Money Story #8: Seasicksquid in New Orleans

This is the story of a girl in New Orleans… trying to go back to school after some time away.

I’m a 23 female living in New Orleans, LA. I went to school for 4 years and stopped after I was in a bad car accident last spring. I moved back home to get back on my feet. I also was unsure of where I was going and not doing so well in school, which I have discovered is due to recently diagnosed ADD, so I decided against immediately returning to school. I live rent free at home. In return for free rent, I am obligated to clean the house from top to bottom twice per month. Good deal, if you ask me.

It was about 9 months ago that I moved back home, and in that time I’ve impressed myself quite a bit – I paid off $3,000 in credit card debt, purchased a car with my own money, saved money, and held down a full time “real” job and been very successful, overall. I also have a 30 hour per week part time job. After taxes, 8% to my 401(k) at my full time job, and health care, I take home about $2,100 or so depending on my hours at my part time job.

My monthly expenses break down something like this:
Car Payment: $300
Tolls: $40
Gas: $150
Personal Care: $250 (includes entertainment, toiletries, food, clothing, pocket money)
Student Loan Payments: $200
Savings: $1200

About my auto expenses…they are high and they drive me crazy, however, I am overpaying on my car loan by $75 automatically to reduce the term of my loan so I can own my car sooner. I have a 40 mile commute, but if I didn’t commute, I would not have a job.

I would love to move out on my own, but following Katrina, rents have skyrocketed in New Orleans and I don’t feel paying 50+% of my income for a hole in the wall in a not-so-nice neighborhood. Despite the successes I’m having, I am not too happy with my current job or situation. Part of the reason I am saving so much in lieu of getting an apartment on my own (or buying anything for myself) is because by August or January, I want to go back to school to finish the year and a half it would take me to complete my degree. I think I’ve finally figured out what I want to do and am ready to commit to it. I wasn’t before. I think it took getting me out in the real(ish) world to figure out what I wanted my life to be and focus me.

In college, you can be as optimistic and dreamy as you want, but I don’t think anyone really knows what their goals will be once they step out. Personally, I think that will make me even more marketable once I get my degree. My degree will be thoughtful, not forced. I’m sure there are many people who know exactly what they want to do from the start and are able to do that – I’m not one of them. I’ve also decided that my life is going to be about happiness and success, not about working a job I hate (like I am now) for the sake of paying my bills and having stuff. I have dreams, and I finally figured out how I can do it. Or at least try it, anyway.

My parents have agreed to let me live with them rent free, but they’re not going to help pay for school again. My goal is to have at least $10,000 before I go back to school, although I’ll be more comfortable with $15,000, which I can accomplish if I wait until January. Since I plan on going to LSU (Louisiana State University) where rent is actually affordable, I should be able to live somewhat comfortable on that for a year with part time income supplementing.

As for my career aspirations, after I graduate, I actually don’t want to start working right away – I think I might go into the Peace Corps. I hope to find contacts and friends there who will help me find a job in the international realm working with emerging markets – specifically Africa. I spent half of 2006 in South Africa and hope to move back there on a more permanent basis eventually. I’m now willing to work for it – in college, frankly, I wasn’t.

That’s my story and I’m definitely sticking to it =)

Wow… Seasicksquid is working 70 hours a week (full time real job + 30 hour/week part-time job) AND has the time and energy to clean her house twice a month. I am impressed… that’s a hard schedule. I wish her the best of luck!

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Money Story #7: MsBusyVee in Norcal

Our next story is from a reader in Northern California.. about how she fell in love (and the credit debt trap), and what she’s doing about it right now.

Have I got a money story for you.

It started when I was in high school. My boyfriend came from a family that wasn’t very well off and he didn’t have a lot of money, and I came from a family that was very financially sound. Of course, being young and naive, I thought that in order to keep him, I should buy him everything under the sun.

