Facing the Hard Truth…
Just a chick in her mid-twenties on a mission to save for and pay off her ridiculous amount of debt within the next five years.
As cliche as it sounds (especially with it being only a couple of days before the new year ) — I am ready for a change. I’m not one to believe in New Years’ resolutions… but heck, here I am.
I guess it would help to start off with what my major dilemma is, how the heck I got into this mess, how I plan on getting out of it, and what my main goal of this blog will be.
A snippet of me and my financial background (or lack thereof): As I am writing this, I am a 26-year old college graduate with a job that I earn about $95k at right now. I have what some would say is a “good” credit score of about 740. Not great for living in LA, but also not horrible.
Before you read that last paragraph and immediately roll your eyes and think to yourself, “there’s no way this chick is seriously struggling with debt,” let me just preface this by saying that my parents were very young when they had me. Healthy financial habits were not the habits that were passed down to me. I have done a lot of work to land the job (and salary) that I have and to get a decent credit score that I have. Due to some family misfortunes, I graduated from college in 2016 when I was 22 years old with about $150k (give or take about $10k) in student loan debt. Four difficult years later, the magic number is now slightly lower at … $126,359.34. I’m not even going to lie to you — it still makes me queasy just typing out all of those numbers, and well, my initial feelings are that I’m really disappointed and ashamed of that number and myself. I entered the workforce a couple of months after graduation and met the harsh reality of my student loans quickly after. I have been drowning ever since.
What was passed down to me from my parents, you might ask? Absolutely nothing besides a f*cked up financial situation that I’ve been trying to gain control of for the past four years.
Hahaha. Just kidding… but wait, am I? What was actually passed down to me was a nasty overspending and shopping problem, with no functioning knowledge of how to keep myself financially in check. My parents never thought to teach me anything about financial literacy, but can I really blame them? They were young and I was an accident. My dad is an immigrant from Vietnam and he grew up at a super young age in San Bernardino, surrounded by tons of gang activity and street racing. He never graduated from high school. My mom grew up much different than my dad did, and was lucky enough to attend a private school for all of her academic career. She got pregnant with me in high school, and the furthest education my mom ended up getting was her HS diploma. My mom was then diagnosed with Lupus Nephritis only a few months after I was born. I hate to say it, but my parents literally knew nothing about financial literacy, and they were so young that they never got to fully develop healthy financial habits for themselves. Ah, kids taking care of kids…gotta love it… And quite honestly, I feel bad for them because they never had the resources that young adults today have to learn these things. Unfortunately, they never bothered to try and learn good financial literacy once they got older.
It’s not to say that my parents are the full reason for my financial downfall, but it’s important to note that they were certainly part of the reason why and how I got myself into this mess.
It should be also be noted that due to my tumultuous relationship with my parents, I have decided to forgo all contact with them. I have not spoken to my parents in a couple of months. My mom’s mom (my grandma), who you’ll read more about later has been my rock through all of my lowest of lows.
I moved to LA (or California, I should say) a couple of months after my college graduation with no money, no savings, no friends, and no job. The only (I say this term loosely, and you’ll find out why later) things I had when I moved to California, was my car (my grandma’s at the time), two boxes filled with my personal items, my insane amount of clothes and shoes, and last but not least, a sh*t ton of debt.
Fast forward to 2020. The year of all years. With the holidays in full swing and my inability to leave my apartment for days on end (yes, COVID-19), I have been forced to deal with my plethora of problems more than I ever have before. With that, I am going to say that I recognize that I’ve got a lot of problems and I recognize that other people also have a lot of problems… so this is my friendly reminder to please be kind! Anyway, since I’ve been stuck in my apartment for the past 10+ months, I think it was time I actually used my time for something useful… :)
My realization. Recently, two of my friends in a relationship just bought a small condo together in Highland Park. That jump-started my annoying inkling to start browsing for other homes that are available in Los Angeles and the surrounding areas… cause ya know, I also want to be a homeowner in this wonderful, expensive city at some point or another.
