Friday, April 25, 2014

FINANCE FRIDAY: My $10,000 debt story.

  I’m taking this blog to a new direction.

At the beginning of 2012, I was in a little over $10,000 in credit card debt, spent everything I made, I had no savings whatsoever, all while living abroad in Vietnam where the cost of living is already low for expats, and it burdened me greatly.  Suze Orman wrote what is now my Bible “The Money Book for the Young, Fabulous and Broke” and I was just that – young, fabulous and broke.

I don't even know how it came to that point.  Scratch that.  I do and I don't.  It's almost like a blur when you're in debt.  You don't want to admit to it and you don't want to look at the damn thing.  Heck, you can't keep track of anything even though you have somehow foolishly tricked yourself into believing that you can mentally keep record of it all.  And worse of all is the delusion that you'll always make more money to make the minimum payments.

You know what's sad?  Being so deathly terrified of opening your mail because of the numbers inside.
You tell yourself, "Yeah, I know the ballpark estimation of what I owe" but you just don't want to see with your two eyes the exact number to the decimal.  I had automated my payments anyways so why would I need to see the physical numbers.

I had letters upon letters.  99% of them not being anything at all actually. In fact, quite of few them were to announce that I was OWED money, not the other way around.

I had one from David's Bridal where they wanted to pay out restitution to their former employees after a settlement.  Because I didn't open it in time, maybe a good year afterwards, I missed the deadline and so I didn't get anything.

Then there was the check from AAA, a reimbursement of dividends or some sort, and it was past the 90 days you could take it to the bank.  For that I was actually able to request for another check printed and eventually got my money-- but the point is this:  I continued my vicious cycle of being fiscally irresponsible because I let my fear of debt take over. I avoided questions I should've asked.  I avoided resolutions that could've helped.

You couldn't ask me what I was paying in interest at the time, because like I said, I turned my face away from all of it.
Later on, when Future Isabelle decided to step in, she found out that she had been paying for Past Isabelle's 21% in interest.  Ridiculous.

You might be wondering, "What were you spending your money on?!"   

For me, it wasn't clothes or shoes.  If it was, I would have already ebayed them by now. Looking back, I lived quite minimally actually, but there was definitely a "Keeping Up with the Jones" mentality, or as the kids these days know it as “Keeping Up with the Kardashians”.  I modeled in Asia and lived there for 4 years.  People assumed that I lived this glamorous life abroad and I wanted to keep up with appearances.  Most people didn’t realize that I barely making money and just scrapping along.

Here in Southern California, your friends might say, "Hey!  Let's go to Vegas for the weekend!" because it's the closest party destination they can think of. 

In Vietnam, because you're within Norcal-Socal distance to neighboring countries, your friends might say, "Hey!  Let's go party in Hong Kong for the weekend!  Come on my business trip to Korea!  Visit me in Singapore!"
The lure of free accommodations made it that much more convincing.  And people tend to justify their instant gratification.

Oh?  All I have to do is take care of airfare?  Okay!  I can charge it.
Foreign fees?  Small price to pay for a fun trip.
Excursions?  Well, I'm not just going to sit in the hotel all day.
Food?  I want to try as many exotic and local cuisines as possible because this is authentic as it gets.
Treating your friend out as a thank you for the free accommodations? Gotta show my gratitude.

Some people have designer bag collections, I wanted to collect experiences. 
Travel and cultural experiences.

Not a bad thing to spend money on, but what's the point of having fun on a once-in-a-lifetime trip if you're going to be depressed about how broke you are afterwards.

And then of course you had the miscellaneous charges here and there.  The ones that didn’t cost much on their own but added up before you knew it.  You know what I’m talking about.  We all have them.  

For some of you, it’s that darn Starbucks coffee you just HAVE to have before you head into work.  Or the lunches you have with your co-workers on the daily because you were too lazy to make/bring your own food.  The cigarettes (that’s two demerits right there, for your health and wallet).  That bag of chips.  New manicure.  The latest issue of Vogue.  Valet parking.  Just plain parking.  One more beer.  Another drink for the lady. 

When I look back though, I think being down and out is when I was the most creative.  You have no choice but to BE creative to get by.  That should be a whole 'nother blog entry in itself.

I made the decision to move back to LA for both financial and personal reasons. 

I regretted it at first and dealt with a second culture shock of coming back to the States.  I was so used to paying $4 a week for my motorbike's gas in Saigon that it made me question if I financially made the right choice to be back and pay $3.85/gallon in LA.  Ouch.

 Me + Goldie, my Yamaha Nouvo I bought for $400 off of Craigslist

I was bitter, frustrated, antisocial...I felt dumb, ashamed and like I somehow got demoted in terms of lifestyle.  It's silly thinking back about it because those feelings stemmed from pride--no, more like, hubris.  I had to let go it.  Took me awhile but I had to realize and appreciate the fact that I was still a healthy person with working limbs and a roof over her head.

