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The Financial Value of Honesty

November 18, 2015


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We all know how important honesty is, but did you know being honest could have a financial impact? The Financial Value of Honesty via @shoeaholicnomore

This might be the scariest post I have written in the almost 2 years I’ve been blogging. I written other things that scared me, like when I revealed my debt total waaay back at the beginning of my blog, but it’s been a while since I’ve written something that scares me.

I’ve certainly gotten more comfortable sharing things about my life, my weight gain, and my finances with the whole world (although the whole world isn’t actually reading this). The only time I really get a bit nervous now is when I hear people “in real life” say they’ve read my blog. Yikes! Now they know things and I can’t keep them a secret.

But that’s the whole point of this post. I’m tired of keeping this a secret and it’s time to be completely honest with myself and with all of you.

I’ve been holding out on you guys about some things, but I’m finally ready to reveal them. I’m ready to take my punishment in the comments (as I’m sure some of you will be upset), and move on. I’m finally ready to put all of myself out there and get this debt paid off once and for all. Here’s my financial honesty:

I Haven’t Shredded My Credit Cards…Until Now

You know when I first revealed my debt total and the fact that I had like 10 open credit cards? Well I’ve never closed any of those accounts after they were paid off, or shredded the cards. Part of that was due to the reasoning that keeping the lines open can help your credit utilization, which is a big factor in determining your credit score, but also because I was using the cards themselves as a security blanket. (Clearly the first reason was just an excuse, as you can certainly keep a credit account open without still having the actual card in your possession anymore.)

Even though I have a (small) emergency fund, and some other savings as well, I always held onto my credit cards “in case”. I’m not really sure why I’d ever need a credit card that’s only good at a furniture store or one that’s only good at a jewelry store, or one that’s only good at a fashionable clothing store. None of those purchases will ever be an emergency. Even if I’m holding on to a Mastercard or Visa “in case”, it makes no sense to hold onto these other kinds of cards as I’ll never be able to use them for any type of real emergency.

So today, in the midst of writing this post, I took a break just to shred 14 pieces of plastic. (It’s more than my original card count because several companies just sent new cards, so I had 2 cards for some of my open credit lines.)

I did decide to keep 3 cards: my Discover card (It has my balance transfer on it. I also use it when travelling before promptly paying off my trip when I get home, and so I can take advantage of that cash back bonus in the form of a statement credit to help pay off my debt balance), my Capital One card (just “in case”), and my GoodYear card which I just opened in September when I had my “car emergency”.

As soon as my GoodYear card is paid off, it’s bye-bye birdie! The only reason I’m keeping it now is that I have to use the card number and security number to access information about my account online and by phone.

I’m also contemplating shredding my CapitalOne card as my Discover should be sufficient for a “just in case” card too since the available credit balance is pretty high. What do you think?

I Bought a New(er) Car

Back in March I finally bought a new(er) car after shopping around for the past couple of years. I was becoming increasingly unhappy with my old car. I was tired of fixing it, fixing it, and fixing it. Every time I turned around it was costing me money and it wasn’t suiting my needs very well anymore.

Granted, my car emergency in September was on this new car, but it was pretty minor. I just needed new tires as one of them was severely damaged when it went flat, and the others weren’t in very good shape either.

Beyond that, I’ve been very happy with my new car. It’s a bit bigger, and thus I can get around better in snowy weather (which we are currently experiencing), I can haul my own stuff without having to ask or beg to borrow a pickup or SUV from my parents, and it still gets decent gas mileage. It also has low miles and makes me feel safe travelling long distances.

I financed my car purchase at a very low interest rate (about 2%) and am making a car payment of $248.84/month. My insurance did go up on a monthly basis, and my tags and taxes were more expensive when I paid them this year.

Part of what made me finally decide to get a new(er) car was that the worth of my old car was quickly going down hill, and I finally found a newer one that was exactly what I wanted at a reasonable price, about $10K less than when I looked last spring.

Love it or hate it, I did it. Overall, I’m happy with my decision even though it is more debt to have to pay off.

It’s Time for Honesty

Part of this post was about being honest with you all. You are my readers and some of you are my friends. It was way over due to come clean about these things. Another portion of this post was about being honest with myself.

Paying off debt is HARD and it makes it even harder if you are trying to do it on willpower alone.

Just yesterday I wrote a post over on Red Debted Stepchild asking why I was struggling so much with paying off debt and keeping my spending under control. A comment came in from Brooke, a former PF blogger, and she recommended a couple of posts to me. (You can find them here and here.)

After reviewing them, they are quite long BTW, I finally realized that it’s time for me to change my mindset and get rid of my terrible spending habits so I can finally make some real progress at getting out of debt.

I’ve had this post topic in my mind for a while, but it didn’t turn out quite like I was expecting. I think it’s way better and I’m glad to have finally come clean with all of you and more importantly, with myself.

I hope these revelations don’t put you off or make you take me less seriously. If they do, then that’s too bad. I’ll miss having you around, but I’m happy to finally be open and honest again. Now it’s time to tackle some debt!

We all know how important honesty is, but did you know being honest could have a financial impact? The Financial Value of Honesty via @shoeaholicnomore

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22 responses to “The Financial Value of Honesty

    1. Hi Karthigan,

      Thanks for stopping by and taking the time to weigh in on this. Luckily, I’m not looking at my debt as insurmountable at all. Rather, I am finally just being honest with myself about my past mistakes and making an effort to change my viewpoint on spending and debt in order to get it all paid off once and for all.

