Gillian : An Introduction

I stand (okay, I sit) here before you a university graduate roughly $60,000 in student debt.  I know, this number seems astronomical. And let’s be real, it is. Let me explain the story of how I came to be in such a financial mess…

How it happened.

Although I was smart, I was the typical head-in-the-sand high school student who felt like the real world was miles away. I did not have passion towards any area, but excelled in my accounting classes and felt that I could make a good living doing this. I decided to go to a decent school close to home, and went off on my merry way.

I quickly realized I did not want to be an accountant. Ever. I was still very unsure about everything. I have always dealt with anxiety, but at this point did not know what was “wrong” with me. All I knew was that I dreaded school and had panic attacks doing things as simple as riding the bus to school. I mentally broke down, and left school by the end of November. One semester’s tuition and an entire year of rent (my landlord was not understanding at all) left me my first $5000 in debt.

I worked through a lot of my anxiety issues, evaluated what I wanted out of life and decided to go to school for something I truly enjoyed: fashion merchandising. The next Fall I headed off to college. School went a lot smoother for me, but living in Toronto cost a LOT. My two-year program cost me $25,000.

While in college, I realized that I wanted university after all. I attended university for marketing management. It was truly enjoyable and I am happy with my choice. Tack on the final $30,000 in debt.

I was a complete idiot with my finances. I made very little money in the summers because I could not usually find full-time work. I had a problem with spending. I knew I was majorly in debt but I thought I could easily make $50,000/year straight out of school and pay it back in two years tops. I liked a lot of stuff – M.A.C. make-up, lots of clothing, and going out to dinner multiple times a week. Once summer hit and I had a bit more income coming in, I felt like I DESERVED extra stuff and extra fun.

How I plan to pay it back.

It has been a very harsh reality check realizing that I am making more like $25,000-30,000/year, and am going to need to pay down at least $600/month in student debt to get out of this hole in eight years. It’s tough to look back at the frivolous way I lived, but all I can do at this point is move forward and not ever get back to that place. There are so many things I’d like to do soon; getting married and starting a family are something I’d like to do in the next five years and my debt is holding me back from being able to achieve those goals.

I have already started working to get out of debt by lowering my fixed expenses, cutting back on variable expenses (good-bye clothes, it was nice knowing ya!) and doing freelance work to increase my income. I am trying to be as frugal as possible without over-doing it.  I do not want to get debt burn-out since I’ve got quite a few years left of repayment. My goal is to be paying $1000/month (hopefully more!) towards my loan eventually. I’d like to eventually get a better paying day job so I have been taking steps with that. Even though my debt is lowering at a snail’s pace, this is the worst of it. Now instead of shopping, in my spare time I read/write blog posts, budget, figure out better ways to spend (or not spend) my money… and watch Dexter.





I still self-medicate with shopping

I think I’ve always bought things to make myself feel better. Bad exams have gotten me new dresses, break-ups have led to Sephora binges, and even a semi-bad day warrants a latte from Starbucks. I don’t know if it’s right to buy things to make you feel better, but I know that I do it. Why? Because it works.

I’ve never done anything totally insane like max out my credit card in one go, but a bad week can cost me more than a few hundred dollars unintentionally spent. Isn’t that just the price of being sad? Is there really anything wrong with it in the long run? We can’t be all good with money all days, and bad days are the ones I cut myself some slack. I’ve mused over the idea of developing healthier coping mechanisms, but no amount of positive thought matches the high of acquiring something shiny and new. I don’t want to read self-help books or “work on myself” or just keep busy. I want to grieve.

Sometimes new things are a life-raft that anchors you in a moment. It’s not just stuff, it’s a souvenir. A desperate act of rebellion against the universe, a distraction from the hurt, a reward for toughing it out. Maybe that’s stupid, but I like the way it feels to be rescued — even if its by material objects. They say money can’t buy happiness, but it does. At least for me it does. No, it’s not ever-lasting or all that real, but that doesn’t mean it doesn’t count.

I’m generally not a sad person (actually I would never describe myself as sad. Ever.), but I’ll admit that the past month has been rough — and I have the receipts to prove it. Because I want to keep this strictly a PF blog and not a personal one I won’t go into detail, but the short story is I dragged out a 3.5 year relationship break-up out over 5 months, because hey, why cut things short & simple when there’s the opportunity to make it as painful as possible? I’m an optimist… or a sucker, and that has its consequences. The final ending came at a bad time: not only would it have been our 4 year anniversary to the day, I was deeply entrenched in stress from my academic demands. Bouts of what can only be described as sheer bad luck only served to compound my already sour mood, and pretty soon it was just like being trapped in those nothing-is-going-right cycles that I’m still kind of waiting to escape. I would hibernate in my room and cry all day to Adele’s new album “21″ for the next month or two if I could, but I have obligations that take precedent over my aspirations to become a recluse. Also, I’m not particularly sympathetic to heartache, even if it’s my own, because it seems like such an abhorrent waste of time. So when it comes to going about my normal day, I go along with it — even if it’s kind of at a melancholy pace, it’s better than sitting still.

Because it’s been so hard, the last thing I’m going to do is feel guilty about the cost. If my net worth is still increasing, there’s no real damage being done. There are worse things that merely saving less one month compared to another. Likewise, there are worse things than treating yourself to Starbucks everyday, buying Tiffany jewelry, spending more on iTunes in a week than food, and thinking about buying a car. (I’ve been talked out of the last one, thankfully).

I’m glad I’m in the financial position that impulsive spending because I’m unhappy doesn’t lead to something else to be unhappy about (ie. a humongous credit card bill I can’t afford). Sometimes you just have to be grateful for what is and wait out the bad — latte and store bag in hand.

