The Millionaire’s Broke Daughter & Me

by Lindy on February 24, 2011

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I once had a classmate who was always broke.  At least, she always talked about how broke she was.

I was broke too, actually.  At the time I was putting myself through design school, paying my own tuition and footing all my expenses.

My classmate was in the same boat, but she handled it a little differently than I.

One day we were sitting together in the design lab, working on our latest project while chatting.

“What are you going to give D & J for graduation?”  She asked me, flipping her long blond hair as she flipped through furniture catalogs.  (It was tradition at our small school that graduating students presented our teachers with parting gifts as a thank you.)

“I don’t know,” I shrugged, and probably slouched too.  I slouch too much.

“I’m so broke.  I’m trying to come up with something free I can give them.” She said, probably not slouching.

“Yeah, I’m broke too.  Free is a good idea.”

A few weeks later it came time for the both of us to graduate and give those gifts to our teachers.

My classmate presented them with a large box of Harvey Mackay books, autographed by the author himself (our profs were big fans of the business guru).  The author was a family friend of hers, so she pulled a favor and got the books for free, just like she had planned.

I, on the other hand, not knowing any authors, had gone to the nearest shopping plaza and bought $100 in teacher gifts using my credit card.  Had I put a little creativity into it, I probably could have come up with a free gift to give them too.  But I didn’t need to, because I had another kind of friend, a friend named Mastercard.

I found it to be ironic that my classmate was always talking about having no cash, and scrimping the way she did, because her dad was actually a millionaire.

But she wasn’t cash poor in a privileged sort of way, like she had spent too much money on diamonds or something. She was cash poor because she was putting herself through school just like the rest of us.  Though she laid her head in her dad’s posh mansion every night, she wasn’t getting any pocket money from him.

At the time, I looked down at her for her scraping-by ways.  I used to think, doesn’t this poor little rich girl have a credit card?  She really needs to get with the program and pull out the plastic more often.

You see, I was operating under a weird belief that if I spent like I was wealthy, money would magically come to me – on the back of a unicorn, as it slid down a rainbow.  I have no idea where this belief came from, maybe too much studying Feng Shui.

(credit card statement showered in magic rainbows)

So instead of being creative with my finances during my time of student squalor, and living within my means, I just charged everything that I didn’t have the money to buy.  No need to be broke when you have credit accounts, right? I figured I would pay it off later when I was older and made more money.

I thought I was soooo much smarter in the ways of life than my millionaire classmate.  But as it turned out, she was the one who had it right, not me and my hot charging ways.

Those flawed beliefs about credit have stuck with me a long time.  It wasn’t until recently that I realized I was living by them.

To illustrate, let me tell you about my current credit card balance – the one that’s been stuck at $6,000 for a while, and the one I toil over, selling my stuff so I can pay it down.  Well, that credit card balance was at zero just three short years ago.

That’s right, after college I had worked really hard, scrimping and saving to pay it down from $9,000 to zero.

But unfortunately, my attitude about charging what I couldn’t afford was still around, and slowly that zero balance crept back up – a few plane tickets here, a few car repairs there, emergency warm clothes for a last minute trip back east.  Before I knew it, $6,000 in debt had come right back to find me.  Sort of like those eight pounds I’d starved myself to lose, only to gain them back as soon as I started eating again.

The debt had returned because my guiding belief about credit hadn’t changed.  I was still using my Mastercard as a crutch to be able to buy what I couldn’t afford.  I can pay it off later, it’s only money, what’s the big deal?

If my guiding principles don’t change, neither will my outcomes.  I will always go back to being fat and in debt.

Thankfully, I know this now.  And the next time I get my card balance to zero, I’m staying there.  I’ll be using these new and improved guiding principles to help me out:

  1. Don’t charge it if you don’t have a plan to pay for it, otherwise the debt will take root and grow.
  2. There is no future me to pay my present bills.  The future is now, and Now Me is pissed at Past Me.
  3. A little creativity can help me get what I need and want.
  4. Emergency funds are great for car repairs.

Do you have any other good credit principles to add to my list?  I would love to hear any flawed beliefs you lived by in your youth, credit cards or otherwise.

PS: Want to hear some gossip about my classmate? Her older sister is a famous actress.  I won’t publish it here, but if you want to know who she is, ask in the comments or send me an email, and I’ll spill it to you behind the scenes.

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  • My DH took a cooking class with the daughter of two famous actors…

    Yes, get that cc balance down!!

  • Do you put all of the money you “mint” towards this, or does it go other places in your budget, too? (By the way, congratulations on your big haul!) I think your fourth principle is the one that I have to force myself to remember, because I find it easier to save for an emergency fund than spend from it!

    • Lindy

      Yes! 100% of the money we talk about minting on this site goes straight to the credit card. Plus, at the end of the month anything left over in our budget goes to the card too, I just don’t report that amount here. We’re paying A-Rob’s card off first because his interest is higher, and paying the minimum on mine until his is gone. So my balance is getting cozy until we can attack it.

      I know what you mean about the emergency fund. We made a hard and fast rule to never dip into our emergency fund if we didn’t have to. But that rule was a little to our detriment, because I’m pretty sure that emergency fund was in place when I had all those car repairs I put on my card. Live and learn, I guess :)

  • Wonderful post.

