Something Has to Change
Posted by Ken | Filed under Ken
First, a joke to brighten your Thursday.
Question: How many social workers does it take to change a lightbulb?
…
Answer: Just one.
But the lightbulb has to WANT to change.
Change is scary for a lot of people. Often it means confronting a part of yourself that you wish wasn’t there. Maybe you shop to feel good. Maybe you’re a credit card junkie. Maybe you don’t think you’re smart enough or strong enough or disciplined enough to change. I personally didn’t want to change my money habits because I didn’t feel like I possessed the right knowledge, skills, or discipline. I’m also not very patient with things that I don’t understand right away – “If I’m not going to be able to do it correctly right from the get-go, I’m not going to do it at all.”
In my mind, the concept of ‘personal finance,’ was an adult preoccupation that I had neither the maturity nor the mountains of cash to have anything to show for all the work it was going to take in order to maintain. Basically, I’d had myself completely defeated before I’d even started and besides, it was easier to ignore the reality of my situation and just live my life unchecked.
Let’s face it: ignorance is bliss.
But ignorance has a way of gnawing at you in a way that makes the bliss FAR less blissful.
I remember when I made the conscious decision to change how I dealt with my money. I had just returned home after celebrating Christmas ‘10 with my family. I was lazing about on a particularly snowy day in Toronto and took to the internet to distract my brain. I got a craving for some reality TV and one episode of Gail’s ‘Til Debt Do Us Part’ turned into about a few dozen over the course of a day (Gail is rolling her eyes at me right now). “Guilty pleasures, right Gail?”
I remember watching the unfortunate couples on TDDUP and thinking, “how could these people let things get SO bad!” At the time, part of the reason I watched Gail’s show and others like it were primarily schadenfreude-istic (a term for the satisfaction we get at the misfortune of others). On paper this is an awful concept but in reality, we all do it. We watch people who have made a mess of their lives because, in a way, it makes us feel better about our own lives. After watching an untold number of episodes, it slowly dawned on me that these couples represented the good, bad, and the downright awful of ALL of our financial lives – including mine. I felt myself shifting from just being a voyeur of their lives to being an active participant in their dialogue. If these normal people could start from scratch and turn their lives around, then why couldn’t I?
Lesson learned.
I certainly had good reason to want to change. Three years out of university, I was gainfully employed but it seemed that all my money was going to my two biggest expenses: my downtown apartment and my $25K student loan. I had no assets other than my shiny MacBook, modest credit card debt and a slowly-shrinking savings account (yes I know these aren’t assets).
My earnings had increased a couple times since getting my first post-graduate job but without a strategy in place for that extra money, I wasn’t getting any farther ahead. I could feel my biological clock ticking (call it a quarter-life crisis) and at 27 years old with this this debt looming over me. I had less than nothing. The anxiety this spurned was enough to get me motivated.
I had crossed the threshold and no longer felt blissfully comfortable with the ignorance that had dominated my financial life. I decided then, on that wintry December day that I was ready to change and and embrace a new money savvy lifestyle.
Skipping ahead…
Tomorrow is my birthday and at the ripe-old age of 29, I can say without a doubt that my picture looks a lot brighter. My debts are paid off, my net worth went from -$30k at age 24 to +$30k today. I’m more content with what I have, I’m a LOT wiser, more patient and – all things considered, I’m living my life free of financial stress. The idea of investing, home ownership, seeing the world and enjoying a happy retirement are now tangible concepts in my life and, most importantly – I’m in control.
Obviously I’m going to get more into the specifics of how I got here in my future entries, but my point is this:
If you want your financial situation to change for the better, you not only have to WANT to change, but you have to be ready to ACCEPT change.
For you readers who are well on your way to financial independence, I’d love to hear what motivated you to commit to the positive change in your life!
Until next week. Stay savvy.
Ken
@KennethPaul615
P.S. Don’t forget to hug your Dad this weekend.
Ken is a twenty-something professional, living in Toronto, Ontario. After finishing university with over $25k in student debt and zero financial literacy, Ken decided it was time to take control and start building his financial foundation. Inspired by the wise words of Gail Vaz-Oxlade and other Canadian personal financial gurus, Ken was able to finally clear his debts and start focusing on his future.