I’ve been through this same exact feeling all too many times before — something or someone around me brings up looking for/buying a house, and it’s almost like a giant satellite is beaming down through the heavens for people like me — people who love spending money. I immediately feel the need to want to buy a house. It’s like I want to buy a house because everyone is buying a house in my mind. In reality, that’s just not how it is. At this point, it doesn’t matter to me. Suddenly this want becomes an obsession and if I don’t control this problem soon, I could easily get myself into more financial trouble than I can afford. I can’t sleep, I can’t focus on work, and all I can do is think about wanting to buy a house. Spending is like some scary drug addiction. I let my wants and dreams take over and become reality without any kind of consideration for my finances. I was so clouded with wanting to get a house that I didn’t even ask myself how I would afford this drug called spending. Credit cards? I love living off of those. Paycheck to paycheck? Yup. Crazy loans? Just this once…. those were my typical answers to everything until suddenly… it clicked for me. I don’t really know why or how… but once this so-called drug “wore” off, I fell back down to reality and realized that I’m not even close to having the financial means for this kind of purchase. Different than all the other times, I finally came to my senses. I can’t keep living like this.
My why. As if my home-owning dreams weren’t already c*ckblocked by my student loan debt, when I graduated from college, I had also made up a random rule, that if I wasn’t ready to take responsibility and control over my debt, I wasn’t yet ready to be married. As it stands, I am in a happy, almost three-year relationship with my boyfriend. Although it is one of my longest relationships, I am in no rush to get married. It’s not that I don’t see myself with him forever, but much like every relationship I have, it’s complicated, and I want to make sure I’m making a big life choice for all the right reasons and in all of the right circumstances.
I always told myself while growing up that I never wanted to have to rely on someone else for anything, including finances. To keep this story as short as possible (it’s still long): my parents were pretty unstable when I was younger, and I had to act like an adult at a very young age. From my perspective, I have always had the responsibility of being a parent on my shoulders. My mom’s illness got much worse while I was going through my tween years in middle school. I remember knowing how bad her illness had gotten and felt the gut-wrenching moment when we found out that my mom had been denied disability from the government. We had to hire an attorney to help us apply again, and luckily, the second time my mom was approved. Soon after that, I became her very official, legal caretaker. I spent the majority of my young age with my mom, often at the hospital for every chemotherapy appointment, every dialysis appointment, every MRI, every doctor's appointment, etc. I learned several things on my own, and in particular I also learned how my parents were actually dealing with their finances… psst. I’ll let you in a secret. They weren’t really dealing with their finances…like, at all. My dad was always busy with working and was too busy focusing on *other* things when I was younger, so he couldn’t always be there. And, if I’m being frank, he just didn’t have the knowledge to be dealing with numbers and stuff.
While she was physically and mentally able, my mom was always trying to find new, and what she thought of as savvy ways to get out of debt. Little did I realize that what she was really doing was just pushing more debt underneath another rug of debt, while still buying things that we didn’t always need. To help her get out of some of her financial troubles, my mom would always rely on family members like her mom, her mom’s brothers and sisters, her grandma, her grandma’s siblings, etc. to bail her out. The same could be said about my dad, but he did things a little differently than my mom. My dad’s biggest problem was and is spending. Unfortunately, I’m afraid this problem will persist for the rest of his life until he decides he wants to make a change in his lifestyle. There’s nothing my dad loves more than buying and having all of the latest new gadgets and gizmos, and what can I say? I feel like I got this quality from my dad. My jaw dropped a couple of years ago when I visited my family at home for the first time in a year for Christmas… only to find that my parents’ closet literally looked like it had done a mega transformation into a f*cking Apple Store. NO JOKE. I mean how many iPhones does one person… or even two people need? My parent’s whole house has turned into a giant museum of the newest and finest electronics and luxury handbags (my mom’s weakness is Louis Vuitton). It seemed like those things were turning into trophies for whoever “the champion spender of the week” was. That’s when I really started to realize that my parents’ problem had now become strangely similar to my own… and that if I didn’t do something about the problem soon, I would surely become my parents.
