Tuesday, November 23, 2004

Shopaholic

I have a confession to make. I am a semi-reformed shop-a-holic! Seriously!  

My first job, I worked for tips only. Having an all cash income made things pretty easy for me. When the cash was gone, I stopped spending. When my mother realized I was just blowing everything I earned, she took me to get my first bank account-it was a plain passbook savings account. The deal was, I would keep half what I earned and the other half would go into savings for college. (Keep in mind, I was being handed cash every day. Did my parents have any idea what "half" of what I earned each day was? Nope!)  

Under the influence of a new friend, I developed a new appreciation for fashion. I wanted to buy clothes, clothes and more clothes! Working in a supermarket just wasn't satisfying that need. I changed jobs and went to work at an upscale department store. Why? They gave me a 20% employee discount and my first credit card! My first credit limit? $350. Ha! I could get a TON of stuff with $350 and a 20% discount. I took my pretty light blue shiny new Filene's credit card and went to town! The interest rate was only 21% (now I say yikes!) and my minimum payment was $9 a month. I went NUTS! I had my card maxed out in no time. I looked so HOT in my new clothes too.  

That pretty blue plastic card put my name into the credit card ether, that magic place where credit is established and banks learn who you are. I started getting offers for other credit card companies. Next stop? A Sears "Discover" card. (Remember when Sears came out with that pretty black plastic card?) That increased my credit another $1000. Filene's increased my credit limit to $500. Then came the offers from Visa and MasterCard. As I would max out one charge card, that would prompt me to apply for a new one.  

It rapidly became apparent that I needed to earn more money. Suddenly my tiny Filene's paycheck wasn't covering all those little monthly payments I had. I got a second job at Friendly's (an Ice Cream parlor and restaurant chain). Oh man, I hated that job. I was also growing tired of taking a bus over to the Air Force Base to do all my banking. My passbook savings was at the credit union on the base and it was a joint account in both mine and my mother's name (the only way I could get a bank account early on). I abandoned that account and opened a new one at the Baybank in the Mall. Much easier! Plus I got my first ATM card and checkbook.  

I sat down with my Dad and he showed me how to write checks. I paid pretty close attention. (I think I am still doing it slightly wrong to this very day.) He also showed me how to "balance" my checkbook using my monthly bank statement. I didn't really listen to that part of the lesson too closely. How hard could it be? You write down all the money you take out of the ATM and all the checks you write. I did that part. You write down the amount of your deposits. I did that part. You sit down once a month and do the math to make sure you didn't take out more than you put in and that your statement is correct. I didn't do that part. Ever.  

You see, I would go to the ATM and check my balance right there on the terminal screen. If there was money in there, I would take it out. I had overdraft protection on my account and it was almost always in the negative. The bank would charge me fees when I used the funds in the overdraft portion of my account. I never accounted for those when I did my mental calculations of deposits and withdrawals. Yes! I tried to keep track of it all in my head. In my own mind, I thought I was doing a pretty good job!  

Then came my first "real" job. I joined the secretarial pool at Digital. Digital introduced me to the joys of Direct Deposit. Like magic, my pay would get put into the bank every Thursday afternoon. (Payday was actually Friday, but those of us with Direct Deposit got our money a half day early.) I would be at the ATM the instant work was over on Thursday to take out my cash for the weekend.   Was I thinking about my bills? No. I just wanted to be sure I had cash for gas, food and fun. I was making good money, and for the first time in a long time, I had extra left over! Then it happened.  

The crappy used-car my Dad handed down to me gave up the ghost. The transmission fell out on Rt. 62. It was towed away and I never saw it again. How was I going to get to work? I talked to my Dad. I really didn't want another piece of junk car. I'd been through 3 and was DONE. My friend Kathleen gave me a ride to a local Dodge dealer just to take a peek at the cheapest cars they had. I fell in love with a little Dodge Colt E hatchback. I couldn't even afford a stereo or power windows, but I scrapped together enough for the minimal down payment and struck a deal with my Dad.  

He would co-sign my loan if I agreed to commute to college and agreed to pay them $50 a week for living expenses (at first - they asked for more later). Deal! I looked so spiffy tooling down the road in my new white Dodge with the cranberry red vinyl interior.   After only a few months, I was already trying to weasel out of the $50 a week I promised my Dad. I stopped spending. I kept paying the minimum on my bills and now I had a boyfriend (John) to pay for my weekend fun. Poor guy. He had NO idea how bad off I was, financially.

Then I secretly dropped out of college so I could work full time (the subject of another post) and spend more time with John...oh, and have more money too.   Before moving to Massachusetts to be with me, John had been living at home with his parents. He had few expenses and his parents never asked him for any money. He'd been able to amass quite a savings! Moving to MA, buying a new car, getting a new apartment, furniture, house wares...blah blah blah...had eaten away a considerable amount of those funds. But here was a guy who knew how to manage his finances! The boy was GOOD!

When he finally found out the state of my own financial affairs, he was horrified. How could I live like that? Never knowing how much money I really had in the bank. Living paycheck to paycheck. Deeply in credit card debt. He paid off all his bills every month! He began to show me a better way to do things.  

He helped me with finances when I moved into my first apartment. He helped me again when I moved into his old place (he hated MA and was moving back to NJ...I was going to join him after the wedding. Also another post.) He helped again when I decided I needed to economize and move to a less expensive place so I could save for some of the wedding expenses (HA! That's a joke folks.)  

In the end, he financed our wedding. He paid off all my credit cards and got rid of many of them (it took YEARS for us to get out of debt). He spent time showing me the RIGHT way to do my checkbook. Eventually, I just handed him the checkbook, we got a joint account, and he manages all the money. It's for the best. Honestly. [Don't let me have the checkbook back, honey. Ever!]  

I still love to spend! But I have learned restraint. John will tell me when the finances are getting out of control. I am very lucky in that, with a little patience, I can usually buy what I really want. We always pay off all our bills each month. We put large down payments on new vehicles and take the least amount of years possible to pay them off. John pays close attention to the market and interest rates and he refinances our home loan appropriately (only a 15 year mortgage, folks!) How many people do you know who will have their house paid off before they are 50 years old?  

Not too shabby for a (slightly) reformed shop-a-holic. Ooo! Look at the shiny new Visa card John just handed me! Hmm. Wonder if there are any good sales at Gymboree.com...

Fool.com: Getting Out Of Debt -- Nine Ways to Pay it Back
Fool.com: 60-Second Guide to Getting Out of Debt

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