I’m 24 years old, I'm making an entry-level salary, and I have more than $37,000 in debt. It's a familiar feeling to many in my age bracket, but my story is a little different than the average college graduate's. Here’s the long and short of it: I have more than $15,000 in credit card debt alone. And that’s not including the $13,000 left on my car loan, or the roughly $9,000 I’ve got in student loans. I am saddled with about 2,000 work hours’ worth of debt, and let me be honest with you...that is not a good feeling.
I was lucky to grow up very privileged, with all of my financial needs and many wants met. I had piles of presents to unwrap at Christmas, a cell phone of my own by the time I was 13, access to a computer and eventually my own laptop. I was given a car at 16, new clothes every couple of weeks, and my parents helped me financially through college.
I don’t want to sit here and pretend that this isn’t a mess I got myself into. I moved to New York fresh out of college with several shiny new credit cards burning a hole in my pocket, and I let the temptations get the best of me. By that point, shopping had already become an addiction, and it felt all too easy to say, “Oh, this card has 0% APR for another 14 months, I can pay off these two dresses by then.” And if it had stuck to just that, I could have. The problem came when I’d buy another two dresses, hit the next sample sale, and then treat my friends to drinks at brunch… you get the picture.
I never did manage to pay off my debt before the 0% APR terms ran out, and then the interest kicked in. For a while, credit card companies would still send me offers – offering 0% on balance transfers, or even some with 0% APR offers again. I’d transfer my balances on the old cards, and use the new 0% APR cards to finance the lifestyle I wanted. Of course, those rates would catch up to me, and the constant spending I’d become accustomed to would always catch up, too.
As things got worse, I became more and more ashamed of my debt and spending. I felt out of control, but didn’t feel like it was a legitimate problem. Some people can’t put roofs over their heads or food on the table, so who was I to complain about an addiction to shopping? "Just stop buying things," I would tell myself. And it worked for a time, but there was always some temptation just around the corner, waiting to bait me into pulling out my wallet again.
For over five years, I was spending money I didn’t have, and now I’ve got a mound of debt chained to me because of it. Every time I get a paycheck, I’m left with the feeling that none of the money I’ve earned is really mine because I lived beyond my means for so long.
I felt ashamed and alone for many of those five years, and continued to spend myself into a deeper hole because I was too embarrassed to talk about the problem. This post is to let you know that you are not alone, and though it’s a scary, gut-wrenching feeling, debt is not a death sentence.
Sayonara, Sallie May!
If it isn’t abundantly clear by this point, I’m far from a financial expert, but I have come up with several proactive ways to manage my spending and aggressively tackle my debt.
At this point, I’ve cut up all of my credit cards except one, used for true emergencies only, which I keep tucked away at home. I’ve even removed my debit card from my wallet, and I only bring it out to withdraw the weekly spending money I’ve budgeted for. Working with cash has made my purchases more tangible, and not having any plastic on hand means I’ve had to be more realistic about whether I can afford to go to that after-work happy hour or treat myself to brunch. It’s been uncomfortable and embarrassing to admit to my friends, family and partner that I can’t go out, but watching my debt shrink will make it worth it in the long run.
I’ve also created a budget spreadsheet – one that I actually stick to and use. It was quite the process to find a system that I liked, so I cannot stress finding a plan that works for you enough. For me, I’ve combined tools through Google Sheets and Money After Graduation.
Google Sheets offers a free monthly budget template that allows you to set both income and expenditure categories, then input individual transactions. Money After Graduation is the blog of finance girlboss Bridget Eastgaard, whose site “provides a clear and comprehensive source of financial information for 20-somethings.” Seriously, this site has so much good stuff, and if you sign up for her newsletter you get her Millennial Money spreadsheets—which come with awesome big-picture and monthly budget/savings breakdowns—for free. Bridget paid off over $21,000 in student loan debt, started saving for retirement and investing in the stock market within 22 months. Can you say #goals?
Cash Money Records
Another huge component to my financial recovery has been saving receipts. Take that extra copy they give you at the restaurant, wait for the gas pump to spit out your copy, ask the local coffee shop to write one out for you—you name it, I’ll keep it. I’m big on using my planner, so I’ve scheduled a regular time each week to plug my receipts into my budget spreadsheet. For me, that’s on Sunday morning before I work out. There’s something both humbling and incredibly motivating about pushing yourself to relive each transaction. For things like gas or basic groceries I don’t feel guilty, but that extra $10 I spent going out to lunch twice in a week, or the $30 spent on wine and cheese with my best friend last weekend suddenly feels less like a fun indulgence and more like an extra few weeks of working for money that isn’t truly mine. This has been perhaps the most uncomfortable part of my financial journey, but it’s had a huge effect on the way I spend.
The final piece I’ve landed on ties into my budget. I’ve decided to put aside more than half of my monthly income for debt payments. In actual numbers, that means $1,100 per month that goes toward paying down my obligations. It’s a big number, but truth be told I’m really starting to get excited about paying down my biggest debts each time I get a paycheck, getting ahead of my minimum payments and watching debts shrink before my eyes.
In just over a month I’ll be 25—quarter-life crisis, here I come! I may not know who or what or where exactly I want to be when I’m older, but I do know that sticking to this plan will help me get to a place where I have the savings and financial stability to figure that out as I go. I hope you’ll come along for the ride.