An investment in knowledge pays the best interest.Benjamin Franklin
I’ve mentioned in a previous post that I learned very little, if anything, from my parents about money. That is not quite fair, as I was taught some values, just not as it relates to personal finance. Divorced when I was 2 years old, my mother worked as a single mom, trying to raise 6 kids on her own. She worked hard, for very little, and it was enough to put a roof over our heads and food on the table. In retrospect, this may have been the best lesson on money I could have learned. The problem is, when you have nothing, and credit is introduced into your life, the first inclination is not about finance and the consequences of debt, it was “yes, please!”
The consequences of not having a father around and a mother who was at work all the time, was that I never learned about how to manage money or had any idea I even needed to. It was black and white, or at least should have been: make money to provide the necessities. That was the lesson and it was a good one, but it was lost on me. I signed up for my first credit card when I went to college. I signed up because I wanted the swag. What a costly mistake, but it was just one of many leading up to that day.
During high school I had worked an occasional job here and there, but post high school it became necessary to find real work. I was also prodded to go to college, even though I did not have any money. All of this meant that I would need transportation. Instead of taking the bus, the minute I found a job, I bought a car. Quick and easy and I thought boy I have made it! Then it was time to go to college. I asked my mom how I was supposed to pay for it and she said you take out student loans. Easy enough. Vehicle debt and student loan debt already at such a young age.
Then I really found a loophole, or so I thought! I could get done with college faster if I quit my job and just used the student loans to cover everything. I could take more classes and be done with it all. It was the perfect plan! The thing was, I really did not like school, having dropped out of high school and equip only with a GED, I had not shown I was capable of going to college. This was what we were taught to do though, it is what society tells us is the way to a better life. So, I went, with my new car, no job, and student loans. What a life, I thought!
Then I was presented with a credit card for some swag. What is interest? I never even thought about it. I can buy whatever I want and as long as I can afford the low monthly payment, who cares. Each time I got a student loan I would just pay the minimum, and my car payment, and the rest I could have fun with. What a time to be alive! Of course, I lived with mom and she was just delighted I could pay for groceries and leave the house once in a while. Then the real fun started. I could have more than 1 credit card. Whoo Boy!
As the years went on, and I was no closer to finishing college as I was when I started, the bills started to rack up. The low payments were all still there with me like a companion. I could barely afford gas to get to school. Insurance was expensive. Life with no job was not what it was cracked up to be. So, I put school on part-time and found a job. A job I was miserable at, but one that could at least pay the bills. I asked my dad for advice and he said to go to a credit consolidation place for a lower payment. I did, and it was great, until I realized it wrecked my credit. I thought I was ruined in my early 20’s. Then I met a wonderful young woman and I wanted to get married.
How do you afford living outside of mom’s house, with a new wife, and all this debt? That was the question I posed to my father. He said, you don’t think about it, you just do it! Just close your eyes and hope it all works out. Well, it has worked out, but with a great deal of pain.
I was close to finally graduating and we had just had our first child. She had been working and I had still been taking out student loans. She stopped working to have our child and was recovering. He would not take to her breast milk, so we had to purchase formula, which is incredibly expensive. I was still doing what I always did, paying the minimum from my student loan and then buying whatever I wanted. We had $200 in our bank account and the new PlayStation came out. I immediately went out and bought it without taking any thought about it. Then my wife came to me in tears and said we are out of formula and our child is hungry. I had just spent all of our money and now our baby couldn’t eat.
I was mortified, and for the first time in my life I realized my actions had consequences. I never wanted to feel that way again, such shame for my selfishness! Luckily, mom was able to bail us out that time and we were able to get some formula, but I hated myself for buying a PlayStation. From that moment on I wanted to change, but I had already put our family at great risk, a risk we are still paying for today.
I went on to graduate and started to learn everything I could about finances, but the damage was done. I am working every day to pay for the mistakes of my youth. I look back and think, boy, just a little direction could have prevented a lifetime of debt. The good news is, that my kids will not be making that mistake. They are having this lesson drilled into them every day.