Questions for reformed spenders

[susanb]

I am curious to know from those of you who used to spend beyond your means, but no longer do:

1. Were you aware that you were spending beyond your means when you did it?  Were you honest about it with yourselves and others?

2. If you were honest, how did you justify it?

3. Were you annoyed by financially responsible people, or did you prefer the company of other spenders?

4. What was your come to Jesus moment?

[Deleted]

1. No, I thought I was doing ok because I wasn't trying to live lavishly. I didn't have a fancy house, I had a boring car, and I didn't have a closet full of designer clothes.

2. Since I didn't really understand I was living beyond my means, I didn't try to justify it to myself or other people. Most people I know IRL, having "bills" is just a way of life anyway. You're going to have bills until you die.

3. No, I wasn't annoyed by financially responsible people. I admired them and wanted to know their secrets lol. I wanted to learn from them, but I didn't know very many well enough to talk about it. The ones I tried to learn from, I didn't know the right questions to ask, so I didn't get the answers I needed.

4. My "come to Jesus moment"....... after my kids' medical crises, I was beyond broke and couldn't pay all my monthly expenses. I was completely stressed out, to the point that it started to negatively affect my physical health. I finally found the old boards and for a while I thought you all were nuts, telling people to cut their cable, get rid of their cell phones, blah blah blah. Crazy talk! I worked every day, why couldn't I have all the cable I wanted?! Never mind that I rarely even watch tv. Meanwhile, my situation was getting worse and worse.

Then late one night, I sat down with a fifth of Hennessy and wrote down every single thing I spent money on and how much, so I could prioritize. I went through the list and considered every single item for elimination or reduction. I even put my house on the list, which meant I was desperate. That night, everything finally "clicked", it was truly a corny "A HA" moment. I saw that I was living beyond my means even though I wasn't living large. I had the consumer debt to prove it. I also understood why my "budgets" never worked. I was leaving out too many things. Suddenly, a good cable package, a bells and whistles cell phone plan and some other things, meant diddly to me. Those YMers didn't seem so nutty after all.

I was still beyond broke for the next couple years after that night, trying to use what I was learning from the boards to fix the mess. As miserable as I was while I was trying to fix it, I'm glad I did it because I wouldn't have learned what I needed to know if I hadn't. And I was miserable enough for long enough, that I wanted to make damn sure I tried to avoid being in that position again EVER.

That night at my desk with my pen, paper, computer, Hennessy and tears until 4 or 5am, was the turning point that led me to the path I'm on now. I'm still a spender in some ways. But I don't spend money I don't have, and I'm a saver too. My mortgage has been my only debt for almost 4 years now.

[Peace Of Mind]

Apr 8, 2013 21:34:28 GMT -5 susanb said:

I am curious to know from those of you who used to spend beyond your means, but no longer do:

1. Were you aware that you were spending beyond your means when you did it?  Were you honest about it with yourselves and others?

2. If you were honest, how did you justify it?

3. Were you annoyed by financially responsible people, or did you prefer the company of other spenders?

4. What was your come to Jesus moment?

1.  No, I never thought I lived beyond my means and I could always pay my bills. We didn't look at it like that.  We looked at it as a way to get where we were wanting to be.  It was normal for people who were just starting out to have a car payment and credit card debt for work clothes, dinners/drinks out now and then, etc.  I was honest about it because it was normal at our ages (late teens to early 20's).  That's why I keep telling our younger posters to be patient with themselves.  Most if not all of us had to start out broke and that it takes time.  I didn't spend like a drunk sailor but I didn't save yet.  I had the same mind set many have today.  I had credit cards to fall back on if needed.  I would pay them off and start over again.  Nobody discussed EFs back then. Ever.

2.  I never felt I had to justify it.  I didn't think people started off with a magic money tree that paid for the car, clothes, shoes to get started in life and I was always able to pay my bills without using the cc except for the extras I wanted like clothes and shoes or housewares.   Although I started saving my housewares (mostly kitchen stuff) at 13.  I was planning my get away from my parents early!

3.  The only people that were "financially responsible" (which meant rich to me back then) in my world was the lawyer I dated.  But he also had debt and was buying real estate.  He was 10/11 years older than me and had just made partner.  I also dated a Veterinarian and a sales guy and a baseball player and then married my DH1 who was in the fast food/restaurant business.  We were all starting out but some were further along than I was due to their careers, age and/or parents help.  Many of my girlfriends weren't as far along as I was because they weren't in a situation I was in with my parents and weren't desperate to get away like I was. I was pretty focused.  My mom taught me really great money skills and then I took it further by reading the pamphlets USAA sent me and the newspaper.