A couple years went by and I eventually opened a couple of credit cards, with him as an authorized buyer, so that he could have and build some credit. We racked up some debt, but it was nothing compared to what was coming. A couple more years passed, and we decided to move in together. All this took place before I got wise to the game and began to really read about financial health.

During our first year together, we stupidly decided to buy some new furniture for the house, which meant that we spent almost $1000 on the credit card. Then his car broke down, which cost $800 to fix, also on the credit card. Then the car was towed; the woman who worked there gave us some wrong information and long story short, we needed to pay about $600 in towing storage fees, in cash. Of course, we didn’t have that type of money so where did we go? To the *good* old credit card. Needless to say, we are now over our heads in debt.

I am a twenty-something working professional that makes pretty good money, and my boyfriend is working as a sales associate. We live in Oakland but work in San Francisco. We are both attending school (I am in graduate school for psychology and he is getting his degree), which means that in addition to the ugly credit card debt, we also have major school loans.

I can’t tell you how stressful it is to have overwhelming debt and I kick myself everyday about making those unfortunate decisions. It also brings a lot of stress into our relationship because our budget is so tight. We’ll fight because he’ll go and spend money that I’ve budgeted for a credit card payment on something trivial.

I throw as much as we can at the debt, but it just seems to never go away. Reading your blog, as well as blogs of other people who have been there, gives me a source of inspiration to know that there is light at the end of the tunnel. We definitely have made a commitment to slay the beast together, so it helps our relationship that we’re on the same page about that. My boyfriend is trying to get a job that will start off at around 50k, and I am hoping that we can bring the monster down significantly before I have to leave my job or work part time during my internship / postdoc years. We’re working on it, slowly but surely.

Anyway, I just wanted to share my story as a warning to others about how easy it is to rack up a ginormous amount of debt in a small amount of time. Please be careful with those credit cards and live within your means!!

-Thanks for listening / reading.

MsBusyVee, thanks for sharing! Going into debt for a significant other (unless it’s “good debt” and you two are very committed, i.e., married) is rarely a good idea in my book.

Has any readers experienced something similar?

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Money Story #6: Beachgirl in D.C.

This money story is of Beachgirl, a long-time pf blogger who is “living the American Dream” and “paying off some debts in order to do it.” Here she tells us how she did it.

I’m 27, live in the DC-metro area, and work as a consultant. I was lucky in that my mom taught me starting from a young age about money and how to be responsible with it. When I went to college and got my first credit card, I was smart and only charged what I could pay off. I’ve never had a balance on my credit card, except when it was a 0% interest rate. Even then, I make sure to pay it off fully before any interest would kick in.

When I graduated from undergrad, I only had about $9,000 in student loans. However, I didn’t really know what I wanted to do after I graduated, so I went to grad school. While I don’t regret my decision to go to grad school (it helped me get where I am today), I amassed a total of $45,000 in school loans.

Most of the debt ($40,000) was federal loans and I able to consolidate them at 2.625% for 30 years. The last $5,000 was a private loan with a variable interest rate. When I started paying on it in November 2004, the rate was about 4%. When I paid it off in March 2007, it was over 8%.

My parents are having some financial difficulties due to my dad’s illness. He lost his job and is now applying for disability. Having rarely worked for anyone that provided retirement benefits, they have very little saved for retirement. They are also without medical insurance, which is too expensive for them to pay for themselves. They have borrowed money from me, which I am more than willing to do. I know they would do the same for me if the roles were reversed.

My goals are to pay off my debt and continue to save money so that I can provide a better future for myself and my parents.

Even though financial experts may advise caution in helping out family members financially, like Beachgirl, I can’t imagine NOT helping my parents if they really needed it. Beachgirl is facing what many Americans may face in the coming years as Baby Boomers become older… I guess all we can do is save & pray.

Please check out her blog at beachgirlsbudgetblog.blogspot.com for more!

