Handling Setbacks & Staying Motivated

Any journey inevitably has challenges along the way. For me, it was a potentially a $3,000 IRS bill. I have been doing my taxes using Turbo Tax for years and had always received a refund, so I was shocked when I found out I owed that much. As if I didn’t own enough money as it was already, why not an extra $3,000 on top of it? I was working WAY to hard to dig myself out of a pretty deep hole, and the last thing I wanted was something else adding to that burden. It was time to explore my options. I didn’t want to pay a ton of money for an accountant to tell me what I had already figured out for myself. That being said, I am not a tax expert. I started doing some research online and found an accountant that was highly recommend and most importantly was affordable. I hired him for a mere $60 to do my taxes (that were relatively simple) and he was well worth the investment. He was able to get my tax bill down to $1,300. While this amount was not chump change and put me further in the hole, I gladly took my $1,300 tax bill opposed to a $3,000 one.

Some people may have looked at this setback and given up. I chose to take lemons and make lemonade. I learned that I needed to make adjustments to my tax withholding for the following year. I also had someone else to do my taxes for me for roughly the same amount Turbo Tax would charge me, but with better experience.

Another setback came more recently and not in the form of a bill (thank god). With my credit score on the rebound and my debt almost gone, Daniel and I had scheduled that we would be ready to buy a house in August at the end of our lease. After LOTS of research, we decided on a location and to go with new construction based on the fact we could get a brand new house with lots of upgrades for the same price as one that was a few years old. When we visited the builder we were informed that we would be looking at a move in date near the end of 2017 as in November/December. Yet another let down. Daniel offered some encouraging insight that we would be better prepared and have even more money saved by then. I still couldn’t help but to feel disappointed.
After hearing this news, I took a hard look at my journey, crunched numbers, and realized just how far I had come. I had paid off $20,000 by myself through hard work over a period of 9 months. Pardon my french, but holy shit! That is a lot of money! Some people may cry thinking about everything else they could have done with that money (the thought has crossed my mind too), but that money has been my life preserver. It has been a tough lesson, with a great outcome. This energized me to start my blog as a way to share my experiences with other, but to also document it for myself.

Managing Mainstream Money

I found some things I could do on the side to help bring down my debt faster using my hustle, but I also had to learn how to manage my main source of income. This involved creating a budget,finding strategies to stick to it, and finding ways to conserve as much money as possible.

There are a lot of different perspectives on budgeting online, and ultimately I had to make a plan that worked for me. Enter google sheets. I used google sheets because it gave me access to my budget on the go and was similar to Excel. I created multiple pages on the sheet. One page was devoted to my budget for the next 6 months and another page was a running list of my credit cards and their balances so I could keep track.

At first budgeting was extremely challenging, more from mental/emotional position. I knew HOW to budget, but I had so many credit cards I could only devote small amounts my main source of income to each one. This is why my side hustle was so important. My side hustle helped me quickly eliminate line items in my budget that were credit cards.The more credit cards I eliminated, resulted in more “disposable” income I had to contribute towards my remaining credit card debt. When I started my journey I had about 20 different line items, 11 of which were credit cards. Now I am down to eight, two of which are credit cards.  

One money management lesson I have learned is that I need cash in my wallet to spend on things like gas, groceries, household items (laundry soap, paper towels, etc.), small inexpensive meals out, over the counter medication, make-up, etc. Things that are hard to account for and track. It might seem like these are not a big deal, but believe me they add up. These items account for 15% of my total monthly budget. I call this line item “cash for expenses”, and at the beginning of each pay cycle I pull that amount of money out in cash. Until I get all of my debt paid off it is the same amount every month. By pulling out cash, I can easily see how much is leaving me and how much I have left to last me until my next payday. It also forces me to time my purchases ensuring I only get what I need from the store until my next pay period.

I also had to learn to curb my spending habits. I LOVE TARGET!!!! But every time I went to Target, I spent money on nonessential. I would justify this because I had their red debit card, which saved me 5% and I used their cartwheel app, which saved more money. Saving money was awesome, BUT I really wasn’t saving money, because I was buying non-essential things like a pair of shoes or a sweater. I learned there is a BIG difference in saving money on purchases vs. saving money in your wallet. This meant, I had to stay away from Target. If I didn’t it was torture and put me in a very vulnerable position.

