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.
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
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