I feel like the guy who woke up out of a coma after 30 years. After reading this board and deciding that it is time I really face my debt head on, I went back last night till 2am through every credit card statement for the last 3 years to see how this all happened. It blew my mind. Three years ago I didnt think much of credit card debt. I had 3 cards, with a total balance of 2800, and low interest rates of under 6%, and a combined credit limit of about 9,000. Small potatoes I figured- easy to pay off anytime, right? Then I browsed through my monthly charges- 600-2000 per month! Payments? 100-300 per month, with a rare payment over 300. You do the math. Then the slippery slope- those guys are good, and you dont even see it coming. Slowly over the months, I would get a "congratulations!", for being a great customer and paying on time( this should have been a red flag, but still didnt hit me), your credit limit has been raised to...you get the picture. As of January 2001, my combined balance was 14,200 with a combined limit of 41,000 on 4 different cards (I thought I was so smart surfing cards for better rates, until the great rates started to dry up). The worst part? All those stupid things I wasted money on that I really didnt need or want. Fortunately, Ive been able to sell some of those things, but at a loss of course. So here I stand ready to take action and with a plan.1. Live off 60% of take-home pay for the rest of my LBYM life (LBYM life = natural life + 5 years).2. With the 40%, Snowball CCs, then education loans, then save and invest3. NEVER carry a balance on a CC again (all but 1 CCs are cut up, but accounts are open to possibly surf rates while snowballing.4. Track EVERY expense and income EVERY DAY on Quicken (this is great software- intimidating at first, but pretty easy after a while)5. Open a PCbanker account- DONE6. Run my personal financial life as a business: Increase Profit, Decrease Expenses7. Max Employee Pretax retirement Plan8. Open Roth IRA-DONE9. Pay cash for everything except a home (I would if I could!)- especially Cars (Those fancy brand new leased vehicles from a couple years ago wasted a lot of money and what do I have to show for them now?)10. Get One CC that has Cash back or Miles, and pay off every month.11. Smile to myself when my friends with their leased BMWs, fancy clothes, and over-extended mortgages tell me I should get a new car/house/boat.12. Avoid dating/marrying a member of the opposite sex who falls into category 11.Let the journey begin...
The worst part? All those stupid things I wasted money on that I really didnt need or want. Fortunately, Ive been able to sell some of those things, but at a loss of course. So here I stand ready to take action and with a plan.Greetings, this is one of the best-written posts I have ever seen on how to "see the light." If I could make my 1 allowed rec into 10, I surely would - and I hope you will continue to post on your journey about how you are doing, using the same practical itemized format in your present post. It would be truly informative to see the steps you take to get from where you are to where you want to be. I would be especially interested in hearing about how your epiphany shapes your romantic intentions; not that I want to be nosy but it just seems like one of the harder aspects to change - who you are attracted to. Maybe there's hope for those of us out there yet who choose to be prudent and frugal - maybe we're not all drudgery after all!Anyway, thanks for a wow of a post and I do sure hope you will stick around and chime in again often.xraymd
<< 6. Run my personal financial life as a business: Increase Profit, Decrease Expenses. >>I never thought of looking at it that way. I'll have to give that some thought, it sounds like a pretty good idea.It sounds like you had a pretty rough nite! Keep to your goals and you'll do alright. I don't think I'd do #10(10. Get One CC that has Cash back or Miles, and pay off every month.) until your out of debt or way in control though.Good luck and keep us posted,tractorgeek
speedsurfer,Congratulations on your awakening, and I am glad to see you have a definite plan. The best intentions in most cases will not succeed without a plan and a desire. You appear to have both.san6279predicting success
Speedsurfer, this is a great post!!! I absolutely love it! This reminds me of when I first "woke up," even though mine was a little more gradual. Really really great post. -RW
speedsurfer,Wow! What an incredible post. It sounds like an almost spiritual enlightenment, of sorts. The great AHA!I especially like number 11 - Smile to myself when my friends with their leased BMWs, fancy clothes, and over-extended mortgages tell me I should get a new car/house/boat.What a way to turn your life around! Congratulations!!!Beth
SpeedsuferYour story of how debt crept up was great. It is so true that it takes so long to realize how deep we have dug the debt hole. congratulations on your achievements and your 12 advice,Walter