4.  My come to Jesus moment was getting laid off before my wedding to DH2 (found out the night before I was on the 2nd lay off list).  I've been out of consumer debt ever since with a strong EF.  I never wanted to feel that vulnerable again.  I had already started saving for retirement with a traditional IRA.  I was not comfortable with 401Ks yet.  I didn't trust the companies I worked for.  I was right many times as they folded.  But the banks I worked for I was stupid for not doing it.  I started working in banking at 17.   I even owned Sun Bank stock and didn't think to buy more.  They took over the bank I was at and merged.    Then I went to Cameron Brown and worked for the commercial real estate side and they got eaten by First Union. I'm really bad luck for companies.

But I knew then like I know now that there will always be people with more and people with less.   

ETA:  Thanks for the trip down memory lane.  I keep adding as I think of more things and damn I had fun and a good life!  Even when broke and stupid I was very happy!!

[susanb]

Thanks for the thoughtful and honest responses!  Interesting and helpful for me (and likely others). 

[Deleted]

Apr 8, 2013 21:34:28 GMT -5 susanb said:

I am curious to know from those of you who used to spend beyond your means, but no longer do:

1. Were you aware that you were spending beyond your means when you did it?  Were you honest about it with yourselves and others?

2. If you were honest, how did you justify it?

3. Were you annoyed by financially responsible people, or did you prefer the company of other spenders?

4. What was your come to Jesus moment?

1.  I have to say, we really didn't realize it.  We had debt but everyone had debt.  Our bills were paid each month.  And every so often money would come in that would pay off the CC debt (Bonus, tax refund, birthday money).  It was never painful to pay it off, money just came in eventually.  We didn' know anyone who saved outside of their retirement accounts, so we thought we were doing fine.

3.  Everyone seemed to be doing the same thing we were.  IRL, I hadn't met anyone like the people on this board. 

4. When the money came in and it wasn't enough to even put dent in the CC debt.  We were also sending the CC's $800 a month, but were generally charging about $850 (some of which was groceries).  We owed about 20K and it was really just living expenses, because we couldn't afford our house and any type of other spending.  We cut back, stopped charging, sold some stuff, and put everything extra for a year into paying off our CC debt.  Then we moved to car debt and finally building savings.   

[Pants]

Apr 8, 2013 21:34:28 GMT -5 susanb said:

I am curious to know from those of you who used to spend beyond your means, but no longer do:

1. Were you aware that you were spending beyond your means when you did it?  Were you honest about it with yourselves and others?

2. If you were honest, how did you justify it?

3. Were you annoyed by financially responsible people, or did you prefer the company of other spenders?

4. What was your come to Jesus moment?

1. Sort of, vaguely. I knew things were tight right before I would get paid, and that my credit card balance seemed to go up rather than down, but didn't really have a hold on what any of that meant. I didn't have a budget or even know how to budget, so I didn't really understand what I was doing. I did know I wasn't saving anything, but saving always seemed like something I could start doing when I got the next raise or whatever.

3. I didn't really know whether or not others were financially responsible. I mean, I knew my parents were, but they were like, old and stuff.  I didn't really talk about money with my friends, and it never seemed like anyone said "I can't afford to do that" when we were talking about going out to eat or stuff like that, but at the same time none of us were doing absolutely batshit stuff like driving luxury cars or taking luxury vacations or anything. So we were spending on the "little stuff" - meals, drinks, shoes, etc. I assume some of them could afford it better than me, some of them less.

4. One month I couldn't afford to pay my credit card minimum. I didn't have any money for rent either. There was no food in the house. I was pretty much fucked. I found WIR and here I am.

[thyme4change]

1.  I knew.  I was honest with myself and some others.
2.  I justified it by saying that I was going to get a job/better job soon.
3.  I just assumed that everyone else had more money than I did, so I thought I was with fiscally responsible people - when in fact, half of them were in just as deep as I was.
4.  I had several come to Jesus moments.  One was when I thought I was going to have to move home.  Another was when I was relieved that we were robbed because we didn't replace a lot of our stuff and used the check from the insurance company to pay the mortgage.  My mother lent me an old quilt we had so we didn't have to buy one.  I later got one for $15 on the clearance rack.  Less than a year later, my husband graduated from school and got a full time job and we kept the vice on spending.  Our income had doubled, and we still lived hand to mouth.  Our friends made fun of us a bit, but I found out later that we were out of credit card debt before they were.  

[Rocky Mtn Saver]

I find it interesting how many of the tales of spending include the notions that (a) debt is just part of life, and (b) we aren't spending on extravagances, so we aren't 'living beyond our means'.  I have to say that I had the same point of view in my earlier years. 

[haapai]

I'm not sure if I'm the kind of spender that you are looking for.  However, if you define a spender as someone who is living beyond their means, I've been there. 

1. Were you aware that you were spending beyond your means when you did it?  Were you honest about it with yourselves and others? 

