Hello hello and welcome to a new chat series on the blog! We’re going to talk about one of my favorite things EVER – money! This post is going to be lengthy because I ramble.
I really love money and if you know me personally, you’ll find out about my Scrooge McDuck tendencies (I wish I could have a pool filled with gold coins to swim in every day). Everyone has a different relationship with money and for me, money equals freedom. I don’t believe in that whole “money doesn’t buy happiness” crap because if you’re miserable having money you’d be miserable without it too. Thats called your personality and guess what? It sucks, as my father says. But thats just me. Im 10000% happier when my money stays with me and I can do what I want with it instead of working hard only to see it fly away into someone else’s pocket.
So how much debt did I have?
I used to be in debt. I was not in debt the way a lot of my friends are in debt…like tens of thousands of dollars. My debt was more like this:
$8000 car loan
$1500 credit card debt
That was it. $9500. Well, to be honest, my car was originally $12,500 and I bought it in 2011, but by the time I came to my senses I only owed $8000, and I used to owe $3000 on my credit card. I didn’t go to college – not for lack of trying…ok DEFINITELY lack of trying. I hated college and didn’t need it to be a photographer. But after high school I had racked up $3500 in student debt loans and I paid that off in 2012 or 2013 so yay!
To understand why I have the relationship I do with money, put on your time travel caps and follow me back to the 1990’s…*insert dream sequence music*
I’ve had a job since I was 7 years old
My parents always hoped and dreamed that I would become some sort of finance extraordinaire, but of course, I had to disappoint them and become an artist. My dad did call my job a “real job” over Christmas this year so PROGRESS has been made! Yes!
Even as a kid I liked money. Every penny I found on the ground went into my pink Crayola Crayon piggy bank. My parents were not hurting for money when I was growing up, they both owned incredible successful businesses in New York, but they never gave us money for anything – no allowance, no birthday money, no “hey good job you got all A’s” cash like my friends got. But I got back at them for this. Sometimes my dad would ask to borrow $20 in cash for gas that week because why go to the bank when your kids got it in her piggy bank? I would always oblige and he’d tell me he would pay me back that Friday, which he always did. But come Friday, I would ask for my $30 back, please.
My dad would look at me and say “Kate, I only borrowed $20” and my response would be “Yes, but you owe me interest on that $20, so you owe me $30 now”. And because my dad likes smart ass kids, he’d give me $30.
Oh, so I did say that my parents never gave us money, but I guess thats not entirely true – though we didn’t get allowances for doing chores that we were expected to do anyway, we DID get paid if we WORKED. If we did paper work or assisted the realtors at my moms office, we could make $5. If we bussed tables and “took orders” at my dads diner for the morning, we would make $10 a day. Between my older sister and I, only one of us was allowed to work each weekend, but $20 a month to me was like what $1000 is to me today (-; So I thought I was pretty fly. I would also work at my aunts 3 story catering business/restaurant. I’ll never forget how shocked I was to be working in first grade at an event there and my TEACHER was there! She thought it was funny to see me bussing tables. I didn’t even know teachers did things other than teach until that day.
I was also a money magnet at my elementary school. The policy was, if you find money and turn it into the office and no one claims it for 30 days, its yours! I would turn in 10 cents sometimes…but one time, I found a stash of $150 under a bus. I turned it in…and no one claimed it…so they gave it to me!
Even at school though, I was taught to manage money. My elementary school was so cool, we had a “community” called Archerville and each class had a job. You could even earn fake money, called Archer Bucks (I went to Archer Street Elementary) and these bucks could buy you your lunch, and buy yourself something nice at the school store (real money was also accepted). In 4th grade, my class was in charge of the bigger school store and I was voted 4 times to be head cashier. Boooooo yah.
So if you were wondering how as a kid I got any money at all, there you go. Thats how I got money – I worked for it (or found it under busses haha).
Besides lending money to dad for gas every now and then, it either sat in my piggy banks or I would spend it like a crazy person. I could drop $25 on candy like it was going out of style. Today, mmm, not so much. But my spending habits haven’t changed – I hoard my money and watch it grow, but sometimes…I go on spending sprees and its so nice because instead of thinking “man, I have all these bills and all this debt, I feel guilty for buying this” I now get to think “Ooh I want this, and I can get it because no debt!”
The story that changed the way I think about money forever
One trick that I do use though, even on spending sprees, is something I learned from my mom and my “aunt” in a grocery store.
It was myself, my older sister, and our “brothers” who are our “aunts” sons. The moms had to run into the grocery store and us 4 kids had to go in too. While standing in the check out line, we abandoned our mothers and went over to the sticker machines. I clearly remember I wanted one of the Pokemon stickers, a Raichu one, and they were only 50 cents! All of us went up to our moms in the line and asked if we could each get 50 cents for a sticker. And then, I heard the short story that would change my life.
“Ok. We’ll give you each 50 cents but first you have to listen to a story”
Commence 8 eyeballs rolling so far back into 4 heads.
