that way for the time being.

So far my Citibank credit card balance is down from $30,340.oo to $28, 469.02. Not bad, but not on target. Why?

And here comes the real world…

Reason 1:  Expiration of Social Security tax cuts. I now have $100 less in each paycheck. That is, my monthly pay is now $200 less. I have lost $2,400.00 a year just like that. So, that’s is almost one month’s payment to Citibank that the government is taking back.

Reason 2: I’m experimenting with starting a side business (a third job)  that may be another stream of income, but it will take time and upfront investment. Not a huge investment, but one or two Citibank payments worth. If it works, it will pay for itself and generate a small profit over time.

Good News

The good news is that my second job started last week. We have a training / orientation stage for the next few weeks and then we are on our own.

I also got another student loan forbearance approved for the next six months. My goal is too get a big chunk of this credit card down before the student loans kick in. I cannot wait for this credit card debt to die. I will have a little celebration when that balance is finally zero. If the card weren’t full of toxic chemicals I would toss it into the first bonfire I come across and then dance like a madwoman. The people already there may call the cops, but hey, it would be worth it. Hmmm, on second thought, I will likely just cut it up and treat myself to a nice dinner.

The Not So Good

One thing that I am already experiencing is a lack of time. Yeah, surprising huh? Who knew that three jobs makes you crazy busy.  I will have to pace myself to avoid burnout.

Another thing that I am experiencing is lack of focus. It is difficult for me to stay focused at my first (primary full-time office) job or my second job (part-time) because I can’t stop thinking about my side venture (3rd job).

Working for myself and making my own money excites me. As I get older, I’m starting to dislike taking orders from and working for others. I’m no longer interested in advancing someone else’s agenda. I want to advance my own agenda. In the distant future, when I am financially more secure, I would like to work entirely for myself.

Keeping Perspective and Holding On

I keep these goals in my mind as I wait in the dark and freezing cold after work for my bus, which is chronically late during the afternoon rush hour commute home. Not 10 minutes late.  About 25 – 45 minutes late. If the bus is already full, as it often is during rush hour, it doesn’t stop to pick up anyone else so I must wait for the next bus. Even when I’m standing there with my fingers and toes frozen and  hurting from early stage frostbite, and feeling poor and pissed off, I have to cope with the situation. I keep the big picture in mind. Not only my personal debt freedom, but that in the grand scheme of things, my temporary discomfort is nothing compared to what others are going through around the world.

As I get ready for another week of work times three, I have to keep in mind how important it is to have a clear picture of what you want and the reasons why it matters to you. For me, I want freedom and control. I want to be in total control over how I spend what’s left of the limited time that we all have on this earth.

What do you want in life? Are you ready for the real world? I say, bring it on!

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“Debtor’s prison is real, and opportunity cost is a bitch.” (DDSW)