Absolutely not.  I left school with far less debt than most of my friends and if you go back and read the stats, peers too.  I accumulated about $15K of student loan debt and $5K of automotive debt.  The entry-level job that I got after graduation paid $30K.  I was an accountant.  Everyone told me that I'd do just fine.  I think that the school tried to talk me out of the exit counseling for my student loans for just that reason. 

I never would have considered doing something as rote as writing a budget or calculating my committed expenses.  That kind of stuff was for rubes and folks who had trouble with math and self-control.  I kept my records in Quickbooks and broke down each debt payment into principal and interest, like I was trained. 

The thought of keeping an emergency fund appalled me.  It was such a poor use of money and I'd done a ton of time-value calculations.  The only reason that I had any savings at all when I lost my job was because my grandmother had gifted me some tech stock mutual funds. 

2. If you were honest, how did you justify it? 
I was clueless.  I was paying everything on time and my income statement showed a nice little profit.  Equity statements said the same thing. 

3. Were you annoyed by financially responsible people, or did you prefer the company of other spenders? 
I'm a bit of a loner.  What I can definitely tell you was that I thought that people who wrote about personal finance were hopelessly vague and innumerate. 

4. What was your come to Jesus moment? 
Did I mention the part about being fired, burning through my savings, building some credit card debt and then finally getting a job making less than half of what I'd made before? 

I'm tempted to make up something big and dramatic but there were quite a few red flags flapping in the wind and disturbing my sleep.  I was no longer able to pay my obligations the moment that a bill showed up in the mail.  I was noticing that even though I was paying double my minimum credit card payment, I was also charging on it later in the month when cash got low. 

I finally broke down and wrote a budget that I thought reflected my spending and then used that information to build a bunch of nested debt amortization schedules.  They showed me that if everything went right, I was going to be just scraping by for a year and it was going to take about three years to retire the credit card and automobile debt even if I snowballed.  Once I'd done the math (and failed to find a calculation error), I could no longer deny that I was in serious trouble. 

I thought that three years of excellent luck was a bit much to expect.  So I started changing what I could.  Some of the choices were grim, ugly, skanky calculations that I don't want to share with you and hope you never have to encounter.  I borrowed a lot of tricks from my Depression-era grandparents and Third World childhood. 

[susanb]

It is so interesting to me that most people replying were not aware that they were spending beyond their means.  I think that is part of the reason so many YMers get frustrated with people in RL.  The fact that our mother/friend/spouse is overspending seems so obvious to us that we think they are doing it intentionally.  In reality, I wonder how many of them actually have any idea that they are spending beyond their means.

I guess even the term has different meanings.  For some, it means I can pay my bills each month (if nothing bad happens) while for others it means can I save X for retirement, X for other goals and have a cushy EF. 

[sbcalimom]

1.  I racked up thousands of dollars in CC debt in college on top of student loans because I had no real clue how CCs worked.  It seemed like this abstract concept of someday.  Plus, I was supporting my mother's bad habits when her credit was cut off.  I honestly never even thought about having to pay it back because it was just normal to me to have CC debt you couldn't afford to pay.

3.  I wasn't jealous so much as clueless.  I liked to shop with my other spender friends because they always spent way more than me so it made me feel better.  At least I was more responsible then them  .

4.  I think my aha moment was when I sat down and added it all up and realized I owed more in CC debt than I made in a year.  I knew my income would only go up since I was right out of college but that still was a horrible feeling.  I knew I had to change so I started taking baby steps.  I still spend way too much money on crap we don't need but at least I've gotten better and we're not spending more than we make.  We don't carry CC debt and we have savings.  I think things could be better but I'm happy I finally got it about the CC debt at least.

[Peace Of Mind]

People just starting out have to start somewhere.  It's not that we weren't aware - we just didn't look at like that yet because we just started growing into our lives.   I personally was looking forward and if I saw my life then as I would see it today I'd probably just give up!   I was not born with an EF and flush retirement account (some are but not most of us).  You have to live somewhere.  You have to eat.  You have to wear clothes and you have to have a car to get to work unless you have trains, buses, or are close enough to walk to work.  That costs money and most people (back in our day) didn't start out making $50K or more.  Even the lawyers didn't.  And we didn't have cell phones and computers, etc. that is needed today to function and work and job hunt.  That still makes sense to me today with the younger people in this economy.   Adults at it for years (unless something really bad happened to throw them off) should have learned by the time they are able to have grown children themselves, IMO. 

Just trying to stimulate conversation.  I love your thread. 

[chiver78]

Apr 8, 2013 21:34:28 GMT -5 susanb said:

I am curious to know from those of you who used to spend beyond your means, but no longer do:

1. Were you aware that you were spending beyond your means when you did it?  Were you honest about it with yourselves and others?

