One big reason I got into personal finance blogging is that I needed a way for me to improve my finances. As a college student I was making some poor choices with my money. It took away to open my eyes, but I eventually realized that unless I changed, I was going to be living paycheck to paycheck for the rest of my life.
As I’m working on financial goals for next year, I thought looking at my biggest financial mistakes and how they were fixed could be a bit motivating.
Paying Only the Minimum on My Credit Cards
While in college I used credit cards for many things, including bill payments and shopping. I justified my spending by only looking at the minimum payments required for the credit cards. If I could afford them, then I was ok. I figured once I’m out of college I’ll go ahead and pay them off. That was foolish on my part because not only was spending money on a lot of things I didn’t need, I was paying the student interest rate of about 15-20% for them.
Once I realized I needed to get rid of the debt, I made some adjustments to keep me on course.
- Kept credit cards at home. I knew that the best way for me not to dig a deeper hole was to take away that option. Impulse spending was my weakness and leaving the credit cards at my place was a big help.
- Negotiated a better interest rate. It doesn’t hurt to ask and while I wasn’t able to lower as much as I wanted, I was able to get some fees removed.
- Use credit union’s bill pay system. This move eliminated late fees and the convenience fees some of the credit card companies were charging to use their system.
I was happy to be rid of credit card debt. It was a wedding goal I had and it felt good to get married without that around my neck.
Taking Out a Car Loan
Looking at my monthly budget, there was no real reason for me to take out that car loan. The interest rate was ridiculous and could have used a paid in cash car to get around just fine. There were definitely times during lean months that I was resentful of the car instead of appreciating it. My husband never had a car loan and he was willing to help out when I finally decided we need to get rid of it.
How did we pay off our car loan? I wrote about it before, but here are the highlights:
- Created a realistic family budget. I knew we were going to keep eating out, so I adjust the budget include some money for that each month. It made it easier to stick with the plan.
- Cut down or eliminated unnecessary bills. We found ways to bundle our cable, internet, and phone plus we cut our car insurance bill in half. That gave us more money to dump on paying the car loan down.
- Snowflaked extra payments. Even if it was an extra $25 or $50, I sent in extra payments to reduce the principal of on the loan. Little by little it helped speed the process up.
It is possible to not have a car loan and still have a reliable vehicle. I learned the hard way, but I’m glad I picked up the lesson.
Thoughts on Improving Finances
I know I’m not the only person who has decided to fix their finances. I’d love to hear about your experiences. What has been some of your biggest financial regrets? How have you learned from them? Do you have any advice for others in the same situation?