I also had to start cooking at home, which I love. Enter the grocery delima. I also LOVE PUBLIX. At first I thought, well I am spending money on food which is a necessity, but I was spending as much on food as I going out to eat. This wasn’t helping me accomplish my goal.  I had to find a way to conserve as much money, while getting the groceries I needed. I wasn’t willing to give up Publix completely, so I subbed in Sam’s Club for some of the items I need and used frequently. I now buy things like meat, toilet paper, paper towels, trash bags, coffee, and milk from Sam’s Club. It was very easy to blow my entire discretionary budget on one visit to Sam’s, so I had to space out my purchases. I also watch the Publix ad and other grocery items from them like veggies, coffee creamer, and side dishes. A note about Publix BOGO’s…Do the math! Sometimes buying their store brand is actually cheaper than the sale. For example: 1 bottle of Publix brand ketchup is 1.59, but they have a BOGO on Heinz Ketchup 2/$4. In this case, the Publix brand of Ketchup (as long as it is the same size) is actually the better buy.  

The final thing I learned is that my budget could not be 100% lean, it had to have some fat in it from time to time. Meaning, there were a few times (and by few I mean two) I made conscious decisions to spend money on nonessential items. One of those items was a bike and another was an annual Disney pass. I knew if I was going to make it to my goal, I had to “cheat” a little, but with each of these items I thought about making the purchase for about 3 months before actually going through with it. I selected these two items because they would provide a long lasting impact. The bike was $100, and the annual pass was around $400 total-a $100 initial fee and $25 per month for 12 months after that.  Each time I did this of course, my financial coach (aka Daniel) was not very happy, but the bottom line was it was my money and my decision.

 

The Heather Hustle

My purpose for getting out of debt was to buy a house, therefore Bankruptcy was not a viable option for me. I knew I would have to accomplish my goal through hard work and dedication. While I made a respectable salary and could do a better job of allocating more towards paying down credit card debt, it wouldn’t get me where I wanted in the time frame I wanted. Let’s face it, I’m an American and when I want something, I want it now. Ironically, that philosophy partly contributed to my mess, and would also help get me out of it. If I wanted to accomplish my goal in the span of 12-18 months, then l I needed a way to make some extra cash to put towards my debt.

While scanning Facebook I saw a posting from a site called the PennyHoarder.com This is where I got most of my ideas I explain below. These ideas went into a plan I like to call the “Heather Hustle”. I actually did all of the things listed below to help pay off over half of my debt. Twenty thousand dollars of it to be exact. All of this money can trickling in, not rushing in, but I put every penny towards my debt over a period of 9 months. These are things I will continue to do until all of my debt is paid off, and I have enough money for a down payment on a house.

• Donating Plasma-There are lots of companies that collect Plasma which is a protein that comes from your blood. Most companies will pay new donors $250 over a period of  5 donations. The first visit takes the longest as there are numerous screenings required, so if you decide to do this, plan on 3-4 hours. After that, I was usually in and out of the office within an hour. You are allowed to donate twice a week, so within two and a half weeks you have your new donor money. You can continue to donate, but typically they pay less, so my strategy was to collect the new donor money and move to the next facility. So far, I have been 3 different companies to donate so I have literally paid off $750 of my debt with my own blood. On top of that my plasma donations have helped others so it is a win-win for everyone.

• Mystery Shopping-I used the company BestMark to do all of my mystery shopping. Most of the mystery shops I completed were posing as a buyer for a new car. From May-July I feel like I visited every car dealership in Central Florida. Some people may cringe at the idea of visiting car dealership, I was on a mission. I put on my Heather hustle hat, and used my brain to make sure I did want was needed in the shortest amount of time possible, and collected my money. I would often do this after work or spend all day on weekends completing these shops. I made around $17-23 for each shop. BestMark would offer an incentive to take shops outside of a big city which increased the amount earned. I completed around 150 shops and made around $2500 so that was a nice dent in my debt.

• Using a Bank-Every bank is in the business of attracting new customers. One of the ways they do this is by offering cash incentives which are fairly substantial, usually around $200-400. Some of these offers come with requirements which usually involve having a direct deposit and/or making a certain amount out purchases with a new debit card. Using this method I made $800 just by switching my bank.

