Jana Says

Living life from cover to cover

Author Archive: Jana

My descent into debt, part 2

If you missed part 1, read it here.

I was fired from my government job in February 2002. I was fortunate enough to find employment by May 2002. I was offered 2 jobs–one a temp-to-hire, the other full-time position. Being the practical person that I am, I opted for the full-time, even though it was lower paying and located in West Philadelphia. It was in my field, it was full-time and offered health insurance, and most of the staff was around my age. Sounded like a great idea, right? It was. Sort of.

It was also during this time that my then-boyfriend now husband decided to go back to graduate school full-time. This meant, in order for him to get in-state tuition (which was important due to the lack of financial aid during his first year), we had to move back to Delaware (where he’s from) so we could have an in-state residence. So we had to find an apartment that was still a)relatively safe and b)close enough to PA for my commute to be reasonable (we were living 20 minutes from my job). This small move not only cost us in moving expenses but our rent went up by $125 per month. Not a smart idea when you’re facing an income drop. And that’s when things really started to get bad.

I like to refer to 2002-2006 as the lost years. Prior to our move and my husband going back to school, we were doing really well, financially. Then, due to our lack of knowledge, entitlement attitude and unwillingness to compromise/learn about finances, we dug ourselves into a huge hole. In that time, we racked up an enormous amount of debt on G-d only knows what. I have spending amnesia during this period of time. I truly don’t know what we bought and, except for a few memories, we have nothing to show for it. I just remember getting paid, depositing my paycheck, paying rent and other bills and using the credit cards for the rest. I do know that we had fun, though. Dinners out, vacations, clothes, our honeymoon, assorted other wedding expenses (I did pay for his ring in cash!), plus basic living expenses. We ended the lost years with around $60K in debt including a car but not including our house. Yup, through all of this, we bought a house.

Stay tuned for part 3 to find out all about the car and the house…

A short vent about “fixed income”

If there is one term in personal finance I loathe, it is this–fixed income.

Fixed income is technically defined as “income that does not change”. Fixed income is usually a term reserved to describe those who are retired, living on a pension/Social Security or those who are on some sort of government assistance, trying to make ends meet on a small monthly amount. It’s a pretty negative term, designed to conjure up images of those who are poor and suffering and facing the burden of increasing costs without any chance for their income increasing. Fine. I can accept that definition. And I can accept why news outlets love to use it.

However, there are so many more of us living on a fixed income who don’t fit that description. For instance, I live on a fixed income. How? Well, I am a salaried worker. I get no overtime (there is not even an option for overtime), no bonuses, no commission, and I haven’t gotten any sort of raise in 3 years. In fact, one year, I lost pay due to our state’s budget crisis. Every payday, I get the exact same amount of money. No more, no less. No choice to have more or less. That is my fixed income. My income doesn’t change to keep up with increasing costs, either. Because that is the only money I have coming in (unless I’m working my 2nd or 3rd jobs, which have variable income), that is what I have learned to live on. And I’m OK with that, too.

I’m not at all implying that those who are less fortunate or have a lower fixed income than me are at all undeserving of the attention that they receive. But I resent the manipulation and misleading use of an objective term to tug at the heartstrings, when, in truth, there are a lot more of us who fit that description.

I don’t want any special attention; I just want an accurate term.

My descent into debt, part 1

My journey into debt happened slowly. I didn’t just wake up one day, in a money hangover, owing close to $60K. It creeped up on me, one credit card swipe at a time. And now, I’m just sick of it. It’s time to take back my money. So how did I get here?

Like so many others, I graduated from college (and graduate school) with credit card debt. But that was my only debt. I had no student loans, no car payment, nothing. I was set up for a nice, secure financial future. I had a stable government job with lots of earning potential, retirement savings/pension, and a little bit of savings. I was living with my now-husband in a ridiculously affordable apartment, paying down my credit card balance. I was $2K away from being completely debt free and then…I got fired.

Yes, I got fired from a government job. I’m still not quite sure what happened, or why I was fired, but that was the beginning of my descent into debt. I had to pay for my COBRA, I needed to pay for groceries, I needed to pay gas. It all went on my credit card because I didn’t know what else to do. In my mind, I didn’t have the cash. I knew I had unemployment and a tax refund coming in but that money was pretty much obligated. I had to pay for my fixed expenses like rent and the phone bill and electricity but, being 24 with no dependants, I just could not give up some of the luxuries to which I had become accustomed.

Suffice it to say, at this point in my life, I knew nothing of cutting back, using all cash and living on a budget. I knew the concept of making cuts and sacrifices but I didn’t think I had to. I understood the concept of a budget but I didn’t think someone like me needed one. I thought that only poor people used cash; it wasn’t for people like me. For someone with a Master’s degree, I sure was ignorant of managing my personal finances.

Somehow, I always seemed to have enough money but after getting fired, I didn’t. It was hearbreaking. My then-boyfriend now-husband was willing to help but since we weren’t married, I had my bills that were my responsibility. I never, ever shirked my responsibilities. If that meant spending all my money on bills and using credit for everything else that I refused to give up, then that’s what was going to happen.

Confession time: Looking back, I have to admit that I did have enough money for my needs. At the time, though, I just didn’t differentiate between needs and wants. If I wanted something, I needed to have it. They were one in the same. And that is a very slippery slope that I happily, blindly and stupidly went down. Not only did I go down it, but by the time I landed, I had spent close to $60K, on everything you can think of, including a car.

Of course, during all of this, I did look for work. I even spent over $100 on a train ticket for a job interview in Washington DC. I eventually was offered two jobs and, being the practical person I am, I took the full-time job, rather than the temp-to-hire.

What happened next will be explained in part 2…