Please excuse the fact that this photo has little to do with this post. But I didn't want to resort to the standard piggy bank or pile of loose change photo that usually accompanies posts about money. And a post without a photo is just no fun, so here you go, a vase with a pretty but dead and dried out weed. But guess what, that weed was free! I picked it out of the ground and look how lovely! How's that for frugal?! :)
So now on to the big changes that I alluded to a few posts back. As I mentioned here, my relationship with money was something that had to improve, and improve it has. But I think to understand the improvements, you'll need to know more about where I'm coming from, so here's the truth about my money...
For most of my 20s, I lived off credit. The concept of living within my means is not something that dawned on me for a second. I never said to myself, oh I don't have enough cash for x-thing-I-don't-need; I just whipped out my friend Mr. Credit Card. And when you're that young, a certain amount of it feels necessary, you're in what I now like to refer to as the "accumulative phase." You're on your own for the first time in your life and there are things you need, like, you know, a mattress. But why stop there? How about a million design books off Amazon? And that expensive make-up set you've always wanted? And those designer jeans? I'm a grown up, I make money, why can't I have what I want even though I can't pay for it with cash?
Well, here's why. Credit card companies are not your friends. When the economy is good and your credit history is all fresh and new, they love you to pieces, but when things turn, suddenly they're perfectly happy to leave you stranded in the middle of the desert. That sounds a bit hyperbolic, but that's exactly how I felt when the economy took a turn in 2008 and the bank I'd had three clean lines of credit with for years suddenly changed the game.
It all started simple enough. I got two letters from them regarding my two smaller-balance credit cards. They were informing me that they'd be raising my interest rate to 29.9%! And since I didn't wish to pour my hard-earned money down the drain, I promptly opted out, so they closed my accounts and kept my interest rate as it was. Whew! I wondered a little why I hadn't gotten a letter about the third, the granddaddy balance of them all, but I thought well, I've had that card so long, since college, maybe they're trying to honor that relationship and aren't planning to raise my rate. WRONG. A few months later, I looked at my bill, and shock! horror! they had indeed raised my interest rate to 29.9% on a balance that I couldn't afford to pay off anytime soon. Let's pause for a minute to be clear about what that means:
The balance on that card was not in the hundreds. It was in the thousands. 29.9% interest is damn near a third. So, without spending a single additional dime, I'd be paying several hundred dollars of interest every month for the foreseeable future.Surely there's been a mistake, I thought, so I called them up. Apparently the letter got lost in the mail. But instead of working with me once I'd realized what happened, they simply said "Well, we sent you a letter." When I responded "But I opted out of my other two cards when I got the letters for those. Why would I not do the same in this case? Clearly I didn't get the letter," they repeated their claim "Ma'm, we sent you a letter." And then I felt sick, sad, and panicked all at once, and started to sob and plead. Nothing. Then I went for the kill, the line that works in all unpleasant customer service interactions: "I will never ever apply for a line of credit with your bank again. You have lost a customer for life." Crickets. They. Did. Not. Care. I repeat. They. Did. Not. Care. Not your friends.
So, after that slap in the face, I walked away from credit for good and started paying off my debt. If I can't pay for it in cash, I don't buy it. Simple as that.
Only it's not quite so simple, at least not in the beginning. As I'm sure you know if you've ever tried. So I'll be sharing more over the coming weeks about how I've made it work.