# Paying for my foolishness



## GoGoGo (Sep 8, 2011)

hey everyone,

I've been reading here for awhile but haven't posted until today. I really love all the information and advice! So I am hoping that posting a public money journal will help me to be accountable and keep me motivated. 

I am 33. I spent my 20s... literally. I had student loans and consumer debt and did not pay attention to any of it until one day when I was 29/30 I woke up and said to myself, "If I keep living like this I will be in debt for the rest of my life." At that time I had $45,000 in debt. I started living within my means and paying down my debt, as well as reading a ton of personal finance books for information and motivation. 

Today this is what I have:
Student Loan: 12,594 (5.5% interest, $118 monthly payment)
Credit Line: 8,447 (8.23%, $100 monthly payment)
Personal Loan: 1,310 (8.45%, $403 monthly payment)
Credit Card: 8,000 (have to check interest rate when I get home)
Personal: 250 (no interest)

Total debt: 30,601

TFSA: 150 (just recently started it for an emergency fund)
RRSP: starting in October because I'm getting a raise and an employer contribution... the raise will cover the RRSP contribution so it won't cost me any more monthly

The personal loan will be paid off completely in January, at which point I'm going to take the $400 payment and apply it to my credit card. 

Oh, I also owed income tax this year and am paying $147/month on that for a few more months. 

The credit line I have converted into a fixed payment (so that I'm paying it off and can no longer USE it!). 

On one hand I'm doing ok because I'm making all my payments, and I'm really excited about the one loan being retired in January and turning my focus to paying off my credit card.

On the other hand, I still need accountability because I still USE my credit card and I shouldn't need to... which means I'm still spending too much money. My income isn't high (will be about 38,400 after I get my raise in October) but I can still afford to pay all these payments and live within my means if I make better choices about my day to day spending. That's the part that I still struggle with even though I have done better over the past few years. 

My plan is to update this monthly so that I can be accountable on the monthly spending (specifically my credit card balance...). 

I don't have a car; I walk and take public transit. The main leakage of my money comes to food and entertainment. That's the area that I need to work on the most... as well as impulse buying. 

It has taken 3 years to cut my debt by 1/3... I don't want it to take 6 years to finish it off so I need to step up my game.


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## andrewf (Mar 1, 2010)

Carrying 8k on a credit card is nuts. See about putting it on a line of credit or something. Then, cut up your credit card, or do the Gail Vaz Oxlade thing and freeze it in a block of ice. If you can't control your spending, stop yourself from adding to the pile.


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## GoGoGo (Sep 8, 2011)

I agree that it's nuts!  

That's why I am tackling it, starting January when the $400/month from my old loan is finished and I can put that money on my card instead. 

When I get home tomorrow (I'm at work until morning) then I'm also going to rework my monthly budget and force myself to stick to it. :/ 

Overall my total debt IS decreasing on a monthly basis... but my credit card has not been, so that's the part I need to focus on. :/


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## Desdemonia (Jan 16, 2011)

I definetely recommend some books for motivation, specifically to decrease spending on silly stuff.

1) Automatic Millionaire
2) Millionaire Next door

I was a typical consumer around 2007, read book #1 and it changed my life. Its really easy to read, and there is a chart about a third way into the book that was all the motivation I needed.

Good luck!!!


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## jamesbe (May 8, 2010)

Congrats on admitting to the problem, and starting on fixing things. But if you can move that credit card debt it will save you a fortune. Most likely you are paying 19% on the credit card debt!

If you can't move it to the line of credit or something, maybe get one of those 6 month no interest balance mover cards. Sounds silly to get a new card, but 6months interest free could save you enough to make a sizable repayment.


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## GoGoGo (Sep 8, 2011)

jamesbe said:


> Congrats on admitting to the problem, and starting on fixing things. But if you can move that credit card debt it will save you a fortune. Most likely you are paying 19% on the credit card debt!
> 
> If you can't move it to the line of credit or something, maybe get one of those 6 month no interest balance mover cards. Sounds silly to get a new card, but 6months interest free could save you enough to make a sizable repayment.


I don't think I can move it to the credit line because I already had that converted to a fixed loan (technically it's still a credit line but I can't access it) and there isn't space on it anyway. 

