Me & 2020: A Weird Journey
To wrap things up for 2020, I want to talk about how my finances and my money management mindset have changed this year, and what I want to accomplish financially next year. What did I learn this year from doing hours of finance research every week, and how has it affected my own finances?
To be clear, I definitely had a unique situation this year. I started the year barely living paycheck to paycheck, working as a server at a restaurant, while I transitioned back to a full-time marketing job after moving on from acting. I had thousands of dollars in credit card debt, not even from extravagant spending but just from a lack of cash flow and high credit card interest combined with extremely poor planning and some bad decisions. My car lease was about to end, but I wasn’t sure if I could afford to get another car, so I kept extending the lease to the maximum length possible, and I was doing things like using work as an excuse to show up late to a birthday dinner so that I wouldn’t have to split the birthday bill. One day, I burst into tears on my friend’s couch because I had enough money to pay rent, but not enough to pay the $3 transfer fee. Maybe some of you can relate, but I cannot stress enough how much anxiety my finances were causing me every single day. I knew, 100%, that I was responsible for putting myself in this hole. I was very lucky in never really having to worry about money while growing up, had a decent salary immediately out of college, and enough savings and support to do things like go on vacation, or quit my full-time job and pursue acting. Budgets were extremely vague guidelines, and I figured as long as i wasn’t spending a lot on unnecessary things, I’d be fine.
I’m not saying that all those guys who talk about how avocado toast and iced coffee are the reason why Millennials can’t afford a house are correct. But I’m saying that when you are paying zero attention to your spending, haven’t truly adjusted to any significant changes in income, and then deal with financial anxiety by closing your eyes and hoping it goes away…even non-extravagant expenses combined with credit card interest means that you’ll find yourself in trouble!
Then, in March, I was extremely lucky to get hired right before the pandemic hit. I think I was in the office for literally two weeks before working from home. It was around that time that I also started taking my freelance marketing work seriously. I hated being constantly stressed about finances, and I only had two goals for 2020. Pay off this debt, and educate myself so i will never find myself in this situation again! And that’s how this podcast and website were born.
Fast forward to now. I am so happy and proud to share that I have paid off all of my credit card debt!
Listen. If any of you are struggling with credit card debt. Let me tell you. I get it. I really, really understand how insanely impossible it feels and I am here to tell you that it is possible to pay it off. If I can get myself out of that mess, you definitely can. It did help that not being able to go anywhere in 2020 meant I didn’t have many opportunities to spend money. I don’t really like shopping, so overspending there has never really been an issue for me. I also spent significantly less money on makeup since I rarely wear makeup these days, cancelled my gym membership, and spent very little money on gas. That, combined with a full time job, my freelance clients, and this podcast meant that I pretty much spent every waking moment thinking about making money or managing my money, which all contributed towards funneling every paycheck I got towards paying down debt, outside of the absolute essentials and bills.
I know I talked a bit about different approaches to tackling debt in a previous episode/post, and what I personally did was a combination of the snowball and avalanche methods. I tackled the tiniest credit card first, so that i could feel like i was making progress, then paid off the card with the highest interest rate next.
Paying off that credit card debt means that my credit score has increased substantially. Because I’ve never missed a payment or had other delinquent accounts, the high credit utilization was the main thing holding my score back. Now that I’m back under 30% of my credit utilization, my credit score is back to being above 700.
This doesn’t mean I’ve been depriving myself, though! In fact, I actually made two big financial decisions this year: I moved, and I bought a car!
I got really lucky with the move – my boyfriend and I were able to negotiate a free month of rent from the landlord and in an effort to save money – and also because of the pandemic – we did all of the cleaning and packing ourselves and had the movers help with just the big pieces of furniture, which helped keep moving costs down. I also sold literally everything I could. Everything I sold ended up covering the cost of the movers, and more! Plus, my boyfriend and i are using our previous furniture and have only purchased things we absolutely needed for the new apartment – at a discount or at IKEA – and agreed to wait to upgrade larger pieces, like the couch I bought for $200 on craigslist a few years ago, until we’ve boosted our savings and feel more certain about the economic future.
My 2020 Money Moves: I went from lots of debt, little income, no budget, and tons of stress to no credit card debt, multiple streams of income, and a budget I’m excited about! Who's ready for more money moves in 2021?
Then, I finally returned my lease and got a car. A Toyota Camry Hybrid, which gets fantastic gas mileage! Before finally buying, I did a lot of research and talked to so many salespeople before finally getting the price I wanted, and bought my car for over $5,000 less than the first salesman i talked to. To be honest, the car buying process was absolutely miserable. If you know anyone who is a pro at buying cars, please let me know so we can do an episode on it!
Lastly, I finally sat down and made a budget that I can actually stick to and, I’m being honest when I say this, it was actually exciting to do! It’s definitely a work in progress, but it feels like a fun thing to adjust and tweak to fit me, rather than some overly restrictive thing that tells me to not have fun.
What I did spend money on this year was groceries. And wine. I admit I’ve definitely spent too much money on wine but, to be fair, I’ve mainly stuck to the under $10 section at Trader Joes. There’s a Côtes du Rhône and GSM blend under $7 that are my favorite so far, and I would love to hear your recommendations!
So, to sum up this year, I went from lots of debt, little income, no budget, and tons of stress to no credit card debt, multiple streams of income, and a budget I’m excited about! There’s still a lot more financial work and education to do but for now, I’m going to celebrate that as a win over the holidays with lots of food and wine.