How are we already in week three of this Financial Fitness plan? If you’re following along (which of course you are because you’re awesome) you know that this week is all about reviewing your credit cards and debt. I talked about the scary “B” word last week, but this week we’re talking about the big scary “D” word. Debt. Dun dun dunnnn. Seriously, all I can think of are those desperate-looking lawyers on TV, money loan sharks and bills stamped in red ink.
Just like I had done with the word “budget”, I had to change my mentality when it came to debt. Or rather, just educate myself a bit more. Servus Credit Union has been awesome in teaching me all things ‘money’ without making me feel stupid. Just like fat and cholesterol, there are good types and bad types of debt. Good debt is pretty much any money you have tied up in an investment, like an education, your own business or a mortgage. Bad debt, on the other hand, is having your money tied up in something that won’t generate an income or appreciate over time. These are things like cars (<< I’ve been totally guilty of this one), credit card debt (<< also… totally guilty of this one) and pricey consumables like clothes or eating out (again… TOTALLY guilty). I know, I’ve been guilty of pretty much every bad debt sin out there, so who am I to talk to you about money? Well, like most success stories, there are a lot of failures along the way, and I’ve had more than my fair share when it comes to finances.
How I got into Debt & the Turning Point
I’ll never forget the moment my financial troubles hit me. When I was still working for the airlines, I was on a layover in Halifax, Canada and decided to go out for a walk. On my way downtown, I was marveling at my brand new gloves I had just purchased for the fall, my new leather boots, and was thinking that maybe I could find a cute scarf that day to tie my fall ensemble all together. It was a bit chilly so I decided to stop in at a coffee shop. I ordered my usual dairy-free, sugar-free, definitely-not-fancy-free latte and went to pay. I handed the barista my bank card only to be mortified by seeing ‘NSF’ come up on the screen. I made some sort of lame excuse and walked out of there with my head buried in my expensive gloves. How was I a grown adult with a University education and a full time job not able to afford a coffee? This was my turning point.
Until then, living paycheck to paycheck was totally normal for me and when I ran out of money, I would simply use what was left on my $23k credit card limit. I avoided ever looking at my bank statements, fearing that I would have a legit panic attack at the sight of them and was completely oblivious when it came to what my spending habits were. I was over $20k in credit card debt, had a $22k car loan, and had two collection agencies after me.
How I got myself out of Debt
After the latte incident, I had to take a hard look at myself, strip away the ego and get myself to a place where I was no longer living in the shadow of debt. After living on my own for 2 years, I asked my Dad if I could move back in to save money in rent. I took up another job at a bar when I wasn’t flying so I could make a good dent in my credit card debt. And finally, I asked for help. This was the hardest step of all for me. The very last thing I wanted to do was to admit to my family that I was almost $50k in debt at the age of 22, but realized it had to be my first action.
My parents both offered to help by giving me no-interest loans and I was able to pay off a large sum of my credit card debt. We agreed on a biweekly repayment plan and I decreased my credit card limit from $20k to $1k. That’s right, $1000. I made a promise to myself that I wouldn’t make any unnecessary purchases, although it took me a while to figure out what “necessary” really meant. I sold my car for example, and still to this day, exclusively shop the sale racks.
It took me a few years to pay off my parents, but with that credit card debt gone and my car loan no longer hanging over me, I had the opportunity to reinvent my spending habits start from a clean slate.
I now own 2 credit cards. One is a joint credit card with my husband and the other is just for me. I very rarely use the latter but feel like it’s important to keep, as it contributes to my credit score and the joint one does not. Each has a limit of $1000 on it and I make sure the balance is at $0 at the end of each month. They both have a small annual fee but they make up for it in their awesome perks! Travel, for example, is really important to me so I made sure that both of my credit cards had points that can be used for hotels, flights, travel insurance, etc.
Debt-free Credit Card Tips
• Take an inventory of your credit cards. Do you have any that you’re not using? Be sure to keep at least one under your own name to build up your credit but also get rid of any you don’t need.
• Choose a credit card with rewards that matter to you and use your credit card to make everyday purchases, like coffee and groceries.
• AVOID INTEREST. This one is killer if you don’t. Most credit cards have an interest of 19% which is insane. I’m begging you to stop wasting your money avoid paying interest.
Just like getting out of debt was hard work, so is training for a fitness goal. It takes so much discipline and focus. With the Servus Edmonton Marathon only a month away, I’m starting to feel a little fire under me. Which is awesome, because every time I think I should just stay at home and bake more cookies with my little guy, I’m now more inclined to strap him in the stroller and head out for a long walk or jog.
I haven’t been following any training guide in particular because I feel pretty comfortable doing it on my own. My first race was in 2009 and since then I’ve averaged 2 half marathons and 2 shorter races (8-10kms) per year. However, if you are looking for a guide to follow along with, I’d highly recommend Running Room’s training schedule. Click here for a link to their free 10k training guide. They also have in-store running groups that are super helpful. I joined one in preparation for my first half marathon and it was probably the best thing I could have done for myself at the time. You get to meet other runners who are likely training for the same race, professional tips from a running coach, and an overall supportive community. I found the latter to be the most important because it’s so easy to get off track with your fitness goals when you’re just starting out because you are likely the only one holding yourself accountable. If they had a Mommy & Me training group, I’d definitely be joining! For now, I’ll continue with my walk/jogs 3 or 4 times per week and maybe even venture out without the stroller one of these days 😉
Do you guys have a similar story? I know I’m not the only person in the world who has struggled with finances and it’s definitely nothing to be ashamed of. If you’re struggling with debt or have a success story of getting out of debt, let me know! I’d love to hear and share your stories 🙂
*This blog post is sponsored by Servus Credit Union. I am a paid ambassador and all opinions are my own. I truly love this company and the resources they have to offer and would recommend them for anyone looking to achieve optimal financial fitness.