I can’t remember a time before I had a credit card, and I don’t know how or why I even got one in the beginning.
I started using my credit card for things like group dinners when you couldn’t pay separately, or for clothes or cabs.
At this point I genuinely thought using my credit card was better than paying with cash because it gave me flight miles. The problem was that when people would pay me back for dinners or shared cabs the money would go into my savings account – not onto my credit card. My accounts aren’t linked. As in, my spending account and credit are strangely with different banks. It meant that I’d never see the money owed when I’d look at the money I had.
Then all of my friends booked a trip to America. I really wanted to go, but knew I couldn’t afford it. Instead, I booked the tickets on my credit card and thought – I’ll work the rest out later.
Of course, I didn’t.
After the trip I had $7,500 racked up on my credit card and about $350 in the bank. My phone bill was due, but it was also my friends birthday that weekend. So I went out and used my credit card.
How could I be so dumb? It’s a great question.
I knew that a poor credit history, paying credit interest – living beyond my means in general was bad. But, being an optimist, and believed that my credit history would be miraculously wiped out by a cyber terrorist before it caused me any issues. Sadly, that’s not the case.
I pretended that I didn’t care about my debt, but then when I’d lie in bed at night I’d panic thinking about how much I owed.
I sat down one day and thought, “I need to sort this”.
On Credit Fixing Day I spent eight hours looking at my income and expenses and on painfully absurd phone calls to my bank and phone supplier working out how to get out of this mess.
If I paid the minimum ($153 a month) my total debt would be worth $26,757 and I’d pay it back in 40 years. If I paid just under $500 a month, I’d pay it off in two.
I started paying $400 a month – an amount I still could really afford considering the insane cost of living in Sydney – where you basically have to pay for every breath you take.
The weird thing about debt is…if you ignore it, it can almost feel like it doesn’t affect your life that much. It’s the same feeling as, “oh I didn’t exercise this week, I will next.” But then one day you’ll feel so anxious that you can’t concentrate. It’s a roller coaster.