The Financial Advice that Changed My Life
This story starts when I was just nineteen years old. I was working every night at my usual server job, in town. I was spending most of my tips and bi-weekly paycheques on drinks after work just as I always did with all my friends after my shifts. When it came time to pay my rent, I would scrounge together just enough money to pay it off. Anything left over, I would blow it on whatever else that I wanted. It was if I was scared of letting extra money go without being spent – in fear of it disappearing before I had the chance to spend it. Obviously this tactic didn’t last so long, seeing as unpredicted expenses tended to pop up at just the wrong times.
I was hit with a couple of unfortunate events. At one point, I had lost my one hundred dollar work shoes, my car broke down, rent was due, and my boyfriend at the time had his birthday coming up. I had no emergency fund and nothing to comfort my fall. So naturally, I piled everything I needed to on my very shiny, very tempting, visa. It was not long after that the bill exceeded all sorts of new amounts that I never saw before. I never wanted that to happen. I had told myself never to get debt on my credit card. After then seeing that massive amount piled up – it hovered over me like a black cloud. I kept spending money like I usually would, but I had the thought of that heavy visa bill just hovering in my mind at all times. I felt unworthy of any money that I made. I hated the feeling of complete hopelessness. I decided at that point, I never wanted to feel that way again. I promised myself then forward that I would learn what I had to do to move forward and get out of that slump.
I woke up every day and listened to podcasts on financial freedom. I started making breakfasts at home, and buying groceries instead of eating out. I tracked my expenses and made budgets on my spending. I made a plan on keeping my money, and I didn’t stray from that plan. I implemented all the strategies that I could to make and keep as much money as I could.
It was rather quickly, I saw changes to my bank account. I had more money than I ever had before in my bank account. I saw my hard work really paying off and I liked the look of that chunk of money under my belt.
Even so, although I had conquered the saving (or so I thought) I had that built debt hovering over my head. I wanted to erase it. I wanted to forget about it and have it never affect my life ever again.
But it was affecting me. Although I was trying to pretend it wasn’t there – it was very much real. It was haunting me and I could feel it, every time I spent even the slightest bit of money.
Then came a couple of young girls, one fine evening during one of my late night patio shifts. I was billing them out after they had a couple cocktails. They seemed like they were in an exceptionally great mood so I thought to ask them, “What are you two up to tonight?” Out of curiosity.
The one girl – not too much older than myself, right now, answered. “I officially became financially free today! We’re celebrating!”
“That is SO amazing!” I answered. I was suddenly so very intrigued. “Can I ask you HOW you did it?”
She looked at me, pleasantly surprised by my enthusiasm. She leaned in, almost like it was a secret and said these magical words : Until you pay off your debt – you don’t have any money.
This phrase hit me like a tonne of bricks. It was the harsh truth I never truly thought about. I let it resonate with me. I’ve repeated this in my mind from then on and it shifted my way of thinking ever since.
You see, I had it in my mind that because I had a large sum of money in the bank – that meant that I had a lot of money. Which in reality, it was the opposite. That money was not mine. That money was owned by my debt.
I will give you an example. If your friend Tamara loans you two dollars to pay for an ice cream sundae for yourself – you now owe Tamara money. But lets say you worked, you got that money back. Realistically two dollars of that money that you just earned, is now Tamaras. You have to account for that money somehow. That wasn’t just magical money that she gave you that has now disappeared into thin air that you no longer have to worry about. It was your WORD you gave to pay her back. Now you must stick to that. To be clear, the rest of the money you earned is yours but those two dollars Tamara has given you – has to go back to Tamara.
So in this situation, you had gave the bank your word when you decided to spend that money. You have to keep your word.
My advice would be to pay it off as soon as you can, so that whatever you continuously make past that point – is now YOURS to keep.
I remember distinctively after this conversation – I made a huge decision. I took that money that I had saved in my account -We’re talking a few thousands- and I thought about it hard. I had a couple thousand on my credit card – that were just stacking up with interest since I wasn’t even making the minimum payment. It was taking a toll mentally on me, and ultimately, taking a toll on my credit score. I knew at that point – until I paid that off, I couldn’t call that money that I had TRULY mine. I was playing this imaginary game with myself having a lot of money when in reality, I could wipe out this debt and really work at making that reality truth. All the long nights and tables I was serving wasn’t paying off because all that money flowing in was really just that debts’ interest. I wasn’t MAKING I was LOSING.
I wanted to change it. I wanted all that money coming in to be MY money. I wanted savings – I wanted an emergency fund – I wanted to spend some money here or there and feel no guilt about it. I wanted that feeling. So I made that sacrifice. I pulled the trigger, and dumped a huge chunk of my savings into my credit card and wiped it out clean.
Seeing that zero balance was a feeling that’s hard to describe. I felt like an overwhelming rush of relief. I felt like that big black cloud hovering over me was lifted off my back and I could breathe again.
I never looked back at the decision that I made. My life changed from that point forward because I really understood what It felt to not have any credit card bill to pay. I understood how it felt to save money, and know that the money saved was for ME and my FUTURE. If I wanted to pay for something expensive, I knew from that point forward that I needed to SAVE for it in order to get it, because I didn’t have the money for it – until I really had the money for it.
I do want to say, it is important to mention that I knew I was going to be able to sustain myself before doing this. I took the money that was just SITTING there in my savings “looking pretty” – not my essential survival money – and used that towards my debt. I would never encourage taking all that you have and doing this. I am talking about that extra money that you have.
It’s a mind trick your brain plays on you, to tell you that you have a lot of money when in reality, you have only so much. You need to sit and account the money that you have, and SUBTRACT the total amount of debt that you have to show yourself how much money you truly have.
Firstly, plug in the numbers to the equation below.
TOTAL amount of money – DEBT you are focusing on = ___________
Secondly, calculate how much money that you spend in a month and see if the sum that you achieved above can cover your monthly expenses.
If the total of this shows that you cannot financially afford to sustain yourself after paying the total debt off – then do not do it. Please. Take that number, pay the minimum amount, but SAVE until you can afford to live while paying it off.
If you see that number and it looks like you CAN afford it – you will just need to live a little more frugal for the next month or so. Do it. You have to take the plunge at some point and sacrifice comfort for a small while to push yourself forward in the end.
So, I learned a lot at that point in my life. My life changed from then on – smoothing my paths for years to come. I learned that taking sacrifices now, could implement your future for the greater good. I was lucky I learned this early on. I was able to bounce back rather quickly and I could afford many things later on in life because I did not rack large debt in the beginning.
To recap, I learned a couple VERY valuable lessons. 1) Credit card money is NOT imaginary money, unless you have the means or you know for sure when and how that money is coming in to pay it off. And 2) Your money is not TRULY your money until you have your debt paid off.
To conclude, debt is a natural thing that comes around in life. Just know that you are not failing when you have debt – because everyone has it in some sort of way. Either its short term debt, like financing a car or credit card debt all the way to long term debt, like student loans or a mortgage. All you have to keep in mind is that sacrificing now can push you further forward financially.