Stuck in Credit Purgatory

For the first time since I moved out of my parents' house, I find myself having trouble with money. I've never been rich, but I always had enough that I never had to worry about cash flow: whether I'd have enough money in the checking account to cover my rent at the end of the month, etc. Even when I was unemployed I had savings enough to prevent any missed bill payments.

Back when I was first establishing my personal finances I built a spreadsheet to factor in all my upcoming expenses and income and make sure that I wasn't over-expending myself, and it worked really well. It was really handy for figuring out when I'd be able to make major purchases like a new car, or a splurge on a trip overseas. But these days, the projections say that I won't be able to do anything like that until... well, not before the decade is out. The best case scenario it gives is that I keep my head above water.

The fact that I'm not making a very good hourly wage these days is part of the problem, but I'm really no worse off in that regard than I was 15 years ago. The problem seems to be that I've picked up some substantial additional monthly expenses: insurance and debts.

I've always avoided borrowing money. One of the points of that spreadsheet was to help me do that: instead of buying something immediately on credit, I'd wait a few months (or years, for stuff like the new car) until I'd saved enough to pay cash for it. The credit card was strictly for convenience, and for kiting expenses from this month until next month; I never allowed myself to put more on it than I'd have in the bank 30 days later when the Visa bill came due.

This past year I gave in and started borrowing. I took a student loan as part of my financial aid package for college. I bought a computer - my first new machine in years - on credit. I justified the credit purchase on the grounds that I'd be graduating soon and would certainly be getting a job that would let me pay it off pretty quickly. I justified the loan pretty much the same way, plus - being unemployed, with my savings nearly used up - it was the only way I could actually pay for that last year's tuition. It was still all about cash flow, just on a slightly longer term... months instead of weeks.

Better make that "years". I got a decent job, but it doesn't pay what I was expecting. I have to pay the full cost of my health insurance, as well. That doesn't leave much money to spare after my basic monthly expenses. In fact, it means I'm left with just slightly more than the minimum allowed payments on both loans. Which is another way of saying that at this rate, they'll almost never be paid off, because that's what "minimum payments" are for: a way to keep milking the borrower for the rest of his life, then collecting the principle from his estate.

To put this in perspective - and demonstrate that I do in fact have some - I ain't got it half as bad as a lot of people. I've got a friend who fell into the trap of using credit right out of high school, and has spent much of the time since then in and out of credit counseling and bankruptcy. He's financially "stable" for now, but that just means he's not getting any poorer from one month to the next; he's not saving anything. When he's ready to retire... he'll won't be able to, because he'll have nothing to live on.

I don't intend that to happen to me. I do have some retirement investments from back in my fiscally-solvent days, that (the holy Stock Market willing) I'll be able to draw on to supplement my income as a WalMartIntl greeter in my golden years. And if things don't improve in the next decade or so, I can probably shove happiness aside and pick up some McJobs on the side to add up to a decent income. But for now, it means maintaining a spartan lifestyle just to keep the loan sharks at bay.

Unfortunately, because I've never lived extravagantly, there aren't many places I can easily cut back. I could save $13/month by dropping basic cable TV (a recent extravagance). Maybe I could downgrade my internet service, but that'd impact my webhosting business (and this weblog). I really don't want to move, and getting a roommate is... not an option. I've replaced most of my incandescent lightbulbs with fluorescents. I'm already using the cheapest forms of transportation available (bike and bus, most of the time), and selling the car wouldn't get me much. I can't quit smoking, because I never have. I can - and will - cut down on my book-buying. I'll shop for beer based entirely on price, not taste. And I guess I've got a new tool for my weight-loss efforts: buy fewer groceries.