How I grew up
Growing up, my parents made sure that they did whatever is necessary to provide for my brothers and me. As I grew older, they made sure that they started including me in understanding financial situations and to understand the basics of how to balance a budget and keep track of expenses. They did a decent job of making sure I knew what I needed to do.
However, they could not possibly know that I would end up in the situation that I am. They did the best they could with a teenager and young adult that did not want to learn anything about financials and just wanted to spend money. Eventually, around the time I was 23, they were moving out of town and I had a decision to make: uproot everything I have and move with them or move out and stay in my city. I chose to stay in my city and moved in with my girlfriend.
Where I Started Failing
Over the last few years I have been working on my personal finances and really been making an effort to cut expenses, increase income, and pay down debts. Unfortunately, as life has its own plans, things do not always happen as you want them to. So instead of paying down debts and really working on myself, I fell into a trap. A bad relationship built on spending money and me not really paying attention to just how much debt I was getting myself into. What I was not paying attention to at the time, was how much money I have available to pay my expenses, versus how much debt I am racking up.
After getting out of the bad relationship, I had a sense of freedom… but I was also significantly struggling with my sense of who I am and what I am supposed to do with my life. I am still working out what I am supposed to do with my life. During the next two years, I ended up opening a few more credit cards with the intention of doing balance transfers to get that sweet 0% Interest. However, that is not at all what ended up happening.
Instead, I racked up significantly more debt because I was not controlling myself. I would put the transactions into YNAB (YouNeedABudget.com), but I was not focusing on the budgeting aspect. I was paying attention strictly to how much money I have in my bank account, how close I was getting to the maximum credit limit on my credit cards, and just focusing on paying off the minimum amount.
Letting myself down
I believe that I have let myself down in life, primarily because I knew the situations I was getting myself into and I just kept going. I did not try to avoid the situations I was in, and instead dove right into them without much care in the world. I have let myself down because I have forced myself into stressful situations and situations that I do not know how to get out of.
There are plenty of times that I can look back on and determine that I should not have opened credit cards, should not have taken on a loan, should not have done many things. All of those bad decisions have led me to where I am today. Today, I am $93,030.64 in debt. I have a net worth, which is funny enough to think about, of -$79,113.99. Ouch. I have approximately $13,000 in my 401k through work and I am working on increasing my emergency fund.
What turned my mind around?
Believe it or not, this was the very last section of this article that I wrote. I really had to look back and analyze what exactly brought me to this point. I realized that the point in which I determined that I needed to take action and fast was when I looked at my bank account, saw single digit numbers, and the next day I over-drafted twice. This hurt.
While I am very thankful that my bank was forgiving the over-draft expenses during the COVID-19 pandemic until July 31st, 2020, I most certainly did not want to continue down this path. Continuing to spend money that was necessary for other expenses meant that I would continue over-drafting and continue this rat race of living paycheck to paycheck. I do not want to live in a paycheck to paycheck cycle. I want to break free. I want to become financially independent.
Time to start fresh
After realizing that I cannot possibly keep going at my current rate, I decided that I would use the Start Fresh feature of YouNeedABudget.com. Using this feature, it wipes the budget clean, keeps my accounts linked, and keeps my scheduled transactions. That is it. This enabled me to rethink my budget, how I am handling my money, and is enabling me to focus on what money I have in my budget versus what money is in my checking account.
By focusing on the budgeted amounts, I am more focused on what money is available for me to use, rather than what money is in my account. I completely changed my budgeting methods, where I am moving money, and how I am paying for things. The weight is starting to lift off my shoulders now that I can feel a sense of relief. I can finally start to clear the mental blocks I have from these debts. I will talk in another post about how I have managed to completely redo my budget. Now I need to focus on keeping on track.
What am I doing to keep on track?
When I first started thinking about this section and what I am doing to keep myself on track, I felt that this was a difficult section. Instead, I took some time and I thought about it. What I realized is, I am not doing anything super difficult or challenging. I have formulated an initial plan to pay off a large loan that has a high monthly payment, and once I am nearing the end of that payoff, I will take another look at my plan. In addition, I have the YNAB app on my phone, and as I wrote before, I am focusing on what money I have available in the budget for the desired action, such as groceries, outings, maintenance, etc. By focusing on what I have in the budget, I am being more cognizant of how much money I am spending and where I am spending money.
How am I handling goals?
Growing up I have had numerous conversations with my family, friends, and teachers about life goals. Over time people started telling me that I should write down the goals I have, or else they will not come true. For me, this is true. I have struggled with remembering things over time, but my memory can usually be jogged about certain events. It is what it is. However, I am trying to accept what I cannot change, and change how I handle my goals. Folks, I have finally started writing down my goals! I know, this sounds silly, trust me, it is. While it is certainly silly to be so happy about writing down my goals, I can visualize these goals and focus on making them come true.
What is next?
Right now, I am going to focus my energy on paying down the highest monthly payment debt and then will be focusing on paying down debts from highest interest rate to lowest. This is like a hybrid solution to the argument of using the avalanche or snowball method to pay off debt. I do not plan to move jobs any time soon, nor move to a different location as that would cost money that I do not currently have budgeted.
What are your thoughts?
I am always interested in hearing more about what my readers think and how they are handling their own finances. If you have any questions or thoughts, please feel free to leave them down below.
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