Friday, January 15, 2010

Money Mistakes of the Past Bite You in the Ass

We bought a home in January 2009 - a stunning tri-level townhouse through a short sale.  I personally didn't think that I was ready to take on the commitment of a mortgage payment because I still have so much credit card and student loan debt.  But my husband insisted we needed a home to off-set our upper-middle class tax bracket.  I understood this logic but fear that I would somehow be responsible for missing a payment lurked in the back of my head.  See, my husband has no debt from college because he was educated in England and served in the British Army.  So he came out of college without one iota of debt. 

Me, on the other hand, ended up with well over $100K in student loan debt.  I didn't go to a fancy Ivy League university.  No, instead, I was the perpetual student who wanted a Ph.D. but didn't have the family support to cover my educational expenses.  So over 4 degrees I have a ton of student loan debt, not to mention over $13K in credit card and personal loan debt.  How did I get in so far over my head is the question I grapple with almost daily.  Actually, my personal finances contributes so much to my anxiety that I believe that most of my emotional eating binges are brought on by money stress.

I never learned good money management from my parents.  I remember getting my first credit card thinking how much power I had.  It felt good to be able to buy gifts for family or go out to dinner with friends.  But I never understood that paying only the minimum payment was akin to "death by a thousand cuts".  What's crazy is that I've had at least 3 instances where I've come into a lump sum of money only to squander it all away on junk while my credit card bills remained unpaid.

Now that I'm well into my 30's, the enormity of my financial mistakes is hitting me hard.  Then about 9 months after we got our home, I was hit with a 10% paycut due to state budget cuts.  This meant I'd be losing a big chunk of cash each month - equivalent of my car insurance and cell phone payments as well as my gas and hair/nail budgets combined.  My husband stepped up and picked up the slack paying for our HOA fees and our groceries.  But when this paycut occurred (we weren't given notice exactly when our paychecks would be affected), I didn't have much in savings and ever since I've been living paycheck to paycheck.

I have a side job starting hopefully in the next few weeks but if there is some delay, I want to have a plan in place.  I've already mapped out my budget for February and I had to do a double take.  After I pay all of my bills which includes an $800 car repair bill, I will only have $54.88 to get me through the month.

$54.88 to last me for 28 days

After I regained my composure (it took a while, trust me), I decided to view this as a challenge to take on.  Starting February 1st,  I am going to blog daily about living on $54.88 without a loan from hubby, my momma or those payday loan folks.  Now if some unexpected cash comes my way, I will apply it to one of my credit card bills.  But if I want something from McDonald's or a magazine, it has to come out of this $54.88 budget.  Part of me is scared but another part knows that if I can do this, this will serve as a springboard to a more frugal and ultimately less anxiety-ridden lifestyle.

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