Today, I experienced a crowning achievement in my lifetime:
I paid off my last credit card!!!
For the first time in twenty years I have a cumulative credit card balance of zilch and what a feeling of relief has washed over me!
That feeling is something I've never experienced in my entire adulthood, seeing that my first shiny Visa card was delivered via snail mail at the same age that my adulthood began, eighteen.
It arrived with a limit much higher than my then annual salary. From that day, it only took a few years for that limit to be gradually raised to an amount which nearly equals of my current annual salary. Even though I was still making near minimum wage at that time.
Brilliant move, creditors. Well played.
So, what have I been paying off for twenty years? I dunno... *shrug*
But here's my best guess:
- Gasoline. Yes, my "responsible" first credit card purchase was gasoline for the graduation beater. My wise financial plan at the time was to open one credit card and use it to fill my gas tank. I would use my allotted gas money to pay off the card balance every month; thus, responsibly building a credit history to eventually finance a car purchase before the graduation beater's engine had coughed its last breath. Then came shoes...
- When the need came for a new pair of church shoes, or work slacks, or the favorite pair of jeans whose hem became thready, I reasoned that well... it was probably okay to charge that one thing and then pay off my balance in two months. One month of interest can't cost that much. Right? And, think of how that would boost my credit history even quicker. (Eighteen-year-old logic.) But, then I got hungry...
- My generation, in our late teens and twenties, ate out constantly. We didn't have kitchens and ovens of our own. So, we met up over dinner, over weekend lunches, over midnight snacks. It was social! Growing up, my family only ate out once a week. On Friday paydays. And, "eating out" meant Wendy's or McDonald's, not table service. (Paid for in cash, no less.) On a special Sunday night, we might do Big Boy's after church. Socializing, back then, consisted of inviting family friends over for a home-cooked meal, or being invited over family friends' house for an exchange of the same. I don't know how Gen X decided we were entitled enough to be waited on and rich enough to dine out five days a week. But, my guess is probably around the time we all got credit cards! (We were very generous tippers though. I know this because I just finished paying off that waiter's tip who graduated college and got his first grown-up job fifteen years ago. Too back he couldn't collect the interest on that tip, it might have helped with his student loans.) And, then I finally got that new car loan...
- Once I made my first new car purchase, money got tight! Five years of car payments? Whew, good thing I have that credit card for incidentals! Then I got another crush...
- Having a crush on a guy would always require an "investment" of a couple new outfits. I mean, getting this guy's attention could be the first step to an eventual proposal. Then we could pay off each other's debts together as chirping bluebirds fly circling our heads. Then you get dumped...
- A slap of reality can effect many facets of life. With stars removed from one's eyes, the grass is less green, the sky is less blue, and the bills are all yours. Long-term. Your minimum payment is creeping up beyond your comfort zone. You tap like crazy on the calculator, you look at calendars three years in advance, you freak out with your friends who are in similar credit debt situations. Then came the helpful blank credit card "checks"...
- BIG ploy in the nineties! Each credit card bill came with a sheet of blank checks you could write out to pay your bills, to make purchases, to transfer balances or even make out to yourself. The draw was that purchases made specifically with these checks would be charged a separate lower interest rate. Usually in the single digits. Sometime 0%. I'd put these checks aside just in case. If the budget got too tight one month, I'd write one to myself for a cushion or to pay my largest bill. (Hey, I'll pay that amount off later, but at lower interest! Yep, twenty-something logic.) I remember once being on sick leave for two months from a job that didn't offer sick pay. I actually paid two different credit card bills with 0% checks from the other's account. Yes, I swapped a portion of the balance of two credit cards just because I couldn't make the minimum payment on either. I dodged to payment with one fell swoop and it saved my credit score from taking a non-payment hit. It also made me oddly prideful that I managed to eke out the bills once again without ever asking my parent's for a loan. Then, I knew it was time to buckle down...
Yes, my spending spiral only lasted about half the length of time that my debt did. I spent the next decade paying off bills for clothes that had already been donated to Goodwill, meals that had been digested and flushed away ages ago, investments in men that were no longer around and gasoline that was now vapors. The consumerism frenzy that is my generation's produced not one lasting results.
