on credit cards, learning lessons, being an adult and taking responsibility for your actions

Confession:  I'm not good with money.

I have two checking accounts, a 401K, a Money Market account, stocks, and mutual funds.  I don't know what I own stock in, nor do I know what my mutual funds are.  I don't own a savings account because five years ago I spent all of my savings during my last two and a half years in college so I could pay rent, eat every day, put clothes on my back and heat in my apartment, and buy my text books and school supplies.  Looking back, I don't regret spending all of my savings in order to survive college because I came out of it without having any loans tied to my name.  I was essentially debt free.

Right after college, I had the opportunity to move to the big city.  Not the big city, but a big city.  I struggled financially during the first few years because I spent way more than I was bringing in. 

Enter credit cards.

My parents never taught me how to budget money and be financially responsible, so I never really learned how evil credit cards were until I accrued a good amount of debt - debt that I'm still trying to pay off. 

One huge goal of mine is to pay off all of my credit card debt and increase my credit score from average to great before I'm 30.  I have about $6,000 in credit card debt.  For the average credit card user, that may not be much to pay off, but for me it is.  I like to know that my money is being spent wisely.  But four years ago I made the mistake of spending it unwisely by going out almost every night, eating out way too much and just buying random crap that I didn't really need.  And I always had that mindset of: "Oh, I'll just pay it all off later." 

It's been about five years now and I'm still waiting for later to happen.

Over the last year or so, I have been working hard on becoming financially smart and financially responsible.  I haven't used any of my four credit cards in about three months and I've been making as many payments each month as I can.  Surprisingly, I'm doing well with this whole budget your money thing.  I haven't been going out as much and I've been cutting back on my random spending.  I have only $300 to pay off on one of my cards, $400 on another, and $800 on another. 

So why did you say you have $6,000 in credit card debt?

Because I have this one credit card that I just never paid.  I know, it's so stupid, but I just kept putting off the payments (and the interest kept accruing) because I had other things I needed to pay for.  Like rent and my car insurance and buying my best friend a Nintendo Wii for Christmas.  (yes, that was probably a poor gift idea, but I did get one for Christmas too)

As the late Gilda Radner would say:
 
"It's always something."

So yesterday I received a phone call from a debt collector.  Typically they ask me where their money is and how soon I can pay them.  But this phone call was different.  And it was probably the slap in the face I needed for me to learn that one should always pay their credit card every month.

In case you were wondering, if you don't pay your credit card company for six months, they file a lawsuit against you.  Trust me, you don't ever want a lawsuit against you. 

Cue panic attack.  

The woman I talked to said that her job was to be a mediator and try to come up with an alternative solution before the credit card company slaps me on the ass with a lawsuit.  The resolution?  To pay my $4,000 credit card debt in full.  Right now.

Cue second panic attack.

I told the woman I don't have $4,000 saved up.  Clearly since I am bad at budgeting my money.  She suggested I get a loan from someone.  I asked her if she would loan me the money.  She said no.  She then suggested I make a small payment now and then find alternative sources to pull my funds from.  Again, I don't have a savings account and I don't know what I own stock or mutual funds in.

I wanted to cry. 

But then I realized, this is what happens when I blatantly ignore making paying off my credit cards. 

Now it was time to take responsibility for my actions.

So I called my Financial Adviser - actually, I sent her an email, trying not to sound like I was freaking out, but kindly asking where I could pull my money from to pay off this annoying debt.  She called me telling me I could liquidate two of my mutual funds just enough to cover the $4,000 debt.  And I would only take about a $600 loss on those accounts.  I don't know what that means, but if it helps me pay my credit card off, I like it.

I called the debt collector back, told her I'd have the money in my account by next week and she said that my account will be put on hold and they won't slap me with the lawsuit.

Thank god.  I'm still stressed about having to use my mutual funds to pay off my credit card debt, but I'm relieved to know that once this is all said and done, I won't be getting a lawsuit and I'll only have about $1,500 in credit card debt to pay off.  My new goal is to pay that off by the end of this year.  My other new goal is to never use a credit card ever again.

Lesson learned - always pay your credit card bill.  On time and in full, if possible. 

Another lesson learned - always take responsibility for your actions.  While it may look like a reward at first, if you're careless and irresponsible, it could come haunt you in the end. 

"When did we become adults?  And how do we make it stop?"

- Grey's Anatomy -