Part 3 – Treading Water: 2.5 Years of No Progress
Part 4 – Fire Under My Ass: The wake-up call
Part 5 – The Final Push: How I finally dug out, and what I’m doing to stay in the black.
This is a series of articles explaining how I personally got myself nearly $20k into debt over the course of 4 years, and then out in just under 2. For the next week, I’ll post one article a day going through one particular phase of the process, and either how I screwed myself over, or how I started on the road to recovery.
Yesterday I gave the mundane introduction to these articles and a bit of history on how I’ve always perceived money. Despite being raised in a household that put a great deal of emphasis and value on saving over spending, I went the opposite way. No dollar entered my wallet that did not leave it again in short order.
I graduated from college in December 2003 with no debt. In fact I have a $10k starting fund to get me through the initial costs and a car (used Ford Focus). By all accounts, I shouldn’t have had to worry about a thing. I moved out after college, got a well-paying job working for an insurance company, everything was looking good.
Unfortunately, giving $10k, and steady income to someone who has no money management skills is a recipe for even greater disaster. Toss in my first credit cards and things were set to spiral out of control quickly.
When I only ever had small amounts of money, it was easy to keep out of much trouble. I’d go down a few hundred, pay that off, go down a few hundred again. The hole I dug was never too deep. Add in a sudden pile of cash though and I went a bit nuts
In August of 2004 I moved to Hartford, CT to work for the insurance company. I had to buy everything from furniture to kitchen supplies. I had never stocked an apartment all by myself and I went a bit overboard. I bought a lot of things I didn’t need. The worst part was none of it was particularly nice. I got a crappy TV, but I didn’t look for a deal I just picked up the first one that looked OK. I bought some furniture, but instead of going to IKEA, I went to office stores for bookshelves because they looked a bit nicer (but cost a lot more). Same thing for kitchen supplies. I got a lot of crappy stuff that I ended up replacing/throwing out a few years later.
Add in a nice new laptop, a secondary PC, an iPod, an expensive cable package that I never used (I hardly ever watch TV), and a penchant for eating out each and every meal (In the first two years post-college I cooked maybe a handful of meals for myself) meant I was burning through money faster than I was earning it. Oh, I also didn’t do very much work to shop for a good apartment at a good price and ended up with an OK apartment for a lot of money.
For two years in Connecticut, I spent money like it was going out of style and didn’t save a single penny. Well, I did contribute heavily to my 401(k) plan, which ended up being a very smart move on my part that helped me out immensely just a few years later, but aside from that it was money in, money out.
Slowly I bled out what was left of that $10k. A little bit here, a little bit there. Always promising myself that I was only going after it for a one-time emergency or to pay off some unexpectedly large bill. In two years I worked up nearly $12K in credit card debt. I was making the minimum payments, but little else.
The biggest money blunder I made though was paradoxically tied to probably one of the best decisions I’ve made in my life so far; Leaving the insurance job and the state for a new job in Michigan for a small game and software developer called Stardock.
The money blunder was that I made the move very spur-of-the-moment, and at possibly the worst time of the year. I decided I wanted the new job and applied in April of 2006, interviewed and was made an offer in May (which I accepted), last day of work was June 30th, and I was in Michigan July 10th.
This meant a few things:
Toss in other costs like security deposit on a new place (along with application fees), gas & all the other incidental costs when you move a long distance, and I was looking at a bill of around $6,000 by the time everything was said and done. And with no real savings, and an income gap of about a month before my first paycheck from Stardock, I had to dip in and blow away what was left of that original $10k.
So there I was, at a new job, with $0 in the bank, and what had grown to around $15k in credit card debt through the magic of interest rates.
I was in a bad hole, but I didn’t see it yet. I cut back some spending sure, but it would be a long time before I got serious about fixing things….
I’ll talk about my time in financial limbo more tomorrow.