2. If you were honest, how did you justify it?

3. Were you annoyed by financially responsible people, or did you prefer the company of other spenders?

4. What was your come to Jesus moment?

1. no, not at all aware. I was oblivious to the fact that I had stretched way more than I should have to buy this beautiful townhouse (yes, the one I now can't wait to unload ) and honestly thought that I'd lucked out in finding this "great deal" when I did. at peak market, about a year before I bought, units in this complex were going for almost $40k more than what I paid. I didn't realize the market was on its way to a crash, I just focused on the great deal I was getting. oh, and knowing that I had stellar credit - still do, through all of it - because I had never paid anything late, even if it was just a minimum payment. I thought that made me invincible as far as finances went.

2. you can't be honest if you really don't get it.

3. annoyed? no. as far as my college friends went, I wondered more how they got so "lucky" to have found a better-paying job than I did.

4. my come to Jesus moment came about 6 months after I bought this place. I had been dating a guy who was in the process of digging out of $60k+ in debt (mostly CCs) that his peach of an XW had run up on cards she had forged in his name. while rebuilding his own credit, he also learned the YM way on his own. in the course of griping about money being tight as I changed banks and tried to realign automatic payments - yes, I was that day-to-day -  he offered to sit down and go through all my numbers with me. I was so far over-extended each month that I was running up the cards and paying them back down with my quarterly ESPP returns. I kind of knew it, but didn't really let myself acknowledge it. what the ex-BF did for me that day was GIVE me the $200 that I would use as a buffer while the accounts were all settling out from one bank to another. in return, I loaned him my stellar credit and put about $9000 onto a 0% offer for him to pay down there instead of the 24.99% rate that his now-trashed credit was carrying. I also turned over my debit card and all but one CC (that I had to justify each and every purchase to him - they were pretty much gas only) and got an allowance. he paid his balance off well before the rate reset, and I learned a little about how NOT to spend like you're a trust fund baby. a couple years later, I found my way to WIR. I lurked for a few months before finally signing up with a starting balance that turns my stomach now. my race has stalled a bit with the drama surrounding the selling of this townhouse, but I'm actually okay with this. the highest interest rate of the balances that carry over right now is 2.9% - and it's for the life of the balance. (remember that stellar credit score?) this year, between my bonus and tax refund - I had an escrow snafu, explained at length in another thread. please don't flame me here - I could have paid off the remainder of the CC balance that wasn't low-interest. I opted instead to move that balance to a 0% promo rate while banking the cash in my EF. if I still haven't sold by the time the rate resets, I'll move it again. I get offers like that all the time. pre-YM, I absolutely wouldn't have done that.

ETA: re-reading this morning, I want to add that I know I still have a ways to go. I have my moments like oped said in her post - where I just put x on a CC, what's a little more? but I've learned a lot on these boards, and I'm not going anywhere any time soon.

[susanb]

Apr 9, 2013 20:18:37 GMT -5 Peace Of Mind said:

People just starting out have to start somewhere.  It's not that we weren't aware - we just didn't look at like that yet because we just started growing into our lives.   I personally was looking forward and if I saw my life then as I would see it today I'd probably just give up!   I was not born with an EF and flush retirement account (some are but not most of us).

This is a great point.  Age related goals aren't something I have seen regularly addressed and it is easy to get discouraged when you compare your income/financial position to someone who is 10+ years older, with much higher income levels and years of compounding interest in their favor. 

I subscribe to Money magazine and they addressed this in the latest issue.  According to Money the biggest cash drain for people ages 25-35 is "student loans and other debt" while the biggest opportunity is "lots of time for your money to compound."  The cash drain and the opportunity seem to be in natural conflict, and hard to balance. 

[Deleted]

I didn't grow up around great money role models. Not surprising. My parents were still growing up themselves when they had me, and they didn't have good role models either. I had never heard of an EF, didn't think at all about retirement, didn't have tons of debt, but wasn't really doing anything with my money except spend it. I didn't know exactly what was wrong, but knew I wasn't doing it right exactly. I do think education is key. You have to know what you don't know.

Having kids helped me focus, stop spending and do some things differently. However, 6/7 years ago I had knowledge that my father was likely to benefit from an influx of capital which has the potential to be generationally life changing. It terrified me. Because I knew enough to know that that kind of influx often also makes a speedy exit. I started educating myself. I found these boards. I learned some new terminology ... I think I've managed to be helpful to father and myself. At least get him to the right managers and early.

One thing about spending early on.... There are always phases I think to overspending, and interestingly enough, for me, my natural tendency was to pinch pennies when I had them, but dig a deeper hole when I didn't ? Ie. i wouldn't blow money when it was in my account, but if id already had to put a legitimate 1 k On the cc, might as well add whatever. I'm not sure why that is? But being self employed it was something we had to come to terms with early, as income doesn't come in steady, even increments.