Originally published on October 5, 2015.
When I was a kid, I avoided reading any of those “choose your own adventure” books. You know, the ones that ask you to make a decision at the end of each chapter, which determines the next part of the plot, the next phase of your character’s life and, ultimately, the ending of the story. I chose not to read any of them, because I hated knowing I’d have to skip past many of the other stories and never know the other possible outcomes of the book.
What was I going to miss out on!? What if one of the chapters I skipped was the best one in the entire book? What if that chapter took me down a better path, with a better outcome than the one I’d chosen? And what if I felt like I’d made a mistake and couldn’t go back in time to fix it? I didn’t want to make the wrong choices and deal with any regrets, so I opted not to read the books at all—and deciding to do nothing is a mistake I made many times in my life after that, especially when it came to my finances.
Whenever we reach a milestone or crossroads in our lives, we are often faced with a decision that has at least two options, which could lead us down two very different paths. The first option is often the smarter choice; it’s the one your parents and loved ones would encourage you to do. The second option is to keep doing what you’re doing, which is to essentially do nothing to change your situation, so you stay on the same path.
If you apply this to your financial life, every time you choose the second option, you’re taking another step down a steep path towards financial ruin. The further down you go, the steeper the incline gets and the harder it is to climb back up. And if you get all the way to the bottom, sometimes the only way out is to wave your white flag and ask someone to bring you a ladder (e.g. file for bankruptcy). I didn’t quite make it to the bottom, but I picked the second option many times.
Here is the adventure I chose.
Chapter 1: Paycheques (and Budgets)
I got my first job when I was 15 years old. Leading up to that, and in the days before I got my first paycheque, my dad constantly told me to save at least 10% of my income (if not more). He didn’t tell me that because he wanted to control me (although that’s what most teenagers believe their parents are trying to do). He wanted me to get into the habit of saving money, because he knew it would help set me up for life. When my first payday finally arrived, there were two things I could do with the money:
- Save 10%+ and spend the rest, or
- Spend it all (as quickly as humanly possible) and save nothing.
If I’d picked Option 1, I would’ve moved on to read Chapter 2: Savings Goals. Instead, I chose Option 2, didn’t learn anything about budgeting or saving money, and continued on to Chapter 3.
Chapter 3: Credit Cards
I barely saved a penny, between the ages of 15 and 19, other than when I needed to save up to get my 1991 white Hyundai Excel (“Roxy”) fixed. Not getting into the habit of saving money before I got a credit card put me at a huge disadvantage, because I didn’t understand the concept of limiting myself to only spend a certain amount of money. I just spent everything I had. When I got my first credit card at age 19, then, it’s not really surprising that I didn’t understand I could use it one of two ways:
- Charge things to it occasionally and pay it off frequently, in order to build credit, or
- Use it like a second bank account, rack it up to the limit and only make the minimum payment.
Of course, my dad told me (repeatedly, again) to choose Option 1—and if I’d done that, I would’ve moved on to read Chapter 4: What’s Good About Good Credit and then Chapter 5: How to Borrow Responsibly. Instead, I picked Option 2, which was a fast-track to Chapter 6.
Chapter 6: Maxed Out
The people who read Chapters 2, 4 and 5 never get to read Chapter 6, because they save their money, and use credit cards and other borrowed money responsibly. If they were reading this Choose Your Own Financial Adventure book of mine, I would put a footnote at the bottom of Chapter 5 telling them they should be happy and proud they can skip Chapter 6, because it’s something I wish everyone could avoid (and hopefully not even get near, in their financial lives).
Unfortunately, because I made the wrong decisions at the end of Chapter 1 and 3, I found myself at Chapter 6, and it was awful. In the timespan between Chapter 3 and 6, I got a second credit card and a line of credit, and everything was maxed out. The total damage: $12,000. Oh, and one month before all of those accounts were maxed out, I also financed a $15,000 car over 5 years. In April 2009, I was 23 years old and had $27,000 of consumer debt. In this situation, there were only two things I could do:
- Consolidate my debt and make a plan to pay it off, or
- Consolidate my debt, make the minimum payments and go back to using my credit cards like they were free money.
Which option do you think I picked? I took out a $12,000 loan and consolidated my debts, so I only had two loans to worry about (that + the car loan). If I’d picked Option 1, I would’ve then skipped ahead to Chapter 9: Life After Debt. Instead, I did nothing in terms of changing my bad habits, picked Option 2 and headed further down the wrong path. I didn’t make it to Chapter 7: Bankruptcy, but I did find myself at Chapter 8.
Chapter 8: Debt Relapse
I still feel sick to my stomach, when I think about the mistakes I made between Chapter 6 and 8. I was so close to figuring it out! I knew I was maxed out, I consolidated my debt and I made a plan. I really wanted to pay it off, and knew I was earning enough money to get things down to $0 in 5 years or less. But when the bank suggested I lower the limits on my credit cards, I nodded and smiled and did nothing—nothing but keep my bad spending habits and continue down my dark financial path.
You know how the rest of the story goes. In June 2011, I realized I was maxed out—again—with over $28,000 of debt. While I’d been making all the payments on my car loan and consolidation loan, I was still using my credit cards like they were free money and also borrowed some money from my parents for university tuition. This time, I had 5 debts and only $100 in my chequing account, which had to last me 6 weeks. Similar to what was at the end of Chapter 6, my options were to:
- Finally get serious and pay off my debt for good, or
- Call the credit card companies, increase my limits and keep spending recklessly.
For the first time, it felt like I only had one option: to get serious and pay off my debt for good. I’m sure the credit card companies would’ve increased my limits if I’d begged, but being maxed out this second time felt so much worse than the first; it scarred me, and I wanted to get far away from the situation, as fast as possible. So, I finally picked Option 1 in this financial adventure of mine. It took me exactly 24 months to pay off every last penny I owed, then I flipped the page over to Chapter 9.
Chapter 9: Life After Debt
Those of us who get to read Chapter 9 know it’s a short one. It’s a quick celebration followed by a push out the door to tackle your next financial goal. When you get to the end of Chapter 9, there aren’t just two options before you: your options are endless. You can flip over the page and decide to enter worlds where people focus on saving, investing, travelling, buying homes, having kids and retiring—or any combination of them all. I’m still in Chapter 10: Saving, with no specific goal other than to travel when possible. But whenever two or more options are presented to me, I always go with Option 1 and do something that will not only strengthen my good financial habits but help me live the life I truly want.
Choose Your Own Financial Adventure
I had to get through Chapter 6 and 8, because I didn’t learn how to live within my means and save in Chapter 1, and because of all the bad decisions I made after I got my credit cards in Chapter 3. I chose to continually pick Option 2 at every crossroads, thinking all the spending I was doing was helping me create a fulfilling life, when really it was helping me do nothing but miss any opportunity I had to achieve all the other financial milestones I wanted to reach at earlier ages. I got so far down the wrong path, I ended up going on an adventure no one would want to take pictures of or write home about, and I was miserable—until I did something about my situation and got onto the better path.
Wherever you are in your financial adventure right now, ask yourself if you’ve been choosing Option 1 or Option 2 at every crossroads. Have you been making decisions that will help you live the life you want, or doing nothing but going down a dark path you can’t seem to find your way off of? If you’re on the dark path, don’t worry. You may not be able to take back any of your mistakes or see what you missed out on, but you can still control the next part of the plot, the next phase of your life and the end of your story. Flip through the pages and decide which chapter you want to read next, so you can turn your one life into a book you never want to put down.
Whatever you do, don’t do nothing. Be an active participant in your life—financial or otherwise—and choose the adventure you’d want to write home about.