If you didn’t know, April is National Financial Literacy Awareness Month. That is correct, it is legit! I have done a lot of things with money, both good and bad, so I am slowly making my way toward great financial literacy. I wanted to talk a little about my quest toward gaining knowledge about finances.
My parents laid a great foundation for my financial knowledge. They taught me how to save, how to spend, and how to treat consumerism. I really appreciate their hard work and all of the knowledge that they passed to me. It was a great help. Unfortunately, though I had the tools, I didn’t use them properly in college.
My First Credit Card
I went into college with good financial skills, yet that all changed when I got my first credit card. You know the ones I am talking about. I think I got a nice free shirt and the bank ended up getting thousands of dollars worth of interest payments. Nice trade-off, huh? 😉
My credit card gave me the power to indulge and enjoy my college life a little more. With that power comes great responsibility, one that I took too lightly. I saw the low minimum payment and never really thought too much about the overall balance. As long as I was paying that minimum payment, I was fine. Oh was I wrong.
Bitten by the entrepreneur bug
While in college, I was bitten by the entrepreneur bug. My parents and other family members had been bitten by that bug prior, so I guess it is just natural. I love business and being an entrepreneur. There is nothing better than building a business from scratch and watching it grow. This happened for me in college. I started an online electronics store and ran it for 4 years. The biggest problem is that I was funding my business all on my credit cards. This was the worst mistake I made in my business and with my finances.
In 2009, I decided to stop running my business. It was a tough decision, but it was the right one at the time. All said and done, I was in the hole $50,000. That’s right, I had $50,000 worth of credit card debt just between my business and my outlandish spending issues. I had been paying the minimum payments for years. I might have had a few months were I paid an extra $20 or more, making myself thinking that I was doing the right thing. That thought all changed when I finally started to put the numbers together.
After putting everything into a spreadsheet, I realized that I was in trouble. I had forgone everything that my parents taught me about money and lived on plastic. I had borrowed so much of someone else’s money, that I didn’t know what to do. Luckily, my wife is a very knowledgeable woman and told me to just start paying down the money and figuring it out.
I worked hard to get a plan for myself and I picked the avalanche method to pay down my credit card debt. My first big payment toward my debt was the redemption day. I was turning my life and finances around.
My Quest toward Financial Literacy
It took me 4 years to pay off my $50,000 of credit card debt. The last payment on my credit card was the day that I vowed I wouldn’t be back in credit card debt. I took that pledge to myself in order to gain a better knowledge about not only my finances, but finances in general. I had learned a low by going through the debt cycle and figuring out how to dig my way back out. I think many people learn by doing, but we need to learn how to teach people before they take on debt.
Debt is dangerous and can swallow you in an instant. I think this is the type of lesson that needs to be taught early and often. Though my parents taught me about money, I didn’t follow their advice. I want to make sure that I lay a great foundation for my son in order for him to make the right decisions about his finances. While he might do the same thing as me, I can at least give him the framework to make the proper decisions. I also plan on showing him the struggles that I went through in hopes that he will not repeat.
Looking back, I wish I would have just followed my parents advice, but I can’t go back. I can only look forward and that is what I plan on doing. I plan on growing my money, making my money work for me, and getting my retirement picture built early, so I can have a choice when I grow older. That is my plan and that is my quest to the ultimate goal, Financial Literacy.
If you are in debt and need help, then check out my personal finance resources for great tools to help you gain control.