Start from the beginning
INTRODUCING SISTAH ANT
I am in debt and I want out. It may take me years, but I will make it happen. Along the way, there are other things I need to do, such as maintain an emergency fund and start a retirement savings. However, the true desire of my heart is to own my own home. This blog is about my journey to turn my net worth from negative to positive, meet my financial goals, and do it all while finding a way to maintain a happy and healthy lifestyle (and credit rating) along the way.
I have good and bad news. Bad news first - this blog is getting started after the beginning, so it won’t be able to cover my whole journey. The good news is that I didn’t wait until today to start increasing my knowledge about all things personal finance. In this post, I’ll give a broad overview of where I am, how I got here, and where I am going.
COLLEGE
Ten years ago, when I left home for college, my dad and I took all the coins that were being saved in various piggy banks throughout my seventeen years to the grocery store to cash it in. That was all of the money I had when I left home, and that was spent quickly on books. That is the beginning. Throughout college I worked at various jobs, earning money for food, books, rent, and bills. I was too proud to call home for help very often. Sometimes I relied on the credit cards I picked up along my way in college to pay for things like groceries, interview suits, textbooks, prep courses… and various other things I’d rather not dwell on (because I can’t remember them!) At one point, I was breaking my neck to pay the balances completely off and skimping on food. A phone call with my mom was a turning point - I decided to eat rather than worry about the debt. I could always pay that later. (That’s not exactly what she told me but that’s what I heard.) I stopped using my credit cards when I left college for grad school, but the damage had already been done. I currently carry debt on credit cards dating all the way back to college, which I finished six years ago. Luckily for me, due to scholarship and financial need, I graduated with no student loans.
GRAD SCHOOL and BEYOND
I lived with the folks for the first two years, but because I was doing grad school full time, and it was too demanding to work for the first couple of years, I didn’t use the savings in rent to get out of debt by working to pay it off. Add to that the years of subsidized and unsubsidized loans, plus a private loan, to pay for grad school, and I have credit card debt plus student loan debt. A few years out from grad school, I decided the maintenance on the 15 year old car I had was too much - at least as much as a car payment. So, add a car loan. Also, every time I’d amass a savings, I’d wind up having to run through it on a move, car repairs, textbooks, etc.
GETTING ON TRACK: Good decisions I’ve made over the years
My government student loans are consolidated.I graduated from grad school at a great time and I took advantage of locking in a very low rate. Using automatic payments and always paying on time have helped me have a ridiculously low interest rate. I stopped adding to the balances on my credit cards for about five years after college, and developed a habit of saving rainy day funds to avoid needing them. However, I kept all three accounts current. My American Express helped me to get the discipline to pay off purchases at the end of each month, and during this five year period it was the only card that I used. Now I use the other cards, and pay them off at the end of the month, too. I consolidated the old balances from those cards to get a better interest rate and a guaranteed payoff date. My car was three years old when I bought it last year, but it had low mileage, and hey - it’s a Honda, I’ll have it for a while. I knew the day I bought it that my future children will be driven to their first day of school in this car. I directly deposit money from each paycheck directly to my savings. I also have started to do quarterly progress reports on my entire financial picture. I’ve also been reading financial articles and books on investing, retirement, home ownership, savings, and debt management. My credit score is great. I budget well and I shop smart. I have a great degree and lots of earning potential, and I’m 3 years shy of 30.
WHAT I PLAN TO DO
DEBT: I want to pay off both my car loan and my debt consolidation loan early. I want to free up enough space in my monthly budget to get off the graduated repayment plan for my student loans. I want to, at least for the short-term, stop using the credit cards for a while so that I can apply more towards my debt consolidation - it has my highest interest rate and a balance in the thousands.
SAVINGS: In the short-term, I want to have about a thousand in easily accessible savings, in case of emergency. Over time, I’d like to have the three to six months recommended by darn near everybody, but I know now that my money would work harder for me on debt. My job security’s good and I have disability insurance, so I think $1,000 is good enough for now. I want to get started on a down payment, closing costs, and incidentals fund for my house, too, but this may take a while.
INVESTMENT: I have no investments, and have never invested before. I want to start a Roth IRA instead of waiting until fall for eligibility for the 401K at my job - there’s no reason why I can’t have both, and every day that passes is missed opportunity. I want to build a portfolio of diverse investments. The IRA is high priority, so that I can take advantage of compounded interest. The other portfolio needs to take a backseat to my debt right now.
Ultimately, I want to turn my net worth from negative to positive, and then raise it from low to at least six figures. I have no idea how much time this will take, how much money I will earn, what obstacles will pop up, or how to do half of this stuff with any confidence, but that’s okay. I will learn and share the process right here.
