Debt. AKA the really vulnerable blog post.

At Problogger (I know, lately all of my blog posts begin with that sentence - it's just because I was SO inspired!), Darren Rowse and other guest speakers like Andrea from Fox in Flats and Caz from Y Travel Blog talked of being brave and publishing a post that reveals something really personal about yourself - these posts showing your vulnerability will mean the most to readers, because its likely they will identify with what you've written. I write about quite personal stuff here, with boundaries. I've written about love, grief, death, sex, fandom and pain. I called my Mum on Saturday night and told her that I'm finally writing a blog post about my former bad financial habits. It felt cathartic to do so. And maybe one of you readers will identify with what I've written.

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People only talk about money when they're doing well with it. Good debts like a house, investments or a lottery win. No one talks about when things get tough and they're receiving a final demand notice for their electricity bill or when their mother gets a call to follow up why her daughter's store credit card hadn't been paid off. That was my electricity bill and my mother receiving a letter from a debt collector for my debts, maybe six or seven years ago. Being bad with money is shameful, guilt ridden and a stain on a seemingly perfect life.

I came across a young woman in her early 20s, showcasing her latest purchases, proudly announcing that she has no financial control. This worried me - because I've been there. I was that 21, 22, 23, 24 year old. I wanted to tell her how dangerous her habits were - that they were nothing to be proud of or laugh off.

It started with that pesky 12 month interest free payment plan for my first computer in September 2003. Who knew no monthly payments doesn't actually mean NO PAYMENTS?! The life of the debt was longer than the life of that computer. And then there was a bank credit card or two, and some bills - phone bills, electricity and gas bills - that I ignored and went shopping for clothes instead. I thought the bills would go away. But they didn't.

Getting into debt was a bit like gambling, I guess. I'd shop, I'd ignore the bills, and I'd get some instant gratification out of the purchase of a new dress or DVD. I'd get a rush, shopping was a hobby, and I'd do it regularly. Maybe it was loneliness, or unhappiness with my situation at the time, and I think it had a lot to do with clothing aspiration through reading a fashion forum. My purchases were nothing lavish, no brand names - but they just added up, and spending frivolously came before the bills. I wasn't in debt a huge amount - maybe $3000 or $4000 in total - but I was drowning. I'd be awake at night worried how I would pay debts off, I'd worry that I couldn't afford the things I really needed - food and my tablets and creams.

And then my Mum found out. That was scarier than the knock on the door from a debt collector. But having someone in my life know my situation was a relief. Mum didn't have to rescue me, but she did. She paid off my debts - and I paid her back - as much as I was able to afford each pay. It took more than a year to do. At the time when Mum found out I was in trouble, I called Lifeline to talk things through. And I asked one of my best friends - an accountant - to draw up an budget for me.

That budget was drawn up about six years ago - and I still stick to a similar budget now, even though my wage has increased. At the time, I also made sure I scheduled all of my bills via direct debit so I didn't have to think about them. I pay off a little of my gas and electricity each pay day, so I don't deal with a big quarterly bill. (Once my electricity was out when I arrived home at night, and I called the energy company to check if there was a local fault or a problem with my account - and they said I was in credit by $600! Six hundred dollars!! That would never have been the case in 2006!)

I haven't given a house purchase much thought, because the reality is, housing prices are too high for me to afford. But I know that my credit rating will be tarnished by my need for a quick splurge at the shops one lonely Saturday afternoon when I was in my early-mid 20s.

In the four years, since paying off those debts, I've improved with money and bills by a thousand percent:

I am a secondary credit card holder with my Mum, and I pay off my credit card by the end of the month if I use it (and she reminds me if I haven't!).

I use my credit card for online purchases like domestic flights, accommodation and bulk concert tickets - but they're rare purchases. I occasionally use my credit card for in-store purchases like my new fridge last month or my MacBook in 2010, but I make sure I have the money in the bank to pay those purchases off right away or forecast how long it may take to pay them off before buying them. I use my Visa and MasterCard debit cards (above) for most online purchases and all of my everyday in-store purchases.

I schedule all my bills so they're being paid off by direct debit each pay. I pay a little of my utilities and insurance off this way so they're more manageable.

Shopping is no longer a hobby. But I don't feel bad when I spend the money that I've allocated myself to spend on fun stuff. (I bought a few lovely things on the Gold Coast, and the money I had left over was out straight back into my savings account.) I've also cut down on reading magazines that make me want to shop (ironically, even though I read Shop Til You Drop mag each month!) and spend very little time on the fashion forums. I don't aspire to dress like others now. I save for a purchase and use lay-by on occasion (I bought my new quilt and a dress on lay-by).

I talk about money now - at least to my Mum and accountant friend. I tell them how much I've got saved up. And I admit - to myself - when I can't afford to do spend money or do something that is out of my budget.

