Jodi Goldfinger wanted to travel the world while she was young and able. That youthful wanderlust, combined with fluctuating income from self-employment, landed her in roughly $25,000 of credit card debt.
Now she's slowly regaining control of her finances, already repaying $3,000 and aiming to be debt-free in three years.
The 35-year-old Toronto woman knowingly went into debt to travel. "I figured when I'm older, I'll buckle down," she said.
She visited nearly 30 countries – from Iceland to the Galapagos Islands - sometimes scoring an online deal or extending a business trip. The costs slowly "added up" and eventually the hodgepodge of travels accounted for up to half of her debt-load.
While travelling can be a wonderful experience, financial planners agree that repeatedly borrowing money to fund any experience is best avoided. Credit card debt is particularly troublesome because if the amount borrowed is not paid off immediately, the card holder will be slapped with a high amount of monthly interest.
"Eventually, you're paying interest on your interest," said Caroline Battista, an H&R Block senior tax analyst.
Ms. Goldfinger estimates the other half of her debt load came mostly from needs, not wants.
At times she relied on credit to pay for daily expenses, like groceries or toiletries. Once in a while, she'd use her cards to pay for bigger items, like a couch or a laptop, or to cover her living costs, such as rent.
"Since I work for myself, if I don't have money in the bank, I put things on credit and hope money will come in," she said.
Ms. Goldfinger worked as a freelance graphic designer for more than a decade. She'd pick up a short-term job here and there to supplement her freelance earnings. About a year ago, she started a personal concierge company that is now her main source of income. Last year, she made roughly $25,000 gross and believes she'll raise that by $5,000 this year.
Sometimes when she got paid for a freelance job, Ms. Goldfinger hesitated using the money to pay off her credit card because she needed it for rent or other fixed expenses.
"It's a tough juggling act," she said. Despite several attempts to create a budget, she found her fluctuating income made it it difficult to plan ahead.
Self-employed people generally have "ups and downs" as their monthly earnings vary, said Patricia White, Credit Counselling Canada's executive director. "It's those dips where problems can arise."
Anyone who is self-employed should create a so-called cushion account, she said. It is not meant to replace a traditional emergency savings account for larger, unexpected expenses, but should help pay for necessities like housing and food costs during months when they don't earn much.
Ms. White recommends contributing a set amount every month (or, at least, during high-earning months) into this cushion account. Self-employed workers should try to resist the temptation to spend extra money from a high-earning month on a night out or an expensive pair of jeans.
Ms. Goldfinger admits managing cash flow was a problem, but is determined to be more vigilant about budgeting. About three months ago, financial guru Gail Vaz Oxlade inspired her to create a realistic budget and start an aggressive debt repayment plan.
She pays at least $700 a month toward her debt, but is trying to increase that number. She places another $100 into an emergency fund each month and once her debt is gone, she plans to start saving for retirement.
Ms. Goldfinger estimates she saves about $100 on food a month these days, without changing what she's eating. She grocery shops with coupons and frequents discount sites, like Groupon, to avoid paying full price at restaurants.
But the biggest change for Ms. Goldfinger is that she now waits – sometimes a month – before making a purchase to ensure she has the money in the bank, instead of borrowing it.
Ms. Goldfinger's love of travel hasn't disappeared. She wants to take a trip with her partner. So, they're each depositing $25 a week into a savings account for a future getaway to a sunny destination.
That "definitely feels very strange," she said.
"I always felt that living the way I did allowed me freedom ... But there was always this knowledge that my debt was increasing, and it got to the point where I honestly didn't think I'd ever pay it off."
Since revamping her budgeting skills, Ms. Goldfinger has a different interpretation of freedom.
"The truth is having the knowledge and understanding ... of my money and of my debt feels way more free," she said. "It feels really powerful to know that I have control over my finances instead of them [having] control over me."
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