It’s All My Fault

As an adult in debt that is not related to absolute necessity (i.e. medical debt), I am fully aware that my debt is my fault. Not my parents’ fault because they didn’t tell me what to do with my money, not my school’s fault because proper financial education was not required, and not the big bad credit card companies’ fault for giving me credit when I was young and irresponsible. Mine.

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At the age of 18, we are officially declared adults. We can vote, smoke, have holes drilled into our bodies, and obtain credit with little to no income. I did all of these things. With this power comes great responsibility (thank you, Uncle Ben!). Adults are in charge of themselves. Therefore, whatever happens to them is directly influenced by the way they choose to live their lives.

Sallie Mae did not hide the fact that I would eventually owe the money I was borrowing back with interest. Neither did Visa. They gave me paperwork that laid this information out, and I signed it.

I am in a heap of debt. While it’s frustrating sometimes, the one thing I don’t do is play the victim. If you blame everything and everyone around you and do not take responsibility for your debt, you are essentially saying “I am not an adult. I am a child who ate too much candy and got a tummy ache.”

Grow. The. Fuck. Up.

If I may quote a movie (and I may because I’m the one writing this), “Stop feeling sorry for yourself. Okay, ‘cause I don’t associate with people who blame the world for their problems. Because you’re your problem Annie, and you’re also your solution.” If you don’t know which movie this came from, we probably can’t be friends. It’s not personal, I just really can’t associate with people who don’t watch awesome movies.

Own every decision you make in adulthood. You should be proud of and/or learn from every single thing you do. When I get mad about my HUGE amount of debt, it’s at myself. No one else spent that money for me. No one else over drafted my checking account like twenty times freshman year. No one else decided to max out my credit card buying spray paint. I did ALL of it and I own it. Because blaming it on someone else would be me waving the white flag to adulthood. It would be saying, “I can’t make my own decisions”. It would be the easy way out and I would lose all respect for myself.

So please, stop blaming:

Your parents

Your teachers

The economy

Marketers

Credit card companies

Banks

God/Allah/Buddha/Satan/Nature/Dave Ramsey/Me/Whomever or whatever the hell you believe in

You’re your problem. And you’re also your solution. Decide today to own your life.

Defenses against credit card debt

This is my last credit card statement:

There’s a fair bit of turnover on my card. As I’ve mentioned before, I use my credit card whenever I can on whatever I can, from my cellphone bill to groceries to shopping. I’ve said this is primarily for the airmiles, but truthfully the biggest benefit to using my credit card for everything is ease of tracking my purchases. If everything goes on the card, then everything is on the card statement, and that makes it really easy for me to see where I’ve spent my money. It also keeps me from getting dinged a fee for using too many debit transactions on my debit card.

Anyway, look at that balance: a modest $600 + change. But look at that minimum payment: $12.

Seriously? $12? In addition to being a mere 1.90% of the total amount owed, it’s a completely painless charge. I think most of us make more than that in an hour at our jobs, so this essentially means that of an entire month where working full-time would be approximately 160hrs, you work less than 1hr to pay what you have to on your credit card bill. Less than 1hr is all it takes to keep an excellent credit score and the collections agencies at bay. $12!

For fun I put this is the debt calculator, knowing I would get a hilarious result. It delivered as promised:


Haha! Paying the minimum, in addition to taking you damn near a decade to shed the balance, will also see you pay 118% of the balance in interest! I guess I should stop saying “you” since this is “my” credit card bill, but I won’t take 9+ years to pay it off (it’s already paid!). But anyway, isn’t that insane?! NINE YEARS.

I think small minimum payments probably trap a lot of people with huge credit card debt. More meaningful amounts that are still manageable, say $250/mo minimum payments, mean enormously absurd balances like $12,500. Paying $500/mo minimum on your credit card? You probably owe just over $25,000. Scary!

Even when I was steeped in consumer debt, I tried to pay more than the minimum. I don’t know why, I definitely wasn’t thinking about eliminating my debt (at that point, it was already an old friend and I bought into the I-will-always-have-debt, everyone-has-debt, who-cares? mentality) — well, I think I did it to free up credit on the card so I could shop more. Isn’t that sick? Actually, what I should be asking is, isn’t that normal? I think it is.

A few weeks back I posted that being crushed by credit card debt is my greatest fear. In an effort to manage my money better and not spend ahead of my earning (really bad habit I’ve developed, I’m always about 1 week ahead of my paycheque), I’ve switched to automating my credit card bill payments for the full balance. Previously, what I usually did is just pay a chunk of every paycheque towards the balance regardless of its due date. This has worked out in the sense that the the amount owing always gets paid in full and the balance on the card is kept relatively low (Gail advises not to have a balance more than 1/3rd the available credit), but I still need to kick the habit of spending money before it comes in. One of the reasons is if I were to lose my job(s), it would be really unpleasant to have a bill come in for hundreds of dollars that now I won’t get to earn. That would eat up a huge chunk of my emergency fund in seconds, and put a really big hole in my financial security at a very uncomfortable time.

So while I’ve always been living below my means, I still feel I was kind of cheating by spending ahead of my pay. It’s been really easy to slack off on budgeting now that I’ve returned to credit cards after 2 years of cash-only living, and I really don’t want my new-found casual attitude towards credit to come back to bite me.

Tracking Spending

I hate tracking my spending. I know that monitoring where your money goes is the cornerstone of financial health, but I loathe keeping track of every penny. Even as I type this, I have a pile of unsorted receipts in front of me. I know I should go through them but.. ugh I’d rather just fold laundry or something instead.

Tracking your spending is hard for a number of reasons. Firstly, there’s so many ways to spend money: cash, debit, credit cards, cheques, automatic withdrawals. It’s easy to lose a transaction or two in the fray. I try to streamline my spending by putting all my expenses on one credit card so my statement does the tracking for me, but over the past few weeks I’ve found it infuriating to be without cash when I go out with my friends. I was thinking of giving myself some sort of cash allowance, but since I’m prone to losing receipts, I’d be left with a spotty transaction record of where I’m spending my money — and memory will be no reliable substitute to fill in the gaps.

Secondly, I find budgeting hard because I try to put all my expenses on one credit card. While I track my money monthly, from the 1st to the 30th, my credit card billing cycle ends on the 20th of every month, and the bill comes due on the 10th of the next. I’ll come clean and admit to a bad financial habit here here: I regularly put expenses on my credit card before I have the money in my account. I generally ignore my pay-days as a whole, spend my money when I need/want to, then pay off the balance when my cheque comes in. Often I feel good about putting something on my credit card after the 20th, because I know I won’t have to pay the piper until the 10th of the month after next. I know this isn’t as healthy and responsible as allocating my pay before I spend it, but I never said I didn’t have things I needed to work on!

Lastly, I hate tracking my spending because it makes me accountable for it. Looking at the total for my entertainment budget always makes the penny-pinching undergrad in me scream in terror. It takes a lot of self-reminding that I am employed now, receive a regular paycheque, and have all ready paid out responsibly to retirement & long-term goals before I finally relax and accept the total as reasonable. On the other hand, I’m often in the position where I would just keep spending whenever I want on whatever I want, but looking at my month-to-date total is a good way to determine where I’m at and if I need to reign it in.

To be honest, the only reason I’m tracking my spending at all is for this blog. Otherwise I’d just continue on my merry way with automatic payments and my credit card. Grudgingly I’ll admit that tracking spending does have it’s benefits, but I don’t think I’ll ever describe it as something I enjoy.