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