  1. Put me off? Girl, no. Let me be honest, at the end of October I financed a car. It’s in my hubby’s name because his score is a smidget higher than my score and the interest rate is so cheap on the car, we’ll only pay $1500 total interest over the life of the loan. I wasn’t happy about having to get another slightly used vehicle, but for me it boils down to this – is it safe to be driving around in my old car with my kids by myself the majority of the time? And the answer was no. I put their safety first and I had to respond accordingly. Don’t beat yourself up because you’ve done a few unconventional (at least unconventional in the blogging world) things. I haven’t cut up all my credit cards either, but I’m surely not out there charging them up.

    1. Hey! I’m so glad you hear from you Latoya! I decided the same thing about my car. I want to be safe and not end up broken down on one of my travels. I nearly always travel alone (since I’m single), so I wanted something a bit more reliable, newer, and with less miles. 🙂 Thanks for being on board and sharing your story too!

  2. Love your honesty, Kayla. I’m not into shame and judgment and honestly – I don’t think you did anything wrong. You’ve been honest about your journey – which is what I care about. Whether or not you chose to cut up the credit card after you paid it off – is your choice. I am glad, though, that you were honest with yourself as to why you kept them and were finally able to move past it. The one word of caution about keeping Discover as your sole credit card is that there are still a few places that don’t accept them. You might be better off keeping the Capital One (which I assume is a Visa or a Mastercard) and just asking to have your credit limit lowered if your really concerned that it might be too much of a temptation for you.

    1. That’s a great point Tanya! I should consider keeping both Discover and Capital One, or just the Capital One. My hesitation with the Capital One is that I don’t get any rewards at all from it. (It was my very first credit card and I couldn’t qualify for a rewards credit card since I had no credit history at the time.)

      1. Length of accounts opened is one of the key criteria in determining credit scores, so I would keep the Capital One open for that reason. But it isn’t worth a credit score or rewards if you are going to add to the balances! If you aren’t, I’d keep both open.

        1. Oh yeah! Even if I shred my Capital One card (which I probably won’t do since as Tanya said, Discover isn’t taken everywhere), I would never close the account since it’s my oldest one.

  3. I admire your honesty, not from the point of sharing with other people but for the rewards it gives you as a person. I feel that when we step up and say look this is me, that’s when things start to change in our lives. You are becoming more aware of your spending, and that’s half the battle. It will be a long time before we are debt free, but we will get there in the end. I love to live a more frugal lifestyle; I have more value on the purchases we do make. I for one think you’re great.

    1. Thanks Denise! It was scary to write it all down, but I feel so much better now that it’s all out there so I’m being honest with my readers and myself.

  4. I am glad you found the posts useful!

    It is also important to point out that these posts point to financial independence as a goal, but that it takes the same habits of living on significantly less than you make to overcome the debt mountain (one debt at a time!).

    As I said in my previous comment, the “Becoming a Saver” post helped me personally flip this mental switch.
    Here are the key points for me from this post :
    “The thing is, restricting your spending is not about flipping some kind of magical behavioral switch. It’s not about willpower. If you rely on willpower alone to make life changes, you will generally fail. ”

    Also: “You’ve got to learn how to be just as happy not spending money as spending it. And that there’s your problem.”

    Other tactics that work for me in addition to my suggestions yesterday:
    1) Allowances — Personal allowances for me make sense because it makes me not feel deprived. Because I have free money to spend, I do not feel deprived and therefore am able to keep within the budget I set up according to my values.

    2) YNAB — I previously had tracked my expenses in Mint. But Mint is reactive rather than proactive — It gathers your spending after it is done. YNAB is proactive — it encourages you to check your category balances in the store via a mobile app, and you can see how much each purchase affects each category balance as you are making the purchase.

    YNAB also helps you think of what expenses might come up in the future, so that emergencies happen less often. I personally do not save for a lot of rainy day categories, but I do have them in my budget sheet along with the month they are due so that I can anticipate when big, lumpy expenses are coming.

    3) Automation – Trent Hamm from The Simple Dollar talks about this a lot. If you automate payments, this takes the willpower out of picture. So, many people automate their debt payments so that happen whether you feel like it or not. Make good desicions on the good days, so that they mitigate poor decisions on the harder days.

    Lastly, I want to say that I struggle daily with this mindset change / not acting according to my desire to pay off debt when I am low on will power. But, I feel like I have made headway because I have identified the correct problem in changing my spending: my own mindset. Because I have identified the true problem, I have adapted my debt-paying tactics accordingly.

    And we have made progress: My husband and I have paid off more than 31,000 in principal alone (not including interest!) in 2015.

    You can do it!

    1. That’s amazing! I’m also totally impressed that you just added all of that to a comment, lol. 🙂 I have thought previously (many times) about trying YNAB or maybe even hiring a “coach” or something to help me work on my debt situation. I definitely need someone or something to help keep me accountable at all times. That’s when I do the worst, when I’m having a tough day or when my accountability (my budget spreadsheet) is too far away.

  5. Kayla, I appreciate your honesty and I’m glad you shared this with us, so you could get the weight off your shoulders. With that being said, I also don’t feel lied to or betrayed and neither should any of your readers. You’ve done tremendous work with changing your money mindset and habits and change is hard. It can be scary to let go of things you knew, if when you know those things aren’t the best for you. You may have kept the cards as a temporary crutch but you weren’t adding new debt to them, which would be a different story. Now you’re obviously at the point where you feel confident about your ability to make good choices with your money and have a growing and thriving business that will support you and your goals.

    1. Thanks so much Shannon! I always appreciate your encouragement. You’re right, it’s soo hard to change and let go of how you used to think about things and old habits too. I’m glad that I’m finally ready to let go of some of that old weight and move on. 🙂

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