When You Have Credit Card Debt, You Can’t Afford Anything

When You Have Credit Card Debt, You Can't Afford Anything

Let’s talk about credit card debt for a second.

I know about credit card debt. It was my companion for over six years. At its peak, I owed more than $20,000 on a credit card. I ignored it for a long time (that’s how it stayed with me so long!) but once I got serious, it was time to break up with the credit card.

I paid off the credit card somewhere in 2012, and just kept trucking. In fact, I can more easily remember the feeling of paying off all my consumer debt than I can recall what it felt like to pay off my credit cards. A little less stupid, I think. But as Joe always says, paying off credit card debt is not a goal. It’s just the first step toward getting your stuff together and acting like an adult.

When You’re In Credit Card Debt, The Bank Owns You

After I got out of credit card debt, there was no going back. In fact, I remember thinking I couldn’t even give financial advice until I’d gotten myself out of credit card debt. Credit card debt is evil. That’s strong, sure, but true. If your finances are determined by how much you owe rather than how much you can save, you will never, I repeat, never, get ahead.

Anyone who tells you otherwise is lying, either to you, or at the very least, to themselves.

It’s interesting. I’ve seen several personal finance bloggers write about credit card debt lately. But not in the “credit card debt is evil and must be eradicated as soon as humanly possible” way. In the “I still carry credit card debt because I’m working on other financial goals” way. I know that personal finance is personal, and we’re in America, or Canada, where everyone gets to do what they want, but I am left scratching my head.

I honestly thought, “high-interest credit card debt” was the category of debt that fell firmly into the “Bad Debt” category. Because if there is such a thing as Bad Debt, it’s the kind that charges double-digit interest on things you’ve already bought. How is this not a universal thought?

What Paying Off a Credit Card is Like

If you have credit card debt, let’s play a game. How much is your interest? Mine, at the highest, was 25%. Once I called and got it negotiated (after three “transfers to my manager”) all the way down to 23% interest.

Would you invest in a fund that guaranteed a return of 10-15% (or whatever yours is — are they still 25%?)? I know the answer, because who wouldn’t want a guaranteed return of double digits?

Here’s the thing, though. There are no investments that can guarantee that kind of return.

No investments, that is, except your credit card.

See, by paying down your credit card, you’re essentially earning that interest because every month you pay over the minimum is a month of your life you get back at the end of the debt payoff process. So why not do it?

Here’s the thing. If you have credit card debt, absolutely every purchase you make is something you can’t afford. Buying something while in credit card debt is not always irresponsible, because even those of us in debt have to eat, but when you’re already in the negatives, you can’t afford anything. Not groceries. Not rent. Definitely not those shoes.

Paying Off Credit Card Debt is Step Zero

Don’t buy anything until you’ve proven to yourself that you can live in a world where you spend less than you earn. Don’t overextend yourself. You want take out? YOU CAN’T HAVE TAKEOUT. You want to buy a car? Forget it. You can’t afford it.

I’ve seen other people talk about buying a house while they still have credit card debt.

Don’t do that.

Get your financial house in order before buying a house.

Before aggressively paying down other loans.

Before building a huge emergency fund.

Before having a baby.

Before getting married.

Do You Still Have Credit Card Debt?

If so, why?

Honeymooning with AirBnB

Honeymooning with AirBnB

In less than two weeks, I’ll be married.

There’s a lot of planning that goes along with a wedding, and honestly, it’s a little stressful. Even when you’re trying to keep things simple, and frugal (which, by the way, is pretty much impossible if you have 150 people joining you and you want to feed them — more on that later).

You know what shouldn’t be stressful? The honeymoon.

Where Should We Go?

Belize was at the top of our list initially. It sounds magical, has beaches, fun things to do, and isn’t so super far away. Brent looked into it. September is hurricane season in Central America. Should we go in November? Maybe the week of Thanksgiving? We’d only have to take a few days off and we would get a whole week off in return!

My sister wasn’t having any of that. So we’ll spend Thanksgiving here, and host it for the first time. That will be sweet and wonderful. We floated the idea of going to Hawaii as a family for Thanksgiving, but that turned out to be better kept in the idea stage. Turns out, nobody really wants to travel the week of Thanksgiving.

We’re getting married on a Sunday, and we want to maximize our time on vacation, so when Brent heard that his friends went to California’s wine country for their honeymoon, that sounded about right to us.

Can We Travel Frugally?

