Okay, so I’m going to try and be as honest as possible in this post and control my hyperbolizing tendencies.
Also, I decided to use pictures of cute puppies instead of the stereotypical stock photos of credit cards.
Hope you enjoy!
*Spoilers: I just paid off 2 out of 3 credit cards this week. And paid off 99% of the 3rd credit card. Total: $12,000.
How Did I Get Into This Mess?
I made several “bad” mental choices before I got to this point. I want to share them with you so:
1) you can learn from my mistakes and not make them yourself.
2) it’s cathartic for me to get it off my chest and the act of putting this into writing is quite liberating.
Here We Go
After graduating college, my girlfriend and I wanted to backpack Asia.
With oil prices at record lows, flights to Thailand were around $600 USD round trip.
It was too good to miss.
Especially because we both paid $1,300 per person for flights to Thailand only a couple years before, when oil prices were at record highs.
So after graduation, we immediately went to work and for the next year, we worked our butts off and saved a good chunk of income.
I think our goal was to save up $7,000 per person for the 4 month trip through Asia.
We managed to save up a total of around $12-13,000 between us.
I had taken out a Barclay Arrival Plus Credit Card which would give us 50,000 bonus points if we spent $3,000 within three months.
I think the idea was to use the points to pay for some of the travel purchases we made.
We did the rough calculations of hotels, hostels, flights, food, etc. and it would definitely come out to more than $3,000 in those three promo months.
We easily got those 50,000 points and I used them to pay for hundreds of dollars worth of hotels and other travel stuff.
So we won, right?
And Here’s Where I Messed Up
Instead of putting my $7,000 into my Ally Bank Savings account and letting it accrue interest while only pulling out what was needed for the trip at any given time, I put all the money into my Vanguard SP500 index mutual fund.
The problem with this is that I sacrificed the liquidity of having my money in a savings account versus a mutual fund.
Initially, this wasn’t a problem because after Trump got elected and stocks went up 20%, I had a good chunk of growth in my Vanguard.
I was mentally on cloud nine. 😆
However, it was what happened after we came back from Asia that I messed up.
I Got Attached
I was supposed to sell out of some Vanguard money that was meant to pay off the credit card balance for Asia.
By that time months later, I had grown accustomed to seeing a higher account balance in my Vanguard that I didn’t want to touch it.
I didn’t want to sell out of any more vanguard funds because I liked seeing the higher numbers.
Not to mention, because it was “In Vanguard,” it was much more cumbersome (read: I was lazy) to sell out and do the specific lot selections for sales, etc.
Getting attached to the mutual fund and not wanting to sell out some of it was a completely emotional issue for me and I battled with this existential dilemma for a good couple of weeks to pretty much a year later to the time of this writing.
I Got A Job
After coming back from Asia, I landed a job at a local university.
However, because I KonMari’d my clothes before the Asia trip, and because I only had backpacker clothing, I over-spent $1,000 on “professional business casual” clothing that I shouldn’t have bought.
In my exuberance at getting the job, I bought way more clothing than I needed.
I could have done away with at least half of the purchases.
And after I completed my university job, I ended up donating 2/3 of the clothes.
So add $1,000 to the credit card balance.
I Got A New MacBook Pro
Before going to Asia for 4 months, my MacBook Pro broke. The screen stopped working. It was from 2011-2012.
It served me well for the roughly five years I had it.
I bought the 2015 or 2016 MacBook Pro for around $2,500-3000. Forgot which one.
I made sure to pay for the upgrade for memory and RAM so it was faster and had more space to store files for the many years I plan to have it.
Add $3,000 to the credit card balances.
So right now, we’re looking at over $10-12,000 dollars.
I remember there was a time when all 3 of my credit cards were maxed out and it wasn’t a pleasant feeling.
I felt kind of hopeless. But I also realized that I did it all to myself.
Car Needed To Be Fixed
When we were gone in warm tropical Thailand, New York experienced harsh winters and I guess this took a toll on the cars parked at our parents houses.
My Jeep needed about $1600 worth of repairs to fix it. And my girlfriend’s car needed over $1000.
So add a couple more thousand to the credit card balance.