June 14, 2012 at 10:03 am
Life isn’t about finding yourself. Life is about creating yourself – George Bernard Shaw.
Great Blog Ken!
June 14, 2012 at 11:46 am
Thanks for the post, we all need these reminders from time to time. Congrats on taking control, keep it up!
And happy birthday too
June 14, 2012 at 2:30 pm
Hi Ken.
I don’t know if you’re supposed to be Thursday or another day, since Arianne is also Thursday. I was surprised to see there were two new posts this morning, when I was sure I read yesterday’s post.
My motivation was 28K in student loan debt, and a savings account that lost its savings when I had to pay for first and last months rent! I thought I had a ton of savings (turns out paying 1/2 a month for an apartment, just so you HAVE an apartment, plus 1st month rent, plus last month rent all when you are still waiting for your first paycheque to arrive makes a huge dent!).
I then got my letter from the gvt telling me I had to pay $355 per month to pay off my loan in 9.5 years, and I realized I didn’t even have that much available to pay off my loan with rent, groceries, and the like (my take home pay was $800 every other week, and my rent along was $750, never mind the bus pass, food, etc!). So I had to call and ask to extend my loan to 15 years to a more manageable payment.
I had made a few pre-payments during the summer, but then I got the letter saying I could pay the balance of the interest accrued during the summer (which was just under what I had already paid!!) or I could add that to my loan. I didn’t have a choice and had to add it to the loan, and then started calculating what the interest was. I made a few spreadsheets to figure out how to time the payment the best (and learned bi-weekly was better than monthly), so I paid my default amount on the last day of the month, and strived to put an extra $100 (bringing me to the $355) at the middle of the month.
Then I found myself getting addicted to updating this document and gleefully watching my numbers dwindle, and I would give myself targets and strive to reach them. I was exceptionally proud of myself when I realized that I had paid off my loan by August 2010 (at this time I was 25), just under three years into the 15 year loan payment.
I was mentioning this yesterday, but I’ve gotten lax with my spending. I’m definitely saving, but I’ve moved into a nicer apartment, spend more on food and enjoy more options and entertainment.
Also, I have to admit – I let my savings accumulate their money (auto-debits each week), and every few months when I add things up I feel like I’m awesome. My number is not yet at 30K, and it won’t be since my wedding and honeymoon are dropping two of my savings accounts down to zero, but I am happy to say that we’re paying for the wedding in cash and that it’s coming from money that we’ve saved specifically for the wedding and the honeymoon. It’s sometimes hard to turn down all the awesome sounding things I do want to do in order to host a wedding for people, especially since we’re spending a bunch of money on one day (at $12,000, our budget seems outrageously high to me, but I know it’s small for most Toronto couples). Then there’s the honeymoon. No regrets there! I’m quite looking forward to going on a 2 week vacation
June 14, 2012 at 2:31 pm
Oh, and Happy (early) Birthday!
June 18, 2012 at 6:17 pm
Hi, I had my “awakening” this weekend. I recently had my bank account hacked (which btw who would want the pennies that I have) anywho, it was right before a trip and I had already booked my hotel, rental car etc that I planned to use my debit card, well that was cancelled and I had only cash but these places while they will take cash as a final payment need cards to keep on profile for damages or whatever….
My turning point was realising even though I have money in my bank account and money on hand. I have 3 credit cards that are all maxed out and I couldn’t use one to help me out of a crisis. I was soooo upset with myself and I kept telling myself credit cards are for EMERGENCIES like the one you’re in, not shopping and dining and whatever else I blew 3 credit cards on….
There’s no worse feeling in the world than being the very source of your own problems. I was so sick of myself that if I could have given myself the silent treatment I would have….
Needless to say. I’ve made up my mind that I am getting out of debt and I’m doing it today, not tomorrow, next week, when I get paid, when I get my taxes….TODAY!!!!! I made early payments on all 3 of my credit cards, paid off my 1 store card, paid any outstanding bills and tonight I’m going to work on my budget and I’m going to stick to it because I can’t experience this weekend again.
One thing I also learned about using cash, is you get a lot of spare change which I’m going to put in my piggy bank….forget BOA keep the change….I’ll keep my own change. Thanks!