Although the Federal government went out of their way to bail out large banking institutions in 2009, they decided to leave individual Americans at the mercy of high interest rates that continued to get higher. I can’t wait for the government to bail me out so I’m taking the initiative to do it on my own. I need to know where I am financially so I can formulate an action plan to get out of debt. I begin with a financial triage and assessment.
I grab all my credit card statements and other loan documents and write down who I owe and at what percentage rate. It gives me realistic picture of where I am right now. It doesn’t look pretty but it is better that I expected it to be, especially after calculating my blended rate. The blended rate is a calculation to better understand how each interest rate of each balance affects the total obligation. Below is a chart of what credit card is a percentage of my debt and what rate it’s at. I originally had the total amount of debt but I didn’t want to share that on the interwebs. Suffice to say, it’s weighing me down.
|
Card |
Balance |
Rate |
| Credit Card #1 |
24.9% |
15.22% |
| Credit Card #2 |
21.2% |
13.24% |
| Credit Card #3 |
30% |
16.99% |
|
9.1% |
6.99% |
|
| Credit Card #4 |
.06% |
29.99% |
|
14.5% |
0.99% |
|
| Total Balance |
~100% |
|
| Blended Rate |
11.20% |
How did I get into this mess?! The bad debt I’ve accumulated over the years is just a symptom of the actual cause of my poor financial health. My parents taught me how to save. I saved and invested in high school and during my first year of college. When it was possible to contribute to a 401(k) retirement plan, I did so. The only real debt I had was my student loans. I believe it started there.
College became an endless journey. I burned out, turned apathetic, and felt like a listless boat at sea. I then saw people around me living it up while I lived at home, worked, and went to school. I kept my nose to the grindstone until I became fed up. I slowly picked up bad habits from people around me. Then suddenly, I got laid off during a few summers ago. I burned through my emergency fund, lived off my credit card, and decided to go back to school. I started accumulating debt again. Between college and today, I bought stuff. I bought petty materialistic stuff. It was stuff to make me feel better. I kept up appearances. It masked hurtful things. It made me feel better for a brief moment of time.
A lack of self confidence, a reliance people’s opinions for my self worth, and not being genuine caused this debt. The debt lowers self confidence and affects other parts of my life. It confines me into a small box. I closes the door of opportunity. It is a vicious cycle I need to break today.