Certified Financial Trainer™ Columbus Tells His Personal Debt Story
My personal debt story began when I first started undergrad. I did not know anything about managing my finances, and I was easily persuaded to sign-up for my first credit card. I did not do any kind of research and moved strictly on excitement, I was immediately denied! See, credit applications were a foreign concept to me, so I had no idea that I needed to meet specific credit requirements for different cards. And of course instead of wondering why my application was denied and looking more into it, I decided to fill out 4 more applications on 4 different cards! Of course as you can imagine, all of the applications were denied and my credit score took a major hit. To sum it all up, my debt journey began with 4 hard inquiries and zero credit available!
Once I finally wisened up and did some research, I realized the gravity of the situation, and I am not sure if I was driven by determination or anxiety, but I knew I had to start recovering soon. A balance transfer card, and a few months of on-time payments later, and my financial confidence was through the roof. So much, that I decided that it was time to apply for a new credit card. Now this new card didn’t have the same restrictions like the old one. I not only had a credit limit that went into the thousands, but I had some great cash back offers that made it even more tempting to use. Unfortunately, this sparked the beginning of a really unhealthy habit with debt.
As time went on with my new card, I realized that there was a huge difference between a secured card with a $200 limit that I used to pay my phone bill, and a cash back rewards card that had close to $10,000 worth of possibilities. At first it was easy to just pay my phone bill off every month through the card, but I soon found myself charging things little at a time, and justifying it by thinking things like “I won't have to pay it in full anyway” or “it’ll eventually get paid off”. I mainly blame my lack of patience and desire for short term gratification. If I wanted to purchase some new clothes, the upcoming video game releases, or even travel somewhere for vacation, I always looked at my credit card as money in my pocket. It was easier to see things that way instead of coming to the realization that I actually couldn’t afford a lot of the things that I wanted at the time. Very soon I found myself not only nearly maxing out my credit cards, but also paying minimum balances that would definitely cripple a college student’s pockets. This is where it clicked to me that changes had to be made.
There’s usually an emotional side to debt that people tend to not take account of, and mine was the fear of missing out. If my friends were traveling, going out to events, or even talking about playing a specific video game online, instead of saying that I didn’t have the money, I simply would pull out the credit card. It was a crutch that kept me from accepting that I didn’t have the financial capacity for the things that I enjoyed. Once I identified and realized that I was destroying my finances with this mindset, I immediately decided to switch things up!
I promptly changed my spending habits, and started using a majority of my paychecks to tackle that credit card balance. I had to steer myself to be comfortable with missing out on a few things, and enjoy what I had available to me without constantly spending. This definitely was not an easy task, and it took me forever to get used to this change in lifestyle, but about a year later I had finally done it. I was officially credit card debt free!
The increase to my credit score was DRAMATIC, and the amount of money from my check that I suddenly had available to myself was such a relief. That’s when I knew that I had to learn more about how to navigate through all the different types of debt, and I share those same tips and tricks with each of my clients struggling from debt today. And there have been a few times that I had accrued more debt on those cards, but now I manage them much more effectively, and use my cards very scarcely, for emergencies only. The moral of this story: There’s always a way to rise up against debt no matter the type you’re dealing with. You just have to find the tools to do so, and the determination to keep pushing forward.
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