Wednesday, December 7, 2016

Digging My Way Out of Debt....AGAIN

In 2011 I was 3 years into my financial planning career and going to graduate school for my MBA.   A career in financial planning takes awhile to build so I was still waiting tables at night and on the weekend to make extra money to pay for grad school and to cover my living expenses. But then I tore my meniscus.  I had to take about 6 weeks off from the waitressing job and have knee surgery.  I had a crappy insurance policy with a $10,000 deductible so  within 6 months I found myself about $12,000 in credit card debt for medical bills.  It sucked! But I really slashed my lifestyle and slowly dug my way out.
I started 2015 completely debt free.  And my income really increased in 2015.  I thought I had finally made it.  In April of 2015 I had $10,000 in my savings account, was regularly contributing to my IRA and my business was really growing.  It was then that I decided to finally quit my weekend job of waiting tables.  It was the best feeling ever.  It made me think that going to school and working hard had finally paid off.  

Fast forward to February 2016 when I did my income taxes and realized I owed the government $10,000.  In hindsight I should have known better but I thought I had enough business expenses and write offs and that the tax bill would be closer to $2500.  It was a very scary feeling!  I remember calling my boyfriend in a panic and having a major meltdown!  A few days later I went to my bank and applied for a loan.  They gave me a $15,000 loan at 9% for 60 months.  I should have only taken out the $10,000 I needed for the tax bill but the banker said I was approved for $15,000 so I took it all.  WOW what a mistake!  Looking back I should have called my prior employer at the waitressing job and asked for my job back and started stock piling cash til April 15th when my taxes were due.

So this past year I have been treading water to get the loan paid off and I haven't really made any progress.  Actually I have made ZERO progress.  I took the $15,000 loan out in April and I currently owe $16,866.  How is that possible?  I started moving some of the bank loan onto credit cards that had 0% introductory rates.  Then I told my boyfriend I only had $7,000 left on the original loan that was charging 9% interest.  Being the sweet, generous guy he is he loaned my the $7,000 on the spot so I wouldn't be paying any interest anymore.  But instead of using all of it toward the bank loan I used some for living expenses.  Again bad decision.  So I finally got really fed up with this and decided its time to do something about it!  So this is what I am doing:

  • I am using a budget and the Dave Ramsey envelope system - this is working pretty well!
  • I have stopped contributing to my retirement accounts until the debt is paid back
  • I have cut a lot of things that aren't necessary out of my budget like massages, new clothes, my Audible account and have cut back on dining out
  • This week I asked for my old waitressing job back - I honestly can't believe I did this but it will really help me knock this debt out
My goal is to have it all paid off by August 2017!!  And then I can quit the waitressing job again and start getting massages again!  Its embarrassing to have a financial planning business and be in this situation.  That is why I feel the urge to clean it up immediately! 

Have you ever made a dumb financial decision?  Did you know it was stupidly immediately?  How did you fix it?

No comments:

Post a Comment