Interview: How a single mom paid off $60,000 in debt
Here's something interesting for you all!
Debt Consolidation Care Community is now introducing a brand new section – "Exclusive Interviews" highlighting the best personal finance bloggers and their blogs.
We begin our very first interview with "Fabulously Broke in the City". The blogger here is a 25-year old single woman from Canada, who started off as an IT professional but ended up being an IT consultant in 2008. The way she found her way out of debt and transformed herself from a shopaholic to a frugalite is quite exciting. Interested to know about her views? Just read the excerpt below.
Jason: From where did you get the idea of blogging?
FB: I started reading personal finance blogs once I told myself that I had to figure out how to get rid of this $60,000 in debt and to finally understand where my money was going. So I thought of being the personal finance version of Carrie Bradshaw from the HBO TV Series "Sex and the City"; I would blog about the effects of money on people, like a money-thropologist.
Jason: There are so many topics on which you can blog. But why Personal Finance?
FB: I don't just blog about PF any longer. It started off as being 75% about money, but now it's an even 50/50 split between money, style, life and general career tips. The blog is truly a reflection of myself. And I chose money to be the 50% of the blog because it's a topic I am interested in, although I do tend to stick true to my original idea, of being a money-thropologist rather than being a money guru.
Jason: What do you do in real life and how’d you get started?
FB: I am an IT consultant, and I fell into it by accident after graduating business school.
I started off working at a company for 2 years, then I left and became a freelancer, quadrupling my salary and increasing my vacation time in the process. Now, I work on contract and only when the contract seems like a good one. It's a real sense of freedom to be able to pick and choose, but it is not for everyone as you have to be extremely disciplined with your money but not obsessive (a hard balance, this one..), and you have to be willing to be jobless for a couple of months, while actively searching for something (also a hard thing to do).
I stay calm about my situation because I am financially secure for at least a year to two years without working, as my must-have expenses are around $1000 each month.
Jason: What advice you would like to give to the people in this economic recession?
FB: I don't have any good advice other than to take this opportunity to re-examine your lifestyle and to scale back if necessary.
It took me 2 years to get to the state of mind I am in right now, understanding that money isn't everything per se, but it controls a lot of things. No one needs to have so much space, nor to fill up their lives with so many things just to feel rich.
Being rich and satisfied is a state of mind, and I find having a lot of things (and the big bills that come with it), causes more stress and insecurity than not having much at all but people tend to use things to fill the deep emotional void and stress in their lives, when all they need to do, is re-examine their top 3 priorities and spend accordingly to what they find fulfilling.
Jason: We just noticed the tagline on your blog is, "Just a girl trying to find the balance between being a Shopaholic and a Saver." Do you think you've found that balance?
FB: Most definitely. I have quite a bit saved in cash from freelancing ($36,000), about $25,000 in retirement funds (book value), and another $15,000 left in my business, plus a $2000 car.
I do tend to shop from time to time for unncessary items, but when I do, it's only if it's a good deal, of decent quality and if I see myself using the item forever. I don't buy clothing, shoes or accessories in bulk any longer -- I actually sold 60% of my wardrobe just to get to the essentials that I needed. I also don't buy unnecessary toiletries, makeup, random pieces of clothing.. everything has a purpose.
My only weakness is technology, but I still only buy what I find to be useful, of good quality and worth the price they're asking.
Jason: What are the three biggest finance mistakes you have ever made?
FB: Not bothering to understand the full impact of student loans while I was in college. I mean, I knew I had to pay back that debt, but I didn't understand how much would be skimmed off my paycheque each month and for how long. The number that I graduated with ($500 minimum each month) was shocking.
Not being a saver and a conscious consumer before I got into all of that debt. I wasted 75% of my money before and during college on stuff that I ended up getting rid of. It is a hard lesson to sell a $100 top for only $15, the sunk cost and the knowledge of wasted money is disheartening.
Not taking a better interest in my money in general and at an earlier time. If I had, I would have saved 50% from working as a teenager (it was all disposable income anyway), and had a larger savings and retirement fund right now. But, c'est la vie.
Jason: Where do you see yourself in 10 years down the lane?
FB: In Dallas, working as a freelancer for what I do best, with a modest home and at least 2 kids. I just need to get my toe across the border and for the recession to be over so that companies will be allowed to hire foreigners (Canadians) and sponsor their visas.
Jason: How do you feel after paying off almost $40,000 in just one year?
FB: Pretty good. The ending was anti-climatic when I sent the final payment.
I was pretty obsessive about my debt. I put everything, I mean EVERYTHING I had towards it. Any extra pennies, a $5 bill I saved or found.. everything. It was just such a high to be able to pay my debt off, even in small amounts; to see the interest rate drop and to feel like you're making progress, albeit a little bit at a time.
Considering I was only earning $65,000 as a gross income when I paid off most of my debt (except $15,000), my net income was around $50,000 for 2 years, so I lived on $10,000 each year - this was made possible by being a consultant, and I went the unconventional way and lived out of hotels with only a single suitcase, just to save on rent (the biggest budget killer).
Jason: Do you think blogging has changed your life in some way or the other?
FB: How could it not? I have met so many wonderful online friends, and the personal finance community is incredibly welcoming.
When I first started, I did notice that there were two camps of PF'ers: The ones who were extreme frugalists, to the border of being cheap, such as eating only the food that was on a deep discount, or refusing to spend money on luxuries such as a glass of pop or a candy bar.
Then you have the other camp (the one I consider myself to be a part of), who tells you that getting out of debt doesn't have to be painful and you don't need to become a hobo to do it, you can still be stylish and have fun even though you are in debt. You just have to figure out where you draw the line in terms of comfort in your lifestyle (can you survive in a bachelor apartment with a family of 4 for 2 years?), and adjust the balance until it fits you and your family -- not everyone is the same, nor do we get out of debt the same way.
Jason: How do you feel by becoming a part of the world’s largest debt consolidation community now?
FB: I am not sure I would call myself part of the debt consolidation community, as I didn't consolidate any debt at all when I cleared my $60,000. I just paid it off with hard work and scrimping, and re-examining my life to become a minimalist (as far as I could take it), and a being a conscious consumer who looks at quality first, and price second.
Anyone can do that because once you have the tools such as tracking your expenses, creating a budget and setting priorities for your money, it's not a question of will any longer. It is a question of willpower.