Master Your Card

For the first monthly edition of the PF Bloggers group writing project, I was asked to write a post about my financial history and what has motivated/inspired me to be frugal and more conscious of my money choices, so here it is. My life story. Ok, well maybe not that much of my story, but the most relevant to our discussions anyway.

First let me start by saying that I was the know-it-all teenager, typical for my age group. My parent’s didn’t know a thing and I knew everything. Like any kid my age, I had issues with my parents and I moved out when I was 16. The reasons for this decision are varied, but lest you think I was a rebellious teenager destined to be nothing but trouble, understand that I was not the partying type. I had already graduated high school and was going to start college.

I moved in with a friend, who lived with her mother and had a houseful of people. I think my bad money decisions really started there because they were the only role models in those terms that I had. My parents had never sat down with me and talked about money so I was going off what I had learned from them – which wasn’t the sort of education that lends itself to good money management.

In any event, since I was only 16 at the time, I couldn’t have my own bank account. I worked, got my check, and cashed it at a check cashing place. I immediately paid my rent and other small bills, and then the rest was mine to do with what I wanted. At least I was smart enough to pay the bills first. My problem was that I had no concept of saving money. I would spend my free money until it was gone and then I’d wait to get my next check only to repeat the pattern above.

When I turned 17, I was able to get a savings account on my own. It was an exception that the bank made for me because I was not living with a guardian. I was able to start putting money in the account, but because my bad habits were already ingrained, I never kept more than $10 in that account. Around this time, the house that I was living in started to get more crowded because my friend’s brother hit a financial snag so he, his wife, and three kids moved in. That was literally hell. I moved out shortly after, living with another friend from work and her husband.

My financial education hadn’t really improved all that much, although I was able to learn the benefits of saving; particularly since I didn’t want to live with these people – the husband was in the military and reminded me of some of my father’s less charming qualities from his military days. Oh, and I really didn’t like having to share my room with an iguana. So, I saved my money until I was able to get a place on my own.

I turned 18, got my own little apartment in a fairly old complex and found a new job in the area that I was in. By this time I had stopped going to school because I couldn’t afford to live on my own and pay for school. I picked up two jobs, had no social life, and existed only to work – so it seemed at the time. I also got a couple of credit cards and a checking account, complete with checks. That was the highlight of that time period for me. It meant a little more financial freedom because I didn’t really understand credit cards and how they worked. I thought I’d get to enjoy a few more dinners with friends and it would be no big deal.

Soon those dinners with friends turned into other things that I wanted – a DVD here, a CD there. I didn’t understand the concept of late fees accruing interest. I paid my bill when I got around to it and paid whatever I could afford. Unfortunately, even though I was working two jobs, most of my money was going to rent and the electric bill. Some months I had to decide if I was going to get groceries or pay the utility bill. It was a weird place for me to be at 18 and I didn’t really like it, but what could I do? I didn’t know there was a different way for things to be.

What it came down to is that I made a lot of mistakes at this juncture in my life. I didn’t really have any responsible people in my life to guide me. My parents and I were still on the outs, though we’d started talking again. But, even if our conversations were that personal, I’d never bring myself to admit that I needed their help with this. So, I continued to struggle and manage as best I could. I finally got a higher paying job that allowed me to only work one job for a little while and it helped me catch up on some of my debt that I had accumulated. My lease was up and I decided I’d move in with a friend whose roommate had bailed on him. It wasn’t so bad at first, and it certainly made things easier when it came to money.

After our lease was up, he decided to move somewhere else. So, I moved in with a group of people – let me just tell you, five people living in a four bedroom, two bath apartment created a lot of misery for everyone. However, this situation was probably one of the best things to happen to me because I had one roommate who was good with money. She taught me a lot about how to manage my money and make it last from one paycheck to the next without a gap in between. She tried to teach me to save, but I was more concerned with having money to live a little. I was 18 after all.

Things went well for a while. I still hadn’t really mastered the credit card thing at all and I was having problems with collection agencies. Apparently, being $5000 in debt at the age of 18 concerned my credit issuers. I really couldn’t imagine why.

Once that lease was up, I moved in with only one of the roommates while the others moved on, and this would turn out to be the biggest mistake in my entire life. She was worse with money than I was and she had a hard time keeping a job because she had a mouth on her. So, when she lost her job for the third time, she decided she was taking a break. She assured me the bills wouldn’t be a problem. Well, the bills were very much a problem. She wasn’t paying her half and I was struggling to pay the ones that were in my name. She began stealing checks from me and all of a sudden I get a call from my bank – I’m $947 overdrawn and there’s three more checks waiting to clear. They want to know what’s going on. I learned that I had to press charges in order to get my money refunded from the fraudulent checks she wrote. As you can imagine, this made my life very complicated as she was still my roommate.

After mulling it over, I decided it was best to move out first. We still had another 7 months on the lease, so that was going to be a problem. I talked to the apartment complex and they said as long as she was willing to sign me off the lease, we could work something out. When I talked to her about it, she wasn’t so willing to do that. Fine. I could play that game. I turned into the meanest I’ve ever been in my life. I made her life a living hell. When I got up at 5 am for work, I made sure she was up. I cut off the cable and internet – which were in my name and took my computer to my room – it had previously been set up for community use. I bought a small refrigerator and a locking storage cabinet and kept my food in my room – which I bought a lock for as well. Needless to say, she eventually agreed to sign me off the lease.