• Freelance Work-I used a company called Upwork which allows people to post small jobs they need done ranging from website work, to writing papers, to reworking files. I made around $500 writing papers and even a set of lesson plans. For me however, this proved to be too much work and time for the payoff.

• Driving for Uber-This too was short lived. I did enjoyed doing it because I got to meet some pretty cool people and walked away with some good stories, but it did put a lot of miles on my car and part of my profits were eaten up by paying for gas. When I decided to do this, I set one major ground rule (1) no driving past 9 pm because that is when people are drunk and will more than likely puke in my car. Additionally, this job had the potential to be a bit dangerous. With Uber I averaged around $10-12 per hour. Ultimately, not worth the time, effort, and costs associated.

• Selling Stuff on Craigslist & Amazon-This option only works if you actually have valuable stuff to sell. During this journey financial freedom journey I moved from Tampa to Orlando and needed to get rid of some furniture. I also had some teaching books that I decided to sell since they were still relevant and in good condition. I made around $400-$500 this way. My recommendation for selling items on Craigslist…don’t do it alone. Always have someone there with you during the sale, again for safety reasons.

• VIPKid-This has by far been the best of all of my hustles and one I still do. It pays between $18-$24 an hour, allows me to work from home during the hours I don’t work my normal job. I can set my schedule and have to do very little prep. I teach English to Chinese students. The students live in China which means the peak teaching hours for the Eastern Time Zone is between 5:00-8:00 AM Monday-Friday as well as 8:00 PM-10:00 PM. This job does require at least a bachelor’s degree, a head set with a mic, a deck of alphabet cards, a few props and a willingness to be very animated. If you are interested in applying, please use this referral link (I get a kick-back on recommendations). https://t.vipkid.com.cn/?refereeId=2944116

A word of warning….do your homework! Each of the items I listed I really researched and they all come with fine print. I didn’t want to get caught up in a scam or do something that would sink me further into debt. I am happy to answer any questions based on my experiences.

The First Step

I mentioned in an earlier post that in order to get out of debt a person has to have the desire, willpower and knowledge to do so. It wasn’t until April of 2016 that I gained the desire and willpower. Like many people in debt, getting rid of it seems like a very daunting task or you are waiting for an influx of cash or a better paying job.  I knew it was something that I needed to do, but thought one day I would get around to it. That point in time came when I entered a serious relationship with a goal to buy a house.

In the beginning….I was one of the people that was burned during the housing crisis in 2008 coupled along with a failed relationship. This was the real start of my accumulation of debt. These two experiences left me bitter against combining finances with anyone else as well as ever buying a house again.

Then 8 years later, came Daniel. (Insert love story). I never told Daniel about my financial situation. As we discussed what our future together looked like and he questioned me more about my finances I knew that if I really wanted this relationship to have a chance at success, I would have to come clean. I gathered all of my credit card information-logins, passwords, balances, limits, interest rates, put it on a spreadsheet and hoped our fairly new relationship would survive this bump. That was one of the hardest conversations I have ever had. I have to give him a lot of credit because he has stuck by my side and given me the tools to succeed. He too had been in the position I was but had worked his way out. We had lots of discussions about finances and what that meant for our immediate future, which of course meant dreams and hopes were crushed…for the time being. Though our discussions he helped me realize that getting out of debt shouldn’t be something I should do for him, it had to be something I did for myself.

Through these hard and probing conversations about finances in the following months I shed  many tears. Even though it was extremely invasive, I knew I had to give him full access to view my accounts and how I was managing my money so he could give me the tools I needed to accomplish this goal. I was fully exposed and could hide nothing. But like any great coach or trainer, he wouldn’t let me give up, reminded me of the progress I had made and always kept my expectations in check. He pushed me, questioned me, and challenged me, but most importantly he supported me.

As I mentioned, our relationship was in an early phase when I revealed my secret to him. Not exactly the best way to start a relationship. The early phases of a relationship should be filled with love, affection, dates, romance. Ours was not. This secret undoubtedly caused tension, but it also cost me the opportunity to have those experiences mainly because I had to work extremely hard to dig myself out of this financial hole and not further into it. My reality became that, I had no money to go to nice dinners, on dates, or trips. ALL of my disposable income had to go to credit cards. Furthermore, ALL of my spare time had to go towards activities that would earn more money to pay off bills. This is yet another example of how poor financial decisions and lack of financial responsibility can impact a relationship.
Some of you may be wondering, what did she do to pay off her debt? How much did she really pay off? How much is left? When will she achieve her goal? Keep reading. The next article will answer some of these questions.