Brent booked us flights to Oakland, and a rental car. For several weeks, the joke was that we were going on our honeymoon in Oakland (no offense to anyone who’s actually done that). The flights were cheap, the car rental was inexpensive, and we knew we wanted to stay somewhere in wine country.

I’ll save you the trouble of looking this up yourself: wine country hotels are expensive. On the one hand, yes, it’s our honeymoon, but on the other hand, I simply cannot possibly justify spending $4,000 on a hotel room! HOLY SMOKES you guys. That’s crazy expensive for six nights. Even if it came with daily massages (which it didn’t), it would be really hard to spend that kind of money on a place to sleep.

Plus, we’ll be spending all kinds of money anyway on excursions, though we don’t yet have any plans (which I think is kind of the point of said honeymoon), shouldn’t we allocate our money differently?

Solution: Honeymooning with AirBnB

Brent looked on AirBnB and found an adorable cottage two blocks off the main square in Sonoma. Two blocks! The average nightly rate was around $125, and we have the whole place to ourselves, including a cute garden for coffee drinking and book reading.

Of course, I can’t find the link right now, but go to AirBnB, search for Sonoma, CA, and see all the options! There are so many private homes available to rent.

Our total cost for the week? Including a cleaning fee and the AirBnB fees? $1300. Which is still a lot of money, but nowhere near the $500/night fancy pants hotel.

Why Honeymoon with AirBnB?

I love the idea of “living like a local” in wine country (although if we were really locals, we’d be a lot more frugal with our choices). No matter how nice a hotel room is, you still don’t want to spend much time in what’s basically a bedroom. Don’t go there — this is a family website!

You wake up, spend a little time lazing around, then you get ready, and leave the room for the day. At least that’s how I treat hotel rooms. But with a cottage, we can go grocery shopping and get breakfast food, and laze about all morning long without feeling like a real slug who spent half the day in bed.

I know I’ll be more relaxed if we don’t have to go out for every meal. I’ll happily laze about drinking coffee in the morning, planning our days as they come.

I’ll report back after our trip with the good, the bad, and whether or not there were naked pictures on the wall.

Get $25 from AirBnb

If you’re interested in using AirBnB for your travels, use this link and get $25 toward your first trip. They really want to spread the word, and they’re offering incentives for signing up — whether you want to go on a trip, or rent your own space out, you’ll be given a little boost toward that by using my link.


A Snapshot of the Portland Real Estate Market

It’s fun to see what you can buy at different price points in cities. That’s half the appeal of those HGTV shows, don’t you think?

Come with me, take your imaginary money, and when you find something you like, call my realtor. She’s 39.5 weeks pregnant, but she’s insane enough to help you out anyway. :)

We’ll only look in Portland, not the greater metro area, and since Andi is busy, we’ll go ahead and use data from Redfin instead.

Under $250,000

There are 107 results, and since you seem pretty hip, we’ll find you a sweet little place on the east side.

under 250

SE 74th and Stark. Two bedrooms, one bath. Built in 1904. $221,000. Here’s the Redfin listing. Sure, it could use a little work, but it’s charming, and it’s 110 years old! It’s in Montavilla, a fun neighborhood, not super close to downtown, but they have great restaurants out there. This is what I’d pick for you if you were willing to spend up to $250,000.

Between $250,000 and $500,000

1216 listings. Whoa, let’s find a good example, and fast! Let’s switch neighborhoods. It seems that half a million dollars can get you a lot of nice things in this city, which is good, because it’s half a million dollars.


Okay, here’s a really beautiful home. NE 16th and Prescott. Four bedrooms, two baths. Built in 1927. Here’s the Redfin listing. It comes in $500 less than $500,000. But this is stunning. It’s in Irvington, which is a lovely part of town. Close to shops, close to great schools, close to other large and beautiful houses, and close to parks.

$500,000 to $750,000

459 results. It’s hard to find a good example. Do you want a high rise condo downtown? Do you want to live in the hills? Portland sits in a valley surrounded by hills on the west side, and some of the nicest neighborhoods are in the northwest and southwest hills. 90s reference ahead: do you remember that Everclear song, I will buy you a new life? They’re from Portland, and he sings about being rich one day: I will buy you that big house | Way up in the west hills | I will buy you a new life | Yes I will.

So, let’s go there, if that’s the rich life.


Okay, we’re in the southwest hills. Basically if you drive past Portland State University, you go up a hill. It’s probably less than a mile from downtown, and definitely less than two miles. It’s awesome up there. This one is four bedrooms, two and a half bathrooms, some strange little zen room, built in 1925, and costs $749,500. Here’s its listing.

