I’ve been thinking a lot about my 20s, mostly because I’ll be turning 30 soon. This afternoon, it occurred to me that I will be turning 30 relatively unscathed, debt-wise.
Now, don’t get me wrong. Halfway to debt-free was not really my doing; its more Trinity’s doing. In fact, most of the debt-wise moves we’ve made have been thanks to him. At 29, I’ll have paid off one car (which I already gave up to the state and unfortunately am paying on another car already) and many of the accounts I unknowingly saddled myself with are about to be moved off my credit report later this year and next year. Thank God!
But I look at Trinity and think to myself, damn. I wish I’d done everything he did. He’s not even 29 yet, and he’s about to pay off all his school loans and his car is about to be paid off this fall. For a journalist, that’s usually damn near impossible. Together, we have one credit card, but we’re about to slash that debt in half when we get our tax return. What’d he do to be so financially responsible?
I figure there are five main things Trin did get debt free by 30. Not debt free, period, mind you – we did buy stuff on credit when we first got married and didn’t have a big wedding to have people buy us all sorts of stuff via a registry. We did get a few key things, like knives and a cutting board and a Pyrex set, but that was about it. Everything we have, we mostly bought on our own.
First, Trinity went to community college. So did I, but I took out loans in community college. Spending your first two years in community college is so cost-efficient its not even funny. I think that when we were in community college, we paid about $12 a unit. It’s gone up a lot now, to $26 a unit, but still — you can save thousands of dollars and get away with not taking out any school loans for two years. Of course, the reason why Trin couldn’t get school loans during his community college years was because he was working full time and made too much money at Kinko’s. Stupid, but true. But you can learn from that weird fact — go to community college for your first two years of undergrad, make sure its only two years, since so many community college students end up there for more than three years (Trin and I included), don’t take out any school loans, take advantage of any grants or programs that you can, and transfer out to the 4-year of your choice.
Second, we became members of a credit union early on. (I get to take credit for this one, hehe.) We had just gotten married and gotten into our first place together when Trin got into a car accident and basically had to get a new car. I had become a member of the LA Times FCU while I was working at the Glendale News-Press and urged him to fill out an online application for a car loan. He was instantly approved for $12,000. With a little bit of online shopping, we got a nice used Infiniti sedan for him within that approved loan amount. I bought my car the same way. Credit unions reliably have better rates for everything from car loans to home loans to CDs than banks for profit, plus they have usually have better service.
Third, we restrain our spending. When we bought cars, we didn’t buy brand new models or even recent models. My car is a 2003 model, Trin’s is a 1999. When it came time to buy furniture (on credit, unfortunately) we went to a discount store and negotiated the best deal we could get. Even when it comes to clothes, I detest stores like Macy’s and Nordstroms and always go to deep discount stores like Burlington, Ross or Marshalls first. (I’ve found some pretty damn good deals.) I think, with TV and cable, its so tempting to keep up with what we see on the screen and put it in our homes, but TV (even reality TV) isn’t reality. As one recent WaPo article so astutely pointed out:
Zweig has studied several experiments examining people’s brains when they make personal finance decisions. The results, he said, are surprising.
“You would expect logically that the borrowing and spending of money would be emotionally painful to people because having money is intrinsically a good thing, and having less money would have to be worse,” he said. “Going from more money to less would be painful.”
If only that were true.
“When people borrow and spend money, it’s really the reward centers of the brain that become activated,” Zweig said. “When you borrow money, you are thinking not about the long-term consequences but the short-term result: You have more cash in your pocket. The pain you are going to experience down the road of having to pay — that’s in the future, it’s remote, it’s abstract.”
Don’t get me wrong, I love buying stuff. Believe me, I have a whole list of stuff that I want to buy. But even if I get clearance to buy all that stuff, I get all serious and practically put together a spreadsheet to figure out which product is the best value and where I can get it for cheapest for each thing I want. I like buying stuff, but I also like seeing my savings account grow. And on this account, I have to give the kudos to Trinity, because believe me, I would out buying stuff here and there every paycheck, and it adds up.
Fourth, we actually paid off debt. I am encountering more and more people who believe that you can’t live without debt or that you might as well get in debt or you’ll never enjoy life. If I’ve ever heard anything that was poppycock, that would be it. Because my personal credit was so bad, I didn’t have access to any credit between college and when I got married. If you have to live off cash, you will. The first credit card Trin and I got as a married couple, we used fast and furiously, but the next year was spent paying it off. Now its totally paid off and never used. We’re working on doing that now with our second credit card. Again, I have to give credit to Trinity for this habit. It took paying off one credit card for me to see that its actually possible to get out of debt before you die.
This is probably the most important thing that Trinity did. He said no. I’m sure it wasn’t easy, because I can be pretty persuasive when I want something. Now, I know that Trinity wants to provide for me and give me everything my little heart desires, but its just not possible since we haven’t hit the lottery just yet. Heheh. So saying no to me is probably harder for him than it is for me to accept “no.” And don’t get me wrong, he doesn’t say no to necessities or food. He just says no when its something we really don’t need or really can’t afford to do. Like going to Greece or Egypt? Yeah, that’s a no for now. But going to Malibu, where parking is just $2? That’s a yes. Besides, he knows me so well, he knows what I really want — like a digital camera for my birthday? There’s nothing like getting the perfect gift that you didn’t have to leave hints for. I figure its good practice for when we have kids. We’re going to have to learn how to say no (Trinity’s better at it than I am) even when we wish we could say yes.
So, yeah. Trin is going to be debt-free by the time he’s 30. He’d probably be there by now, if I hadn’t had a tax debt a couple of years ago. *Doh!*