You know what’s awesome? Booking a trip to Vegas. Less awesome? Not actually taking that trip. The least awesome of all? That trip you didn’t take (combined with bad habits) landing you into years of credit card debt.
I wish I could tell you I was making this up, I really do. But nope – this happened to me back in 2008 and was one of the catalysts to landing me in credit card debt.
Mistake #1: Trusting Drunk Dave
When I was in college one year, I was living with 5 other dudes. Yes, 5. Three of them were named Matt, and two had the same last initial. It was a very complicated period of time, and we drank. A lot. Do you know what happens when a bunch of drunk college-aged guys who just turned 21 decide to talk about Vegas? They book trips to Vegas that they can’t afford.
That’s precisely what happened one spring evening in 2008. Despite my heavily intoxicated state, I remember the conversation somewhat well. We were talking about Halloween and how, now that we were 21, it;’ be nice to enjoy it somewhere where we could legally drink. We’d all been to Madison (though never together) before, and wanted to do something equally fun.
One of my roommates had taken a trip to Vegas shortly before, and had convinced us that it would be a good decision to go. Pumped up on cheap beer and adrenaline, he calls some hotel (I forget which) to book us a room. I, of course, take care of the flights. For all of us. Because that was a smart idea…
Mistake #2: Not Collecting Money ASAP
So here I am, busting out my credit card for the purchase of four flights to Vegas. The flights weren’t particularly expensive, but they weren’t exactly cheap either. Being booked for Halloween put a bit of a premium on them. Instead of asking for money immediately from my roommates, I decided for some reason to wait. This was a horrible decision. It turned out that not all of my roommates could afford to pay me right away; not too surprising but I was stupid enough to think that it’d be fine.
Not collecting the money they owed me right away meant I didn’t have enough cash to pay off the card. That resulted in me starting to just make minimum payments – a big no-no that cost me hundreds of dollars in interest. Ugh.
Mistake #3: Not Looking At My Budget
Here’s where things really start sucking. In 2008 I had a job making barely above minimum wage (averaged about $10/hour with commissions factored in). I knew that the flights and the hotel would be costs that I’d struggled to cover, but I didn’t even bother to look at my budget and consider if I had enough money to do anything in Vegas when we were there. A couple weeks after booking, I crunched the numbers to see how much money I’d have.
The result? There’s no way I would be able to spend any money on entertainment in Vegas. For a city known for its wide breadth of entertainment options – shows, just hanging out at the casino, drinking, etc – this didn’t seem like any way to spend a trip.
I decided then that I wouldn’t go on the trip. It didn’t sound like fun to be stressed about the money. There’s no way I’d be able to enjoy my time there if I didn’t have money to spend, so it just wasn’t worth it.
Mistake #4: Not Paying Off My Card When I Got Money
With the new revelation that I couldn’t even take this trip, I decided to find another of our friends to go in my place. One of the Matt’s who was going along did the same, and we switched our tickets to their names. This transfer cost us $75 a pop, but it was better than going and spending more. Besides, the two people who decided to take our spots paid me for the airfare so that was a plus, right?
Well, kind of. But they paid me in cash, and there’s actually little more in life that I hate than cash. I have this weird problem when it comes to keeping Benjamin’s in my pocket. If I have cash on me, I spend it with no regard to my budget. It just disappears, often to things like food I don’t need, or beer. To this day I pay for everything I possibly can with a card, because I’m just not wired to handle cash responsibly. For a personal finance blogger, this is kind of a tough thing to admit, but at least I learned this and can do something about it.
Years of Recompense
From there, it was downhill. I struggled throughout the remainder of college to pay off my credit cards, and when I graduated in 2010 I had piled on more. As in, about $10k total. I haven’t gone through to do the math on how much that drunken night screwed me over financially. To be honest I don’t want to – no point in dwelling on the negatives of the past.
But it did have a significant impact on me. It ate up a considerable portion of my income post-graduation as I aggressively paid down the debt. When my car died due to a faulty gasket, I had to buy a new car in order to get to work. Unfortunately my piles of debt and relatively low income left me with a crappy interest rate on a car loan – 13.5%.
Between the car loan and the interest on the credit cards themselves, it’s likely that that one drunken night cost me thousands of dollars over the course of those three years. It sucks, making stupid decisions, but every mistake comes with a learning experience.
Since then I’ve made some big strides, and the lessons I learned have put me in a much better position financially. For starters, once I finally paid off my credit cards, I was out of credit card debt and vowed to never get back in. Seven years later and I still haven’t. I hated my debts so much that I paid off my high-interest car loan in about a year and a half.
I also made a new rule for myself when it comes to spending money. Any time I want to buy something, I need to budget for it. If it’s not in the budget, I don’t get it then. If it’s something I really want, it’ll have to wait until the next month. This tends to work really good for bigger things, but I admittedly let some of the small stuff slip. It’s not landed me in hot water yet, though, and I feel much more confident in where I am now in regards to how financially responsible I am.
The last major lesson is that sometimes, as good of an idea as something may seem, it’s important to really evaluate my decisions. An impulsive vacation is definitely a costly mistake, and I’ve avoided several others by taking the time to think about what I’m doing. How will large purchases impact my ability to save money this month – and what impact will that have on my retirement plans?
Everything we buy delays retirement, even if only by a small amount. Some of those things are worth it, while others are not. A trip to Vegas that I didn’t take? Yeah, that screwed me over big time. It was an expensive way to learn to not be an idiot.
What are some of your stupid financial decisions you’ve made? How did you recover?