The intro-rate card switch idea is a good one... not sure if I can even get another card in my current situation but it's worth looking into. Thanks!


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## GoGoGo (Sep 8, 2011)

ok, I checked out card options online and applied for a 0% intro, no annual fee mastercard. I have no idea if I'll be approved but I figure it doesn't hurt to try.


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## mind_business (Sep 24, 2011)

8.23% rate on your line of credit is extremely high. I just checked mine and it's at 5.75%. Having said that, it makes sense to pay off as much of your credit card as you can, using your line of credit.

If it was me, I'd contact your bank and negotiate a lower rate on your line of credit. If they won't give it to you, check other banks out.


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## financialnoob (Feb 26, 2011)

Congrats on acknowledging the problem and taking steps towards resolving it. That's often the toughest part. I think you're off to a solid start. The CC rate is probably high, so switching to a different card with a 0% or lower balance transfer would help.

Have you started a budget? I think it would be helpful, especially since you know you're overspending on food and entertainment. Tracking what you're spending it on every day might help you prioritize some things.

Are you going to fancy restaurants all the time, or are we talking eating out all the time? What about entertainment? What type of things are you spending the money on?


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## hboy43 (May 10, 2009)

GoGoGo said:


> I don't have a car; I walk and take public transit. The main leakage of my money comes to food and entertainment. That's the area that I need to work on the most... as well as impulse buying.
> 
> It has taken 3 years to cut my debt by 1/3... I don't want it to take 6 years to finish it off so I need to step up my game.


Don't beat yourself up. I would suggest that by not running a car and paying down $15,000 over what was it 2 years, you have considerable strengths and are moving in the right direction.

When I have trouble downing a bag of chips or whatever, I find it best to leave the chips in the store. Then when I have the urge, I am usually at home and the chips are in the store - impulse problem fixed. Cut up the cards, bury them in a 4 foot hole or otherwise make them not present when you find yourself in an impulse purchase location or situation.

After a while, your "cravings" will subside and you will likely be able to keep a card around.

Another useful exercise would be to examine regular money drains like say a daily coffee at work over a 40 year career. Estimate the future value of that expenditure stream at say an interest rate of 8%. Some will say I want the coffee, others will say holy **** I had no idea the long term cost. Repeat with restaurant meals, magazine subscriptions, etc. Keep what you truly value, ditch the rest.

hboy43


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## GoGoGo (Sep 8, 2011)

financialnoob: yep I have a budget... I've been doing that for a couple of years now. I have a spreadsheet that shows all my monthly stuff on separate pages, plus running totals on the front page so I can see things at a glance. It's fun to see my progress, but progress is so slow!

As for the extra spending it's a recent development; I was living with a balanced budget until I acquired a new boyfriend 4 months ago.  Now it seems like we are often out and about... going for sushi, going to movies. None of it is expensive stuff on its own, but it's adding up. Fortunately he's supportive so when I say to him tomorrow that I have to start living within my budget again, he'll be good with that (I think!). We'll just have to eat at home more. It's hard for him to understand the position I'm in though because he has never struggled with debt!

hboy43: thanks for the encouragement! I don't have a lot of daily drains, and I'm lucky that my job feeds me when I'm here, but I definitely do have a weakness for Tims and Starbucks! If I focus on eating at home more that will be improved.


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## joncnca (Jul 12, 2009)

watch out for intro-rate cards and low interest balance transfers. there's usually some fine print about a fee to use the service amounting to the greater of $50 or 2% of the amount transferred (something like this, it varies).

do the math and make sure it's meaningful to do so, because this fee is basically just getting the interest from you up front, and tricking you into thinking you got an intro-rate of 0% or something low. 

keep up the good work! i had a similar epiphany when i was 23, and became really aggressive about turning things around and i think i've done pretty decently. you will too!


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## financialnoob (Feb 26, 2011)

Second what Jon said about the intro offers. A lot of the 0% balance transfers are only for a limited time, sometimes only for the first 3 to 6 months before shooting up to 19.99% or similar.

And I understand about the extra spending. Have you considered other things you could do to go out but spend less? Instead of going out for sushi, you could do a picnic (though it's getting a bit cold for that). For movies, are there any indie theatres nearby? Those tend to be much cheaper. Or do they have Tuesday specials out in BC? There should be ways of reducing the costs while still allowing for some fun. You're in Vancouver so there must be a million events going on that don't require a ton of spending.

