Being in Debt is a Bitch

Mar 28, 2018

I know. I’ve been there. 20years old and $20k in the whole, with nothing to show for it. Maybe a few good nights out, a random throw cushion and well stocked fridge. But that was it.

I’d circle between denial, avoidance and bargaining. I couldn’t talk about it to anyone - it was way too embarrassing. Even in my 20s I considered myself to be an intelligent woman. So how could I have made such a monumental f up? And not just one f up, 20,000 of them.

I remember flying down to Melbourne to spend my 20th birthday with my girlfriend. I had $200 left on my credit card before it was maxed, and about $80 left in my bank account. So naturally I thought I had more than enough to have a weekend away (this was over a decade ago so $280 went a little further then).

The only catch was I had grossly underestimated just how much it costs to eat out and drink out all weekend long. It got to 1am on Saturday night and we were about to hit one of the coolest bars around. We stood in line for over an hour, and then right before we got to the front of the line I froze, after hearing there was a $20 cover charge. I wasn’t even sure if I had enough to get in to the club, let a along buy a drink. So I feigned some sort of yawn and pretended I’d had enough just so I didn't have to have an awkward conversation about just how little funds I had left. Needless to say my friends were Not Happy Jan.

I’m a pretty big believer that it often takes hitting rock bottom before you’re truly motivated enough to change. And I was at rock bottom. I couldn’t see a way out. My confidence was shot and my self esteem had been sucked out of me. It felt like I had a 20kg python snake wrapped around my neck. I couldn’t breathe. The weight of the stress, the pretending, the constant worrying...it was suffocating. Being in debt really is a bitch.

When I landed back at the airport and had to call mum for a lift home, it also meant I had to spill the beans. Scary? Yep. Uncomfortable? Hell yes. But thank god it happened.

We went to a cafe and had a money chat. There was no yelling. No “what the f have you done” comments. Actually it was quite civilized - I cried. A lot. (All that pent up stress had to release at some point). Then we drank tea and wrote out a plan.

First, I cut up my credit card. And I don’t mean I cut the card up but kept the details so I could still make “urgent” purchase online. Noooo.

What I mean is, I cut up the card, THEN I did some solid research and found an 18 month interest free personal loan then transferred the credit card balance to that. THEN I cancelled my credit card. You see, banks don’t let you cancel your credit card until the balance is zero. And why would they? Cause they’re making waaaaaaay too much money off you.

Note: this ONLY works if you:
a) actually cancel your credit card, and 
b) have plan to significantly pay down the debt rapidly within the interest free period. If not, forgetaboutit. The catch with many of these interest free periods is the second you’re out of it they start slogging you with hefty interest charges - often higher than the 18% your credit card is charging you.

Now you’re thinking - but hey, I can just play pogo stick with personal loans and jump from one loan to another and spend years interest free! No, you can’t. Banks cotton on pretty fast - plus it kills your credit rating (in case you ever want a loan again, like say, a mortgage).

Second, I got focussed and worked my gravitationally positive butt off (I was 20 after all). I moved in to a share house so I was paying less rent. I picked up a second job as a door host at a nightclub so I spent more time on Saturday night earning dollars than spending it on dirty martinis. I sold some stuff on ebay and borrowed clothes instead of going on shopping sprees. I executed my plan like a boss.

15 months and-a-bit later and I was on the phone to the bank to work out the final payment figure. I was as happy as a fat kid in a candy store. I printed out my $0 balance, framed it and stuck it up on my wall so I could stare at it when I hopped in to bed. Sexy, right? I certainly thought so. I worked hard for it. But damn it was worth it. I was worth it.

That uncomfortable conversation over a decade ago paved the way for an extremely successful financial future. Now the only debt I have is investment debt. No car loan, no credit card. You see, every time you borrow money, you're robbing your future self. And some.

Start your own conversation by emailing [email protected].

xo
Simone