It is not every day you are awoken in the middle of the night to wipe off beads of cold sweat, not because you are sick, but because the stress of money in your life is keeping you from catching those important ZZZs. A plague of these nights have been all too recent as debt and financial burden begin to creep past the borders of my built up “safety net”.
Even though I thought I was carefully planning all of my income and expenses I have found myself ill equipped to manage an onslaught of unexpected costs and “miscalculated streams of revenue” that are completely unraveling my financial plans.
It is a crippling feeling when it seems you have stepped into quicksand with the inability to claw your way out.
It has been one of those, when it rains it pours moments where I completely forgot to grab my rain jacket, boots, or even an umbrella. Due to the furnace breaking down again for the 2nd year in a row taking -$500, unexpected car maintenance -$400, no roommate for four months -$3200, a miscalculated escrow by mortgage company costing -$460 (still waiting to be fixed), misfiled student loan deferment restarting payments for two months -$800, and a monthly revenue increase of $250-$500 that did not pan out. For some this may not be a lot but for me it put a few kinks in the current plans.
Lets Put It All Out There
For years I have done what society deemed necessary to be successful. Get up, learn from previous experiences, work hard, and continue forward. If you put in the effort you can have the American dream. After putting in effort for 7 years to get all the way to a Master ’s degree and working in my professional field for 5 years I have found myself earning a bi-weekly paycheck of $1221 after taxes, benefits, and contributions which leaves me with a grand total of $31,746 a year. It’s nothing to balk at in consideration to the many people out there who are fighting against the poverty line. Even still, what I earn and the lifestyle I choose comes at a heavy toll.
As I sit here writing this post (on 1-20-2017) my grand total of debt has reached:
Broken down as followed:
- $5,800 – Visa Credit Card w/ interest rate of 14.49%
- $8,246 – Car Loan w/ interest rate of 2.25%
- $42,069 – Student Loans – w/ interest rate of 5.30%
- $138,222 – 1st Mortgage (FHA) – w/ interest rate of 3.25%
- $11,650 – *2nd Mortgage (CHIF) – w/ interest rate of 3.125%
*Lacked the necessary 20% for down payment …a post for another time on how to buy a house with no money (and maybe why you shouldn’t)
In 2016, while my student loans sat in deferment for the majority of the year, I paid just over $5,300 in interest which is about $14.50 a day.
In 2017, I project the total interest to be around $8,000 for the year which is just under $22 a day.
This is money I will never see, money that I cannot put towards investments, and money that is lining the pockets of those who provided the loans.
- $1221 – Paycheck
- $1221 – Paycheck
- $1167 – Mortgage 1
- $52 – Mortgage 2
- $315 – Car Loan
- $385 – Student Loan
- $125 – Credit Card Minimum
$2442 – $2,044 = $398
for food, gas, electricity, heat, phone, internet, cable, etc.
It is not the dream I was expecting
This Missing Piece – Financial Literacy
As a first generation college graduate, from a low-income home, raised by a single mother of three where survival meant utilizing government assistance programs such as section 8 and food stamps to keep that roof over our heads and food on the table there was little or no knowledge surrounding financial literacy. Therefore, little to no room for discussions on savings accounts, interest rates, or creating a budget. This topic was also never taught in any classes I attended growing up and it seems like it should be a standard part of the regular curriculum.
Armed with a lack of knowledge, I borrowed money from the federal government to pursue a higher education in an attempt to change my circumstances. The only way to stay afloat and have a normal college experience required me to have a constant balance on my credit card which could never be paid off even while working in multiple jobs on campus as an undergraduate. Graduating in 2009 I left undergrad while our nation’s economy was in poor shape. Ergo, making the decision of jumping into graduate school easy while allowing me to continue to defer repaying my student loans, all the while putting more debt onto my credit card. This complete lack of understanding of the world of personal finance has put me a bind in the past and has limited my potential for the future.
Since 2001 there has only been a handful of months where my credit card balance was $0 which means 180+ months of interest payments
Do yourself a favor and avoid my mistakes if you can and learn to create a debt snowball plan
There is Hope to Change Your Stars
I know there are many of us struggling out there in the same process of trying to figure out the best way to make ends meet. Even in my current situation there is definitely a brighter future through seeking out knowledge and educating myself and others. This is a big piece of why I am even creating this website and writing these posts. Therefore, affording me the ability to give someone better tools than I started with for their financial life.
As the late great Heath Ledger once asked his father in the movie a Knights Tale, “Can it be done, father? Can a man change the stars?” in which his father calmly replies,”Yes, William if he believes enough, a man can do anything.”
It is Time to Make Some Changes
This is the catalyst that has sparked action by me to move forward with ideas that have been lingering for some time. Overall, my goal is to transparently share my path to becoming debt-free. The good, the bad, and the ugly! I’m starting with these steps:
- Take a second and breath
- Grasp the reality of whats in front of me…and create a real BUDGET
- Identify areas in which I can reduce (like that cup of coffee, cutting cable, etc.)
- Secondarily, sell unneeded items owned (more reduction)
- Put in more energy to finding a new Roommate (PRIORITY)
- As I continue this website look into how it may be monetized
- Create an eCommerce drop shipping site
- Continue to educate myself on Personal Finance by reading Tony Robbins Financial Freedom Playbook
- Research and experiment on other income opportunities
- Continue Forward! Share what I learn with all of you.
Please add a comment below about your experiences with debt or successes in your personal finances, would love to hear from you!