There. I said it.

I’m racking up a huge credit card bill. There I said it.

It all started October 2, 2010. I was debt free and starting the BBP with no debt, rent saved for a whole year and $35/week until December 31, 2011. My nest egg that I’ve been saving since I paid off my student loan and started working would be safe.

Now, 14 weeks later, I’ve amassed just over $2000 worth of credit card debt – FML.

I’m a certified financial planner who knows how to handle her money – how did this happen? Well, I ignored it. I knew it was happening, but stuck my head in the sand. I really needed a new dress for the launch. Swipe. I really needed to buy a Go Train ticket to visit family. Swipe. I really needed to buy Barter Babes buttons. Swipe.

Swipe. Ignore. Swipe. Don’t log into online banking. Swipe. Tea. Swipe  TTC tokens.

Swipe Swipe Swipe!!! The amount of cerebral justification I am capable of is astounding.

Time to assess. WTF is happening to me in those moments of the dreaded swipe!?

I’ll tell you. Credit cards allow for INSTANT gratification. “oh, I want this” Swipe – it’s done. You really don’t have time to let your brain perform a cost-benefit analysis. Perhaps we have guilt after we’ve spent the money, but the deal is done. Cash or debit on the other hand, make you account for your purchases – literally.

I paid for several large ticket items in October for the launch and fully (and rightly) justified those expenses because they were for the Barter Babes Project, and therefore all part of the plan.

Here’s where I fall apart. Every time I logged into my online banking and saw $400 on my credit card I cringed because I have no income to combat that with. Then more expenses for BBP put me at $600. Then more and more until finally looking at my credit card balance scared me so much I stopped logging into my banking on a daily basis. I pretended like it wasn’t happening.

This is not the worst part. Usually, when I put something on my credit card, I immediately  transfer the exact amount of cash from my checking account to my credit card so that I don’t overspend. Try doing that with $35/week. I was unable to pay off  the $1000 I had racked up for BBP and became overwhelmed by the crappiness of my financial situation. Then a terrible thing started. Whenever I wanted to spend money I didn’t have, a little thought popped into my head: Do it – what’s another $20?

Never good. In fact, I warn Barter Babes about this very thought all the time. Here I was right in the thick of it.

You want to know how to live off $35 a week? So far, it’s an extra $40/week on my credit card.

Sometimes, when debt feels insurmountable we believe we will never pay it off. We lose the connection between our actions and their outcomes. In other words, when you pay down $50 of debt you feel good for a millisecond until you realize that you still have $1950. It’s like you made no difference to your financial situation whatsoever and a “what’s the point” attitude begins. Watch out for this. Another $20 can hurt.

Like putting on weight vs. losing it, putting on debt is MUCH easier than losing it.

My Plan

1. Stop. It’s only getting worse and I’m only hurting myself.

2. Log onto my online banking and actually assess the damage.

3. Pay off my credit card with my line of credit that has a lower interest rate (4.5% vs. 19.5%) immediately

4. Breath

5. Breath again

6. Analyze what my savings are earning in my investment account vs. what the interest rate on my loan is. If I’m paying more interest than what I’m earning I need to bite the bullet and pay off the debt with a little piece of my nest egg. Ouch!

7. Stop feeling sorry for myself

8. Learn how to survive on $35 a week. This is clearly not enough….but that’s what I have.

I’ll let you know how this goes.

Until Next Time…

Barter On Babes

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5 Responses to There. I said it.

  1. Reesa Rosen says:

    I’ve been following your blog and I have so much admiration for you because you chose to do this. I really believe you are going to come out of this ahead of the game and maybe somehow get a book published – I’m sure an advance would be nice :) I feel what you feel everyday. I used to have so much extra income and I was able to put 25% down on my home no problem in 2001. Today that would be completely impossible – expenses are crazy. I don’t live a lavish life but its just that daily expenses have crept up and my income has not kept up. also I have to pay for private daycare/preschool and activities for my little one and my husband is underemployed – every year I keep thinking this will be the one where he gets a permanent contact but teaching is highly competitve) I try to look for deals all the time to stay ahead of the game – but its not always possible. Yesterday I was quite pleased with myself because I managed to throw my son a fun birthday party on half the cost that we spent last year. I also use group buying websites but that is mostly for fun stuff not necessities. So what is the answer? still trying to figure that one out. good luck and I hope you succeed.

  2. Barter Babe 1.0 says:

    Reesa, thank you so much for your kind words and your honest reply. It is hard and there are no easy answers. The best advice I can give, is to keep your fixed costs of living (the essentials – house, food, insurance, transportation, child care etc.) as low as possible given whatever your household income is. Easier said than done. As these costs rise more and more in the GTA, it gets harder and harder to maintain a grip on our finances and we sacrifice more and more “life”. There is a great article in the February addition of Toronto Life that deals with this exactly. Costs in Toronto are rising and our wages are stagnant and have been for almost a decade.
    If you ever want to barter with me, my door (at Starbucks) is always open!

  3. Kathryn says:

    One word – GROUPON. And those other sites, like Living Social and WagJag. They allow you to buy services, gift certificates etc for at least 50% off. It can be tempting to buy things you don’t need because the deal is SO GOOD but if you exercise control, they can be excellent for the things you need and for gifts. I thought it would be annoying to get the emails but I don’t even have to open them because it says what the daily deal is in the subject line.

    Also, I don’t know how you’re doing groceries but have you tried making massive batches and then freezing them? Freezing in glass containers, like Pyrex, is healthier than plastic – you could request a few from one of your next barterers. I’m about to try the freezing stuff thing.

    And for clothes, do you have friends whose style you like? Have a clothing swap. Everybody brings good quality clothes they don’t want anymore and you trade. Some of my fave clothes are from swaps. Tell people to bring friends. AND it would be a great way to tell people about Barter Babes.

    Hang in there!

  4. Kate says:

    Hi Shannon,
    I totally feel you. Thanks so much for actually posting this. It’s nice to know that even the gurus can make mistakes.

  5. Helen Hubert says:

    Shannon, I just discovered your blog today. Cool idea. My hubby has the same problem with credit cards. And he has the same philosophy re $20 here and $20 there… “aah, what’s $20 ???” We’ve near divorced over it many times.
    For groceries you should barter with a gardener – get lots of yummy fresh food.

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