Speedsurfer- This was a really awesome post. Glad you finally saw the light. I also liked the point: 11 - Smile to myself when my friends with their leased BMWs, fancy clothes, and over-extended mortgages tell me I should get a new car/house/boat.Can totally identify with this. There was a recent thread on the LBYM board about "How can they afford this house/car?" I often wonder that myself. You can smile quietly to yourself knowing that instead of spending on things that may depreciate in value, you are investing in something important, YOURSELF and your financial future.Giftedhands
Wow. My husband and I just purged our credit card statements last year; we spent an entire rainy afternoon going through them and saying, "We bought what? We ate where? Whatever happened to that thing?"Welcome to the Land of the Ruefully Awake. Go forth and conquer!Tamarian
"9. Pay cash for everything except a home (I would if I could!)- especially Cars (Those fancy brand new leased vehicles from a couple years ago wasted a lot of money and what do I have to show for them now?)"I'll reiterate a point I've raised several times out here. Since I graduated college, I've purchased 3 new cars for cash, that totalled to $31.8K. I haven't paid a dime of interest, and as soon as I buy 1 car I start saving for the next. Amazing to think that there are many people who have paid more for 1 car, than I've paid for 3! (And that doesn't even factor interest paid, for those who finance.) Good luck - you can do it. Remember, your BEST credit is your own cash.johnmoni
speedsurfer,Thanks for the great post.One thing I did while I was paying off my credit cards was make a list of everything on each card that wasn't paid for yet (from oldest to newest). With every payment, I'd adjust the list and every once in a while I'd get to cross something (or several things at once!) off the list. It kept me humble and inspired, all at once :)You've made a good start. Keep us posted.foolwizard
Spped,All I got to say I am right with you!! You said more than enough!!Let's All Move Forward and never forget the past or we are doomed to repeat it.Sean
Follow up 12 years and 9 months later:I was helping someone through their credit card problems recently and I ran across my post from 2001. I have always felt that I learned so much from this board and that the members gave great advice and support (great to see some of the same names still here on the board!) I would like to post my follow up to the above post to help any current members who are in that position I was in over 12 years ago. At that time I was in over $225,000 in debt.I've followed every one of those steps listed above to the letter over the last 12 years. I never wavered. I still drive a 10 year old car. I paid all credit cards off in about 3 years and have never kept a balance since. I paid off my school loans over the last 10 years. I lived frugally and saved enough for a down payment on a house, then eventually a vacation condo. I have saved and invested in stocks, real estate, and most of all myself (starting my own business using my education and my perseverance). Despite my colleagues driving fancy cars and living high consumption lifestyles, I purchased just what I needed and nothing else. Not to say I was perfect, there were bad real estate investments in 2006, a stint with active stock trading that led to losses, and a time I actually thought I could trade oil futures (please just put your money in an index fund and add more when the market goes down and leave it there- learn from my expensive mistakes!) I did however make compounding interest work for me instead of against me and what a difference it makes to be on the other side of that equation! Hard work, living on a budget, and saving with investing paid off. It's not glamorous, in fact, to the contrary it's downright boring. There is no better feeling however, than the feeling of financial security and freedom.So where am I today? I can afford to buy any car but am perfectly happy with the one I have. I have no debt besides a small mortgage I could easily pay off completely. LBYM habits are hard to break once you have them ingrained for so long. I focus on offense and strive to earn more (something not to forget, it's defense AND offense). I strive to make passive income, my money is making money for me. Over time, the decimal point just keeps moving to the right but I stay the same. Let's just say that I could comfortably retire tomorrow if I was so inclined. I am considering working part time, volunteering, and traveling the world. I'm not here to gloat, but rather to inspire those of you who are in the same position I was in over 12 years ago. I just wanted to let you know that the steps in the original post are as valid today as they were in 2001. It can be done, and you can do it!
That's a terrific update. I'm glad to see you back, and I'm extra glad that you were able to stick to your decisions. You've bought yourself the great gift of freedom.Nancy
I was helping someone through their credit card problems recently Did they listen? I completely gave up on one friend. She would ask for advice, and then do the exact opposite.
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