in conjunction with the speech President Obama will give tonight, in which financial matters will likely play a very large and looming role, i have a little story i'd like to share.
once upon a time there was a girl. she was 22 and had a new job, a new apartment—and a new credit card. her dad said it was important to build credit, now that she was out in the real world, and that buying even one CD a month (it was that long ago—CDs were the newest form of music available) and paying off the balance in full was an excellent way to start.
so that's what she did. very small purchases, every month—balance paid in full. this went on for an entire year. she was off to such a successful, responsible start, it's hard to believe what came next.
because she could no longer stand living in the suburbs and passing through the Port Authority each day (twice), she moved herself into the city. her salary had gone up only a minimal amount and she had no business paying the kind of rent she was now paying (to share a studio!) on the Upper East Side. but it was pretty much her only option at the time—at least it felt that way—and, hell, she was young. so she dove in.
it wasn't long before the walls started closing in on her. suddenly one whole paycheck was wiped out each month, simply to keep a roof over her head (and that was with a little help from her dad), which meant that soon she was using her credit card for a lot more than CDs.
not a good idea, of course, but the girl was in her early 20s and with a new boyfriend—not to mention living in Manhattan, a dream she'd had since she was little—she couldn't very well stay home all the time.
new clothes, manicures, gym membership, dinners out, books, DVDs, concert tickets, shoes—all of it went on the credit card. whatever cash was leftover after the rent check went to non-fun things like commuting costs, bills and groceries.
as the balance on the credit card increased, so did the weight on her shoulders. her magazine salary was paltry, no hope of rising anywhere near what she needed to get her balance down, and she was trapped. completely stuck in the cycle of spending without saving, buying without truly having the means. she felt guilt, shame, panic, dread. she was completely uninformed about APR rates and had not yet discovered Suze Orman. instead of asking for help and advice, she made minimum monthly payments and otherwise practiced avoidance.
two years later she finally fled Manhattan for the cheaper pastures of Brooklyn, but the damage was already done. six years later, she's still paying for the sins of her 20s. she's no longer living paycheck to paycheck—and has long-stopped abusing her credit cards—but the money she could be saving for things like a trip to Ireland, a house, the super 120s jacket and trousers she's dying for from J.Crew, is all going toward her debt.
and, quite frankly, it sucks the big dill.
*for those of you out there just starting your grown-up lives—or those of you in high school or college who will be out in the real world before you know it—i hope you will remember this cautionary tale. if you can't afford it, don't buy it. if you can't afford it, don't rent it. the Port Authority is not that bad. (and don't ever get a job at a magazine.)