Habitual Spender

I figure it’d probably be interesting for people to know more about me and how I ended up where I am today. I don’t want to go into great detail as I imagine something will come out more organically, but some details might be fun to share.

I’m a Colorado native and I currently live in Denver. There was a brief period in my early 20s when I moved to the northwest, but my love of the Rockies (the mountains more than the baseball team) and a business opportunity brought me back. The business opportunity proved to be a bust, but my financial situation really started to spin out of control during the same period and some of it has stayed with me for years.

photo by ishrona

Like many people my age I got my first credit card almost 12 years ago when I turned 18 and started college. At the time I didn’t have much income, but credit was so easy to use I quickly started running up my balances. I was generally able to keep up with my minimum payments and not surprisingly my creditors were more than happy to increase my available credit and keep me spending. By the age of around 25, I had accumulate over $25,000 in consumer debt with little to show for it (I’ve always been into computers and it can be a costly hobby). I had also managed to acquire my first mortgage payment at the age of 22 by purchasing condo (recently sold, as previously mentioned). All told this left me with a grand total of over $155,000 of debt between my mortgage and credit cards. In an attempt to get ahead of my debts I refinanced by credit card debt into a home equity loan against my condo and promptly started running up even more credit card debt (thus the cycle continues).

About 6 months later I managed to get both of my loans refinanced into a single mortgage at a much more favorable rate. This move finally helped me stabilize my situation; I wasn’t making much of a dent in the debt I had, but at least I wasn’t adding more debt on top of the old. This became the status quo. I got a couple of fortunate breaks with my career, met the woman I married and we eventually bought a house together. Since the housing market wasn’t terribly strong in the Denver-area in late 2004 (for condos, at least), I decided to hold onto the condo and rent it out. That worked out fairly well — I was taking a hit on against my expenses for the place at around $200/month, but I was able to recover a lot of those loses on my taxes. Just before my wedding last year, I got a surprise offer on the condo and was able to sell for a modest gain, all just before the bottom fell out of the housing market.

Through so much of those early years (we’ll say from the time I turned 18 until around when we bought our current house) I was pretty carefree with money. While I did finally manage to get a better handling on my finances in my mid-20’s, I’d say that much of that was thanks to beneficial rates (thanks Mr. Greenspan) and a growing income. I do feel comfortable saying that these days I’m less impulsive in my purchases, but I feel I’ve clearly still have work to do. I still find myself justifying purchases of new computer gear that I may or may not need. And with the house now and the work we’re trying to do on it to improve it, I find myself buying more and more equipment and materials for project without ever thinking about the total cost.

And given that my wife and I are both employed and have more income than ever before I find we easily blow through the money that’s itemized in our budget as “discretionary funds” — we’ve each got our own hobbies and projects that are important to us, and while looking over credit card bills it’s obvious to me how all these little $5, $10 and $30 purchases that seem so small and innocuous can quickly add up. Hence this blog (which, I’ll note, cost me $80 to start)… a place to document my progress and frustrations as I try to get a handle my personal spending habit.

Okay… these posts can get lengthy quickly, so I’ll end here and work towards being more concise in the future.