Attention, readers: Over the next weeks, we’ll be giving away 25 copies of Hot (broke) Messes, the new personal-finance book by Nancy Trejos. The details are below.
As the personal final columnist at the Washington Post, it was Nancy Trejos’ job to help people manage their money wisely and plan for a stable financial future. Yet, Ms. Trejos’ own finances were a mess. She owed thousands of dollars on her credit cards, had lost most of her down payment on a recently-sold condo (purchased at the height of the real estate boom with an ex-fiance) and drove a 2001 Volkswagen Beetle that was worth about $6,000 less than she owed the bank. Yet, she just couldn’t stop treating herself to pricey dinners, splurging on exotic trips and buying hardly-needed little black dresses and cosmetics. (One of her decadent purchases: a 6.7 oz bottle of Bulgari shampoo, at nearly $50 with tax.)
In the summer of 2008, Trejos was working on an article about shopaholics when she realized that she needed help more than many of her readers and set out on a journey to be debt free. She chronicles her fall into debt — and the difficult road back — in her book Hot (broke) Messes: How to Have Your Latte and Drink It Too, in stores May 20, 2010.
The book resonates with many young consumers today and, interspersed with solid and actionable advice, is as useful as it is easy to read. And we want you to have it. Over the next five weeks, MintLife will give out 25 copies of Hot (broke) Messes — but you’ll have to do a little work for your copy. To enter the giveaway, tell us in 300 words or less, how you got out of debt and are managing to stay debt-free — or how you plan to do it. (Email us at email@example.com.) Every week, we will select five winners and feature some of the best stories on the blog.
In the meantime, we recently got a chance to ask Trejos a few questions about her own debt and over-consumption story. Here’s what she told us.
MintLife: In your book, Hot (Broke) Messes, you chronicle your struggle with debt. Rather, debts: you had credit-card debt, student loans, an auto loan and, at one point, a mortgage. Of all these, which ones kept you up at night?
My credit card debt worried me the most. You can argue that it is worth getting student loans because you are investing in a college degree. And you can argue that a mortgage is worth it because you own a piece of property that has the potential to rise in value. But you can’t argue that there is anything good about credit card debt.
I had used my cards frivolously. Here I was, in my 30s, still paying for a little black dress I had bought in my 20s that I probably couldn’t even fit into anymore. It wasn’t worth it. And after the economy took a turn for the worse, credit card companies started jacking up rates and charging inexplicable fees. It was scary to be beholden to companies that did not have my interest in mind at all.
My car loan was the second worst debt I had. Cars depreciate the second you drive them off the lot. Yes, for some people, a car is a necessity. It was not for me because I no longer needed my car for work. And I couldn’t sell it for what I owed the bank. I was stuck with a loan for a car I couldn’t really justify. I should have driven my old car, which had been paid off, until its wheels fell off.
MintLife: What is it, do you think, that got you in trouble with your finances?
Credit cards were so easy to get when I was in college, and I got used to using them and just telling myself that I would pay them off later. Combine that with the fact that for much of my 20s, I was an impulsive shopper and traveler, and you get a toxic stew. I also got so caught up in wanting to keep up with my peers, many of whom had higher-paying jobs or family money or just better budgeting skills, that I ended up going to fancy restaurants or taking expensive trips or buying nice shoes just so I would fit in. I’ve since learned that it’s okay to tell people that you can’t go to that restaurant with $35 entrees because it’s simply not in your budget. Thankfully, my friends love me even if I can’t afford such luxuries.
MintLife: Do you think that instant-gratification attitude and living an unaffordable lifestyle on credit is common among Gen Y-ers?
Yes, I think many of us grew up in a time of prosperity. For much of our young lives, the stock market was at a high, the real estate market was soaring, the economy was healthy. Accumulating possessions was the in thing to do. It was all about what you owned, where you dined, where you vacationed. The one possibly good thing this recession has done is to bring everyone back to earth. We all know now how easy it can be to lose our material worth. I think people are much wiser with their money now. Being good at budgeting is now the in thing.
MintLife: Obviously, getting your finances in order is no easy thing. Are you debt-free now? What helped you the most?
I am still a work in progress. I am still paying off my student loans, but I really don’t regret taking out those loans because I got a Georgetown University degree that has helped me get to where I am now as a writer. My car is close to being paid off. And I have stopped using credit cards for anything but work. I travel a lot for my job, so I have to use a credit card, but I get reimbursed for my expenses. I no longer use my credit cards to buy a dress or a fancy meal. If I don’t have the money for it in my bank account, I won’t buy it.
My planner, Christine Parker, was an immense help to me. She taught me how to budget, and she did so without making me give up every fun thing in my life. Thanks to her, I learned how to make trade-offs. I would remind myself that if I bought that pair of shoes, it would mean I would have less money for that trip I wanted to take. And taking a trip was more important to me than having another pair of shoes in my closet. I learned how to prioritize.
MintLife: If you could leave young consumers – your book’s target demographic — with one piece of advice on money management, what would it be?
Think before you buy. If you’re at a store or online considering a purchase, just ask yourself: Do I really need this? I’m not saying you should never shop or take a trip. I don’t believe that at all. But you have to budget. You can budget for those luxuries. But if you’ve got loads of debt, your money has to go to paying that off before it goes to the extras.
MintLife: Do you still splurge on Bulgari shampoo?
I still have my hotel samples left! I was able to score many samples from my stays at the Ritz Carlton. Plus, all my friends know about my Bulgari obssession, so when they stay at the Ritz or fly on an airline that gives out samples (yes, I have one friend who is lucky enough to be able to fly on that airline!), they make sure to bring me back some. And they know what to get me for my birthday!
What’s your get-out-of-debt story — or your plan to do so? Tell us in 300 words or less (send an email to firstname.lastname@example.org), and you could win a copy of Nancy Trejos’ book!