I've got some savings. All of the money I get for writing and speaking is paid directly into a high interest savings account that is not linked to my debit card or internet banking, and I put a portion of my day job pay into this account each fortnight. I have another online savings account that I can access for spare money if I need it. Sometimes I feel like I'm still skating on thin ice with my every day spendings account, but I've always got a buffer. And I make savings goals - I see that holiday that is 30 March 2014, and I know I must save for it.

I was so proud to have $8000 in savings a few weeks ago. I was even prouder to be able to pay for my entire previous trip overseas with my own money (I set myself little goals - buying tickets for BlogHer, then the airfares, then accommodation and finally saving up my spending money). And I paid for the airline tickets for my next trip up front.

I may not be rich but I've got my shit together with my money and bills. I used to be scared to look at my bank account and to open bills, and now I am not. And it feels so bloody good.

To that girl in her early 20s, who's proud of her lack of financial control and credit card adventures - I urge you to be careful. Those clothes may look great on you and make you squeal and sigh when you unwrap them at home. Shopping may be a social, adrenaline filled activity. But that credit card bill and possible future debt might not bring you so much joy - instead it may lead to guilt, worry and sadness, spiralling into further debt, fearing the debt collector, getting a bad credit rating and not being able to afford the essentials - all making you wonder whether that new dress was even worth it?. The clothes I got into debt for were in fashion for one season. My debt lasted longer.

Don't be proud of being financially out of control. Be proud of saving and paying those bills and that credit card off. Be proud of being able to pay for your purchases up front.

If you're seeking financial counselling, visit Money Smart - the Australian government website.

If you need to talk to someone, call Lifeline on 13 11 14.

 

Expectation of wealth - guest post by Kylie Ofiu

 "So when you gonna get a real job son
And buy a little real estate?
If that means living someone elses life
I guess we’re gonna have to wait
Another day"
~ Bob Evans, Hand Me Downs

Lots of people expect me to be more financially advanced than I am. Owning a house. A better car. And a yearly holiday. In my dreams. 

Money expert Kylie Ofiu from Aspiring Millionaire wrote this guest post for my blog. Enjoy!

These days the pressure to be incredibly successful and wealthy is enormous. Pretty much anyone can become a celebrity it seems with reality TV being churned out like never before. It seems everywhere we look other people are living rich fantasy lives which puts a lot of pressure on those who are living on a more average wage. 

It seems the pressure to keep up with the Jones’ is worse now than ever before because what everyone else has is thrust in our faces all day every day. At any given time online, on TV, through social media websites, radio and magazines we can see what everyone else has and is doing and it can make us feel like we are missing out, that working more and earning more money will solve all our problems. 

What is interesting though is if you look past the lifestyles to the real lives of the really rich such as Warren Buffet he lives in the same house he bought years ago and has always lived a modest lifestyle, yet he is one of the richest men in the world. The book The Millionaire Next Door discusses this in detail, how most real millionaire do not live the lifestyle we expect millionaires to have. 

The pressure of trying to keep up with the Jones’ is unrealistic. Most people cannot afford the fancy cars, new clothes all the time, the mansion and unfortunately throw themselves into a lot of debt in order to live this way. Yes, some people can afford it, but it is often at a great sacrifice to family life. 

There is nothing wrong with aiming higher and striving to succeed or dreaming about being financially successful. The problem comes when it is done with a negative attitude and a general dissatisfaction with your life. 

If you look around the world, there is so much poverty and homelessness that if you have a job and somewhere to live, realistically you are financially successful. It is estimated that ¼ of the world’s population is homeless; over half the world’s population live on less than $2.50 a day. If you have more than that you are successful. 

If you are looking to be financially successful you more than likely are. If you are looking to be financially successful as the Western world sees it you can be, but it is not easy. It takes either a lot of hard work to create something worthwhile or that will sell to the masses; a qualification in a highly specialised field or you need to find a way onto a reality TV show. 

It all comes down to your personal view on financial success. Would $60,000 a year be successful for you? If so, that is doable with many careers. You might need to study and work a while to achieve it, but it is achievable. Would you prefer $150,000 or more a year? If so, again it is achievable but what you gain in money you may lose in big taxes and often a loss of family and social life. Most doctors and lawyers who are on the six figure incomes have to work 70+ hours a week so they often well and truly earn their income. Also when you are on that sort of income you are taxed quite handsomely. 

In order to determine if you are successful or not you need to define what success is to you. Once you know what it is to you, it is easy to see if you are headed in the right direction or if you need to make some changes. Sometimes in order to earn the big money you will need to study for years, move town or even country and often work long and hard. But if that is what you want, go for it. Nothing is stopping you. 

The reality of it all is that you can change your situation, you just need the drive and motivation to do so, which is what most people lack. Decide what it is you want, make a plan and go for it. I am a big believer in the power of positive thinking and aiming high, but also understand not everyone shares my view.  

Kylie Ofiu is author of 365 Ways to Make Money. Her blog www.kylieofiu.com is where she shares what she is doing as well as ways to make and save money.