I lied to the government

I got home from California Wednesday night, went out for wings with my all-time favorite @Britt, then tumbled into bed and resolved to go back to the “real world” Thursday morning. Step one of being organized now that I am rejuvenated post-vacation was filing my taxes.

My T4 from the university is posted online, so I entered in all the information, along with my statements for interest/dividend income from my investments that I received in the mail. I was really excited the process took me less than 20mins — even with a call to the Canada Revenue Agency to change my address — and I hit submit in a hurry so I could finish getting ready for work.

As I brushed my teeth, I mused over the hilarity that I had about as much in savings as I earned this year. Ha! Aren’t I rockstar? Who saves 90%+ of their income? Only super-savvy frugalistas such as myself.

Then I was like… wait, who does save 90%+ of their income? How did I do that? I didn’t even have an income for the first 4 months of the year, and I was still buried in consumer debt for nearly 3/4′s of 2010. There’s no way I saved such a huge portion of my earnings, NO WAY.

I realized I forgot to include a T4 slip from my part-time job. The reason I forgot is because I haven’t received it yet. I didn’t have any tax taken off at this other job, and even with the earnings included, I haven’t made enough money to pay any tax, so my return won’t change at all, but I still feel like I lied to the government — maybe because, well, I did.

Still without a T4 I went back through my own book-keeping and calculated my income from the second job, then I used some creative and probably not-too-accurate math to determine my CPP contribution. I put my numbers into my online form and recalculated my totals: as expected, nothing changed.

But what do I do now? Submit my (self-)corrected tax forms? Do nothing and let the government correct it? Wait until my missing T4 comes in then submit a form to adjust my filed return?

I feel like such a moron. I don’t know how I completely forgot about an employer I spend nearly 20hrs per week at.

So much for being refreshed and ready to take on the world after vacation, this is worse than when I left.

Financial mistakes: you will make them — and that’s ok!

A lot of my blog is stumbling through personal finance on my own, which makes it a bit ironic that I’m trying to help my peers with their money. Tackling my own debt and saving over the past few years has taught me quite a bit, but I know I’m nowhere near perfect when it comes to finances. I have SUCH a long way to go, and I’m expecting to stumble a lot more along the way — but the thing is, I try not to beat myself up for it. Mistakes are something we all make, in all aspects of our lives, and since we can be our harshest critic, it’s important to use a clear head and forgive yourself for the things you do wrong.

So, in the spirit of coming clean about financial faux pas past, here are my confessions:

1. I bought my iMac from Future Shop on one of their “don’t pay interest for a year” promotions that had me sign up for a department store credit card. No surprise, not only did I not pay interest for a year, I actually only bothered to submit one $200 payment in that time. Consequently a year later, I had a one-year-old computer and still the bill for a new one. Fail.

2. I pursued savings above repaying my consumer debt. As of January 2010, I had the same amount in savings as I did on a line of credit, but the savings was only earning 4% (oh those were the days!) and my debt was earning 6%. I should have followed Dave Ramsey’s advice and kept $1000 in an emergency fund, then thrown everything else at my debt.

3. I didn’t start saving until I was 23! I never realized how important it was, and was never disciplined enough to keep some of my hard-earned cash for myself. There’s a few wasted years of not saving there, plus a complete lack of assets. Shameful in my adult life!

4. I SIGNED UP FOR CANADA SAVINGS BONDS. Fuck. I put that in caps, because I’m still mad at myself for this. As an employee of the university, I have the option to buy bonds as a deduction right from my paycheque. I signed up because automatic savings is the way to do it.. and then I saw the disgraceful interest rate: 0.6%! That’s less than half of what my money makes in my ING accounts. Now I’m trying to fix the mess but CSB tells me to contact the UofA payroll and UofA tells me to contact CSB. ARGH!

5. I bought mutual funds before understanding what they were, how they worked, or what I bought. This is just stupid. The only thing I understood was that 1) mutual funds are for investing and b) lots of people have them. A year later when I knew what mutual funds were, I finally took a look at what I bought and thankfully, was very happy with my purchase, so I lucked out this time. But I really discourage buying things you don’t understand just because you think it is a good investment (see #4! Canada Savings Bonds! Gah!).

6. I never tracked my spending. Oh, head-in-the-sand living is comfortable, isn’t it? I never paid attention to what I spent or evaluated it as reasonable or not. If there was money in my chequing account, I went shopping until it was gone. This caused some exciting moments of panic when I realized a bill was supposed to come out 3 days after I hit the mall, and I’d have to go desperately scrounge up some cash.

7. I never set goals and I never did the math. I don’t know what the hell I was thinking, but like many 20-somethings, I thought I needed a six-figure income to live the lifestyle I wanted. Part of the problem was wanting the wrong things, but a huge fraction was just being completely ignorant of what things cost. Turns out, life is much more affordable than I anticipated and it’s very, very easy to become wealthy if you do it right. Now I don’t really care if I make a graduate student wage for the rest of my days, because I’ve made a fulfilling life on this income and I feel secure about my future. Isn’t that amazing? Some people make that six-figure income I wanted and are living paycheque to paycheque, whereas I get to be content on the cost of a modest car. Needless to say, understanding my wants and how to get them took a lot of the pressure off.

In short, forgive yourself for the mistakes you’ve made. Maybe you have a lot of debt. Maybe you delayed saving. Maybe you invested money in the wrong place. It happens, and yes, you’re going to have to pay back what you owe, start saving aggressively now, and cut your losses & move on. There’s still time to redeem yourself — and unfortunately, time to make more mistakes. But we don’t all get 100%, 100% of the time, and that doesn’t mean you’re failing. 90% is still an A!