“You kids like going to the Bahamas every year right? (“Yessss”). Ok, good. Well, we know the gentleman who owns alllll of those sticker machines on Long Island, and every time you put money into one of those sticker machines, guess who you’re sending to the Bahamas – HIS kids. Your money is funding their vacation. So, we’ll give you each 50 cents to get a sticker, or we’ll give you 50 cents and you can go home and put it in your piggy banks to save up for the Bahamas instead”
And y’all, all 4 of us pocketed our 50 cents and put it away when we got home. And thats how I make every purchasing decision. “Hmm do I really want to give Lauren Conrad my hard earned money so SHE can go on vacation…or do I want to keep it and go on my own vacation?”
Now you’d think that mindset would cause me to live frugally, making my own clothes, clip coupons, and all that. Hah. No way. I find other ways to save money, I like my $4 lattes, I like dressing cute, I like having stylish camera bags. I dont give up the things I like and want, I give up the things I can do without – like eating out 3 times a week when its cheaper to cook at home, buying a gym membership when I can work out for free at home, buying brand new L series canon lenses when I can buy perfectly good like new used off brand ones that do the same exact job for half the price…stuff like that.
Oh, and Im not the only one who was effected by that story above. My older sister has always had her sights set on making as much as possible, and BOTH of my “brothers” live in Manhattan and work in finance. I cant wait to shoot one of their weddings in NY this summer!
How I paid off $9500 in debt
So how did I pay off $9500 in debt? It was hard work but it was also quite easy. I gave myself a goal of 1 year (so October 2014-October 2015) to pay it all off. That would be $792 a month towards debt. Do you want to know how long it actually took me?
5 months.
I paid off $9500 in 5 months. Oh, when I made that last car payment, I could have SCREAMED with joy!
How did I do it though? I had to recognize that I had a problem. Now, obviously, I knew I had debt. I was making the monthly payments every month wasn’t I? But I didn’t really recognize it. But then one day…I made a payment on my credit car. I think my minimum monthly payment was $90, and thats all I was making on it. So I made that payment for the month (September I think), and I happened to second shoot for someone that month very last minute. When I got paid I thought to myself “Hm, I wasnt expecting this money…maybe I’ll put it on my credit card!” and so I logged in to make another payment.
What I saw almost made me puke.
In the 5 days since my minimum payment had gone through, I had only paid the total owed down by about $10. I realized that the other $75 of my $90 payment WENT TO THE INTEREST. How had I not noticed this earlier!? I knew about the evil interest, but I just didnt realize how bad it was. I’ve been trying to pay off this card for almost 2 years, no wonder it was taking forever! And, it had an interest rate of 22%. I decided enough was enough. I took all the money out of a different paid off loan (only an 8% interest rate) and paid off that credit card. The next month, I picked up 2 family shoots (something I never do) and I paid off that loan. Now I was only left with my car…
When other photographers began asking if I was free to second shoot for them, you bet I jumped on it, and I still do. I second shot a bit, photographed an event, picked up a very last minute wedding…it ALL went onto my car loan after taxes. I was also putting the $90 I had been paying towards the credit card I had just paid off, plus my minimum car payment of $227. I realized that I also had wiggle room every month of about $233…so every month THAT also went onto my car payment. So every month I was putting a minimum of $550 on my car, on top of any second shooting jobs, any last minute engagement sessions, any prints that sold…all of it went to the car. Do you know how awful of a feeling that was? $8000 that I had worked so so hard for…gone. I had to give all of that money to a bank!
But watching that number go down was addicting. I wanted to top myself every month, put more on it, pay it down more, shrink that number!
And I did! A 12 month goal was met in 5. And from there, I applied the very same tactics to saving up a $5500 emergency fund within 4 months…and in ONE MONTH I saved $5000 for our Ireland trip. All in all, I paid off $9500 in debt and saved up $10,500 in TEN MONTHS. Is that not crazy?
You might be wondering what Im doing with that extra $550+ a month now.
Well…now, Im helping Jay pay off HIS debt (lucky guy, huh?). I know that when we do get married, his debt will become mine, and I refuse be in debt again, so the solution is to just get rid of it before that happens. Plus, once his debt is gone, that leaves us a lot of money to save up to get married, put a large down payment on a house, start saving up for retirement…and go on lots of vacations (-;
One of my goals for this year is to read books on investing so I can grow my money slowly for retirement. I want to know which one is the best when I start investing, so I also read the facts about the amortization debt vs. simple interest. I really don’t understand a lot of it, but I know that if I want to retire comfortably, its something I have to do, and do it soon!
One of my favorite finance books is I Will Teach You To Be Rich by Remit Sethi. I really love Remit’s approach to finances, he has a no BS attitude about it and tells me Im allowed to spend $4 on lattes unlike a lot of other books. He talks about getting out of debt as well as savings accounts and investing! Its a great and easy read and I highly recommend it! (-:
Do you have any get out of debt tips? Leave them in the comments below!
