Transparency is lighting the way to financial health
My debt-free journey: Part I
I didn’t want to write about this. I did everything to avoid putting the words on the page. I wrote about other things, I started new projects, I chilled in the name of chilling and justified it with the idea that I do not have to do something every waking minute, a valid reason for procrastination. But it was all to avoid bringing my shame into the light. I’m finally over myself and even still I had the urge to hide. I wanted to fall into comfort and hide behind data and numbers. Data is safe, it cloaks you in a sea of nameless numbers. Writing about money feels anything but safe to me. But I am here writing anyway. I’ve done so many things despite the fear, and maybe because of the fear, and this is no different.
Candid conversations about money are not default in our society. Most conversations surrounding money are designedly vague. In fact, conversations about finances are actively avoided if discussed at all. 1 in 4 Americans were explicitly taught that discussing money was rude. An overwhelming 6 in 10 people do not discuss money, and nearly half do not discuss it even with their partners! Many things tend to be more agreeable topics than finances—even death.
There are a few reasons I think this may be. Zooming out and looking at the big picture, it is easier to exploit you, the collective you, if you only know your financial situation and not the persons next to you. Culturally we have made it boastful to discuss money if you have a surplus of it and grotesque to discuss money if you hardly have any, it is rude, ill-mannered, and unsightly all the same. This enters the perfect setup for likely the most salient reason we keep it all hushed: shame. Shame takes a life of its own in an individualistic society. If you are not making enough, being exploited, or making enough and exploiting, it’s your fault in the U.S. If you have spent your way into debt, for any reason, housing, leisure, medical, etc. it is your fault and you should have known better. Even if nobody told you. Even if you never learned. Even if that is what the systems you live within require. This can make discussing finances stir up a plethora of emotions we have not had much practice in dealing with. So largely we shut up and accept the ills as our own because shame is a thick smoke that chokes us from inside out.
The silver lining is that shame dies in the light. I’ve practiced shining a light on my shame in private conversations with friends and family since I began to seriously work on my financial health two years ago. But there is something especially terrifying about writing it out for all to see. So here it is. Two years ago, I was $63,287 in debt. Back then I had no idea, and am still learning, what financial health looked like but I figured tackling my debt would be a good place to start for me. I tethered myself to the goal of paying off all of my credit card debt. I did not know how long it would take, I couldn't care. The goal would get my full effort no matter the time frame.
I have started the debt-free journey many, many times in my life, I have finished it exactly zero times. This time though, I had the feeling that it would be different. Maybe because I knew, after several attempts, I was equipped with the patience to walk the path. To take the pace of a marathon instead of a sprint. At the start of this journey, I had practiced meditation consistently for about two years and can not overstate enough that without this practice, I don't find the patience, I don’t find the mental fortitude, and I don’t regulate my nervous system enough to get as far as I have. Meditation changed me and is still changing my life four years in.
My previous attempts saw me take out personal loans, transfer balances, and then run my credit cards right back up to be in an even worse position. I was looking for the quick fix, although none of these options are quick fixes, you can convince yourself of anything if you're delusional enough. I digress. I was going into my 27th birthday feeling an optimism I hadn’t had for most of my twenties, an assuredness. I was ready to take this journey head-on.
I’d been in student loan debt since I was 17 years old since I needed loans to go to school. I got my first credit card in college shortly after, I’ll never forget that Chase Freedom card, my limit started at $500 and I was able to manage that. Then, somehow, it kept creeping upwards. $2,000, $5,000, $12,000 without me even requesting it. I did not keep good enough track of my spending and soon the limit went up along with my balance. And this card was around 20% APR at the time, so I was paying for it big in interest. Then I got another card the Discover It card a year later. You see the picture. The banks knew I loved spending their money and they gladly gave me the shovel to dig them into the ditch of prosperity.
Acknowledging the Debt
The first step in this journey, and one of the hardest, was looking at what I was up against. At 27, I was in $63,287 of debt, $22,080 in credit card debt, and $41,207 in student loan debt. Jump scare.
This was the part that I told myself I was good at, I always checked my accounts 63 times a day. I knew my finances! Wrong. I knew ballparks, and I knew I could pay the minimum, and I knew about the student loan payment pause. But I had no clue what minimum payments went towards, how interest worked, and definitely could not tell you what I was spending my money on so I tracked all my finances: income, debt, and spending. I created a tool to consistently refer to.
Create a Tool That Works for You
I looked through the internet for pre-made budget templates but nothing excited me. I decided to make a Google sheet that I built specifically for my needs. No, it is not pretty but it does depict the personal in personal finance, it worked for me. We all have different goals, needs, and motivators. My tool was a Daily Spending tracker. On the first page, I list all of my monthly and annual expenses and which day and month they fall in. Nothing else. And then I made cuts to what I could. Did I really need that subscription? Did it spark joy? If not see you later! If it did, then yes it could stay. My philosophy was not the popular method of getting rid of everything including things I enjoyed. I got rid of things I did not want or could replace with something free. My audible subscription was replaced by a free library card and that alone has enriched my life in ways I did not expect.
On the second page of this Google sheet, I started my daily spending tracker. Every day I would track how much money I spent. Every Sunday I update this tracker and I can see what my daily average is, how much money I earned this month, and if I spent more money than I have earned. This kept me consistent and engaged, I liked seeing the numbers change. I liked that I had to be accountable every single day. It was tough to look at and I liked it. This built a strong habit and completely changed the way I spend, which is an essay for another time.
Creating a Plan of Attack
With multiple cards and debts, I had to prioritize. One card had a significant amount of consumer debt. $18,600 on one card. I made the awful terrible mistake of putting $10k on that card in a balance transfer while still having a balance. Never do a balance transfer on a card that still has a balance. I realized I was still paying interest. Only paying the minimum the entire amount would go towards the balance with 0% interest. Anything extra went to the portion of the balance with the highest interest. So out of the gate, I had to strike at that interest. I put all the $800 I had to spend on my debt toward that amount. It was about a 50-50 split on the two balances. The journey was off to a shaky start due to naivete. But it was off to a start, one I put time, effort, and patience into.
The early stages of this journey were some of the most eye-opening for me. The financial industry is banking on your ignorance. It felt personal because it is. They put thousand-dollar details in the fine print. They raise interest rates even if you have never missed a payment, they entice you with high limits hoping that you will max out because they win big, they are quite literally making a fortune off of you. That alone was enough for me, once you start pulling the curtain back and exposing yourself to your financial situation you will be scared straight. Or simply scared, like I was. But knowing these things is a step in the right direction and one step is all any journey starts and ends with.
Empower Money Talks. 2023. https://www.empower.com/the-currency/money/money-talks