money

I Paid $5,000 in Interest Last Year, FICO Scores aren’t a Big Deal, and More About Money

Since signing up for Mint in November (which I feel weird about for big data/privacy reasons, but continue to use for now because it’s helping my debt payoff journey), the amount of interest I’m paying has become obvious. Before, I was largely unaware of how much I am charged. Now, Mint sends me a notification any time I’m charged interest.

When I received a notification one day saying Citi Card had charged me $125, I was upset. I genuinely thought it was a mistake, and nearly called them before I looked into it and realized…they charge me that much every month. After that experience, I thought it’d be useful/horrifying to calculate how much I was charged in interest and fees in 2018.

Talk about a wake-up call! I paid over $5,000 last year just to carry debt. At first I felt so much shame about this. I just felt stupid. I’m sure I’ve paid this much interest or close to it every year for many years, but I didn’t look into it, probably to avoid the negative emotions I would’ve felt if I knew the truth. I’m deciding to forgive myself and be kind with myself.

Through reflection, I’ve recognized that much of my debt is a product of good, if naive, intentions. I wanted to learn, I wanted to go to college, I wanted to continue my education in graduate school. I wanted to travel, and engage with different cultures and geographies. I wanted to make the world a better place, and the disciplines I pursued aren’t known for high-paying jobs. I wanted to help people and I wanted to live in line with my values, so I worked at non-profits and in academia. I wanted to be healthy, and able to keep working full-time despite chronic illness.

Youthful ignorance and money mismanagement only explain my first few years in debt. I’ve stayed in debt because once you’re in debt, it’s really, really hard to get out of while making an income that essentially only allows you to live check-to-check. Recognizing how much interest I’m being charged makes my continued debt seem less confusing, and the more I thought about it, the less foolish I felt. Debt is difficult to get out of, and I’m sure that’s intentional, because creditors want our continued payments.

Dave Ramsey writes that people who live debt-free are countercultural. After looking more deeply at what I could do to reduce my debt, I realized he’s right. We live in a capitalistic, consumer-driven culture. Even though I don’t own a car or house or many expensive items, and I don’t gamble or compulsively shop, I see that I could have started this quest to be debt-free sooner, while still staying in jobs that are in line with my values (and don’t pay so much). I simply would’ve had to give up many things considered normal and basic.

Not caring about my FICO score is another countercultural thing that I’m beginning to embrace, per Dave Ramsey. The fact that number of lines of credit factors into it is pretty messed up. The whole system is really messed up! Here are some screen caps from Dave Ramsey on FICO scores:

I’m beginning to view FICO scores as analogous to weight. Yes, they tell us something about financial health, but not everything. They are just one measurement, one indicator, not the be-all, end-all. And they DEFINITELY don’t reflect self-worth.

Just as some people with higher weights are healthier than some people with lower weights, some people with lower FICO scores are financially healthier than people with higher FICO scores. (Note–I’m not suggesting I’m one of those people! My financial health is suffering, which is why I’m doing this.)

When my FICO score updated in December, it was the same as in November. When I focus on improving my physical health, I don’t over-emphasize the role of my weight, so now that I’m focusing on my financial health, I’m not going to focus much on my FICO score. It just ain’t it. I’ll probably still share my FICO score in blog posts as I continue on my debt-free journey, but it’ll be more out of curious observation than because I have any attachment to it.  My prediction is that it’ll go up, but then next year when I cancel my Bank of America card (I plan to cancel it before I am once again charged the annual fee I didn’t realize it had until now), it’ll dip again. We will see.

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