Here’s Steph’s journey with debt and how she’s trying to manage it:
Once upon a time, I was just okay with money—not too good, not too bad, until I found myself in debt to almost every major Canadian bank. It all began when I turned twenty. I received my first credit card and, boy, did I use it a lot!
For some time, I managed to keep my spending within affordable limits. But soon, I started buying stuff I didn’t necessarily need and maxed out my card. And wouldn’t you know, I got a second card and then a third—all maxed out.
To handle this, I decided to consolidate my debts. Sounds smart, right? Well, not quite. I thought a single monthly payment and less interest was a good idea.
Don’t worry though! I didn’t continue using the cards. I cut them all to ensure I wouldn’t fall into temptation again.
Being responsible was the name of the game for me at this time. I had an amazing opportunity to own a small business that I had spent a good part of my career working for. Since I didn’t have any savings, I had to get a startup loan. Borrowing again, I know, but this time it seemed different, as I expected profits to roll in.
And profits did come! My business was triumphant. Imagine, in just three months, I was outperforming businesses that had been operating for years. Everything was going smoothly.
Unfortunately, good times didn’t last. The recession struck, and things became tough. I had to rethink how I was spending my money. Cutting back on unnecessary expenses became my focus. It seemed to work well until restructuring hit our head office, leaving us franchisees to bear the burden.
Despite my best efforts, the financial situation worsened. I faced a loss of customers and was drowning in bills. Unable to cope, I had to give up the business I had dedicated over a decade of my life to. I sold my store at a loss to escape quickly, knowing full-well it landed me in a whole pile of debt.
That leads me to today. I’m still deep in debt—about $75k—but that’s 25% less than what it was in April. I’m unemployed, and every penny goes toward my living costs. I have a couple of debts left—a credit card and a line of credit from my supporting mom. Our plan is to clear the credit card debt first.
I’ve had to follow an extremely strict budget for almost a year now. It’s not easy, I admit. However, I’m determined to overcome this financial burden. I get a sense of accomplishment whenever I see my debt go down and my savings go up. I don’t want to be left with nothing when I retire.
In reflecting on my journey, I don’t regret those past mistakes. They’ve taught me life-changing lessons and shown me that life isn’t all about “stuff”.
Feel free to follow my story at Paperbag Princess, where I share more about my journey of living on a strict budget to get out of debt and to get back my financial stability. You can follow me on Twitter at @pb_princess79.