$750,000 to $1,000,000

126 results. Again, you could buy a condo downtown, but paying an HOA is like throwing money down the tube, so let’s not do that. Let’s get you a house, with a yard, and a view. And since I’m the imaginary realtor here, you get to only look at older homes with charm. Here’s my favorite.


It’s SO CUTE. Three bedrooms, three bathrooms, built in 1928 but remodeled extensively since then (I mean, who in 1928 was putting three bathrooms in a house?), $995,000. Looks like something straight out of a fable. Here, if you want to buy it, is the listing. If you buy it, can I come over for dinner?


I’m actually surprised at how many actual houses there are in the under $250,000 range. That simply wasn’t the case when I was looking. Maybe the market has cooled somewhat in the last year and a half? Or, more likely, it’s heated and cooled several times, and right now, people are focusing on going back to school, or planning a wedding or something, instead of buying homes.

I love the architecture of Portland. At every price point we looked at, there’s something kind of wonderful to see. And real estate shopping, especially way out of my price range, is pretty fun.

How Much Money Can a 20-Something Save? More Than You Think!

The following is a guest post by Leigh, who has saved more than 50% of her income ever since she earned an income! Find out more about her, and how she does this without eating cat food and ramen, below. How much money can a 20-something save? 75% of her income in this case!

how to save 50 of your income I love what Kathleen and Brent are doing with trying to make saving more normal! I’ve always been a big saver myself, but I’ve gotten a lot of flack (mostly from my sibling) for being cheap. They say that being a saver or a spender is a natural instinct and being a saver absolutely is for me.

In high school, I worked a minimum wage job and saved 80% of my paychecks. (No, that is not a typo!) On pay day, I would take 80% of my paycheck and transfer it to the attached savings account at my credit union. I often transferred money back to checking for spending, but I kept a spreadsheet of how much my checking account owed my savings account and would then pay myself back out of my future paychecks. I didn’t actually earn a lot of money then, but I didn’t spend a lot either.

I’ve tracked every penny of the money I spent, earned, and saved including every transaction out of every single one of my bank accounts since about 3 months before I turned 16. I have charts of the growth of my assets from the time I was 14. When I went off to college, I had about $6,000 in the bank. My estimate is that I saved about $5,000 in my last year of high school, even though I never made more than $8/hour nor worked more than 16 hours a week except in the summers. It looks like I earned about $6,000 in high school and saved $5,000 of it, 80%.

I opened up my first retirement account at 19 and made the maximum contributions I could, while still in college. I lived off of about $500/month while in college, including during internships. (My parents were really, really generous and paid for my tuition, as well as books and housing while I was in college. I was on my own during internships.) I never felt like I was scrimping. I just didn’t have need for much more than a nice computer and food! Plus, I eat very little, so I’ve never spent a ton on food. My sibling definitely thought I was being cheap and I remember him/her complaining to my parents that it was impossible to live as cheaply as I did!

At 21, I graduated from college with $32,000 in the bank.

It was mostly in cash, except for about $7,000 in CDs in retirement accounts since I knew nothing about investing. I sure did know how to save money though!

Thanks to my internships in college, I had a great job offer in hand and I netted about $65,000 in my first calendar year out of college. I estimate that I saved about $34,000 of that, including getting the most of the employer match from my 401(k), maxing out my Roth IRA, building up an emergency fund, setting aside some money to buy a house some day, and buying a car. My initial goal was to save 50% and it looks like I met that!

The next year, I saved 60%, and 75% the following year. How? By maintaining my spending level while increasing my income.

Here’s how my 75% savings broke down in 2013:

  • $17,500 Traditional 401(k)
  • $2,602 Health Savings Account
  • $2,010 Series I Savings Bonds / Cash savings
  • $16,000 Backdoor Roth IRA (2012, 2013, and setting aside for 2013)
  • $6,790 Principal paydown from my regular mortgage payments
  • $66,419 Extra mortgage payments
  • $2,167 Vanguard taxable index funds

Today, in my mid-twenties and almost five years out of college, I maintain a $20,000 emergency fund, get great rewards from my credit cards, max out my Roth IRA and Traditional 401(k) every year, and have a plan to pay off my mortgage within 4-5 years from origination. My net worth sits at around $400,000 today. My 401(k) balance should surpass $100,000 early next month when my last contribution for the year goes through and I’ve paid off almost half of my original mortgage balance! I’m on track to save 75% of my net income for the second year in a row. One day soon, I will get back to saving 80% of my income like I did ten years ago, I’m sure! But I’m totally okay with saving 75% instead 80% to enjoy life a bit more. I’m definitely less frugal than I was in high school and college, but I’m still focusing on savings.