 LA is a trying place.  Everyone’s dream is to become an actor of some sort and in reality, they're mostly broke in trying to do so.  The mileage, the headshots, the classes,  the networking, the rent…how’s that for miscellaneous costs adding up.  The ones who don’t make it, I’ve seen go into production, move back home to the Midwest, end up bartending or serving more than they actually act, or resort to getting a full time job.  I ended up doing just that.  I was offered to do sales for vacation resorts but I needed my real estate license.  And so, I started in marketing with the mental note that I would only be there for a year—max—until I was finally stable. 

I started saving 20% of everything I made.  I chose that number because one, that’s what they say you should be saving and two, the average American was only really saving 10-15% of their income and I wanted to be above that.  Maybe it's my Asian American upbringing, but I've always had a need to be above average in everything I do.

In the meantime, I dated here and there and made it very clear that I didn’t want to be in a relationship. 

I had my issues and didn’t want to tangle another party into it.  What I had left of my pride wanted me to resolve it on my own once and for all.  I needed to commit to myself as a person before I could commit to another person.  That was the thought process.  And a healthy one at that too.  

Things eventually became more serious with Dennis, who I had been platonic friends with for 8 years at the time.  I don’t know why I never noticed it before, but Dennis and I were so ridiculously similar to one another.  (Cue for Beauty and the Beast’s musical number “Something There”)  Especially when it came to our personalities and values.

However, there was something I had differed from him.  He was on track in life and like every adult should typically aspire for—responsible.  Not to sound weird, but Dennis reminds me so much of my dad. Logical, practical, dependable and fiscally savvy.  He used to be in public accounting for one of the nation's top firms and is now currently a financial planner for an e-commerce company.  Being around him motivated me.  It’s not very often I feel this way around other people.  

I couldn’t bear to tell him the source of my frustration and so I didn’t.  For 7 months. 
When I finally confessed to him, part of me felt relief. 

And the other part of me felt guilty as hell.  Why? 

Because I lied about how much I was really in debt.   

I told him that I had 40% of what I really owed.
Since that fib, I made it a goal to pay off my debt by my next birthday and THEN tell him the truth of my actual number as a birthday gift to myself.   It was my only goal, all the other goals were merely steps towards it.

When I passed my real estate exam the first time taking it, I felt more proud of myself than ever.  It had been awhile since I had some sort of academic achievement and I started sales finally.  I became even more aggressive with my savings and saved 35% of what I was making.  I chose 35 because I found an infographic comparing what people from other countries were saving on average and that Chinese people saved the most out of everyone at 30%.   

And per usual, I wanted to be above that.   
(When I find that infographic, I’ll post it up on here)

 I learned to embrace being frugal and took to heart the saying, "A penny saved is a penny earned"
  • I always asked for discounts and rarely pay full price for anything.  
  • I did credit card balance transfers that had no balance transfer fee whatsoever.  
  • And then I would cut up those cards because those accounts were purely to pay down my balance.
  • I would sign up for bank accounts for the bonus offers.  
  • I eBayed everything I didn’t need or use
  • I only bought clothes in the same amount that I had just sold on eBay.  
  • I downloaded apps that earned me points, cash back and gift cards  
  • I used websites to get cash back when shopping online.  
  • I started taking advantage of credit cards for airline points.
  • I took surveys.  I recycled.  I only went out for special occasions.
Just like how all those miscellaneous charges add up, the coffee, the magazine, the parking valet adds up – SO. DO. THESE.  In fact, I kept an excel sheet that I named “FREE MONEY” that kept record of free money I received during the year.  Not how much money I had saved but FREE money I had gotten from my random things I did.   

My goal for that was $500 by the end of the year.  I accomplished that by 8/21/13 and at the end of the year, I actually made $540.81.  

Keeping Up With the Jones Kardashians

I had a girlfriend who scoffed that she didn’t bother with recycling for coins because it’s such little money and that she’d rather not be seen at those places.  I get it.  Image, right?  We usually associate recycling with the derelict.  But isn’t that better than begging. 

Usually a comment like that would have embarrassed me years ago, but rather than embarrass me, it offended me and if anything, I felt sorry for her.  She was in more credit card debt than I was, along with her student loans, and was constantly talking about struggling financially.  Her expenses exceed both mine and Dennis' combined.  I see this all the time.  Where people prioritize having a luxe life with all of its high-end accessories and fixings in lieu of practicality and a safe financial foundation for themselves.  In this day and age, it's hard not to when everyone looks to spy on your instagram and believes everything on it.

You know what though, that’s on her.  I’m not going to say no to 5 Mr. Benjamins in cash and some change while being green to Mother Nature.  That could be someone’s one month share of rent.  Or 2 months worth of gas or groceries.  A year’s worth of school textbooks.   If that means I have to head out to the recycling center a few times, then who the bleep cares.