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See here for more Money Stories

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Follow-up to Marie

So in my previous post I had some questions for Marie, the 20something who is coming to grips with her family’s influence on her finances and her choices… and Marie was nice enough to answer back!

What did you think while your father was indulging you with the cars & such?
Partly because of the fact that I was still a child/adolescent and my thinking processes weren’t fully developed, I didn’t think about what it took to buy things and whether my parents were being financially responsible. The other part is that I just didn’t know any other way of life: I went to school and was friends with upper middle class children, and my extended family is financially comfortable, so I thought material possesions were the norm.

Do you think that watching his behavior made you assume that having credit card debt is okay? Growing up and when I was in undergrad, I thought credit cards could be used to buy whatever made you wanted. Now, however, I definitely do not think that carrying credit card debt is ok. 

Has money affected your relationship with your father now?
Absolutely! Although my dad loves myself and my siblings immensely, because of the way he was raised he tries to use material items to show his love. And his lack of and mismanagement of money is an issue that permeates every aspect of my life. Regardless, I love him and I’ve already come to terms with the fact that I will probably be supporting him in his older age.

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Money Story #5: Marie in Houston

Very long (but extremely interesting!) story about “Marie”, who lives in Texas. She writes of family (in particular her father’s) influence on her view and management of money.

I am 24 years old, currently live in Houston, Tx, and work at a higher education institution. I have to examine my grandparents and parents finances to lead up to my own financial situation as a 20-something. Both of my parents were born and raised in Latin American countries, and their respective families were well-to-do/wealthy in Latin American standards, translating to maids, large houses, private schooling, and attending college ‘abroad,’ either in the US or Europe.

However, neither of my parents’ family was flashy or flagrant- my mother had 5 siblings, and she emphasizes to myself and my brothers how hard both her parents and my father’s parents worked to be able to provide the lifestyle they lived.

My father was a ‘surprise’ baby- born when my grandmother was in her late 30s, he was 10 and 12 years younger than my two uncles. This large age difference coupled with the fact that my grandparents were older and couldn’t deal with a young child, led to my father being spoiled as he grew up, and eventually sent away to boarding school. Constant indulgence meant my father never learned self-denial and has acted on his impulses all his life. To this day he live paycheck to paycheck, doesn’t have health insurance, life insurance, retirement savings, pays all his bills late, his credit score is in the garbage, and to top it all off owes the IRS money and my mother back child support, leading to his bank accounts being frozen and assets seized multiple times. Ironically, my mother is the epitome of self denial- she currently lives on $500 a month from Social Security.

So how did these opposites get together? My mother became pregnant while in college, and they got married. This was the start of many bad decisions, as my parents continued to have children and my mom never finished her college degree. This meant she was limited in the jobs she was eligible for and the maximum pay she could receive. I think she was happier than I was on my college graduation day, because simply having a degree opens so many more doors for you.

My father, although obtaining a degree in architecture and working as an architect for a few years, decided that he did not like having an ‘office job,’ and coinciding with my birth he quit the relatively lucrative field of healthcare architecture for his passion, photography. For the majority of my childhood he was the sole breadwinner for our family of 5 with a maximum income of around $50,000. That income was supplemented by my paternal grandparents (still indulging my dad!) and my mother eventually working full time prior to my parents divorce.

Growing up, however, I wasn’t fully aware of our financial situation- my parents (with my grandparents help) bought a large, slightly run down house in a good neighborhood, and we attended good schools. Summer vacations were funded by my grandparents, and we did have brand name luxury items due to my father’s self-indulgence and desire to indulge his children as well.

I have a vivid memory, however, of being around 10 years old and my next door neighbor, a girl a year or two younger than me, asking ‘what it felt like to be poor.’ I also remember my father always making the joke after Christmas about ‘Santa being broke.’ And we never had health insurance until my mother started working full time.