  • Red

    Psssssst… Who is her sister!?!?

    I used credit cards like free money. I paid them down to zero, cut them up and closed all of the accounts. I don’t care if it messes up my credit report to close the accounts. It certainly didn’t hurt the report as much as not paying my credit cards did!

    I don’t plan to ever apply for a credit card again. I’d rather pay by cash, as un-cool as that may be.

    • Lindy

      Cash is the new cool…though it does take a little more restraint. :)

  • I love your story! In my past, I have been forced to deal with the credit card lie as well. But, for the past 2 years I have had ZERO credit card debt. If I can’t use my debit card or pay cash, I don’t buy it!

    BTW…who is the actress??!!

    • Lindy

      Nice job on beating those cards (and lies) into submission!

  • Wow..sounds like I would get along just great with your rich friend’s dad. I often wonder if my kids appreciate money and hard work when they will have a much more privileged upbringing than I ever got. This story gives me hope…that you can teach children how to be financially responsible at any income level.

    PS..spill the details. Inquiring minds want to know. DO you still keep in touch with this friend?

    • Lindy

      I was pretty impressed that he wasn’t supporting her at the time, especially since it would have been so easy for him to do so. He was an entrepreneur, and she definitely had those tendencies too. She now runs a successful design business.

  • I love number 2. Future You isn’t gonna take Past You anymore, So Now You has to intervene. I think Future You will be grateful.

    Okay, I want to know! I would have like to make a guess, but I need more clues.

  • Ann

    I’m just sorting out my own credit card debt, and I see myself in so much of this! I was also using credit like free money, screwing over Future Me so that Past Me could have what she wanted now.

    Oh, and I’m DYING to know who your classmate’s sister is.

  • I thought (many years ago) that I was being really clever by having two credit cards so I could use one to pay the other if I couldn’t afford the payment that month. Ohhhh yes….clever I wasn’t!! I still have two cards, not the same ones, but they are both gathering cobwebs in my wallet.

  • When I was in grad school, I had credit cards and good credit left over from my years as a “real worker” in the “real world.” I took out one loan (in 8 years, pretty good, but still too much), earned stipends and assistantships, worked odd jobs, and still ran up credit card debt because, yes, I still thought I couldn’t live without clothes, books, music, and “stuff.” Took me the whle 10 years after graduation to pay back credit card debt and student loans.

    • Lindy

      Somewhere along the way we all got the wrong ideas about how and when to use credit cards…wait, is there a right way to use them? :)

  • It’s kind of weird, but when I was in University, I didn’t have a credit card and was completely fine with not using them – even though I was dirt poor. I really only got into trouble when my income got erratic when I was self-employed and I just get behind the 8-ball. And not in a good way.

    Years later when I went through a broke period, I had established the “rule” of not using them unless I had enough cash to pay them off, and so just didn’t use them. The big thing for me was just boosting my income though – bar none.

  • exciting about your friend!
    As for the credit card principles, I think the one about future me is best. Maybe I’ll write a small book called “the future me” and make it be about how crappy it is being the future you and how you should not charge up a bunch of stuff. I put quite a bit of stuff on a card in undergrad, paid some down in grad school, and then got rid of it after having worked for about a year. It sucked, but I’m glad I did it. Even got a free plane ticket out it.

    • Lindy

      Oooh, that is a good idea for a book. I’m trying to avoid more run ins with an angry future self by making smarter choices now.

  • Margie

    I can totally relate to this! During university and when I first started working I used my credit card for just about everything – I went to Sydney a lot to visit my sister (I live in another Australian city), and went crazy on eBay and Amazon, buying CDs, DVDs and books (and a lot of other stuff!). I was attracted to time payments for upgrading my electronics as well. They’re ok, as long as you pay them off before the interest-free period expires. Most of the time I managed to (at the expense of making bigger payments on my credit card), but I got caught out a couple of times. Ouch.

    How I wish I’d taken off the rose-coloured credit card glasses and realised what I was doing much sooner!

    Fortunately for me I married a man who is (and always has been) very sensible with money, so he helped me sort myself out. I had started the process just before I met him, but the moral support makes a difference! I still have debt but it has been consolidated into a single loan. I’m getting there – it should be paid off by the end of the year! :)

    We have a credit card which we use for most purchases, but then we pay it off in full each month. We operate this way because our incomes go into our mortgage offset account – the higher the balance the better, as it effectively lowers the principal on our mortgage. I guess if there’s a ‘right way’ to use a credit card, this might be it. :)

    Ooh yes, I’m very curious about your classmate’s sister too!!!

    • Lindy

      Great job on keeping up the credit card busting! Yes, so many college students fall into this. Myself and my husband included. Luckily we know the lessons to teach our own kids.

  • You basically nailed every single one of my old thoughts! I remember looking down on friends who were “cheap”. Those cheap friends are loaded now! I thought I had so much confidence in myself by spending money I didn’t have. “It’s just a few thousand dollars, I can make that easily. I’m not going to worry about it.” I like my new philosophy a lot better.

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