Anyone you don’t want to see you there won’t be there to see you anyways! 

They’re too busy frontin’.

Like my dad says, he respects the guy who owns a pre-owned, older model of a BMW OUTRIGHT than the guy who has rent–worthy-car-payments on the latest, year ahead BMW.

There’s a miniscule part of me that’s a bit hesitant in posting something like this online.  But that’s the Isabelle that lied to Dennis about how much debt she really had.  The reason why I want to be honest about debt is because I’ve realized that there’s too many of us out there who’s dealing with it.  And there’s the same amount of us who’d rather pretend that they’re not.  I can hang with "faking it till you make it" but not at your own expense.

It’s funny because when I talk to people, they’ll brag about this and that and everyone starts chiming in about their own brags.  When I talk about debt with the same people and more specifically about my own debt, all of sudden it’s reeeeal talk and everyone’s trying to one up each other on their debt struggles.

And I can’t judge.  I get it.  There needs to be more forums where people feel like they can talk about it and I hope that my blog can do just that.  I used to secretly stalk and scour debt diet blogs too.  Hey, there’s a reason why they exist – it’s because someone else has been there and were able to overcome it.

Your pride-- as Elsa would sing it, “Let it go”

Wouldn’t you rather be more proud of being debt-free?

Or would you rather be proud of your constant fine dining, lavish nights out and the high number of likes on photos that show these things off while your bank account shows off zero?

You could still do the latter with being debt free. 
There's nothing wrong with living an amazing life, that is, so long as you can afford it.
Like Dave Ramsey (another favorite financial guru of mine) says:  delayed gratification.

Am I completely debt-free?  No.  I’m prettydamnclose though.  The only thing I have left are my student loans of $10,275.21.  And I’ve already decided that that’ll be next year’s birthday gift to myself. 

But I figured hey, let’s du this together. 

Here’s to us becoming debt-free and many more Finance Fridays!


  1. this is so awesome! congrats! ive been reading financially fearless and tracking my spending more strictly through mint... since i haven't worked in three years, i have depleted my savings and trying to get by also doing free offers from banks, cc points, and sometimes taskrabbit (tho not enough), so hoping to get ramped up again once i start work. congrats on your real estate license too!

    1. @jessica I LOVE MINT! I totally forgot to mention that too!!! Mint has definitely caught errors for me which has saved me money too. I am so proud of you girl!!! A lot of people that I talk about mint with get lazy and don't bother until like seriously a year later. To which then they're like, OMG, MINT IS AWESOME, lol. Amd I'd rather deplete my savings to chip down my debt than to have it sit there while I accumulate more interest on the credit cards. I should look into taskrabbit and thanks for the congrats!

  2. Welldone on clearing ur cc debt. Thanks so much for dropping your pride and pretense to write us this thread. Such a good read and thanks for all your good tips on savings and clearing debts. Love ur work! Please keep it up :)

    1. For sure! And thanks so much for reading and supporting. I really appreciate the kind words. It's hard letting go of your pride but seeing the out pour of support I've gotten for it has been very comforting that it's the right thing to do. :)

  3. Thanks for sharing this amazing story Isabelle. This is such a good read. So genuine and real! I love it. Im looking forward to your future blog post!

    1. Thanks Melba! I really appreciate it!!! Especially from such a successful blogger like yourself!

  4. Came across this thread, and thought it was quite insightful. First, let me thank you for bringing this issue to light. Young people (like myself) tend to abuse credit cards because it's so accessible. Many end up racking up so much debt that it would literally take them a life time to get out of.. which is pretty much financial slavery. I believe that its the fear of facing your actual debt, that allows it to accumulate. Just stare at the numbers and chip away. I myself had a moment of insight (and got debt free) not too long ago, so I feel your pain. Kudos to you and good luck!

    1. Thanks so much xLion!!! I am right there with you about accessibility. I signed up for my first card freshman year of college on campus and got a free t-shirt. As if that cheap shirt that ended up being my sleep shirt was really free in the long run right? Looking back, I think educational institutions are unethical to take a credit card vendors' money to take advantage if a student body with financial literacy ranging from little to none. Money talks though right? Schools need to empower their students. But that goes with a conspiracy theory if mine that corporate America wants us to stay ignorant to drive consumerism. We are a perfect generation of an example after all right? Anyways sorry for the rant!! Lol, I am so happy to hear that you're out if debt and that you faced your fear head on. You're a step ahead. Thanks again for reading and supporting, hope to see you around!

  5. I'm xLion. And no problem. I share the same sentiments as you regarding the unethical behavior of financial institutions preying on high school graduates. They teach you about micro and macro economics but won't teach you how to properly manage your finance. But what can we expect from the shitty bureaucratic system that wr have in place? keep doing what you're doing and build a good life where you are not financially enslaved. Best wishes, xo x.