Debt

Mid-March 2013 Debt Balance Update

Posted on by Double Debt Single Woman

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.

.

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

Still Dealing with Bad Past Financial Decisions

Posted on by Double Debt Single Woman

regret - the shopping sherpa

The Final Kicker

Yes, I am renting a room in a house now. However, my apartment is still not completely out of the picture. You see, last year when I foolishly renewed my lease in that complex, I did not get a standard 12 month lease. I got a 14 month lease.  So instead of my lease being up in January, it is up now in March. That’s right. For the past two months, I’ve had a sub-letter living here. They paid $300 less than the actual rent price because no one else in town was so financially stupid as to  pay the overpriced rent to live here.

Yes, here. I am now here in my old, now empty apartment after 2 weeks of selling most of what I own after the subletter moved out.

The experience has been bittersweet. Although I’m glad to be disconnecting from this place and launching headfirst into debt freedom, it is sad seeing everything that I spent so much time carefully searching for and selecting over the past two years, sold for pennies on the dollar or given away. And even though I’ve met a lot of lovely people through Craigslist in the last couple of weeks, its a bit of a kick in the teeth to see another round of people benefiting from my financial ignorance. Never again will I let this happen to me. Another lesson learned the hard way. I have resolved that I’m not going to buy another piece of furniture until I am out of debt.

So what? What’s the big deal, you ask. It’s all just stuff, you say. And you are right. But over the past 10 years that it took me to rack up $30,000 of credit card debt, part of that debt came from moving frequently throughout grad school. I have now realized that I have a pattern. I move every couple of years for various reasons – some within my control, some out of my control, but each time it required buying or selling furniture. Like the time I moved into an apartment that turned out to be unbelievably bug infested. I moved out soon after and left my furniture there. Or like the time I had to move away for a year to do research. I didn’t want to sublet the apartment I was in at the time to strangers (heard the horror stories) and couldn’t afford to put everything in storage for a year so my landlord let me keep everything in her basement. When I came back, surprise, surprise everything was covered in mold.  The furniture thing is just one spoke in the wheel of bad past financial decisions, but it’s times like what I’m experiencing now that make those past financial patterns salient.

Sofa with dollars isolated on white background

It’s not that I miss the furniture that I sold/gave away. It’s that I can’t help but see all the money and time wasted in every thing or every box of things that someone carried out of my apartment. I’m done with stuff for the foreseeable future.

The rickety bed and other salvage furniture that I have in the room that I rent now are provided by the owner of the home. I plan to stick to furnished rooms while I’m paying off my debt. If I can’t find one, I have a small inflatable mattress that I will sleep on. In fact, I’m sitting on it right now in this nearly empty apartment.

I’ll be handing over the keys in a few days after two years of living here. I’m ready to chart a new course in my life. Now I have a map. First stop, debt freedom. Final destination, financial independence. No more detours.

Photo credit: Regret – the shopping sherpa @ flickr

.

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

Is Extreme Frugality for You?

Posted on by Double Debt Single Woman

frug coneslayer

When I talk about extreme frugality, I’m not talking about ‘Extreme Cheapskates’ who take risks with their health and safety.

I define Extreme Saving or Extreme Frugality as living on 20 to 40% of one’s take home income. I am practicing extreme frugality, living on 25% of my net income, not as a lifestyle, but out of necessity.  When I am out of debt, I will always retain a frugal mindset, although I will not practice it so extremely.

Are you the extreme type?  Here’s how to tell if you are ready for extreme frugality to get out of debt. You are are ready if the following principles resonate with you.

1. You Can’t Outearn Stupidity

Dave Ramsey is fond of warning anyone who will listen that when you are in debt, you have to change your lifestyle. You can’t simply get two or three jobs without making adjustments in how you think about money and how you manage it. In other words, you can’t outearn stupidity.

2. You Are Not Your Crap

You must be willing to give up materialistic things and stand on your own with out them. This doesn’t have to be forever or for all things, however you need to know who you are without them. You need to learn what you mean to people without them. You have to break the  consumerist, materialistic mentality that got you into debt in the first place. You need to really know that you can live without any of it. You are not the labels on your clothes or the hood ornament on your car. You need to give it all up for a period of time. You are not your crap.

I always thought that I was not materialistic, but now I can see that I was, at least somewhat. Digging out of debt is teaching me to be very conscious and very selective about the things that I want to buy when I’m out of debt and what they will mean to me. I’ve also learned that I’m more interested in experiences than stuff.

3. You Need to Live the Lesson

burner

You are the type of person who needs to experience something in order to truly understand it. You need to feel the pain of the consequences of your past bad decisions. Most of us have learned the lesson of our financial mistakes mathematically, but there is more to learning a lesson than just math for some of us. For some of us, we need to LIVE the lesson. Some of us need to metaphorically feel the pain of the hot stove on our hand, to learn at a deep visceral and permanent level not to ever make the same mistake.  We need to live through the consequences of being financially illiterate, gullible, and uneducated about personal finance.

Everyday when I wake up and go out into the world, I am keenly aware of the gulf between where I am and how I present myself, and where I feel I should be and how I’d like to present myself.  It’s depressing.  When I’m down, I remind myself of why I’m living this way and what got me here. When I’m taking crap at work I remind myself that my poor decisions with money, and resulting debts, have trapped me in this situation. I am living my lesson, thoroughly. And once I am out of debt, this is a lesson that will NEVER be repeated. EVER.

4. You Need to Get On with Life

By being an extreme saver, you get out of debt faster. You are ready to rip the bandage off quickly, to live with more discomfort, but for a shorter period of time.

I don’t want to pay this debt for 30 years and into my old age. Even the 10 year repayment plan for my student loans is too long. I’d like to save money and live abroad for a year. I don’t want to be in my 50’s before I can afford to do that. Debt carries too much risk for me. At any point in a 10 year or 20 year repayment plan, I could become injured or ill or unemployed and we know what happens to people who default on student loans. Life becomes a living hell. My goal is to be out of $140,000 debt in 3 to  5 years, depending on how much money I can make and save. I’ll be in my early 40’s by that point and still young enough to let my hair down and have a good time while I save for retirement.

well travel

These are just a few reasons that attracted me to temporary extreme frugality. It is not for everyone, nor should it be. Is extreme frugality right for you?

.

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

.

Photo credits:

Frugality – ConeSlayer @ Flickr

Well Traveled – Andy Barrow @ Flickr

Burner – Muffet @ Flickr