Exactly two years ago today, I had written about my final monthly payment toward nearly $40,000 in credit card debt, in a post entitled My Parable of Debt Management. For 52 months, I had contributed roughly 50 percent of my take-home pay toward Money Management International (they are wonderful). It was a grueling process. It forced me to differentiate between mandatory and discretionary expenses, think creatively about where I could cut costs and increase income, and maintain a strict budget. Throughout that time, I had retained one credit card in order to maintain some credit history, but as a stipulation of my Debt Management Plan, I was never permitted to add any debt to that card. I still possessed some student loan debt but it was (and is) manageable, and the interest rate remained low.
So how has my financial situation progressed over the last two years?
I began using credit cards again -- responsibly. "What?! Shouldn't you avoid using credit cards?" you may exclaim. One of the valuable lessons I learned is that utilizing credit cards can be a positive action if you're disciplined about it. Of vital importance is to effectively manage your credit cards and build upon your credit history. What you should avoid is carrying a balance from one month to the next. Charge your cards, but pay them in full every month; this is how you avoid accruing interest.
I applied for and accepted a second credit card. At this time, I hold two credit card accounts. One account is designated primarily for purchases related to my professional photography business. The second account includes major expenses and significant travel, especially outside of the country. Most debit and credit cards apply an international transaction fee whenever you make purchases abroad; if you believe you might travel outside of the country EVER, obtaining a credit card with zero international transaction fees makes a lot of sense! Both accounts feature the advantage of rewards programs. A small percentage of every purchase is turned into a cash reward that can be used at a later time in the form of discounts, checks, or returned to your account to help pay your bill.
I always pay my balances in full. I enjoy the rewards benefits. I keep my credit history in excellent shape. I eventually will apply for a third card to increase my available credit. I also maintain a credit score above 800, which will be helpful whenever I purchase a car, rent an apartment, or buy a home.
I accumulated enough emergency savings to last one full year. This created a safety net in the event of a major financial scare with my health or property. It also enabled me to pursue a career change on my own terms. In late July 2017, I made a decision to resign from my job as a residence hall director -- without another job in place. It's a risk -- but while I enjoyed many aspects of my job, I was ready to take some time off, evaluate my long-term career goals, and consider a change that would keep me refreshed and challenged. Since leaving my job, I have dedicated much of my time to my part-time professional photography business that I've managed since 2005. Leveraging time and money into a side business in which you have a passion is a great way to create additional income. In the mean time, I have been actively searching for a new full-time career; my fingers are crossed for that search to pay off soon!
Without the savings I had built up, I would not have been free to take time off and explore new options.
I've continued the practice of limiting expenses wherever I can.
I am obsessed with mocha lattes, and instead of buying them at coffee shops (although I still occasionally treat myself), I make them at home with an espresso machine -- resulting in an 80% savings on the daily coffee expenses.
Additionally, I am an avid fan of Ting, an independent mobile phone company. My monthly mobile phone bill on average is less than $30. By purchasing a phone at full retail value, you simplify things. You don't pay hidden fees like major phone companies charge. The great news is Ting now allows you to lease a phone and make monthly payments if you're unable to pay full price all at once. If you do the research and find Ting would work for you, use this referral link to earn $25 on a Ting phone or credit; just make sure you use it BEFORE creating an account (full confession: I'll also earn a $25 credit).
I buy in bulk from Costco for items that make sense for me. I prefer to buy the generics at a lower price and which are usually just as good as the brand names. I eat at home far more often than I do by dining out.
All in all, my financial situation is healthy. There are plenty of ways where I can still improve. In the future, I plan to contribute at a higher rate to a retirement plan (I've contributed for over 14 years but I can do better). I'd also like to invest on my own. And when I settle down in one place, I hope to purchase a home when it's the right move.
Thank you for taking an interest in my situation, but I also hope you can gain some tips for your own financial future from this blog post! Please stay tuned for more updates!