Kathleen’s thoughts: If Leigh can save as much as she is, why aren’t you saving more? What’s your excuse?

What to Include in a Minimalist Wedding Registry


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What to put in a minimalist wedding registry

One of the things I struggled with the most while planning the wedding of the century was registering for gifts. I mean, I don’t like the idea that only married people get to have neat kitchen things. And furthermore, we’re both past 30. We have a stocked kitchen. Our home lacks for nothing, really. Then there’s the issue of space. We’re already living in as small of a space as Brent wants to live in, ever. Where are we going to put all this new stuff? So really, the question is, what do we include in a minimalist wedding registry?

There are cash registries. Pay for horseback riding on our honeymoon! Upgrade us to a different sized room! But asking our nearest and dearest for money felt even worse than registering for stuff. I wanted to ask for restaurant gift cards. You know, put a list of our favorite places on our website and ask people to buy our date nights for the next year? That would be awesome! But Brent said that was exactly like asking for cash, and he wasn’t comfortable with that.

My future mother-in-law is a frugal kindred spirit, and understood my dilemma. But she picked up the phone several months ago and administered a little tough love. “People want to buy you things. They’ve been waiting years for this. You have to have a registry.”

Anne, who is the expert on all things gifty, agreed. She even put together a whole post of what to register for when you already have everything.

So, I reluctantly agreed. We registered with Amazon, which is amazing, because I didn’t actually have to go to Target with one of those gun things (which I bet I could get into, but sounds really awful).

Then, a funny thing happened. Brent made margaritas, which was a really splendid idea. That loosened us up a bit, and we used Anne’s list as a guide, and got to work.

It wasn’t long before we were shouting things back and forth at each other. “Get the fanciest can opener they have!” “Sort by price high to low!”

I can’t be the only one with this problem. We had to register for stuff. Well, that’s not true, we can do anything we want! But I decided not to start my married life by picking this battle. Wedding guests give presents, that’s how it goes. Okay.

First, let’s agree on a working definition of minimalism.

I like this one:

My interpretation of this rule: have the very best things in your home. The best things don’t need to be replaced often (if ever, for some things), and they’re perfect registry items because they’re the kind of thing we wouldn’t buy on our own.

Next, let’s talk about one of the cardinal rules of minimalism: one for one.

Every time we get something in the mail, we promise to take out something it’s replacing, or if it’s not replacing anything, we have to find something to get rid of anyway. We’re aiming to decrease the amount of stuff in our home, not increase. So we’re doing this gradually, though we recognize that we’ll have our work cut out for us when the wedding gets closer.

Getting gifts ahead of the wedding is wonderful, and it’s a practice I will carry forward for every single one of the weddings I’m invited to in the future. We’re able to thank people right away, and play our one-for-one game several times a week.

Now for the registry. Everything we registered for falls into one of four categories: nicer versions of things we already own, things we’d like to own but haven’t gotten around to buying for ourselves, things that will help us organize our small space, and things we’re “supposed to” register for.

Below is a sample from our list.

Category One: Nicer versions of things we already own


Chef’s knife, paring knife, cleaver… and a place to put them in the drawer.


Le Creuset hotness

We had a Dutch oven, but it wasn’t Le Creuset, and the enamel had chipped, revealing rust. Also the ramekins are just adorable. And the crock replaces a vase we currently use to hold wooden spoons.


All-Clad amazingness

This line replaces almost all of our pots and pans.

Included: an awesome steamer, a saucepan that sits under the steamer, big stainless steel frying pan with lid, little stainless steel frying pan, a teeny tiny saucepan, and a 3-quart simmering saucepan.


A wok, and lid

We’re getting into Thai cooking, and a wok, and its corresponding lid are essential for cooking the way Thais cook.

Kettles for Coffee — both electric and stove-top

Ours leaked, and needed to be replaced. Now it is gone, and we have two new ways (electric AND stovetop) to heat water quickly. They’re so hip, too, that our kitchen looks like Portland’s smallest coffee shop.


The world’s most beautiful cutting board

Seriously. This thing is amazing. It lives on our island (take that, mail!) and is one of those pieces we will have for our whole lives. It is not just a cutting board. It is a statement.

Fancy wine glasses

Sure, we had wine glasses. But not these. These are lovely.


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