Talking about debt has never been in my bucket list. Nor it’s something I am going to share to everyone! I was once like you, I never want to have a conversation about finances particularly debt. Neither I wanted to admit that I am ignorant or plainly stupid.
But right at this very moment I am going to step out of my comfort zone. I am going to tell you how I got myself into a financial mess that I have never dreamed of. And how I am going to get out of it.
Before I got myself into debt world.
To be honest, when I started working in Canada as a nanny, my wage is minimum. It’s not the best but I was able to support my family back home, I can pay my bills ( cellphone, food and rent ) and I can put a little amount aside to my savings.
My life was pretty simple back then. I am using cash for my purchases and no debt at all. I’m living a life within my means because I can’t afford to spend extra for stuffs that I like.
Aside from being a nanny, I did some cleaning and babysitting jobs occasionally. Some of those became my regular side hustle on the weekend. With this extra income I have, I allowed myself to splurge on something because I deserve it.
Then, the I deserve it mentality became a bad habit. I started spending most of the money I am making from that extra job every weekend. I started visiting the mall more often than usual.
Then, a year after…
I finally got my very first credit card. Having one card is good because it allows you to build your credit, that’s what people told me. It was good as long as you pay it right after your purchases.
At first, I was very anxious about using it. Nobody told me the pros and cons of having a card because I came from a place where people use cash only. Yet, I decided to use it carefully. I made sure that I will pay my bill right away.
But then, my spending went uncontrollable. My visit to the mall became very often. It became my therapy from boredom and loneliness. I started buying more stuff… shoes, clothes, purses, books, and etc. Shopping gave me that feeling of happiness.
What made it worse is that I relied using my card. Yes, I purchased everything with money that I don’t have. It was very bad.
This bad habit of spending led me to zero savings and buried me to debt. It gave me stress and kept me living paycheck to paycheck.
Despite the fact that I am working 2 jobs I still didn’t manage to pay my debt because spending money was something that I became good at. I totally forgot about saving.
I even relied on credit when I sponsored my family to Canada. It was a big mistake. I could’ve prepared for that but I simply did not. I was so stupid.
This mess didn’t stop still…
A year after my first car starts having issues, I went to a car dealership to look for a better car. I couldn’t afford taking my car for repair every now and then so I decided to do a car shopping without having enough knowledge about car loan. All I thought it’s just regular shopping.
As ignorant as I was, I didn’t even had a second thought. I just went through the whole process of getting approved. And the next thing I know, I am driving this pre-owned Juke.
The bi-weekly payment didn’t bother me at all. It seemed to fit in my budget and I thought it was okay.
However, I wasn’t happy at all. I am not satisfied with the car I have. I started complaining that it was way too small for me and my family. BLAH… BLAH… BLAH…
I went back to the dealership for the second time to do car shopping again!
This time my car loan almost doubled in amount. I went from a $27,000 to $46,000.
I know, I am one of the most stupid person on this planet. Why? Because I didn’t ask anything. I didn’t know that I gained a $6,000 amount of negative equity from the first car loan.
What I knew is that I have car that met my family’s needs. I didn’t knew that having new car will suck most of the money in my bank account. The payments and insurance alone takes up to almost $800 every month.
It dawned on me when I realize that having consumer debt with zero savings and emergency funds totally sucks. I was worried about keeping up with the bills every month and meeting our needs as well. I was stressed how will my income fit with our other expenses.
I had a total debt of $65,000.
Oh my word! It felt like I got slapped on the face.
I thought it was normal to have car loan and other debts. That’s A BIG FAT LIE especially if it’s a big chunk of money. That car loan and other payments could’ve been saved for an emergency fund, sinking fund, house down payment or retirement.
However, there’s always a room or change and improvement. It’s still not late to get my finances in order. It’s time to learn my lesson and take control of my future.
Therefore, I started my research how to pay off debt quickly. I began reading finance blogs that gives me some helpful tips in paying off debt fast. During those research, I came across to this guy named Dave Ramsey. I purchased his book “The Total Money Makeover” and read it.
Reading finance books and blogs has helped me lower my car loan to more than half ( $19,400 interest not included) and my other debt as well. It took me three years to do this because it is not easy. I failed A LOT! I made TONS OF MISTAKE along this journey but I NEVER GAVE UP!
This journey of mine may seem long and unending but I know that it will be worth it once it’s over. The sacrifices that I am doing today will lead me to the life that I am dreaming of. I believe that I will be able to live a debt-free life and achieve financial independence.
Therefore my friend, keep going! Don’t give up on your goals and be patient.