Thursday, November 24, 2011

History repeats itself

By living on a shoestring budget and staying far far away from the shops, I have managed to pay down my credit card from $800+ to $322 so far this month. I gave myself a deadline of December 1st to completely pay it, and with 7 days to go I'm feeling pretty confident. And not so sorry for myself anymore. This was a good timely lesson, that I would rather have now when money is tight, than when I go back to work in February and money is a bit free-er. Who knows how much longer it would have taken me to get my act together if I wasn't feeling the impact. What I know about myself is that I am one of life's natural spenders. I love to spend money.
11 years ago as a pregnant teenager I found myself keeping house with my then boyfriend for the first time, getting ready for the bundle of joy that was soon to arrive. Financially, we had more disposable income than was really good for us, because like many teens and young adults we promptly committed to debt and lifestyle choices that maxed out our money without having anything of significant value to show for it.
Its funny for me to look back and remember how every Friday I was up at the Westfields, spending all of our money on things. Not even very sensible things. Way too many clothes for starters. Makeup, Cd's, food. Easily $200 every week at the Supermarket and yet we ate out most nights. Not enough furniture, given that we only had a crate for our big TV, and a matress on the floor in the lounge room (with no couches or a bed frame what was the point of sleeping in the bedroom?).
Because I couldn't conceive of accumulating money for any given time or shopping for second hand, we took out finance to furnish the house from fantastic furniture. Our baby had hand me downs that had been through 6 or 7 other kids because cots and change tables cost more than I could produce in 1 pay. We got into a bunch of trouble with insurance debt collectors due to uninsured accidents, because of course insurance was a waste of money.
We even got a credit card, to pay off the 3 stores cards I had acquired when the weekly pay ran out. Thanks St George, at 19, I really think I was equipped to deal with a $20,000 credit card. Especially when my store card problem was only $2,000. But of course I didn't say no. I didn't try to reduce the limit. That would have been smart. I maxed it out in 6 months, but I had nothing to show for it.
It's crazy, but I even felt a little hard done by. Poor me, I couldn't have enough nice things. I couldn't have a nice car, I couldn't afford my own washing machine, and I had to have a bar fridge instead of a real fridge. It was a while before it occurred to me that the reason I couldn't have these things was because I was making stupid decisions with our money, and boyfriend was no better.
By the time my daughter was 9 months old, I had my head together. My life sucked big time, and it was all because I was paying money towards stupid things. Money to debt collectors, money on fines, money on a maxed out credit card that had nothing to show for it.
Boyfriend and I married, in a simple basic outdoor ceremony. We each committed to a 2nd job for a while. We flattened our budget, and focused on one financial problem at a time. We didn't worry about the biggest (St George!) or the highest rate (fantastic furniture finance!), we started with the most manageable - a $500 insurance company collection debt. It got all our spare cash until it was paid off. Then we turned our attention to another debt. One by one we chipped them all away till there were none left. By the time my daughter was 2, we had managed to pay them all off. We dropped the 2nd jobs in order to spend more time together.
Our spare cash was probably still not well spent, it was frittered away on restaurant dining, clothes and toys that barely got used, and experiences that could have been a lot cheaper. But we did it on our own dollar. It took a mortgage to teach me the real value of money, although even then we went about it the wrong way. We had saved only $10,000 when someone offered us 100% finance to build a house. Fortunately for us I was able to refinance as soon as the house was built into a more reasonable loan thanks to a 20% increase in property values. Right place, right time. Even so life was tight for the first few years of the mortgage.
I learnt a hard lesson about money at 19, but it was the right lesson. Apparently I needed a reminder now, since I forgot how incompatible credit cards and I are. Lesson learnt, I have nice things now not because I borrow for them, but because I save for them. Because I'm willing to work hard for them. And because I'm willing to sacrifice for them.
Hopefully I won't need another reminder in 10 years time. Were you ever there? Am I the only one with an extremely stupid financial start in life?

2 comments:

  1. Good on you for getting your credit card down! We had a pathetic financial start in life - both coming into married life with debt, no money sense and wanting everything 'now'. We're doing a lot better now - and have learned to save for things rather than be instantly gratified (and then have to pay for it later - in both a financial and emotional sense).

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  2. @Debbie @ Aspiring Mum Thanks for commenting Debbie! - I think sometimes we have to make these mistakes before we can really make a success of our finances. There are only a few people out there blessed with inbuilt financial commonsense.

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