How Bad Was It?

At 33 years old, I was in a lot of debt. When I say a lot of debt, I am not talking factoring in  a mortgage, a car loan or student loan payments. I am talking about credit card debt. $30,000 of debt. Debt that began during the housing crisis of 2008, 8 years before I was put on this journey. I had 11 different credit cards, all with high interest rates, with balances that totaled $30,000 dollars. To add further insult to injury, I was also going to cash advance agencies monthly. The worst part of this whole situation was that $30,000 debt total wasn’t even in my name. It was in the name of someone else who had tried to help me. I am specifically not naming the individual who carried some of my debt for their own privacy.

I want to stop here and point out something very important. If you know someone who is struggling with credit card debt, do NOT take on their debt, do NOT pay their debt for them, do NOT loan them money no matter how much money you have or how much you love them. I say that for a couple of reasons.

(1)The fact that someone else took on a portion of my debt has caused significant damage to that relationship. They took on my debt to try to help me. The fact of the matter was I didn’t have the knowledge, skills, or dedication to solving my debt problem when they did this. Additionally, they put themselves at great risk because now their “debt to income ratio” a big part of your credit score which provides purchasing power was now unrepresentative of themselves and extremely high.

(2) If you do take on someone else’s debt or pay it for them, you are NOT solving their problem. You are putting a band aid on it. I would venture to say that the majority of people in credit card debt do not know how to manage their money or live within their means. For me personally it was both. Think about the weight example I provided in the previous article. If I don’t know, have the willpower, or the tools to manage my weight through diet and physical activity, I can’t succeed. In order for someone to truly get out of debt and stay out of debt, they need to have the knowledge, willpower, and dedication themselves to do so. Therefore lecturing and shaming isn’t helpful either. Encouragement, knowledge and resources are powerful tools you can provide to someone, but ultimately the decision to change has to be theirs.

As if being $30,000 in debt wasn’t enough, part of this journey was also about my credit score. When I started according to Credit Karma (which after lots of research I have done, uses a scoring model that is typically a lot lower than what most lenders use) was a 523 which is in the very poor range. Of course my credit utilization was extremely high and I had a lot of inquires 14 to be exact all from the same day from various banks that were run when I needed to purchase a new vehicle.

The interesting thing about all of this information, is I knew my situation was bad, but I didn’t know how bad, how fast (and by fast I mean 1 year) I could change it, or how much hard work, dedication, and willpower it would take to do so. There was a moment and a specific person that put me on the path to healthy finances. My next article will explain just what happened.

Debt Shame

Sometimes people hide things that they are ashamed of. By hiding these things, they can’t be ridiculed, questioned or lectured about their decisions. They blend in with society as if everything is normal and they are accepted. This is something that I have been doing for quite some time. I didn’t want to see or hear the disappointment of others so it is something I did not talk about, and quite frankly hardly anyone ever asked me about. That topic was finances, debt, and money. This is a topic that is very personal to most, and maybe that is why nobody asked me other than as it related to my salary. Maybe nobody asked me because they did not know it was an issue, because I blended in.

When I think about financial health, I can’t help but to think about how it relates to a persons physical health and social perception. While some people can hide their weight with baggy clothes or covering parts of their bodies, it is still something that can illicit a response positive or negative. Responses like, “I noticed you’ve put on some weight” or “Wow! You look great. Have you been working out?”. You see, these responses can be positive or negative. Because a persons physical health is something visual making it easy for others to follow your progress.

Finances, on the other hand are not. You may have an idea based on the possessions people have, but can you really make a correct assumption? A person with a high-end car and a large house could either be doing financially well OR they could be in debt.

I am starting this blog to share my financial journey and to promote discussions about finances not from a place of judgement, but a place of understanding and how you can be supportive (without contributing money). As you read my blog, please keep an open mind and think about why this may have been something about me that you never knew. Unhealthy finances are just like someone who has an unhealthy body. It is something that can be changed with hard work, dedication, and may not be what they appear. While this journey for me is not over, nor will it ever be over, it will have a happy ending.