Greetings and Salutations
I’m a twenty-four year old girl living in one of the most expensive cities in the U.S. – New York City. I’ve always wanted to live in New York. There’s so much to do. Dance classes, voice lessons, cool clubs, movie premieres and such. However, the all cost money … and I’m broke.
How did I end up here? Living in the midst of one of the most culturally stimulating places in the world without the money to enjoy it? It’s a story that spans the last 8-9 years. I hope what I share will help some of you avoid the same mistakes I made. You can follow my day to day journey here but I will be posting here periodically and sharing whatever tips and tricks I come across. Where does this story start? Let me take you guys back, way back, into the past.
College Years
I had it pretty easy during college. I took out loans not because of need but because my parents were planning their cash flow. Whatever loans I took, they were going to pay off so I didn’t think too much about it. I was given an allowance each term and I worked on campus. I didn’t work a lot, just enough to make an extra $100- $150 every 2 weeks. In general, I didn’t think about money.
Fast forward to my senior year. Sometime in my last semester, I decided that it was important to have credit history. I had no cards and I had heard that no credit was worse than bad credit. I applied at my main bank (BOA) and got a student card with an $800 limit. That seemed like a lot. I used it every now and then and always paid it off. Then I applied for another card this time and got approved for a citi card with a $2000 limit. I was wowed! I went to visit a friend in a closeby city and we went to the mall. It occurred to me that I now had enough “money” to buy whatever my 17 year old mind could think of. I remember going into Louis Vuitton and looking at purses. I picked out one I liked and didn’t even ask for the price. I figured they were expensive but could not be more than $200. The salesperson rang it up and it was almost $450! I was floored. Not wanting to seem young and dumb (which in itself was young and dumb) I handed over my card. I think my heart dropped to the floor as I held that bag. I had never spent that much money before. Over the next couple of months, I went shopping. The new found freedom I had in never having to look at prices tags was exhilirating. I always had enough money to pay my minimum so I thought I was fine.
First Job
I got a job after graduation. However, it paid only commission and it would be a while before I got paid. My parents paid my rent and gave me money for things like utilities. However, it was my first apartment and I wanted it to look nice. Nevermind that I had no money coming in. At this point I had 2 additional credit cards – one with an $8000 limit and the other with a $7,500 limit and Martha Stewert I was determined to be. Long story short, I racked up more debt but continued to make at least the minimum payment.
This job didn’t last long, I got another job in another city and was making 33k a year. Half my pay went to rent and the other half to credit cards. I would usually have $10-15 leftover after I paid all my bills. Needless to say, I used my credit card for things like movies and food.
I went back to grad school and racked up more debt.
The Big Apple
I got a job in NYC and was excited to make almost twice what i was making before (62k). However before that, I decided to travel abroad for the summer. At this point, my father had given me money to pay off my undergrad loans but I decided to use it towards my credit cards since the interest rates were higher. I had zero CC debt but still had loans. This is when I most have really lost my senses. I decided that it would be no fun travelling around Europe with no money and so I took money out of all my CC’s that were having specials on balance transfers and took out money from a line of credit I had ($20,500) and decided to live it up. I had a very good time and I saw a lot but looking back, there was no need to be so extravagant. I had rationalized that it was a once in a lifetime experience and I would rather have fun now and concentrate on work when I come back and pay off my debts. This is basically where the majority of my CC debt comes from at this point.
The turning Point
Things changed after I read a book “Millionaire by 30″ by Alan Corey. It’s a very quick read, nothing fancy but reading about how he lived so frugally in the same city as me on a smaller salary, inspired me to rethink my ideas. I discovered personal finance blogs and read them hungrily. After a while, I started my own. I’m not perfect but I have certainly learnt a lot in 2009. At this moment, my total debt sits at $55, 632.60 (27,603 CC and 28 loans). This is down from 75,142,37 in october of 2008. I call that progress and I know that it will eventually get to zero.
This post was long and I promise the rest won’t be as lengthy. I hope to engage many of you in discussion and look forward to sharing with you.
Over and Out.
B-A-D
{ 8 comments… read them below or add one }
Congrats on being able to pay off about 20k in a little more than half a year. Good luck on your endeavors in paying the rest off.
Considering you only make $60k a year, I highly doubt you paid off $20k debt in about half a year by yourself. It sounds like your parents gave you a ton of money, as they did for your college and for living afterward.
I sure hope your parents are saving for their own retirements. It sounds like you have made a lot of progress as far as becoming financially responsible, but I’m guessing you still have a ways to go.
I hope you live within your means and use all the gifts from your parents as extra to pay down debts. I would be more interested to know how much of the debt you payed down vs how much money your parents gave you in that time period. It would give you a better sense of how much of your income you have saved.
I liked your post, I look forward to reading more, please take my criticism very lightly.
I think you mean “million bucks by 30″, indeed a great book. Good luck , nothing is stopping you but you.
It’s all about entitlement and living off Mommy and Daddy. It is the american way! Feel no shame. Just ask them for more money it’s cool. Everybody is doing it.
I totally hear you on the once-in-a-lifetime experiences. Those are so hard to determine if you’ll regret it later or if you will be thankful for the experience. I don’t regret the travel I did to adopt my kids (Ethiopia for a month and Orlando for a week, respectively, which account for a substantial amount of my debt) but I do regret some of my earlier debt-induced “once in a lifetime experiences.” like a four-day trip to New Orleans to stay in a four-star hotel BY MYSELF (yep, I didn’t even go wtih friends, and to make matters worse, being just 18, I couldn’t go in to hardly any of the establishments… I ended up eating most of my meals at Hooters because it was one of the only places in the area I didn’t have to be 21 to go into). Some once-in-a-lifetime experiences are bad. Oh well, I think that experience did help me to evaluate others more carefully!
Good luck in your adventures in the big city! I look forward to reading more posts here!
Jess
Thanks for the post. I can relate as most of my debt is from”experiences” or “things” that looking back I didn’t need or could have done cheaper. Most of my trips were done fairly cheap but often went over budget with drinks/food due to poor budget planning. But each experience has provided one heck of a learning opportunity most of which I am not soon to forget. Congrats on moving your debt down so quickly and good luck knocking it all out!
Yikes. I don’t mean to sound harsh, but I’m amazed that someone, even a 20-something, could be so clueless about money. Well, it seems like you’re working to correct those tendencies…right?
Considering you only make $60k a year, I highly doubt you paid off $20k debt in about half a year by yourself. It sounds like your parents gave you a ton of money, as they did for your college and for living afterward.
I sure hope your parents are saving for their own retirements. It sounds like you have made a lot of progress as far as becoming financially responsible, but I’m guessing you still have a ways to go.
Thanks for all your comments. It’s nice to get different perspectives.
My parents gave me a fair amount of money. I wish I knew the exact figures but I don’t. However, even though I only make 62k a year I did get a 10k bonus (minus taxes) that I put towards my debt and I got a tax refund of about 3k that I also put towards my debt so a good chunk of the debt payoff came from me as well.
I’m learning.
@ Joe, I do mean a million bucks by 30 thanks for the correction.
@ fern, maybe I should point out that I was about 15 when I started college and my parents never taught me much about money. It was just something in the background.