This week I plan on writing a few posts about financial wellness and simplification, so I thought I’d start things off by sharing my financial story. Obviously this blog is about simplicity and, to an extent, personal development. But maybe you’re wondering what sparked my interest in simple living? The answer is easy: debt. For some, debt can be debilitating. For me it was and is a catalyst for evaluation, change and simplification.

This is a fairly long post, so grab a snack! Or just jump to the simple money lessons section.

Backstory

In 2004, having just graduated from college, I rented my first apartment and began adjusting to the new life of a recent grad. At the time, I worked two jobs and had a surplus of money at the end of the month–and zero credit card debt. Throughout college I had two or three credit cards with low balances and had closed or paid them all off by the time I graduated. I didn’t even use those cards, so I don’t know how I managed to get into my next situation. Ah, I know, image. See, not long after I graduated I started to receive pre-approval notices for a certain prestigious credit card company that shall not be named—and I bit. Looking back, I see now that it was the allure of carrying that card that hooked me. I paid for everything with it. Then, I soon realized that I had to pay the balance off in full. Every month. In less than a year, I’d built up a total credit card debt of $7000.

And then there was none

Around the same time, my hours were cut at my job. Which meant I was bringing home a total of $1100 per month, 90% of which went to rent, food, gas and student loan payments. I had no room for any unexpected expenses. Which, of course, is when unexpected things happen! So how did I pay? You got it: credit. Needless to say, I had to make some major changes if I was going to survive. So in late 2005 I restructured my life: I got a roommate, closed and consolidated my credit cards and got a second job so that I could pay my balances off. I wasn’t making much money at the time, so it took me two and a half years to pay off the debt. While this experience basically sucked, it also taught me a lot. I learned to value simplicity, to use only what I needed and how to manage credit.

But wait, it doesn’t end there!

After working a dead-end job for two and a half years, I decided to go to grad school and accrue more student loans. Yay! By the time I graduated in early 2009, I had 51K in student loan debt and little savings. Do I regret grad school? No, because it enabled me to generate a high income, save a year’s salary and help my family financially. Do I regret taking out loans for grad school. Yes. But then again it prompted me to simplify my lifestyle even more and focus on liberating my financial self.

Simple money lessons

My parents didn’t provide much guidance on finances. So, I learned most of my lessons the hard way. What I’ve concluded is that debt equals slavery. When you’re in debt you deal with certain conditions that you’d normally just walk away from. In 2009, I began to make some serious changes so that I could stop being enslaved and start living freely. The simple money lessons I’ve learned have enabled me to make several positive changes to my financial story. These lessons include:

• Reduce my use of credit – My motto for credit cards is less is better. I pay my card off in full every month and I seldom buy what I don’t need. Recently I decided to move all except one of my recurring expenses to my debit card and only charge emergency expenses.
• Save, save save! – For someone who always had “just enough” savings for most of their adult life, I’m happy to say that I now have 12 months of emergency expenses saved. It feels better than good.
• Regularly review my credit report – When I got into financial trouble in 2005, I realized that I hadn’t done a very good job of checking my credit report and score. Now, I pull my credit report several times a year to make sure everything is accurate.
• Pay off student loans – This is where I am currently. So far I’ve paid off 7K in student loans. My goal is to pay off the remaining balance in three years.
• Rent until the debt is paid – The temptation to buy a home is strong. With money in the bank, a sizable income and the housing market down, why not? Because it would mean going further into debt, that’s why. With what I’ve learned, I’m just not comfortable signing on for 100K or more in debt.

Over the years, these simple financial actions have become habit. Wellness (in all aspects) is the goal and simple living is the path.

There’s always room for improvement

Even though I feel that I’ve accomplished a lot, I still have a long way to go. There are 45K dollars between me and financial freedom. While I’m intent on attacking this debt, I also remain deeply committed to maintaining a simple lifestyle. My attraction to simple living has now grown beyond financial motivations, it’s allowed me to truly focus on what matters to me.

Coming Up…

In the next few posts I’ll share some of what I’ve learned about simple financial tips, as well as my goals for the upcoming year. Thanks for reading!