Now we’re looking at over $13,000 in debt. 🙂
Credit Score Took A Hit
My credit score took some hits.
While in Asia, I didn’t have access to my bill pay at some point and missed two payments.
Really, it was because I was too lazy to figure out a way to pay it while in Asia and this laziness took my credit score from a pristine 755 down to the 600’s.
By the time I maxed out my credit cards from consumeristic tendencies, my credit score was below 650.
This sucked. I had always prided myself on having such a great credit score and no debt.
It sucked completely.
Hopes Vs Reality
I got a job and hoped that the income coming in would pay for the thousands of dollars of the credit card balance.
Even though it was at a prestigious private liberal arts college, the pay was alright but the job was part-time and I was apparently too lazy to get another part time job.
So the single part-time income didn’t help much.
I tried to use the biweekly paycheck to pay off the balance but some how, it just didn’t seem to be enough.
Then the promotional period ended on the Barclay Card and interest started accruing.
$150 in interest a month. $70 in principle. Just for the Barclay Card.
The Solution Was Simple – The Execution…Not So Much
I still had my money in Vanguard and Wealthfront mutual funds.
All I had to do was sell out of them and I’d be able to pay off the balance in full right then and there.
But sadly, I didn’t do it.
Which is why please learn from my mistake and don’t let your emotions and attachment to your mutual funds get in the way of doing what’s necessary.
It took me a full year to finally be like, “Okay, I’m done with this crap. Sell out some Vanguard.”
After all, isn’t money supposed to be able to help us enjoy life more?
It can cause us anxiety, or it can cause us relief, depending on how it’s used.
The Fear Involved
I dug a little existentially deeper and think that the reason why I didn’t want to sell out of the Vanguard mutual funds was because I was deep down afraid that if I sold out of some funds, I’m going to be setting myself back from reaching financial independence.
Maybe I thought that if I did it, it would take me even longer to reach financial independence and I didn’t want that.
Also deep down, it might be me seeing my Vanguard money as something that I spent years putting away, little by little, to try and grow a giant tree for myself to rest in the shade of its majestic beauty.
And selling out of some now would be like asking me to cut down my tree while it’s still a sapling.
I even wrote a post on why reaching financial independence is like planting a tree, which you can read here.
But you know what was really setting me back from reaching financial independence?
The crushing debt and interest payments.
So by finally selling out of some Vanguard money to pay off all the credit cards, I’m wiping my debt slate clean and starting over.
Looking forward to not having interest and principle payments for credit cards.
And I’m going to see about using debit card and cash whenever I can. And only credit card hack vacations and trips when absolutely necessary and only if I have the cash on hand to pay it off right away.
The Mini Emotional Roller Coaster
To be honest though, I tried to train myself to not get too attached to money itself.
Trying to be very zen Buddhist about it.
But you can see it didn’t quite work 😅
Which is why I felt anxious and anguished over whether I should sell out some mutual funds or not.
But when I finally mustered up the courage and it came time to sell them and pay off the cards, I did so without hesitation and clicked “sell” without second guessing myself.
I didn’t feel anything when I clicked “sell” either.
It might be that I had emotionally shut down after the mini shock of selling out of years worth of saved up income and hard work because it wasn’t just to pay off the Asia trip, it was for the clothes and the MacBook Pro and the car repairs.
I’m still in a mini state of shock and as of right now don’t want to look at my vanguard mutual fund balance.
On one hand, I will give myself time to grieve at the loss of my vanguard funds.
On the other hand, I’m mentally rejoicing that I don’t have credit card balances anymore.
For future trips, I’m definitely going to aim to just keep the money in either Ally Bank Savings account or just in my personal checking account’s savings account because the money can be instantly transferred when needed.
The Ally Bank Savings would just be nice because right now they’re paying 1.60% interest a year. Can’t get that with my bank’s 0.25% savings interest rate.
And if I do the credit card hacks again for travels, I will aim to better pay off right away the credit cards and not let the interest accrue.
It only took me a couple hundreds of dollars in interest for me to figure that out. 😆
And a year of lament and existential anguish.
Though to each their own 🙂
Good luck with your financial goals!
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