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How To Get Your Life Back

I don't know Katie Willert personally. I started paying attention to her on Cracked.com, specifically on the show After Hours, which I binge watched and then kept up with fairly religiously, because I like irreverent pop culture references. When Cracked fell apart a few months back, I gave all my favorite members a follow on Twitter, again, because I love irreverent pop culture references. I expected more of the same.

But, as one tends to find on twitter, people are multi-dimensional. Recently, Katie posted a thread on her battle with, among other things, getting control of her finances. You can read the full thread here.

First, I want to thank Katie for posting this story. I think a lot of the time when we get ourselves into dire straits, we tend to feel isolated. It's easy to get embarassed, and feel stupid and helpless. It's really important to remember that you are not the only person who has gotten themselves into debt. I know that I have been in a similar position to Katie in the past. It's also really important to know that you can get yourself out.

It also helps us to learn from others mistakes, so we can start working against the tides of a spiraling debt crisis before it completely takes over your life. Katie had to do a lot of work over the better part of a decade in order to buy that SUV at the end. The longer you wait, the longer it will take you to get twitter to name your new car. Lets go over a couple of the big warning signs and mistakes that you could be making right now.

1. You're Not Looking At Your Accounts

When I saw that Katie didn't know her bank account was overdrawn, I knew exactly how she felt at that moment, because I've been there as well. I think a lot of us have -- maybe we drank a little bit too much last night, and oh man, I don't even want to know how much I spent. And then your car breaks down, and you need some new clothes, and rent is due. You know you're cutting it close with your next paycheck, but you're probably fine. If you don't look at the problem, your brain doesn't have to deal with it right now. And that feels better than dealing with it, so your brain makes not looking the habit.

If you find yourself saying oh I'll check my bank account next week, you need to break out of that habit loop now. If you don't know what's going on in your accounts, then you are in very real danger of losing control. I recommend doing a complete run down of your spending once a week. You don't need to obsess over every penny, but you should at least know more or less how much money is in your accounts, and which bills are being paid this week, at any given time.

It might feel good immediately to be blind, but dealing with the situation will make you feel way better in the long run. Keep your eye on the SUV.

I could probably end this post here, it's that important.

2. You Don't Understand Your Income

These are all good things to learn about, and I hope you keep paying attention to us here at Witsi, because I have some interesting thoughts on these subjects. I learned to get myself out of a debt spiral through the school of hard knocks, and so I might have an interesting perspective. But the most interesting idea that I picked out here is being an underearner.

Now, full disclosure, most of my career has been in software engineering, and so I don't know that I've ever been considered "an underearner". My early days were not high paying, however, and I've been straddled with quite a bit of college debt. The real point here is that many people don't like to think about their income sources, and how they relate to paying for their lifestyle.

The simplistic view is I make $45,000 per year, my friends make around the same, I should be doing the same things they are doing, and then I just got paid, what can I do with this paycheck?. This isn't you being stupid, or you trying to "Keep Up With The Joneses", which I find a bit derogatory, because it makes you seem like some selfish idiot. What your doing is just normalization. People, in their base state, want to be what they view as normal.

"Lifestyle design" sounds like something for the rich entrepreneur, but it's really an important concept that everyone should be thinking about. The idea is that you figure out the life you want, and then figure out how to make the money that's needed for that lifestyle. It works backwards as well -- you need to know how much money you have coming in, and then figure out what lifestyle that can realistically provide, both in the short and long term.

3. Credit Card Abuse

Katie didn't mention this. This one is all me.

I used to serially max out my credit cards. Meaning, I would max out a card, then pay some amount over the minimum, and then max it out again the next month. At my worst I had actually signed up for a new card with an intro 0% APR, and did this. I told myself I was getting free money.

Easy rule: Don't do that, it's just going to get you into trouble.

There are some really good uses for a 0% Intro APR. We're going to start talking about them here on this blog! But using them for day to day purchases is not one of them -- it's too easy to let yourself spend more money than you have, knowing that you won't pay interest on the overage next month. The problem is twofold. First, next month you owe more money, and you're not going to make any more money next month, so how do we pay that off? Second, you've now normalized the extra spending, meaning next month you'll spend more than you have again. Month after month, it adds up, and then, boom, 0% goes to 21% with your rolling balance, and you owe even more.

Credit cards always end up costing someone money. The only way you can keep it from being you is by paying them off every month. Sometimes this isn't possible, and no one blames you for that. Life happens. But it's important to remember that someone always pays.

Get Your Life Back, and Stay Ahead

Katie did some incredible work to get herself out of a huge hole. I'm glad I happened across the story, and I hope she's okay with the write up I've done here, as she has nothing to do with Witsi.co. If she's reading...hi!

The only good way to get out of a debt spiral is hard work, and starting as soon as possible. I want to help you, because I've been there before.

The first thing you should do is subscribe to this blog, because we're going to be writing all about credit, personal finance, and how to get rewarded for responsible spending. You might learn a few tricks along the way.

The second thing you should do is sign up for Witsi. Witsi helps you stay on top of your spending by giving you a single dashboard you can view all your account information right in one place. It also gives you insights into the rewards you could be earning with your day to day purchases. Use Witsi to track your reward card spending, and you can get the most cash back, the best rewards, or even free flights and hotels for your next vacation.

Tommy Walsh

Tommy Walsh

Software Architect, Engineer, Blogger at https://Thwiv.io and https://Thwiv.com, Buyer of Internet Stuff, Owner of some cute dogs, and Founder of https://Witsi.co

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