So fast forward past my parent’s divorce, my mother suffered a stroke which left her partially paralyzed. She could no longer work, and my younger brother and I (still dependants) were eligible for Medicare and other governmental assistance. I was actually glad because this meant I could go to the doctor if sick, get new eyeglasses, etc. I had also entered high school, and started working to pay for my clothes, discretionary spending, etc.

My father, continuing to indulge his children, bought me a brand new car when I was 16- which took him 6 years to pay for. I applied to college, and lucky for me was accepted to a large public institution with a full financial aid package, including about $5k in loans a year.

In college, I was the model of living above your means- large apartments, opening credit cards to pay for living expenses (including a bed, mattress, computer, lots of clothes and eating out) and basically maxing out everything available to me. I studied abroad my junior year, living in France for a total cost of $30k, about $25k of which was funded by loans. My mother constantly asked me about my credit cards since all my mail went to her house, saying that she was worried about how much I owed.

By the time I graduated college, I had about $53k in loans and $15k in credit card debt, with no one besides my mother knowing the full extent of my finances. My father’s car was repossessed at this time, so when I moved back home he started using my car and after finding a job I bought a used luxury car for the sweet deal (not) of $17k, bringing my total debt to a little over $85k.

That was about a year ago, and I had a wake up call about 6 months ago. My entire life I had been surrounded by irresponsible financial decisions, and had never learned how to manage finances successfully. My debt was consuming me- I worried about money all the time, and I couldn’t do anything that I wanted to do because all of my take home pay was used to pay credit cards, my car loan, and my school loans. I had no idea where my money was going or what it would take to pay off my debt. I couldn’t move out of my dad’s house because I couldn’t afford an apartment.

My boyfriend kept nagging me to take a vacation together, but I couldn’t tell him the real reason why this wasn’t possible- my massive debt. I finally cracked in December and told him how much I owed, which makes 2 people who know the full extent now. 🙂

I try to be open and honest with my family and my boyfriend now about my finances and money in general, especially with my younger brother who is a sophomore in college, paying for it the same was I did- primarily loans. I also lecture my boyfriend, who doesn’t budget and doesn’t have any retirement savings. I have a pretty strict budget, but it’s hard to constantly battle the urge to shop, eat out, etc. I read lots of PF blogs for budgeting/saving ideas and bolster my resolve to pay off all my debt.

My total debt now stands at $72k, and I’m also funding a 403b through work and building an emergency fund. In terms of the future, I’m considering getting a second job to help pay off debt faster, and help defray the costs I will incur when I move out of my dad’s house next month.

Did I mention I will also be applying to medical school this year? So although I know my financial situation will get waaaaaaaay worse in the next few years because of med school loans, I think I am at least better educated now to not fall into the same traps I did growing up and in undergrad- including using credit cards endlessly, not budgeting, not facing my financial problems, etc. Also, I hope to have all my consumer debt (around $19k) paid off by the time I enter med school in the fall of 2009. Then I will only have student loans left, which the interest can be deferred while I am in school.

Whew! If you got through all that, congrats! I’m glad that Marie is now on track with her finances, and on her way to a fairly lucrative career as a doctor (although, the loans!). Marie – what did you think while your father was indulging you with the cars & such? Do you think that watching his behavior made you assume that having credit card debt is okay? Has money affected your relationship with your father now?

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Please check out more Money Stories here!

Email me if you want to share yours.

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Money Story #4: So@24 in Los Angeles

With this story, the 20something Money Stories series has officially crossed the Great Gender Divide!

In other words, let me welcome the first story submitted by a male author, a quarterlifer Angeleno working in the communications/media industry.

Well. Hello there.

A few days ago, I was asked by Well-Heeled to write a guest entry for her blog.

