“You’re always going to have bills.”
This was the statement a friend made to me in college. With $12,000 in credit card debt, a student loan (I was fortunate enough to have received athletic and academic scholarships so, after 6 years, I only had $6500 in loans) it seemed reasonable. But even then something in me gave a little twitch of rebellion. A future full of debt? That sounded horrible.
Frankly, I knew squat about finances in college. My mom told me once upon a time to keep good credit because it says something about you. Problem was, I didn’t know enough to stay out of debt in the first place.
So after college I got the apartment I wanted, rather than what I’d had before—the one I could afford. Hey, I was going to have a steady paycheck. If I could live on minimum wage in college surely I could make rent now. Besides, I wasn’t going to make any other drastic changes in my lifestyle, right?
Not on purpose. But it happened. You know, vacations, eating out at pricey restaurants, movies every weekend instead of just on occasion, and anything else I chose to do on a whim. All on credit.
The rationale goes a little something like this: “Sure there’s only $40 in my bank account, but I get paid on Friday.” Yes, idiot, but you owe 4 (yes, four!) different major credit card companies $12,000!
The money in that paycheck didn’t belong to me, it belonged to the Big Bad Credit Card people who trespassed on campus and made me sign up for their evil plastic. And all for a free T-shirt or some other $2.00 giveaway that would compel me to in turn spend thousands. Marketing at its best.
It sounds stupid because it is. Yet unsuspecting students fall for the free whatever every day! And guess what? The bad habits that I’d developed in college didn’t go away just because I’d gotten my degree. I originally got my first credit card for emergencies. Things like Red Lobster and that cute sweater—that was on sale, thank you! I was saving money.
Right. By the time the thing was paid off—behind the other $13980 bucks—that $20 sweater at 14% interest over 1 million years is… You see where I’m headed with this.
One year I finally took a good look at how much I’d spent in finance charges—while my balance owed practically stood still as I continued to make the minimum payment due. And I got mad! $500, $600, $700 in finance charges??? I wanted to hit something. Someone. I wanted to hit…myself! How could I have been so stupid?
I needed a plan. And I made one. I wanted to be out of debt within a year. So I took every balance on my major credit cards and divided each one by 12. I added the current finance charge, even though it would get smaller each month, just to assess the damage. I was not hopeful, but I’d been promoted a few times by the time I got the revelation and, thanks to my salary as a manager, the payments were doable. I could be debt free in a year!
Well, it actually took 1 year and 9 months (there were a couple of things I didn’t say no to at the time) but I was still ecstatic! And I know without a written plan it wouldn’t have happened at all.
Why is a recruiter rambling on about finances? Because your money management matters. And not just because you don’t want to wake up in the middle of the night in a panic wondering how you’re going to make it two more weeks before your next paycheck.
It’s because many employers run credit checks.
Why? Because how you handle your own finances (which should be of great importance to you) says something about your level of responsibility. Especially if you’ll be in charge of major assets. If you can take care of your own finances chances are you’ll be just as diligent with the company’s. And, in some cases, poor credit will keep you from getting the job.
So here’s some homework for you. Keep track of your spending over the next week just to find out where your money is really going. Check out financial expert Dave Ramsey’s website: www.financialpeace.com and consider going through his course in your city.
Today I am debt free and have been for many years. I am blessed to have a husband who has the same opinion about debt so we continued to work together to make good financial decisions—including paying off our home in record time.
Trust me, when you owe no one there is a peace that surpasses all understanding. A spring in your step. You even do your job better because you’re stress free.
Oh, and in response to my friend’s brilliant statement? The only people who are always going to have bills are those who believe it.
Check out the next blog for some tips on how to make better financial decisions.