So, I moved to my own place. It was nice to be alone after such a harrowing experience. I got a new job as a teller and this is where my financial education really began. Through my training classes I learned how to help those who were struggling with their finances, how to teach them to balance a checkbook, how to manage their money. It was during that training that I realized I was just like those customers they talked about – those whose financial education was woefully inadequate. I also realized that if I was going to be successful in this industry, I would have to make some changes to my own habits.

The first thing I did was get a copy of my credit report. You know that sound you make when you’re caught be surprise at the smell of a skunk? Yeah, well you can imagine me looking over my credit report for the first time. I had a mess to clean up and I didn’t know how to go about doing it. I sat down with one of the personal bankers and told them I didn’t know the first thing about my financial picture and asked what I needed to do. He looked over my credit report and took pity on me. He explained everything to me in more detail than I’d ever thought possible.

And so began my journey to financial balance. I had outstanding debt – which had grown since I’d let it sit there and accrue fees and interest. I had things on my credit report that were a result of the old roommate. And I had slow pays because I didn’t realize just how important paying a bill on time could be. My eyes were being opened to a whole new world; one where I was drowning.

Unfortunately, old habits die hard. I found that I was making more money and I was able to live a little – something I’d missed out on between 16-18 years old. I wasn’t helping myself get out of debt; I was merely keeping my head above water. I also decided that I would try to go back to school. The bank had a tuition reimbursement program and I figured then was as good a time as any. So, I enrolled and soon discovered that the tuition reimbursement was only for finance or accounting degrees – mine was Economics. I also discovered that I wasn’t really ready to go to school, so I stopped going to class and I forgot to withdrawal. By the time I got to it, I couldn’t get any of my tuition back. It was quite a bit I’d forked over, too. Enough to pay off a credit card, at least.

Eventually, all of the debt and the bills become too much for me. I got a transfer at the bank I was working at, swallowed my pride and went home. That was the worst feeling for me EVER. Not that I didn’t want to see my parents, but the embarrassment of having to admit they were right all along. I felt very low for a long time. But, I took the opportunity to get to know myself a little more. I finally began to understand what I wanted to do with my life and how I was going to fix my finances. I did some research and talked to the financial planner at the bank and I discovered the “traditional” snowball method. I worked hard, paying off all my credit cards while still setting money aside for my savings and retirement accounts.

I continued to stay at my parent’s house probably longer than I needed to because I just wasn’t ready to try again. I’d lost some confidence in myself financially and I needed to find that. But everything I struggled through became a story I could tell a client, and something to help them overcome their own financial troubles. While I was at my parent’s house, I got a new car – which my dad had to cosign for so I could get a decent rate – and I went back to school with the renewed effort of someone who knew what they wanted to do. I ended up having to get student loans and was surprised by how quickly they added up.

Finally I’d reached my breaking point and moved back to Austin. I was working at a different bank by this point and making way more money than before. I had a nice balance in my savings account and I was prepared.

I continued to visit with a financial planner regularly to make sure I was on track. I didn’t use my credit cards, except when I traveled and I always paid them off when I got home. I learned the meaning of the word frugal. I gave up cable, I stopped eating out as much, and I started renting DVDs instead of buying them. The last was the hardest for me to stick to – I still struggle with it today and will buy the ones I really, really, really want. I figure three really’s is a good reason to buy.

I still had debt though, and those student loans were killing my credit score. Even though I don’t have to pay them until I’m finished with school, the debt to income ratio is terrible and that affected a lot of things with my current credit cards. I had the universal clause, something I hadn’t heard of until I was 23. I was a little aggravated to discover that my credit card companies could increase my rate based on how other things were going on my credit report. I was also perturbed to find that I had more debt than I thought as things were suddenly popping up from many years ago, things I couldn’t even remember having, but they said I owed them. So, I spent another two years trying to sort out that mess – still contributing to savings and retirement. All the while, my credit score was getting stronger and my financial knowledge going up with it.

I still talk to a financial planner every six months, I’m out of debt except student loans and the car, and I keep a decent amount in my savings account for emergencies. The turning point for me was that I had to go home, tail between my legs, and admit defeat. It made me realize that my life and my finances couldn’t hang in the balance like that any more. I had to make changes and if I wanted to help others do the same thing, I had to understand the behaviors that lead to the debt in the first place. I learned and I processed, and I was able to share my knowledge with others. There’s a difference between sharing textbook knowledge and real life knowledge. While the textbook information is good to know, it doesn’t give the situation a sense of realism quite like a real life situation. For me, I like to be able to tell me clients, “Yes, I do know what you’re going through. Here’s how I fixed it.”

I’ve made a lot of mistakes in my life. Almost every bad thing that appeared on my credit report was my own fault. But, I chose to make a difference because that wasn’t the life I wanted – always stressed over money. That’s why I stay with the credit union and why I write with Jonathan. Sharing my knowledge may help someone else avoid the mistakes I made.