Money Musings 💭 My first credit card 💳
My first job in NYC was near the flagship Bloomingdale’s. It was probably the biggest department store I’d ever stepped foot in – it’s 9 stories high!
The first time I went in and bought some clothes I was offered a store credit card at checkout that would save me 20% on my purchase. 🛍️
20% off probably meant $50 in savings, and I felt like such an adult getting my very own credit card. Little did I know what I was getting myself into.
I went back to work and forgot all about it. Although I made a login to see my credit card statements, I rarely checked it. I thought I signed up for alerts and linked my credit card to my account, but I must have done it wrong.
I remember having the feeling I should check in and see what was happening with my credit card and when I finally logged in, I saw WAY too much red.
I had missed multiple payments and one was over 30 days late. I had also incurred a bunch of late fees and interest.
I thought... this must be a mistake.
I called the credit card company and remember my conversation with the customer service representative very vividly. She walked me through how to set everything up and I asked her to show me what I had done wrong.
I felt extremely embarrassed and was also mad that I had wasted so much money. At the time, I didn’t even know this would be a blemish on my credit for the next seven years.
I had no idea how credit cards worked, yet it was so easy for me to open one up.
When it comes to our debt, we’re not set up for success and we have so much working against us.
I’m here to help change that.
For the next four weeks, I’m going to share a money move you can make each week to put together a manageable plan to pay off your debt.
Head to the money move for step #1 and keep me posted on how it goes!
MONEY MOVE OF THE WEEK
PAY DOWN DEBT SERIES: STEP #1 - LET GO OF THE SHAME.
Before we make a plan to pay down our debt, we need to address the shame many of us feel about it. Sometimes we feel so much shame, we can’t even look at our debt or it can even make us feel physically ill.
But what is debt, really? 💳 Debt is just money you owe for something you bought.
That’s all it is. It doesn’t mean anything is wrong with you. It’s not
bad. You’re not bad.
Take a minute to reflect. What is your debt? Maybe it started with your expenses while you were going through school, or because your income didn’t cover your expenses during a certain period of your life. Maybe it’s mostly from one specific purchase.
Also, don’t forget how much we have working against us when it comes to personal finance. That can help us muster up some compassion for ourselves. 🫶🫶
YOU GOTTA SEE THIS
DEFINE KEY DEBT TERMS.
In honor of our money move debt series kicking off today, I wanted to demystify some of the most common debt jargon. If there’s a term I don’t cover that you’re curious about, hit reply and let me know so we can do a part 2!
CREDIT CARD. A revolving loan from a bank or other institution. You can use the card to pay for things, pay the balance down, and build up the balance again.
CREDIT LIMIT. The maximum you are able to borrow (or put on the card) at any given point in time.
BALANCE. The total amount you owe on a credit card or loan at any given time.
MINIMUM PAYMENT. A.k.a the required payment on a credit card. This is different from your balance. Your minimum payment is not the total amount you owe. It’s much less.
INTEREST RATE. A.k.a. APR or annual percentage rate. The amount we pay to compensate (or overcompensate 😭) the credit card company for lending us the money. The APR is applied to the balance that is not paid off at the end of the month (or cycle). For example, if your balance is $1,000 and you make a $30 minimum payment, you’ll pay interest on the remaining $970.
Let's say you have an APR of 20%. That’s a 20% interest rate per year but you are charged interest monthly (20% divided by 12) as part of your monthly bill, which comes to about $16 in interest.
REFINANCE. Taking out a new loan (usually at a lower interest rate ⬇️) to replace some or all of your current debt. The lower interest rate means you’ll pay less interest over the course of the loan and it can also lower your monthly payment.
STUDENT LOAN CONSOLIDATION. Consolidation is combining all of your federal loans into one payment. Consolidation doesn’t change the interest rate. You can lower your monthly payment through consolidation but you will end up paying more over the course of your loans.
your weekly money wins
Here are all the amazing money moves you made this week 👏👏👏
Tamra: I'm 4 months in to paying an additional $375 on the principle of my house! Still going strong!
Jay: Took a much needed unpaid hiatus from work and enrolled in an intensive yoga training program because of my FU fund I have the freedom to do so
Kristi K: Spent a lot of time finding a new accountant and he's been patient, helpful, and more dedicated than anyone we've worked with in the past. It feels like we've found someone we can work with long-term
Hil: I said no to extras for our wedding that would put us over budget
Rachel G: I think we are buying a house! 🤯 🙈
Ashley K: Got preapproved for a mortgage!
Aseefa: Called my internet provider to get my monthly payment lowered! 💸
Gabs: We did our 2022 taxes!
Casey D: Open a new HYSA at 4.8%!
Madeline L: Opened a high yield savings acct!
Stephanie B: Spring break staycation - library, zoo, play date. Family time and mostly cheap