As you can guess, at some point, things went very sour with my parents. The reason I had to take out so many student loans was purely because my parents told me repeatedly when I was applying to colleges, that “we [they] will pay for you [me] to go to any school that you [I] want, as long as you [I] have the smarts and determination to get in.” Even my grandma had asked them how they were planning on sending me to college. We both got the same answer from my parents: they had magically come up with the money to send me to whatever school I wanted as long as I got accepted. As you can guess again, I did get accepted into said colleges only to find out that the “college fund” that my parents had been telling me and my grandma all about, didn’t actually exist. It was all a giant load of sh*t. At that point, it was too late for my parents to gather any money, and while my grandma gave me as much money as she could, I was forced to pull out from the college I had worked so hard to get into, only to apply LATE to my local college and get accepted within a couple of weeks. I had no choice but to take out student loans in order to receive any kind of education and independence from my parents that I so badly craved.
Needless to say that after everything I’ve been through with my parents, I just think I’m at a point in my life where I would like to gain overall independence from everyone. I would like to know who I am, when I am no longer a slave to my debt. I’m an only child and I have really learned to enjoy relying on no one else but myself. It’s hard to focus on your own personal growth path when you are constantly held back by financial responsibilities.
I’m doing this to invest in myself. For my financial freedom and independence. For the day that I decide I want to get married. And for the day that I want to finally buy that house.
I have decided to fully commit to saving for and paying off all of my debt within the next 10 years (and hopefully sooner!). I will be documenting my progress here with the hopes that if I’m lucky, maybe one or two of you reading this will be able to hold me accountable.
The plan (as it stands). As I mention above, I’m writing this blog to document my progress and to hold me accountable. This doesn’t mean that there won’t possibly be mistakes made… I am not a certified financial planner, nor do I expect you to think that I am. I am just doing what I’ve read about online and tips from people that I know. This is how I am approaching my debt repayment. Doesn’t mean that it’s the only way to do it or that it has to be your way to do it.
Without further ado, here is what my general plan is (I have already planned out specifics, but will dive into those more with later posts):
- Accept and acknowledge that I have a problem. Done and done.
- Figure out “the why.” Why do you want to fix this problem that you have? It’s also a super important aspect of sticking to your goals! Done.
- If you’re anything like me and a visual learner…Download free spreadsheets online for budget/expense tracking or get a budget planner. I downloaded a really amazing Debt Reduction Calculator from Vertex 42, the other day. All you need to do is enter in all of your accounts, interest rates, and payments, and it does all of the rest! You even get to choose between different debt reduction strategies and it calculates how much you should be paying to each creditor. I honestly can’t recommend this enough. They also have several other free resources on their website like budget calculators and money managers! I am definitely Type-A when it comes to things like this, so of course, I also had to buy myself a Budget Planner. Thankfully I got it on a budget of $14 from Amazon, and even saved $1 with a coupon. Doubly done.
- Set aside the time to actually go through every aspect of your overall financial situation and fill out the above (either a money manager/budget planner). Also done and done. I can’t tell you how many times I’ve tried to budget, but have refused to spend the time on actually going through the numbers.
- Set tangible, realistic goals. Plan payments. Look for different ways you can save money/take out spending. Pretty much the whole point of #2 is so that you can set goals and plan payments! Done.
- Start! It doesn’t have to be the start of a new year for you to start saving money and paying off debt. You can start once you’ve come to the realization that you’d like to change your life. Done.
After carefully entering in all of my data in my Money Manager, Debt Reduction Calculator, and Budget Planner, I am ready to start saving and paying off my debt! I have already calculated how much of my income I would like to contribute to my paying off my loans, and have also already planned for creating an emergency fund.
The next step in my plan is to try to a week-long Spending Fast. A spending fast is when you only spend on necessities — nothing else! I will start this on January 1, 2021… two more days!
I already know this is going to be a difficult challenge, so I have decided to start small. I’ll start with a week of a spending fast. If I can continue, I’d like to do a spending fast for at least one month and see where that takes me. UGH. Wish me luck!
xx
Sammy