After graduating from college, I became obsessed with having money. I remember thinking now I can finally have enough to get my first apartment, buy a new car, and money to do things with friends. I went to work for a bank as an audit associate out of college, making a whooping $48K! Listen that was a lot of money to me at the time. I didn't have any student loan debt and I had never paid so much in my life. Plus the cost of living was relative 10 years ago. I don't even think today you could ever find a 900 square foot apartment for $705 a month. All was well in the world of an independent woman. I never even stopped to think about the options for actually doing responsible things with my money because the I in independence was really calling my name. I just wanted to feel like an adult. My mother, bless her heart, wanted me to stay at home longer because she wanted to make sure that I had saved enough money and didn't want me to start my new found life struggling. As you probably know I just didn't want to listen!
Out on my own
I got by my first year out of on my own. However, even with low expenses and no student loan debt, I was almost living paycheck to paycheck. I had very little savings, and when I did have something saved up, it seemed like something always came up. I was barely able to put anything towards retirement because I needed my paychecks. I think what got me was how much things cost or came up. Outside of the rent being $705, my car note was $270, and my utilities came out to be about $200 a month. For obvious reasons, I didn't have cable, and I did go out with friends occasionally. However, as an avid cook, I spent a lot of time at home buying my own food so that I can cook my own meals. I had a modest life, and I was happy with it because although I wasn't rolling in dough, there is something special about taking care of yourself and paying your own bills rather than coming back home to mom's house with your tail between your legs.
Tapping into my Brokerage
In college, I ended up getting a full ride, and as a result, all the outside scholarships would end up as refund checks. I opened up a brokerage account during this time and contributed on a quarterly basis. However, as my "living on my own" expenses crept up, I started tapping into this and depleting the money that I had put away in investments. It wasn't very good, I had started to live beyond my means.
Hitting Rock Bottom
I finally had hit rock bottom when I had a few things happen, my car needed all new breaks and tires, and I had started racking up a large amount of credit card debt. I knew it was getting really bad, so I finally decided to dump all my savings into my debt and start over. From then on, I created a budget and stuck to it. I had my little excel file on my computer and began listing out all my expenses along with the money that was coming in. I gave myself an allowance to keep me sane, and the rest went to savings or bills. I even carved out a percentage for my 401K since I was still a baby investor and didn't realize the importance of taking at least the full match. That's okay, we will take about that in another story later!
In the end, I came up with 5 lessons learned from this experience:
1. Always stay consistent with contributing to saving and investing.
I never was consistent. Sometimes I would save when I had money, and sometimes I would invest but never for long periods of time without digressing in my journey. It was frustrating to see all the progress that could have been made if I had just stuck to it.
2. Never spend more than you have
Part of the reason I had credit card debt, which was dumb, is because I would make the mistake of saying, "oh, when I get paid on Friday, I'll pay it off"! Um no sis, you won't because Fridays are for going out and you overspend on food and drinks every time. Having self-control when it comes to you finances is so important because you need to make sure that you know how to tell yourself no when it comes to spending.
3. Track your expenses at all times, even the little ones
Once I started doing this, I realized where my money was going, and it changed the game. I was able to allocate to categories properly without overspending it one and not having enough in another. For example I love Starbucks and I knew based on that love I needed to create budget for it to not over-spend on it.
4.Always have an Emergency Fund or a Sinking Fund; they always come in handy!
Even now, I can't tell you how many times things come up. This month was my sister's birthday; she wanted an air fryer. It was my birthday this money, we went out to eat. I also needed to