Learning The Hard Financial Lessons at a younger age

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Joined: Mon Oct 15, 2007 11:04 am
Location: Honolulu, Hawaii

Learning The Hard Financial Lessons at a younger age

Postby Jordan » Tue Oct 16, 2007 1:24 pm

My Name is Jordan. I am currently 22 years old and live in Honolulu. Like a lot of other teenagers, I made a few mistakes when I got my first (and second...and third) credit card. I was 18 and got a letter saying that i was pre qualified for a card. Awesome. So I sent in the application and a week later, I had a shiny new Capitol One credit card. It took me 3 years to pay down a 500 dollar balance and get the card out of my wallet. Here is how I did it.

First, let me tell you about Hawaii. Its a wonderful place, filled with wonderful people, amazing beaches and incredible hikes. It also has one of the highest costs of living in the country. I have been living on my own since I was 17. I got a small one bedroom apartment and was paying ~$800/month rent on it. I also had a $450/month car payment because my parents, as a gift for my 17th birthday, decided to get me a fully loaded ford explorer, only they did get it for me, instead they made a down payment and a high interest loan. Don't get me wrong, that car is now paid off and I live having the experience of having the car and I'm glad they did it (well sort of). So at age 17, just graduated high school, I already have $1300/month in set expenses. I have worked full time since I was 15 (legal age to start work in Hawaii) and have always loved working. At the time I was working at Blockbuster, this job was fun, but the pay sucked so I needed to do better. I was hired on as Help desk for a small IT company in Honolulu, the pay was better, benefits were ok. Unfortunately, the pay wasn't good enough, so I got a Second Job with my university as their Help Desk (did I mention I was a full time student too?)

Between these two jobs, I was able to pay all my bills, not collect student loans, and still have some play money. The problem was, I like to play a lot. A lot more than my budget (like I had one of those back then! HA!) allowed for, so I used my credit card when cash was short thinking"ill pay it off when I get paid", that almost never happened. This continued for the next year or two. Durring the next few years, i got even more credit cards, and promptly ran those up. I also got in a long distance relationship where I was spending about~2k ever few months flying to California to be with my girlfriend (or flying her back here). I quit my university job and was hired by a few other companies each offering higher pay. (One benefit I have always had was it was always easy for me to get job, now in Hawaii pay for the technology industry is about 10% lower than the national average so its not too great, but It worked out) So the bills kept racking up. At one Point I was dealing with HUGE credit card bills, a car payment, and rent that kept going up. About a year ago I finally said "this is it" and vowed to clean this mess up. And so the recovery began.

I worked 2 Jobs full time, went to school full time and did part time freelance work to make extra money. I stopped going out as much, stopped eating out every day, heck I even started catching the bus for several months to save on the gas. (I was paying about 150-200/month for gas. ) I started using a budget, I locked away my credit cards, and started tracking my expenses to see where I can cut costs. I worked Hard at this, very hard and it has paid off.

Currently I live in a nice 1 bedroom. My rent is now 1225/month, but I am only 2 minutes from both of my job so I save nearly 200/month on gas. One of the companies i work for pay for my home internet connection because my job requires me to be on call and have access to their network 24/7. My girlfriend moved back and now lives with me (cuts expenses and got rid of that traveling cost) That capitol one card is paid off and sitting in a lock box along with2 other cards I have paid off. My car is paid off because I began aggressively paying off extra each month (and because of a windfall of a few thousand dollars I received). I am paying off my student loans (only 2k left) and I have 2 credit cards to go (total about 5k). I plan to being debt free within 12 months. (less probably).

The way I am managing now is this.

I get roughly 4 pay check each month. (2 from each job). For each of the larger 2 (one company pays me almost double the other) I take out half of all my monthly expenses + $50 and have them automatically transferred to a separate account the day after pay day. I pay my bills out of this account, and because of that additional $50 I have an excess of $100 dollars each month in that account. This is becoming my emergency fund. I use my other 2 pay checks for my entertainment costs, other random expenses(repairs to my car/apartment/etc), my regular savings and to pay of debt. I have decided that if I want any new toy (like a game console, or concert tickets, anything that will cost a significant amount) I will do some contract work to make that money. This is possible for me because of the field I am in. I also have a good reputation and a decent set of contacts in the area so finding these gigs isn't too difficult. This forces me to think hard about wanting something, and if I want ti, allows me to get it. I don't feel like im preventing my self from having fun (I saw Nine inch Nails a few weeks ago (paid for that with a small job from the social security agency) and Ill be going to see the Lion King as soon as I can find a small contract job to pay for it (as soon as I have time to look that is, moving takes a lot of time!)

The one thing all that credit card spending did do was get me a decent credit score, I have never been late with my bills, and my score is only climbing now because I am lowering my debt/credit ratio. I haven't canceled any of the cards yet because most have only been open for a year or 2 I wasn't the credit history. I will however be combining 2 of my chase cards shortly (I need to pay them off before they can be combined). And as I said within the next year I will be debt free. At that point I plan on quitting my second Job, and starting my own business (using my primary job to support that till its up and running) I already have inquiries to provide services to people, but just don't have the time to dedicate my self right now. Running my own business and doing freelance work pays much better than either of my jobs (no over head, and its almost pure profits because provide a service, not a product), but right now I want the stability of the 4 pay checks so I can get my debt to disappear. By this time next year Ill also have complete school (AA and BA in Business Management). So life is looking up (heck its really good) and blogs like this one keep giving me great ideas (like square foot gardening! which I will be doing on my balcony this weekend) to save money.
If you have nothing to die for, then you have nothing to live for. - MLK Jr.

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