Debt can make you feel like a hamster running on a squeaky wheel. So how does one break the cycle, pay it off and gain peace of mind? Is there a Get Out Of Debt Free Card? If there’s one woman who knows a thing or two about escaping the merry-go-round of debt. it’s Joy Buchanan a.k.a. Debt Hater. That’s right, Joy is a hater and proud of it. She’s busted her credit card balances and a few bad money habits. So I asked her to share some of her experience and wisdom with the rest of us. Here’s what Joy had to say.
RDD: What started you on your journey to financial healing?
Joy: When I was in graduate school I began to build considerable credit card debt. I graduated from college without a credit card and no student loans. I actually entered grad school with one thousand dollars in the bank. I had a work study job with a stipend. I got a car and charged the down payment, paid my moving expenses, paid for friends to fly home and basically just didn’t know how to budget. Whenever I didn’t have the money for something I charged it-movies, gas, even clothes for conferences. I always paid my rent, car note, insurance and phone, but afterwards there was nothing left. The second year of school I took out a student loan. After graduating I bought a new car. Eventually my check was not covering everything. I was also juggling three credit cards.
RDD: What made you create Debt Hater?
Joy: One morning I received a call at 6 a.m. from Master Card (I was on pacific time). There had been a mistake with my online payment not being credited properly. That phone call let me to wonder exactly how much I owed? I went to a site called Motley Fool. They had a section on debt repayment. I did the work and discovered I owed $16,000 in credit cards alone, not including my car loan. The calculator told me it would take 14 years to pay it off. So it was panic that led me on my journey to not be willfully ignorant about my finances.
RDD: Wasn’t it daunting to tackle your finances and blog about it simultaneously?
Joy: I really wanted to become a finance guru. At first my ambitions to blog were dampened when I found out there were so many people blogging about finances. But blogging was completely cathartic, to talk candidly about finances.
RDD: Why do people avoid taking charge of their finances?
Joy: [Black] women buy into the super woman syndrome. We don’t want to admit we don’t have everything under control. We’re afraid of “putting our business in the street’. Often women socialized to think that money management is a man’s thing. So not true.
RDD: Do you think it is an issue of values?
Joy: Yes. We don’t esteem being debt free. Because so many people have debt, we consider it a normal part of life. Normal feels better than “new” which feels different or strange. People also don’t see the value because they still get to do what they want. What they don’t realize is that it is a matter of perspective. After 4 or 5 years, the dress you got on sale for $100 is now $600 because of interest. I began to realize that a $50 pair of Sketchers turned into $350 of debt. It’s as if you’re bleeding money. What if you had the $300 you’re not getting?
RDD: How do people get out of debt without going to extremes?
Joy: What some women consider extreme is actually reasonable. At first I felt I couldn’t do anything. I cooked because I couldn’t order out. When I did dine out, I skipped dessert and sodas. I tried the austere, make your own soaps approach, etc. I couldn’t do that. Sometimes trying to do everything yourself adds up to more money. When you’re committed to get out of debt, you do it. When it comes to clothes, you make them last! You learn what you can live without. A lot of women are afraid to discover what it is that they can’t live without. Sometimes my balances looked as big as ever, so I created a spreadsheet so I could see the difference. You learn to wait for things
RDD: What about saving vs. paying down debt? What do you suggest?
Joy: There were times that I wanted to pay off credit cards with my savings. Something always comes up, and that is why I made sure that I saved for those things. There were times when I did use some of my savings to assist with paying credit cards but I always made sure I kept a cushion.
RDD: What does it feel like to be in control of your finances and debt-free?
Joy: Freedom trumps the high of making purchases. I wouldn’t go back for anything. Recently, I was able to take 2 big trips because I had saved. I went to Japan and Hawaii. There was no anxiety when I got home. No shoppers remorse or going home and wringing my hands.
RDD: What is the most important advice to get started on the path to financial freedom?
Joy: First, don’t spend more than you earn. Second, save a chunk for a rainy day and for your future. Visualize what you want. For some it’s retirement. However, there are a million other things, legitimate things, that you can do. Don’t be impromptu! Set up a separate fund for other things like travel and charity. There’s no magic trick or secret to getting out of debt. Don’t derive your highs from shopping. Also, your mindset doesn’t change just because your circumstances do. I had to change from the mindset of debt repayment to savings. I didn’t want to repeat the same mistakes.
To learn more about financial freedom and prosperity visit Joy on her blog, Debt Hater.