Wednesday, December 14, 2011

Budgeting, Credit Scores and Responsibility - These Things Can Be Learned

Who me? On a budget? Oh I couldn’t possibly live like that.  That’s what I thought when I was 22 and my dad was coaching me on how to use credit cards responsibly and what exactly a credit report was.   A freshie at college in a town hundreds of miles from my family, the credit card handouts were just another wondrous beautiful element of college life.  Dinner out every night?  Yes, please!  Should I buy that cute dress from Express, it would be brilliant for that frat party on Saturday night.  Done!  Road trip to Atlanta…I’m in!  This independent living thing is pretty groovy, I remember thinking. 

My first bill showed up.  Fifteen dollar payment this month-no problem.  I could definitely make enough money to cover that at my O’Charley’s serving job.  Then two more bills showed up asking for the same.  It made me a little nervous, but then I figured out the concept that even though I was paying the credit card companies fifteen dollars, in a few days I could use ten of that fifteen.  So really, I was only losing about five dollars each every month. 

I kept using my cards.  I kept playing these games.  And my balances grew.  So did my minimum payments. 

I was drowning.

I ran to my daddy.  I don’t know how this happened, I cried!  I had found myself in debt of $950; it could’ve been worse.  But to me at that time, that was a ton of money that I didn’t have!  My kind father sat me down that day with a forgiving hug and explained to me the way credit works, the importance of credit scores and the ins and outs of being financially responsible.  He had no idea that kids like me were being bombarded the moment they stepped onto campus with offers.  Unfortunately it took me a few more years of learning the hard way that when you purchase things with your credit cards they aren’t in fact just magically paid for. 

The great news is that in 2011 I can finally say I understand the value of a dollar.  I “get” that paying for things with cash is so much more rewarding then that initial buzz you get when you buy something you think you want.  I am internalizing “which would I rather have” instead of buying anything I want.  I am buying responsibly.  This mindset even during the season of giving.  I’d love to buy all of my friends the finest of gifts.  Who wouldn’t?!  But I’m finally being smart about money and that will pay off big in my family’s future.

I don’t have all the answers, I actually don't have many; this is still a huge learning process for me.  But I can say that in 2012, I will be able to say I have no credit card debt.  Don’t get me wrong, I will still use my credit cards, but I will have a sound plan on paying them off each month.  In March, I will finally look into getting that free credit score (remember, I’m being smart with money)- I’ve been dodging for the past few years and I will analyze it and make my new “game” watching that score rise higher and higher!  In hindsight, I can’t believe it has taken me this long to figure it all out, but I’m also very happy that I have figured it all out!  So here’s to a solid foundation and a retirement filled with travel, golf and fine dining-paid for with cash, of course!