Chapter 3: A $10,000 conversation

05 June 2020

You’re back! … fantastic. If you are just tuning in now, here is a link to the previous chapter.

Like most young adults, I moved out of home and went flatting with friends. What could possibly go wrong…?

Going flatting with a group of friends was the ‘normal’ thing to do at my age. All my friends were doing it.

I didn’t mind paying rent of $165 p/w because this would mean I get to spend time with my friends all the time, how cool! I didn’t take into consideration that not only did I have to pay rent, I would have to pay for power, gas, internet etc, but being 21 this didn’t matter to me, I was just happy to be doing something new.

“Go with the flow…”

Graces BedroomThis is a term that I used quite often when flatting. If my flatmates wanted to eat out, so did I. If they wanted to purchase new joint things for the house - I definitely did!

I was always on the hunt for new accessories for my bedroom.

This made my room look AWESOME but unfortunately, wasn’t cheap.

I was becoming a shopaholic..

Spending, spending, spending…

GraceI was always someone that did what I wanted and wouldn’t let money get in the way. I would go on impromptu holidays, travel overseas, buy whatever clothes, handbags or shoes I wanted and was proud I was earning money so I could do this.

But eventually it became like an addiction, I was spending more than I earned, and ended up dipping into my savings.

A $10,000 conversation

Debt was something I had never had before. I ended up getting both a credit card and an overdraft, as these were preapproved for me.

If I’m honest, I can barely remember getting into debt, it happened so fast, I went from $10,000 in savings to $10,000 in debt in a really short time. I ended up being someone who saved regularly to someone living paycheck to paycheck, and this is not where I wanted to be!

Telling my parents I was $10,000 deep in debt was the hardest thing I’d ever had to do. I knew they would be disappointed in me as they knew I was committed to saving. When I worked up the courage to tell my parents, they were fuming – as I expected.

However, they did want to help me get back on track, so my Dad agreed to pay my $10,000 debt off for me as this was getting charged interest on each month. Although 7% interest doesn’t seem like much compared to some of the interest rates out there today, it was a lot at the time – as it was debt I could redraw on and I was only making the minimum payments.

My Dad and I had an agreement: I would pay him off each payday and the loan would be interest free. It came with a condition though…I wasn’t allowed to purchase any more handbags for the duration of the loan. Aaaaargh!

But, to be fair – by this time I probably had about 10…!

Make a plan

It took me years to repay my debt to my Dad. And for what? Some fun times, nice shoes and a handbag collection? Was it worth it?

As much as I love shopping (and I do!) my advice is this: stop and think about what you’re spending your hard-earned money on. Is it worth getting yourself into debt over? Do you really need all those handbags and shoes?

Don’t get me wrong – I still treat myself, but I make sure I save for the item I want first, rather than adding it to the credit card. It’s much easier than it seems to quickly rack up debt. I still believe that a credit card is good as a backup option if you ever need it – but you must have the willpower to not overspend.

And if you are in debt? Make a plan. Talk to someone you trust, work out a budget (Booster’s mybudgetpal can help with that!) and start repaying that debt as fast as you can.

Ciao!

 Graces Blog Assets V10 09

 

Read the next chapter in Grace's journey - Chapter 4: Getting back on track >