Well, except, lessons for the next generation. I can now warn of my biggest traps:
- Thriftiness. Yes, thriftiness! I love clothes, but I love a good bargain too. I've always prided myself on never paying full price for anything. I used to love when people thought I was wearing $50 jeans, but I secretly knew they were $12.99 knock-offs from the clearance rack. I wasn't opposed to name-brands, but would find mine with red tags, at the designer's outlet store or, best yet, with a red tag at the outlet store! This is smart shopping. But, not if you don't have the money in the bank to make the purchase. Outlet stores accept those store charge cards too. Don't fall for the trap! You only need seven outfits to get through the week and to laundry day. Not thirty to get through the month, if you can't afford it. A good deal's not a good deal if you're shopping with credit, period. (And, just think, what were $50-grade jeans back then are now $150 jeans these days!)
- Store charge discounts. "You can save 25% off your purchase if you sign up for an account with us today!" But, with usually double the interest rate of your standard Visa or Mastercard, stores will make back that 25% back and more in no time.
- "Investments". Don't make investments in anything with a credit card. The guys aren't even noticing your new threads. That job interview you "need" the new outfit for, won't know the difference if your pantsuit was bought second hand. Skip the investment and shop instead with that first paycheck once you get the job.
- Socializing. There's no law that states that socializing has to be done under the watchful eye of a hostess, waiter and bus-boy. Bonding has been known to take place over a cup of Ramen Noodles just as effectively. I swear! It's been done.
- Technology. I was never a technology sucker... but, I'll throw this in because everyone else seems to be. You don't need the latest and greatest. Two year old technology works just as well. I am devoted to Amazon and Ebay for used gadget purchasing. My most recent purchase was my first Ipod. (Yep, in 2013. Told ya. Not much of a technology sucker...) I researched online which model best-suited my simple needs, but wasn't too outmoded to be used realistically. Online research protects you from sales pressure and up-selling you'll get if you walk into a store without a clue. I needed something that played music; no games, internet, movie-watching, etc. I've got enough gadgets that already do all of that! I chose a fifth generation Nano purchased on Ebay for about 2/3 of the price of a new 7th generation one. Free shipping. Oh yeah... and it's paid for. Not charged!
- Panic purchasing. Once you realize you're in deep, don't freak out and shop to comfort yourself. You'd be surprised how many people do this! Myself included. "I'm never going to pay this off, so I may as well buy this too." It's seems like a weird concept on paper, but makes perfect sense in the moment somehow. Stop! It's never too late to stop the cycle. A great motivator for me was discovering Dave Ramsey's talk show. It came on the radio every night during my evening commute. Listening to his forceful yet somehow simultaneously caring voice chastise callers with, "You can't afford it! Why would you buy it?" and "Why do you need a new car?" and "Why are you eating out instead of paying down your debt with that money?" was a great motivator. (http://www.daveramsey.com/home/) Hearing others struggle, helped the problem not seem mine alone. And, hearing practical advice from a financial expert, for free, was priceless!
- Feeling "grown up". Yep, I was eighteen years old when this cycle began. You don't need a credit card to be an adult. About 76% of college students have at least one credit card and the average college student already carries $3,173 in credit card debt. College students. Those are 18-21 year olds! Most not even earning that amount in wages from their part-time jobs around campus. They then graduate, hopefully get a full-time job, just to become full-fledged adults with an average of $15,204 in credit card debt now. Their slice of the American credit card debt pie of $848 billion. (Not to mention the average $33,005 in student loans they get to lug around too.)
I don't know the solution to the problem.
I guess the first step is educating the young ones around you about fiscal responsibility starting early. Everytime I've taken my nephews and niece on vacation, I've allotted them a certain amount of spending money for them to choose their own souvenirs with. Some are broke by Day 2, some return home with pocket change. It's not only a good lesson, but a good gauge for who to keep my eye on through the years. Little things like this, I'm hoping will add up to good spending habits.
Most of all, I think our honesty is the biggest lesson. I haven't been the best consumer but learn from my mistakes, young ones!
I know there may be some in the more responsible generation that are shocked I even chose share this news so publicly. It's not proper. Finances are supposed to be a private thing.
But, if my generation isn't the most fiscally responsible, there is one area we do excel in: Sharing and supporting.
It's a long tunnel that alot of us have been trapped in, but it's not an endless one. And, believe me! That breath of fresh air at the end is definitely worth moving forward for.
http://www.statisticbrain.com/credit-card-debt-statistics/ and www.nerdwallet.com