Also, you mentioned that there was an employer contribution to your RRSP. Does that only apply if you put in money as well?


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## Homerhomer (Oct 18, 2010)

After reading the thread I can still offer some suggestions, and I know what I am talking about since I went through the same few years ago.

1) No credit card in your wallet, CUT IT NOW, cash only for you, it is absolutely crucial.

2) Cut your Timmies and Starbucks expenses by 90%, all together would be better but one has to reward yourself once in a while, if you go there 20 times a month, now it's going to be only 2 times, 

3) Eating out is not for you at this time, you boyfriend will understand and even may appreciate that you are responsible and taking care of it. 

4) Make more money, it is as important as cutting expenses and couple of hundred bucks a month will help you pay your debts way ahead of schedule. Examine your skills and figure out what you can do part time or as a side business to bring $300 or more extra a month.

Good luck.


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## GoGoGo (Sep 8, 2011)

thanks for the feedback, everyone. 

financialn00b: most of the stuff we do technically IS free (local festivals and events, etc.) but the hitch is that we'll be out all day/evening and have to eat somewhere in there. Sometimes we bring snacks from home but it's never enough when you do as much walking, etc. as we do. :/ we are both VERY physically active so we eat a lot! and sometimes it's cheaper to eat out; for example, sushi ($6-8) is cheaper than a picnic... I've tried doing the "make food and bring it" thing but I find that I spend more on that than I would on just grabbing a sandwich somewhere. :/ It's kind of a catch-22. At home I eat mostly oatmeal and fruit so at least that part is cheap! 

With that said, I did NOT do well in October! I only reduced my debt by about $50, which is pretty sad. We went to Vancouver Island for bf's birthday to go bungee jumping (among other things). I don't regret that at all because it is a life experience that I value (first time) but November has to be different!

Onward!


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## Helianthus (Oct 19, 2010)

GoGoGo said:


> *sometimes it's cheaper to eat out; for example, sushi ($6-8) is cheaper than a picnic... I've tried doing the "make food and bring it" thing but I find that I spend more on that than I would on just grabbing a sandwich somewhere. :/ It's kind of a catch-22. *


I'm not sure what you are making, but the lunch foods that I typically prepare do not cost more than an $8 plate of sushi. I can make a whole chicken breast and rice for less than $2, or a large turkey sandwich for a similar amount. Both are sufficiently filling for an above average sized, active male, so I would assume that they would be sufficient for yourself as well. 

Looking at your thread overall, I'm a little confused. While, $38,400 isn't a ton of money, it should produce an after tax income of approximately $32,600, or $2,717 per month. I'm curious from there, where it all goes. 

Monthly Cash Outflows:

Student Loan $118
Credit Line $100
Personal Loan $403
Credit Card $100?

Total Debt Service $721?

Remaining Income for all other expenditures = $1,996

3 Zone Metro Pass - $151?
Utilities - $150?
Groceries - $200?
Rent - $700?
Entertainment - $160? 

The only budget line I'm totally unsure of in terms of reasonability is your housing. Looking at Kijiji, there are a number of 1bdrm/basement apartments for a similar cost. I have no idea whether you share a dwelling with others people either. Based on your income, I wouldn't be spending any more than that anyways. If the above generous allocations are correct, you are still blowing another $635/month on who knows what! 

You say that you don't want to take another 6 years to get out of debt, but you aren't making any steps in the right direction. If your boyfriend is so anxious to get out and do these costly activities, maybe he should be paying your way. I'm also confused as to why he would encourage this kind of activity if he considers any type of future with you. After all, your debt will end up being a strain on the total family cash flow. From your perspective, if things end up going sour, will you look back on all the money your blew to be with him and think it was worth it? 

Lastly, I'm quite shocked that the banks would give you in excess of $16,500 (you've stated that it has gone down over the last 3 years) in non-student, unsecured credit cards/credit lines with no equity and a relatively low income level. 

I certainly wish you all the best in conquering the mountain in front of you. I would recommend sitting down and really thinking about where you can make sacrifices to get this debt paid down as fast as possible.


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## Berubeland (Sep 6, 2009)

Make more money.


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