“But what would I write about? Your blog discusses financial responsibility while mine is cluttered with emo postings of my ex girlfriend and guy jokes.”
“Just write whatever you’d like”

Alright then. But in doing so, I am doing my best to honor the themes of both of our blogs. How to manage money and the experience of starting life as a single guy at the age of 24. So here goes:

After the first couple of months moping around, chugging 12 packs of Natural Ice beer on my front porch listening to Ben Folds and wondering “why”; I had to embrace that my life was changing and I had to adjust to being a bachelor for my first time. I found that I was spending my hard earned coin in ways that I have never done before. Here are the top 3 money sucking variables I’ve experienced as a single guy:

1. Clothing. I have terrible, terrible fashion sense. When you’re dating a girl for 6 years, you get lazy when it comes to clothing. I can remember many, many times getting ready to go out for a night on the town, only to have my ex sigh, shoot me a look of disbelief, spin me around on my heels, and march me back into my closet. Alas, I no longer have that luxury. But I needed to be able to look attractive to members of the opposite sex and skate tees weren’t cutting it.

Now I send my cousin a couple hundred dollars every six months or so. She is perfect for finding new outfits for me with the best deals. She buys them and send them down to me. I never question what she buys! Every article of clothing I wear now are things she has picked out for me.

2. Room decor. My roommate (quite the ladies man with quite the record) walked into my room one afternoon during a cleaning day and said to me, “This needs to change if you ever hope to bring a girl home.”

“What do you mean?”

“It looks as if a child lives here.”

And we was right. I never bought proper furniture for my bedroom when I moved down to Los Angeles after college. I used empty milk crates and oranges boxes for my clothes. My comforter was one I had kept since… well… since I can remember. It was a car blanket and I can’t tell you how many times I’d get “Oh my God! I used to have that!” My ex never complained, but now were different times. I rolled up my beloved “blankie” and made a trip to Bed, Bath, and Beyond (sigh). I had no idea how much comforters / comforter covers cost! I swear there’s some undercover racket going on in the linens industry. Alas, it was necessary.

My oranges boxes were trashed and a real, “adult” dresser was acquired.

But I refuse to take down my Spider Man poster. God help me if I ever have to take down my Spider Man poster.

3. Bar money. Gotta go out and meet people. And the best way to do so at my age and in my part of the country, is bar hopping. I was going out on weekends more than I ever had before. That gets spendy, Lordy, does it keep spendy. I’m buying drinks for myself, rounds for my friends. For the record, I’ve never purchased a drink for a girl I’ve never known. That just seems cliche’d and honestly, does it really work? I have my doubts with that route. But to be social cuts deep into my paycheck. It hasn’t really paid off in the romantic arena yet, but… I have faith.

There you have it!

I want to thank our host Well-Heeled for having me on. -takes sip from coffee mug- And to all of you who endured reading the financial woes of a single 20-something living in sunny Los Angeles, California.

So, male readers out there – if you have a story, please do share. Someone else has already taken the first plunge! 😉

Check out So@24’s personal blog for more!

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Money Story #3: Melbourne Girl in Melbourne, Australia

Here’s the first international 20something money story… about a 27-year-old living in the Down Under.

I don’t have a blog, but I’ve been thinking of starting one when I have the time. So for practice, I thought I’d write my money story. I know your focus is on demography rather than geography, however my location is my main point of difference – I’m a twenty-seven year old grad living in Melbourne, Australia.

I’ve had an interest in personal finance since I first started earning an income working part-time at university. I don’t know how it happened. One day it just dawned on me that, seeing as I didn’t know what I wanted to do with my life, getting the best marks I could in all my subjects, and saving as much money as possible, could only be a good thing. So, taking advice from my mum, (whose been a personal finance geek all her life without ever realising it), I set about making sure I didn’t pay bank fees I didn’t have to, making sure I had the cheapest mobile phone deal, earning the most interest possible on my savings etc.

Once I had all of this down pat, I ventured into purchasing shares. I bought some shares in a casino and a building products company, but not really knowing what I was doing, I sold them when they went down. A few years later I bought a book on buy-and-hold share investing called “Retire Rich and Early”. (I was so embarrassed by the title I kept it in a drawer rather than on my bookshelf!). From that book I learned how to pick quality stocks that pay dividends I can reinvest.

