Saturday, August 16, 2008

Debt & Finances

Yesterday I picked up a copy of Money Magazine (I think it was the March issue, I forget) and read some articles of couples who allowed themselves to get $190,000 in debt. Another story was of a newlywed who had no debt to begin with but just after two years, accumulated a whopping $90,000 of only credit card debt. Both stories then told of how they got out of the financial rut by hiring an advisor who educated them of investments, budgeting, and what not.

When I was a college sophomore I desperately wanted a credit card to make me feel more of an adult. I had the mentality to buy and take home now, and then pay later. So while I was in classes, I skimmed over bulletin boards for credit offers looking and comparing for the lowest interest rates. I found one that wasn't too shabby. I applied then received my first plastic within a few weeks. It was beautiful - a clear, see through VISA glistening in my hand. Immediately I went to the mall to buy buy buy. I felt like a million bucks with only a $200 credit limit.

Now the sad part was they approved me - I didn't even have a job - if anything, a minimum part-time wage job that couldn't keep up with my expenses. Later on my credit limit increased and I was out shopping like a rockstar! Again, buy now and pay later! WOOO HOOO!!!! Then came then compounded interests that accumulated... yikes!!! Then came annoying phone calls... Mom and Dad... help!!!!

There are lessons learned and there were many financial shames in my immature life. I made the transition my first senior year of college (I stayed an extra year as a super senior - stayed in college for 5 years which is normal now). I cancelled my first VISA with tears in my eyes, then I went to the library to educated myself with finances, from budgeting, investments, retirement and what not. From then on, I decided to start a savings account and dropped a percentage of my paychecks monthly.

Because of the accumulated savings, I was able to help finance our wedding and am debt free from such a crazy expense. As lucky as Dre and I to have generous parents (thank you and we love you!), we wanted to be responsible for financing the wedding as well.

Now that it is all said and done, Dre and I are debt free and are VERY frugal about a lot of things. We do not use credit cards and believe that before purchasing things, we should already have the money - not borrow or go in debt with credit card bills. I pray we will keep this up. I however am extremely excited to educate our future children about finances. I cannot wait until they learn the value of the dollar. No allowances, but commission. Excitement!!!!

We received a wedding gift from the Crockett's, a book called "The Total Money Makover" - it's very insightful and the author strongly advised against credit cards. It a basic book and truthfully, a lot of it is common sense many of us already know, but we just don't do. It however offers many insightful scenarios of how to handle finances when you think you're at the point of no return - for example: Chapter 7 bankruptcy. There are ways to avoid bankruptcy but it takes sacrifice and effort. Also many other beneficial insights. There are also financial forms at the back of the book to help organize and manage money properly (this excited me the most). It's a good read I thoroughly enjoyed. Reading it made me want to live below our means to enjoy the finer things in life later on. I'm just lucky to have a husband who shares the same financial beliefs as I do.
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