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- I've made a lot of money mistakes, including getting into $60,000 of credit-card debt.
- I've paid it off over the past eight years, but I wish I'd known the emotional toll it would take.
- I also wish someone had told me to figure out why I got into debt in the first place.
- Read more stories from Personal Finance Insider.
I often joke that if there were a financial mistake that could be made, I've made it. One of my biggest financial mistakes? Racking up high-interest debt. Over the past eight years, I've been paying off $60,000 worth of debt, and the experience has taught me an important lesson about money: You don't know what you don't know until it's too late. Fortunately, another important lesson I've learned is: You can recover from past financial mistakes.
If you're cleaning up past financial mistakes, I'd like to share what no one told me on the road to financial recovery.
1. Be prepared for the emotional toll, and ask for support
I was unprepared for the emotional toll the debt-payoff process would take. Becoming debt-free was so important to me, but every time I reached an important milestone, something would happen that would impact my progress. These Murphy's Law moments were so frustrating and discouraging. It wasn't until I took a step back and looked at my overall progress that I realized how different my financial life was even with these annoying financial hiccups.
While having negative financial experiences can take a huge toll on your emotional well-being, asking for support can help. I recently had a financial issue pop up, and because I recognized that I would react emotionally to it, I reached out to an empathetic friend in the personal finance space and asked her what she would do if she found herself in a similar situation. She offered me guidance, and having support from someone else who had paid off an enormous amount of debt — and was empathetic — was a huge help in getting me through that experience with a level head.
2. Ask yourself why you made the mistake in the first place
I've spent a lot of time trying to figure out why I made the mistakes I did. Answering this question wasn't to give myself a hard time about my decisions, but to know how to educate myself better about personal finance and to avoid making the same mistakes again. I came up with a few answers that you might relate to.
- Lack of understanding: I didn't know what I didn't know. I was a great worker and always had a job, but I didn't have money management skills. When money came into my hands, it flowed out like water. Credit cards, in particular, were a huge problem for me for a number of reasons. When I was younger, I didn't really understand that sooner or later you had to pay them back. There was a true disconnect in my understanding of my financial responsibility with this tool.
- Bad money habits: My financial habits were a mess. I didn't have financial habits around saving and investing, and no one around me talked about their financial habits so I had no idea that what I was doing was problematic financially.
- Underearning: This is particularly difficult to admit. I just wasn't earning enough to get in front of my regular expenses, so I used credit cards to bridge the gap between my income and costs.
- Life happened: My mom lost her job and I ended up supporting the two of us on a barista's income and student loans while attending graduate school.
I wish I could tell you that I was able to clear out my debts and clean up my finances two years after I graduated with my Master's. Unfortunately, that's not what happened. Instead, it would take many years and several times hitting financial rock bottom before I changed my financial life.
3. Find a supportive community
One of the most impactful actions I took on my debt-payoff journey was meeting other people who were in similar situations and had similar financial end goals.
The conversations, camaraderie, and support that I've received from this amazing community of friends has been key to staying on my debt-repayment journey. What I didn't take into account was that as other people achieved the results that I was working towards, they would give me guidance and support to reach my next financial goal.
4. Give yourself some grace
When I began my debt-payoff journey, I spent a lot of time being angry at myself for my financial choices and regretting the mistakes I'd made. But, I also took sustained and focused action over a long period of time. It hasn't been easy, but I can absolutely say that the journey has been worth it. I now give myself some grace and am kind to myself and others who find themselves dealing with bad financial choices, financial bad luck, or ignorance.
It's absolutely possible to recover from your past financial mistakes. It may take a while, but I can tell you that this journey has been worth it.
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