The sharemarket, however, is not something I have a lot of spare money for anymore as I bought my own three-bedroom unit in a decent suburb of Melbourne a couple of years ago. I achieved this by living with my parents until I was 26 (Australians tend not to go away to college unless it’s really necessary, and with housing so expensive, never leaving home until you’re in your late 20’s is becoming quite common), and by having a small inheritance from my aunt.

If it weren’t for the inheritance, I probably wouldn’t have bought such a large property. Conventional wisdom would suggest I’ve done the wrong thing by purchasing a property that’s too big for my needs with mortgage repayments that are a little restrictive. I’m happy with my decision though, because I’ve been able buy into a good area that has increased in value, and the unit is large enough for my fiance and I to live in even when we have children. My aim now is to pay as much off my mortgage as I can, as quickly as I can. My fiance has started his teaching this year, so with his income as well, this is much more achievable.

The area that I have really neglected is my career. I completed a Bachelor of Arts, majoring in languages. I didn’t know what I wanted to do after that, so for the past five years I’ve been floating around doing dead end admin and retail jobs and travelling overseas. This year, I’ve finally decided to go back to university full-time to complete an Accounting degree so I’ll have some career prospects, rather than feeling like I’m going nowhere fast.

I don’t intend to work in accounting for the rest of my life; I’m hoping that the steps I’m taking now will allow me to “retire rich and early”, so I can do something I really want to do, such as a Masters/Phd in historical linguistics, opening a homewares shop or renovating houses.

Wow – Melbourne Girl bought her own place at 26. That’s really admirable. And MG – tell me, is living in Australia really as awesome as it sounds? Do you go snorkeling? ‘Cause it sounds pretty awesome. 🙂

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Money Story #2: Elizabeth in SF
Money Story #1: Emily in Austin, TX

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Money Story #2: Elizabeth in San Francisco

This is the story of “Elizabeth,” a 27-year-old who works in the IT field in San Francisco.

I had to think long and hard before I decided to respond to the profile challenge for two reasons. The first being that I am not a very good writer and the second being that my story is very common. However, one of my resolutions for the year is to improve my writing and you can’t improve if you don’t take a chance. As for the second excuse, well, maybe my story can help someone else.

I am currently 27, living in San Francisco and in the IT field. The catch is that I have only been financially on my feet for the past six months. When I first graduated college I was very lucky, I only had a couple thousand dollars in debt from the last semester’s living expenses and my parents had given me a semi-reliable car. In addition, my new job was in the DC area and my parents lived there too so I could even live with them for a few months until I found an apartment. So how did I go from having every advantage to screwing up so badly? It was easy, pride. Looking back the signs were obvious but at the time I had no idea they were even signs or mistakes.

I found an apartment with a friend and it was great, even within my admittedly mostly theoretical budget. But I didn’t start saving for an emergency fund, instead I went shopping and signed up for a couple of new hobbies. I had been living on an extremely tight college budget for four years and I was ready to start living. I was lucky to be making a fairly decent salary so I wasn’t even racking up debt. But then my car had a problem. Nothing major but it did take up about $800 which needed to go on the credit card. And I couldn’t pay it off right away because I had already signed contracts for those expensive hobbies. Since I didn’t have a budget really, I couldn’t look at it and start cutting in various places like eating out and book buying. So I just shrugged my shoulders and figured it would be fine.

Then another car failure for another $600. And then I went on vacation. Yes, that’s right, having roughly $2000 on my credit cards at this time, I decided to go on a very expensive vacation to Honduras (which was extremely fun by the way). When I came back I now had about $5000 on my credit card. Without an emergency fund it was easy to rack up debt. I would just start to get a handle on the card when BAM! another problem or vacation would hit.

