why life shouldn’t take Visa…
Every conversation I’ve had recently has revolved around money. Whether it’s a full-blown confession of a shopping addiction, how to convince a Student Loan Corporation representative that while you make $80K a year you barely survive paycheck to paycheck, how to negotiate the precarious terrain of IRAs, 401ks, credit/savings, IRS audits, “bad” and “good” debt, all the while trying to provide for a newborn or simply to survive each day without screaming, or how to deal with identity theft, my friends and I have grown nervous. We are nowhere near the financial position we thought we’d be in. We are not saving. We are barely spending. Like the rest of the country we are in debt, and by god do we want out.
My father, who probably makes a third of my salary, carries zero debt. During a recent phone conversation, while I prattled on about my student loan debt, my credit card debt, my etc etc debt, my father remained quiet, listening. When I’m done he said: you’ve been in debt since 1997. Isn’t it time for a change? Granted, my father has delivered this message before (countless times), but it never stuck until I was ready for it to stick. At that moment I realized a debt-free life was wholly possible.
I am on a mission, my friends. I bought Suze Orman’s (you bet I did, and I have NO SHAME about it), I kept track of all my spending for a month on an Excel spreadsheet, I determined precisely how much debt I owed and how much cash was coming in. I tallied all of my assets & liabilities; in short, I created the Felicia Sullivan Financial Statement for fiscal 2008. And when I started to realize where all my money went ($3K/year because I buy pasta every goddamn day for lunch? $1500 because my ass is too lazy to brew coffee at home? $600 for magazines that I can clearly swap with friends/neighbors or read on the floor of an air-conditioned Barnes and Noble), and I made some significant changes to my spending habits. While these changes may not work for your lifestyle, they’re helping me chip away at my credit card debt aggressively:
1. I no longer subscribe to magazines. Ok, I subscribe to two. I swap those two mags each month with my neighbor who is a journalist and scores tons of magazines, gratis. I read magazines/newspapers that my colleagues receive at work. I make a “play date” with my bff where we sit in B&N and read US Weekly and all the weekly rags.
2. I make my own coffee, at home. I badgered my co-workers to chip in for a “sweet” bin at work - midday treats on the cheap. I’m also a fan of the potluck, and I shop local because it’s cheaper.
3. I host clothing/household item/book/dvd/cd swaps 2x a year. Not only did I score a crepe pan (!!!), I stockpiled on my friends’ gently worn shoes, cashmere sweaters and jeans. Everyone wins, and the items left over are donated to charity.
4. When folks tighten their belts, they cut cable. No, hell no, I say. Instead of spending $$$ out, I invite my friends over for movie night, and everyone brings over a munchie. Because it’s cheaper to entertain indoors.
5. Thank god I’m a recovering alcoholic (never thought I’d say that) because $$ for booze was killing me. However, if you do drink, consider splitting a nice bottle of wine at home with friends, as the mark-ups in restaurants are considerable. Or head to BYOB restaurants. Also, perhaps consider scaling back. My friend Meghan once said that she’d rather savor a $12 martini at a really swank bar than pound $5 crap ones.
6. Blog your way to free. I recommend eateries; products and books that I dig, always with the disclaimer that I am not obligated to review a company’s product. I write fair reviews on this site (among others) and I snag some free goodies in the process. Note: if I don’t like a product, I won’t review it.
7. After downloading my credit report & score, I renegotiated the interest rates on all of my credit cards, and consolidated debt, whenever possible. I also pay down high-rate debt, first.
8. The concept here is cutting, not killing. I don’t believe in sacrificing my happiness to live richly. I make trade-offs. So while I’m not a person who gets the biweekly manicure/pedicure, I can spend a little on an occasional dinner out. One can’t have everything, so I make trade-offs. If I want this, I can’t have that, so in the end I at least feel satisfied.
9. Work freebies: no, we’re not talking about housing office supplies, but check out your employee website or intraweb; you might find scores of discounts. I work at a large corporatation and one of the perks are art/cultural discounts. I compare these discounts with what my friends at other companies get, so if I get 50% off a Whitney ticket, I’ll split the cost with a friend, and she’ll recoop me with a MOMA visit. In short, get your friends in on the action of splitting cost, sharing benefits.
Lastly, while this isn’t brain science (none of the above is, really), I literally had to give myself a reality check. If I can’t pay cash for a particular item without experiencing vertigo, than I shouldn’t be buying it. Instead of living beyond my means, I need to live realistically. And instead of stressing over purchases that I can’t afford to make, it’s infinitely better to relish the ones you can.
Articles of Note:
With predatory lending practices, volatile interest rates, a fragile GNP/GDP, and consumers who don’t properly educate themselves on how toying with (or perhaps abusing) credit affects their finances in the long term, learn how one woman went from having a secure job and impeccable credit to owing $280K in debt. “Given a Shovel, Americans Dig Deeper Into Debt” - NYT. It’s frightening how companies are so eager to pull you further and faster down the road to financial ruin.
