I have a confession to make.
I love shopping.
Yes that is me. A confessed shopaholic. I love nice clothes and I love nice shoes. I spend 20 dollars on a pair of panties that have enough fabric to cover most men’s pinky. I would gladly spend a few hundred on a handbag and eat protein shakes for a week. I buy expensive skincare. My jeans I buy based upon how they make my ass look rather than the price tag. I buy high thread count sheets. Not even the thread count you can buy at most stores – they have to be ordered. When I feel down I don’t go on a drinking binge or an eating binge – I run straight to the mall. It is my vice.
I am a retail stores best client. I am a sucker. I walk into the store and stupidly get the retail credit card because I get 20% off that day and fail to even think about the 22% APR.
Well – this got me into a lot of trouble.
Lately I have been learning a lot about effective money management and what being a credit card person actually does to ones net worth.
What it comes down to is this.
Credit cards are the demise of America (not my words.) But I believe part of this is true. With credit card debt you will always pay back way too much. So imagine you are buying a 100 dollar shirt – after you pay that off the card it ends up being like 150. And if you are only paying minimum payments or slightly more – well you are barely paying any principal.
Now – to give myself credit I have never had a late payment in almost 7 years.
I have been really good about no longer spending. I am sort of in a “time to get responsible about money” phase – hence the no shopping policy. But getting out of debt is a whole other story.
I sat down with a couple “money savvy” people. One is my uncle who has no debt – only one credit card and is very well off because he knows money. The other is my banker. Who, because he is a banker, obviously knows money said the same thing – debt can’t ruin someone.
So with a little help from my friends I have, with my newfound knowledge, come up with a repayment plan.
The first thing I did was transfer every balance to a low rate card. This I find out will cut my repayment time by half and reduce my interest by thousands of dollars.
I then canceled every single one of my cards. GONE. OUT THE WINDOW.
I will now be completely out of debt in 8 months.
However, my love for nice things will likely never go away. What can I say – it is just who I am.
I Rachel Heather am indulgent. And, I have come to find out this is not a fault – materialism is not a bad word – it just has to be managed.
So how am I going to do that?
First of all I am forcing myself to not buy anything not needed until I am out of debt. After that I was thinking maybe of some sort of budget but it has to be paid in cash.
This is the dawn of a new age – the age of Rachel being financially responsible.
So to sum it all up – what I have learned.
Bad marks on your credit WILL come back to haunt you (I had two late payments when I was 18 that bring down my score )
If you can’t pay cash for something – don’t buy it – unless it is a solid investment (car, home, etc.)
Keep only one low APR credit card and only put on there what you can pay off at the end of the month.
So what kinds of money management and money “rules” do you all follow?