In the next two years, two more major car maintenance problems hit before I had to buy a new car, I took another vacation, this time to Africa, and I moved to a more expensive apartment, all while living the exact same lifestyle (buying clothes, enjoying my hobbies, eating out for lunch every day) as before all this debt piled up.

And then the best thing happened to me. I met two very wonderful European women who helped me get over my pride. Since in our society we don’t talk about money and problems, I have no idea how it came about but one day we started to talk and my immense stress of having roughly $18000 in credit card debt, a $15000 car loan and 2 personal loans (for hobby toys) of roughly $3000 each came out while living in apartment that I couldn’t afford. I didn’t go into specifics with them but we did talk about the fact that I had enormous debt and I couldn’t afford where I was living. I was reluctant to face facts and make drastic changes in my life but with their help and support I did.

Like most kids growing up, once I left home I passionately didn’t want to return. Partly because I liked the freedom of living on my own but also because in my mind, moving back home was admitting failure. But these two ladies brought up a very valuable point, that parents are there for help, that it is not failure to go back home and that the only failure would be to ignore my problems.

My pride still wouldn’t let me just move back home and frankly my lease wasn’t up but at this point I was opened to ideas that would let me ease my situation. At this point, a job opportunity popped up at my company that required weekly travel to the Denver area for the next six months and I took it. Two weeks later I had invoked the clause about moving states for a job, put all my stuff in a storage container that cost about a sixth of my current rent without the utilities and I took two suitcases of clothes to my parents house. I spent the next two years of my life on the road, which sucked, but I managed to pay off all my debt, build up an emergency fund, and learn some very valuable lessons about money, family and pride.

Having saved up some money, when the opportunity came to take a non-traveling job in the city of San Francisco, I jumped at it. I’ve been here for six months now and I have rebuilt my emergency fund, kept a very strict budget no matter how much I hate it and pay off my credit card every month.

This story might be pretty common but for me it was very hard and took a lot of courage to swallow my pride and ask for help from the two people who wanted to give it to me, my parents.

I want to thank Elizabeth for sharing this story. I think those two wise European ladies said it best, “parents are there for help, that it is not failure to go back home and that the only failure would be to ignore [your] problems.”

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Money Stories:
#1: Emily Starbuck Gerson in Austin, TX

***If you are a 20something who would like to share your money story, I’d love to have it! Please email me at wellheeled – at – gmail – dot com.

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Money Story #1: Emily in Austin

This is the story of Emily Starbuck Gerson, a 23-year-old who lives in Austin, Texas, and works as an editorial assistant at CreditCards.com.

Living without credit
I grew up without much exposure to credit cards. My mom mostly wrote checks, and my dad (a criminal defense attorney) paid for everything in cash. I was taught to save until you could buy something, which is still a great lesson. My first major purchase was a Sega Genesis in first grade, which I still own (and still works). I painstakingly saved my $1.25 weekly allowance until I could afford it.

As I grew up, the more I heard about the horrors of credit card debt, the more I became afraid of credit cards. When I turned 16 I received a copy of my mother’s MasterCard, but it was for gas and emergencies only, so I just thought of it as Mom’s money. At university, my college fund, part-time jobs and some allowance sustained me. I thought I’d never need anything but my debit card.

Then one day in college while shopping at Victoria’s Secret, I said yes to the offer for the perk-filled Angels Credit Card. I said no a million other times, but when I learned you could pay it off in-store following the purchase, I caved. I was promptly denied, but I didn’t really understand why. I later learned that store credit cards have very high interest rates, which can be dangerous if you carry a balance…so it is probably best I didn’t get one before I truly understood credit responsibility.

Credit enlightenment
When my boyfriend got his first credit card last year, I said it was stupid. He sighed at my ignorance and said we must demonstrate responsibility with a credit card in order to build good credit, which was vital for the future. Ironic. I called my omniscient mother for confirmation. She agreed, and added that I couldn’t get a home or car loan without credit. Not to mention rent a hotel room or car. Having no credit apparently isn’t much better than having bad credit.

