A finance professional who wound up in credit card debt after 'doom spending' explains how she got out of the red and changed her money mindset
Courtesy of Alejandra Rojas
- Despite a solid financial background, Alejandra Rojas found herself in five-figure credit card debt.
- It forced her to reevaluate her relationship with money, which was affecting her spending habits.
- She's now debt-free and runs a financial education company. She specializes in money trauma.
Alejandra Rojas was raised by two accountants in Cali, Colombia and helped them with bookkeeping to earn an allowance.
"I would play with invoices as a kid instead of dolls," she told Business Insider.
She understood basic money principles from a young age and continued her financial education as a university student.
"I graduated as a finance professional, so I knew every strategy in the book on how to save, how to get out of debt," said Rojas.
But those skills didn't translate in the real world. After landing a job as a financial officer in Washington DC, she started spending more than she was earning and found herself in a $10,000 hole.
"I got into credit card debt from mindless spending — what you would now call 'doom spending,'" said Rojas. "I was a young professional in DC. There were a lot of things to go to. There were a lot of happy hours."
Accumulating debt as a finance professional was confusing.
"If I have spent the last decade studying and growing up knowing about money, why am I acting this way? It was this misalignment between what I knew I had to be doing and what I was actually doing," said Rojas, who also recalls feeling shame and guilt. It held her back from talking to anyone about her finances. "It's not easy to say, 'Well, I am in this amount of debt, and I don't know how to get out of it.' There is a lot of judgment that comes with it."
Courtesy of Alejandra Rojas
Rojas wanted to understand her situation. She recalls Googling something like, "Why do finance people get into debt?" It sent her down the rabbit hole of money and psychology and eventually led her to get a Trauma of Money certification.
She learned that her "doom spending" habits were emotional and stemmed from a fear of losing her friends or not being able to connect with her community. Understanding why she was overspending was empowering.
"When I realized that I wasn't the only one — that this was not a 'me problem' — and that it was something that I could turn around, the first thing I did was make a plan," said Rojas.
Her 2-step process to getting out of debt: Creating a 'big vision' and using the 'snowball method'
For years, Rojas didn't know what she wanted, let alone have a plan for getting there.
"I was just going day by day," she said. "I had to first sit down and say, 'Where do I want to be in three years from now? In five years from now? What is the thing that I want for myself?' And that step alone showed a complete misalignment of how I was spending and where I wanted to be."
She thought through what she calls her "big vision," which was two-fold: to travel the world and build a business. "Then, the second step was, 'Okay, if I want to be there in five years, what do I need to do now, and how would I pay this debt off?'"
She used what's known as the debt snowball method. With this strategy, you make the minimum payment on each debt except for your smallest one — on that one, you pay as much as your budget allows you to each month. The idea is that you gain positive momentum by checking debts off the list.
"I needed the motivation that comes from, 'Okay, I did this. I paid this one,'" said Rojas.
To free up cash to pay down her debt, she felt she had only one lever to pull: spend less.
At the time, "there was no option for me to boost my income," she said. "I was trapped in a cap, so I could only control my expenses."
Courtesy of Alejandra Rojas
She started by examining her credit card statements and spending habits. It was a revealing exercise.
"If I look back to what I was spending at the time, I was literally pleasing everybody but myself," she said. "There was absolutely nothing that showed up that could bring me long-term joy — none of that. It was just in-the-moment purchases and things that I don't even remember."
She started tracking her expenses so she knew exactly where her money was going. Some costs — like rent, groceries, and insurance — were unavoidable, but she wanted all other expenses to feel intentional.
"Every single dollar that went out, I knew exactly the purpose that it had, and how it was going to benefit me," she said. It wasn't easy, she added: "I went through a period of grieving and processing. I'm like, 'Why am I doing this? I want to go out to happy hours. Now I'm just staying at home trying to build this business.' But, ultimately, when I was in those moments, I reminded myself of my big vision and that this is not a forever thing."
Plus, she learned that she enjoyed other, less expensive activities.
"I started to find things to do for free that would fulfill me. I found the most beautiful parks nearby, I found my love for books. I found that most of my friends also like those types of activities," said Rojas, who also became more and more comfortable with declining invitations to social events that didn't align with her goals or values.
Rojas, now 29, said it took her six to seven months to pay off her credit card debt. She's since gone all-in on running her financial education company, The Money Mindset Hub, which started as a side hustle, and splits her time between Maryland and Amsterdam.
Becoming debt-free "felt so good, not only because it was gone, but because I was in control," she said. "That was the part that felt the best. It was like, now I understand that I can turn things around — that I have the control over this."
from Business Insider https://ift.tt/L6El1HZ
via IFTTT
Comments
Post a Comment