12-30-2009 09:58 AM - edited 12-30-2009 10:07 AM
I guess the difference (in my mind) between a shopaholic and spendaholic is the focus of the spending. For me to say that I am a spendaholic is similar to me saying I'm a shopaholic, only with the admission of no lasting benefit to my purchases. In my personal opinion, shopaholics at least have some tangible item to bring home after a shopping spree, whether it be clothes, shoes, technological gadgets, DVDs, etc... they at least have something that will provide worth to them for a period of time.
On the other hand, a spendaholic isn't necessarily focused on the item or benefit that will be gained from the money spent. For example, I have a terrible habit of picking up the tab when out with friends (even though I know I don't really have the money to afford it) because I enjoy the feeling of doing something nice for them. While it does provide the benefit of making my friends happy, it fades quickly and I can't even say that the money is an "investment in future meals" because I don't do it with the expectation of my friends picking up the tab for me at a later date. That might be a stretch for some of you, but it's just how I see it in my mind.
Basically, and this might be a bit more honesty than you guys wanted, last May I found myself as an unemployed, 24 year-old college graduate with $10,500 in credit card debt (none of it attributable to school), no job, living back at home with my parents, and nothing really to show for it all. I had a few items, such as my computer ($600), iPod ($400) and a large collection of DVDs (~$2,500) but nothing else. The money was gone before I had even earned it and I had absolutely nothing left to remind me why. I'm not really a clothes person, or into shoes, and I've always limited my *larger* purchases so that tends to rule out gadgets, so where did it all go? That's what a spendaholic is to me, someone who spends for the enjoyment of spending (or lack of concern for it) rather than for the value of the items gained.
And just as a quick update for anyone who might be curious... my current debt is down to approximately $3,700 and I'm determined to be down to $2,200 by the end of January and 100% free of my debt by April. It took a complete overhaul of my life (because I don't make much money at my current job) and I still have to work hard every day to keep myself in check. I no longer buy breakfast for my office or go out to eat with friends, I hold off on grocery shopping for as long as humanly possible to avoid the temptation of being in the store and seeing something I want, I pay my bills as far in advance as I can (rent, electricity, gas, internet, cell phone, etc) because I can't spend the money if it's not there, I only use cash (no credit whatsoever) and a few other things. I know it sounds drastic but it's the only way I know I can make it.
And yes, the cards are still wrapped tightly in their paper blankets.
12-31-2009 05:28 AM
Congratulations on establishing financial habits while you're still young that will serve you well for the rest of your life. Some people don't get to where you are now until they're twice your age. Good work!
12-31-2009 07:15 AM
Thanks for the thoughtful explanation about the difference between a shopaholic and spendaholic (someone who just spends money), and for sharing your personal experiences. I see you have come a long way.
My experience with credit during and briefly after my college years wasn't much different than yours. I had about $10,500 in credit card debt as well. I had to support myself through college. I had a part-time job. But I still wasn't making enough money to not worry about money and focus on passing exams too.
Right after college, the work-study job I had ended. In 2002, I moved to two different cities all within six months in search of job opportunities. Due to lack of employment, my credit card bills fell behind in 2003-2004. One particular creditor(Citi) was calling asking me to get my parents to pay the debt.
In 2004, I was able to pay all my debt. The creditors closed the accounts and offered settlements, but instead, I paid in full. Fortunately, only one of the accounts that was mines went to an outside collection agency. It was sent to an attorney in my area. I was able to get all those account current.
I cosigned for car that was repoed in 2004. This past summer, I settled the account myself. I was able to get the OC and CA to delete the trade-lines.
Today, with all the hard work that began in 2004 paid off. I now have no negatives reporting on my reports since July 2009. I learned a lot about credit and handling my finances.
My experiences with credit (good and bad) has kept me credit card debt free since 2004. After I pay my car loan off in March 2010, I will be able to pay more on my student loans and start investing. Right now, I only have a regular savings account and mandatory retirement account with my employer.
I wish you continued success.
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