Tuesday January 08th 2008, 10:18 am
Filed under: Debt, People, Personal Finance, Saving, personal finance bloggers
“Debt can make your life feel out of your hands, so the more control and order you can bring to your finances the better you will feel about the struggle.”
URL: http://www.debtkid.com
Blog Name: DebtKid
Blog Start Date: January 2007
Tagline: 300K down, tryin’ to get back to zero
It’s not unusual — in fact, downright common — for Americans to be deep in debt. Combine the raising costs of education, easy access to credit cards, low savings rates, and so many good toys to buy…it’s no wonder we’re a country of debtors!
YET, debt still remains a painful topic for many. Not everyone wishes to discuss it. That is why I am pleased to introduce DebtKid. Even though he writes anonymously he provides a voice to many who have debt. No matter how much or little you’re “in the red” it is helpful to know you’re not alone.
DebtKid, a lot of your debt came from repeated, highly speculative stock trading starting when you were 18 during the “go-go ’90s”. Some would consider destructive financial behavior — like gambling, incurring excessive debt — also signs of a certain form of addiction. Do you consider this to be true in your situation? Have you ever considered your present journey to have parallels to an addict’s recovery? And do you think you’ll ever trade stock again?
I do think my situation has been similar to an addict’s recovery. I was, without a doubt, addicted to trading very speculative investments. It impacted my daily life, my sleep schedule, my relationships, everything.
The good news is that after the first few months of explaining everything to my family, most of my “urges” to trade faded. I also saw a counselor during that time, which I believe was helpful as well.
Will I trade stocks again? No. Will I invest in stocks again at some point, yes, I hope so. I think I could handle owning stocks again, as long as I had set rules about holding for the long term.
Let’s talk a little about what your debt situation has cost you — not in terms of money, but in other ways. How has this experience changed you or relationships with others?
This (ongoing) experience has had a big impact on my relationships with others. Coming out and telling friends that you lost 140K of your mother’s money, or that you’re filing for bankruptcy…It’s not an easy discussion to have. I pulled away from many relationships because I just couldn’t be very authentic in them. It’s hard to keep or form a deep relationship with someone when you hide important aspects of your life from them.
This is an area I’m really focusing on this year. I’m in a place now where I shouldn’t be as ashamed of my mistakes as I am. I’ve been taking the right steps to fix my situation, but it is still hard.
The good news is that I have a very supportive family, and a few wonderful friends who know my situation and still think I’m an OK guy.
I really admire your decision to pay all of your debts, including one of the most important ones: the debt you owe your mother. Some neglect personal loans because they feel the interest is low or that these loans do not influence their credit report. Yet, your decision repaying your mother shows that you value your relationship with her over any credit report gains that could be made “on paper”. Describe a little how this personal debt figures into the larger landscape of your repayment plan.
The money that I owe my Mother is probably the highest priority debt that I have. It may be the debt that gets paid off last, but it will be paid off! It was never a traditional loan (I was in charge of her own investment accounts and lost that much money), but I treat it as if it is.
I send a small payment to my Mom each month. Enough to help her with her bills, but significant enough that it knocked a little over 4K from the total last year.
My ultimate goal is to have enough in an investment/savings account to be able to send a $1,000 a month home. This would hit the $12,000 max gift a year and avoid any tax implications for my Mom.
At this point, my credit is so horrendously trashed it’s really not even an issue at this time in my life. For the next few years (and maybe forever!) I’m a cash only guy.
Anyone in severe debt can relate to the toll it takes on self-esteem. What are some things you do to keep yourself in a positive frame of mind? What do you do for yourself to show respect and kindness to yourself (as I think a lot of self-hatred can grow from difficult money situations)?
Debt can really get to you if you let it. One thing that helps me is that I know I’m controlling the things I can control. I have a budget. I have business plans that I’m following to try and increase how much my business brings in each month. I have back-up plans, etc. Reminding myself that I’m doing what I can helps keep away the thoughts that say, “You’re not worth anything” or “You’ll never be out of debt”.
I also remind myself that if it wasn’t for my past mistakes, I’d be doing great financially. I have a growing business, and if I didn’t have my debt obligations I’d be saving a ton each month.
I also excercize to keep myself in good shape physically (gotta compensate for my financial fitness somewhere!). Oh, and every once in a while I treat myself to a frosty and fries from Wendy’s when I have a good day.
What advice would you offer someone else struggling with what appears to be an impossible debt situation?
First off, don’t try and tackle this all on your own. You need friends and or family that can support you and most importantly keep you accountable.
Secondly, control what you can. You can call your credit card company to negotiate a lower interest rate. You can create a budget (geezeo is great for this!). Debt can make your life feel out of your hands, so the more control and order you can bring to your finances the better you will feel about the struggle.
Thirdly, consider a creative outlet. For me, my blog allows me to vent and discuss some of the debt and financially issues that I can’t always bring up in normal conversation. Maybe it’s blogging, maybe it’s painting, maybe it’s journaling. A creative outlet is vital to dealing with the wide range of emotions a difficult debt situation brings to your life.
What has been the most surprising part of the repayment journey so far?
I think the most surprising part has to be all the wonderful support that I’ve gotten from both readers of my blog, and my family and friends as well. Without either of those two groups, I know I would not be where I am right now.
I’ve also discovered that I really love personal finance. I find a budget liberating, and I love all the great financial tips that I get from the many personal finance blogs I read each day.
Finally, you’ve made yourself a goal to save a $1,000 in an emergency account. Why save for emergencies when you have so much debt?
I think it’s important to have a cash cushion, not just a cushion between your credit card balance and your credit card limit. Plus, all my debt accounts have been closed or put into collection…so I couldn’t access them even if I tried!
Also, for me personally, having a savings account that actually has a decent chunk of change in it is not something I’ve ever done. I hope to fund that 1K account and then start attacking some of my other debts!
Any final words?
You are more than your net worth. Seriously.
So true. Thanks, DebtKid, for sharing a little of your story. The best of luck in your pursuit. You can find DebtKid at his blog, debtkid.com. And you can find others who share similar challenges and triumphs in Geezeo’s Groups. Gain some feelings of control by actively managing your money. Geezeo can help!
January 8th, 2008 at 5:26 pm
[...] balances left on your budget. I did an interview with them over Christmastime, which they have now posted on their blog. It ended up being a good kathartic piece for me to write. The questions they asked really made me [...]