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Too late. I already did. Destroy 12 credit cards. On Facebook Live. If you missed it, you can catch the video below.
Seriously, you guys, it feels like losing 100 lbs. I can’t stop singing While We’re Young. And I haven’t even finished paid off some of those credit cards yet, but I just know that once they are gone this time, they will really be gone for good. NEVER AGAIN will I have those chains!
This post is part of a series covering my journey to get out of debt! Because you can’t talk about college and NOT talk about debt. If you missed the beginning, check out how I got started with this crazy challenge!
This week’s challenge had to do with planning and organization. It was timely, considering that I now have to break out of using credit cards to deal with my failure to plan! I love organizing – it is a lot of fun. But as Rosie said in the 90 Day Budget Bootcamp book, “Organizing doesn’t make you organized. Routines make you organized.” The easy part (though it can be a bit time consuming, is putting everything in your calendar – everything that costs money. The hard part is to build it into your routine to plan ahead, which is what I need to get better at doing. Rosie recommends saving this month for next month’s expenses (birthdays, events, etc). So when I update my budget each month, I shouldn’t just be looking at the new month’s calendar, but also looking ahead to the following month. Of course, I’m on month 1, so that hasn’t really happened yet. As evidenced by the $10 I spent for a ticket to my brother’s band tournament today, which was on my calendar but not in my budget. (Fortunately, for this first month I had a small category of “things I forgot to include!”)
“Organizing doesn’t make you organized. Routines make you organized.” – @BusyBudgeter Click To Tweet
Planning ahead, and building my baby emergency fund (which is now up to $625 or 62% of the goal!), is what will allow me to handle the expected and the unexpected without going more debt. Obviously, that’s kind of important for the debt-free goal! This is why Dave Ramsey has you start out with a “baby” emergency fund; if you don’t have an emergency fund when a crisis hits, you end up going back into debt to deal with the crisis. I’m on track to meet that first $1000 goal this month, and I had enough of it in the bank that I felt ready to finally deal with the credit cards. Here’s how I dealt with them:
Many people don’t have any savings, and so a credit card is the “in case of emergency” plan. I feel like this is especially true for college students. But there are two problems with this plan. One, when you have credit cards, it becomes really easy to redefine “emergency.” Failure to plan becomes an emergency. “I ate dinner out and then a check got cashed and now my checking account is dry” is an emergency. It is really easy to use your credit cards to deal with budget bloopers rather than toughing it out for a little while and then fixing the budget – or sometimes fixing the budgeter!
Second, I’m starting to agree with Dave Ramsey that going into debt to deal with an emergency is one of the worst things you can do. Not evil, just not smart. Why? That emergency that cost you $100 (or even $1000) is going to cost you a lot more if you end up paying interest on it. Debt keeps poor people poor and broke people broke. I have experienced this myself. You end up feeling like you will never ever get out, and it is just awful. This is why it is so important to build up that baby emergency fund first, as fast as you can. If you don’t think you can have a $1000 fund, start with $500 and work your way up from there. Then, be super careful about how you define “emergency!”
A lot of us think we can have the credit cards, use them for the cash back points, and pay them off every month. It’s a great idea in theory. But in practice, a few things go wrong. One, most of us don’t actually follow through and pay them off each month. Sometimes a crisis comes up and we can’t pay the full bill as planned, or we just forget. (Yes, it happens). Two, it is much easier to spend money on credit than to spend cash, so even if we are paying that card off every month, we are spending as much as twice as we would if we paid cash. You may make a different situation for you, but I decided that for me, it’s not worth the points. There are some debit cards with points out there, or rewards programs that you can link to a debit card, and I will probably chase some of those down when I’m debt free. “No new debt!” is going to be my policy from here on out.
The truth is that debt makes people do crazy things. One of my favorite movies is Confessions of a Shopaholic (highly motivating “Get Debt Free” watching!). Like any good movie, it zooms in close up on something true. When we are drowning in debt, and dealing with the stress in unhealthy ways, we start to lose our humanity. It doesn’t happen all at once, but it creeps up on us over time. But the thing is…it’s not hopeless! There have been times this year where I felt like it was. I looked at the bills and the debt and looked at the things I want to do with my life, and it just didn’t add up. I felt trapped like there was no way out. But there is a way out. It won’t be as fast as in the movies (never is), but WE CAN DO THIS. I can do all things (not just some things) through Christ who strengthens me, and if my Jesus is a chain breaker, me and Jesus can definitely handle this debt once and for all.
If you, like me, are ready to start dealing with life’s emergencies the smart way, I really recommend The Total Money Makeover. Grab the book, and start working on that baby emergency fund. Here are some ways to save $1000 fast. As soon as your emergency fund is underway, bust out those scissors! Better yet, do it on Facebook Live like I did! Comment below with the link to your video cutting up your credit cards, and I will share the video on the blog’s Facebook and Twitter accounts!