The L.A. Times has a fascinating article on compulsive shopping in today’s downmarket economy.
A recent True Life (MTV) episode focuses on teenagers who cannot stop spending.
I taped a segment of Fox Business News’ “Three Things” on Top Money Drains
July 21st, 2008 at 3:24 pm
All very good ideas that I follow myself. Also? Cut up your credit cards. Do it. We got a consolidation loan for the balances, put one card in the safe for true emergencies (say, if we are hit by a hurricane) and pay cash for everything. We don’t have the cash? We don’t buy it. This HURTS a lot. But it works! Debt-free here we come (I hope).
July 21st, 2008 at 3:33 pm
I absolutely agree. While one shouldn’t have a basket-load of cards, it’s smart to keep one or two on hand.
I’ve kept two I’ve had the longest to demonstrate that I can have credit without abusing it. It also shows stable credit history. While I never carry the cards with me, I do use them for travel & emergencies.
July 21st, 2008 at 4:31 pm
this is great. More of us need to be talking about these things. I am the first to say the each of us has to take responsibility for ourselves and our actions but no one does anything to address what the financial (and marketing) industry does to people.
July 21st, 2008 at 5:00 pm
You will never convince the Student Loan people you don’t make enough money. They garnish wages, SSI (form of welfare for the disabled) SSDI, unemployment checks. Tax refunds.
So, if I can’t convince them that I can’t pay and I HAVE NO JOB OR PROSPECTS, you will NEVER convince them. Especially when you have credit card debt.
July 21st, 2008 at 6:49 pm
Good for you, Felicia! That’s fantastic. I love Suze Orman, but lots of her info doesn’t apply in Canada. What does, though, I have used with great success and now am debt free except my mortgage. Which is freaking huge.
July 21st, 2008 at 8:29 pm
Erinn,
I couldn’t agree with you more. There is this stigma about talking about money. One shouldn’t talk about salaries and debt and all that nonsense. I fervently believe that if you’re open, honest, and appropriate in conversations about money, it’s amazing how much you can learn and share with others.
Cheers, f.
July 21st, 2008 at 8:57 pm
I love talking about money for some reason - I think it is because it always shocks our friends that we (my husband and I) live on so little. One suggestion I wanted to make was that instead of buying books I get my library to buy them! (I know, I know, I love books but can’t afford to buy new and don’t have much room for them in my small apartment. I used to get lots of new books for free when I was a book reviewer but I ended up selling them all so we could eat.) This way I don’t have to feel guilty because I a)didn’t buy the book myself thus supporting authors who I would like to support and b) the library usually buys more than one copy and I get to introduce the book to lots of other people. That’s what I did with your book and it should be arriving at my library soon.
July 21st, 2008 at 9:29 pm
Thanks for this Felicia! We are trying to get debt free, too. We have a long (long long long) road ahead of us, but I’m determined to not be under the thumb of evil credit card corporations all my life. It’s amazing how much our culture encourages us to spend needlessly and thoughtlessly. We are so contradictory in so many ways. We talk about saving and being responsible on one hand, but then are encouraged to have lotsa car, lotsa house, lotsa clothes, lotsa beauty and are made to feel less than if we don’t. Ugh.
July 21st, 2008 at 9:32 pm
Alison - YES!!! One of my dear friends used to work in Soho (in the same building as Marc Jacobs) and would get stress attacks because she was overwhelmed by the models in the elevator, the constant influx of magazines and little boutiques with 30% sales!! Girl couldn’t even get a latte without tripping over a YSL sandal.
July 22nd, 2008 at 12:44 pm
Rock on — definitely an important thing to talk about. I came across this just now that seems to be perfect for your magazine fix: mygazines.com — people scan and upload pdfs of magazines for free perusal. Not the same as leafing through in the air-conditioned comfort of B&N, but not bad! Also, a great site for keeping yourself fiscally responsible: Get Rich Slowly at http://www.getrichslowly.org/blog/ — read through the archives; there’s great stuff in there, and it’s all about (as the author of the blog puts it) “sensible personal finance.”
July 22nd, 2008 at 12:46 pm
Andi- This is so invaluable, THANKS!!!!!!!!!!!!!!!!
July 23rd, 2008 at 7:01 am
Great, totally do-able suggestions!
July 24th, 2008 at 6:34 am
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July 26th, 2008 at 3:37 pm
Fee,
This is a lot like how I live now, with regards to the not buying what I can’t afford to pay for in cash. I didn’t go crazy with credit cards, but, we all know that it adds up (you know, my online shopping addiction). About a year ago, we decided to stop using credit cards (except for TRUE emergencies, and there really only was one), so, ever since I’ve been Ms. Debit Card. AND I can see my credit card debt disappearing, which is a WONDERFUL thing!
And, “cutting, not killing” is a great concept.
Liz