Half-way through my last year of college, I went to my bank (BofA) for a credit card. They gave me the Student Visa Platinum Plus — a no-frills beginner’s card, even though it sounds fancy. I can manage it online with my other accounts, so it’s really easy to transfer money and monitor balances. If it is possible for you to get a card through your bank for that very purpose, I highly recommend it.

Saved by the credit card
I began making occasional purchases with the card, even though I didn’t have to. I thought it was silly. After graduating, I had a PR/marketing job for a few months, but the company shut down. When I found this job, I was psyched…especially to learn more about personal finance, now that I realized I knew very little. The problem? I had 10 days between the two jobs, and my first paycheck was for only a week’s work. It would be three weeks before I was paid again. At first I panicked — I had money in savings, but I didn’t want to completely drain it. And I’d just told my dad I was ready to be financially independent. What’s a girl to do? Then I remembered I had a credit card! Hallelujah.

In those weeks, that credit card saved my behind more than once. One example: when my dog began copiously vomiting, I raced her to the vet. I was thrilled the tests showed she was OK, but felt sick myself when the bill totaled $240. With no income to cover it, I put it on the Visa, knowing I could pay it off with my next paycheck.

Lessons learned
It’s a huge relief to have a credit card as a back-up, as long as you remember the money you’re spending isn’t yours. Because I have been so careful about paying my balance off, my credit limit was recently raised. That’s a plus you get for being responsible, though avoid a high limit that will tempt you to spend way beyond what is necessary.

The most important thing I’ve learned is that building good credit is vital. When you apply for car insurance, they run a credit check, and those with worse credit usually have higher rates. When you apply for a job, many companies run a credit check to ensure you are financially responsible. When you apply to rent an apartment, a credit check determines whether or not you have a reliable payment history. Having bad credit or no credit can make your life incredibly difficult.

After learning all about reward cards for my job here, I felt like I was missing out with my plain-Jane student card, so I recently applied for a new card through my bank. My good history thus far allowed me to be approved. My credit limit is a measly $500, but I will soon prove worthy of a higher one. The reward program gives me an excuse to make purchases with the card. I am excited about a credit card for the first time, and it’s a cool feeling. I was also approved for an Angel’s card after building credit with my student card, though I haven’t once remembered to use it.

The moral of my story
If you are young and devoid of a credit card for whatever reason, strongly consider getting one. It’s a prime time to start building credit and learning how to be financially responsible. If you’re clueless, your bank can help you decide which card is best for you. But beware; if you get a student card, know that they come with a higher interest rate than regular cards, so late payments can really rack up debt. Always remember: What you put on a credit card isn’t your money. It’s a loan you must pay back.

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20something money stories: what’s yours?

One of the best things I enjoy about writing a blog is to getting to hear other people’s stories, especially from young professionals like myself. And, inspired by My Open Wallet’s NYC profiles, I wanted to do something similar but to switch from a geographic focus to a demographic one.

I’d like to invite 20-somethings (men OR women) to share their money tales.

If you have a beer budget or lead a champagne lifestyle (or both!), if you live amidst the bright lights of San Francisco or in the heart of Texas, if you can calculate compounding interest to the nth degree or if you know more about Ross from Friends than about the Roth IRA – I want to hear your story!

If you have a blog you’d like me to link to, I’d be more than happy to do that as well.

The profile can be as broad or as detailed as you want – of course, in-depth profiles are always the most interesting ones. And everything can be as anonymous or as open as you’d like.

Information that would be helpful to give a context: your age (or a range), your location, and your occupation. You can write about basically anything – how you paid off debt, how you got into debt, what’s your philosophy towards money, if you and your partner have different money styles, what scares you about investing, how you bought a house, etc. etc.

The possibilities are endless!!

So please please email me at wellheeled (at) —- gmail —- (dot com). I’d love to hear all the stories out there, and I’m sure my readers would too.

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