When someone realizes they have a spending problem, getting to the root of it isn’t often the first step they take. After all, a spending problem is typically uncovered when you start having trouble paying bills.
When Jon Dulin developed a spending problem, he decided the only way out was to dig deep and find out why he was overspending. Now he’s debt-free, in control of his money, and happier than ever. Find out how he did it.
First love, first credit card, and a mound of debt
When Jon was a freshman in college, he got his first credit card. And for a while, he used it well.
Jon would use the card to buy small items, then pay off the card before the end of the month to avoid accruing interest. But then sophomore year happened — along with his first love.
In an effort to show his girlfriend how he felt about her, Jon would regularly take her on dates and buy her things he couldn’t afford. By the time summer rolled around, he was $2,500 in credit card debt.
He paid off the debt with his summer job, but he accrued more debt through the end of college — and the end of his relationship. Even though Jon didn’t graduate with student loans, he still ended up turning his tassel with $4,500 in credit card debt.
Graduating with debt and into a recession
As if graduating with debt isn’t hard enough, Jon also graduated during the 2001 recession. Although Jon thought his degree would lead him to a six-figure salary, he had a hard time finding a job after college.
Unfortunately for Jon, his spending habit turned into an outlet for depression after college. He continued to spend money to feel good, even if it was only a temporary fix. When the positive feeling he got from shopping went away, he would have to spend again to feel better.
Two years of this cycle shot Jon’s credit card debt up to $10,185.
Taking a hard look at spending
Then one day in 2003, Jon went to the mall. As he was getting ready to buy a jacket, a light bulb moment struck. He asked himself point-blank: Why am I doing this?
Suddenly, Jon realized he had a problem with spending money; he was spending to feel better. So he drove home and began the hard process of dealing with the problem and its root cause.
The first thing Jon did when he got home was dump all of the clothes and electronics he’d bought over the years on his bed. He took a picture of the pile and shoved it into his wallet.
From then on, Jon would use the photo to remind himself to think twice before spending.
Then, Jon did what many people are not brave enough to do. He started a process of self-reflection that made him see that his problem with spending money was rooted in his low self-esteem.
He read books on self-improvement, saw a therapist, and confessed everything to his parents. Much to his relief, they were supportive and reminded him that there was no need to be embarrassed.
And with that, Jon got to work on his debt.
A few missteps in debt repayment
Wouldn’t it be great if the moment you decide to solve your problems, every effort you make to that end is met with success? Unfortunately, that’s not usually how things work out.
As Jon worked to pay down his credit card debt, he used balance transfer credit cards to lower his interest rate to zero so he could make faster progress. But balance transfer credit cards are tricky and can lead to more debt when mishandled. That’s exactly what happened to Jon.
Although he was able to pay off his high-interest credit cards with a balance transfer credit card, he didn’t completely stop spending. So he tried again until he got it right.
During this time, Jon’s career was looking up — and he capitalized on that wisely. When he finally found a full-time job, he didn’t quit his part-time job. Instead, he used the extra money from his part-time job to pay down his credit card debt.
By the time 2005 rolled around, Jon was officially credit card debt-free.
Moving on from his spending problem
In the process of paying off his debt and building his career, Jon realized he enjoyed blogging and wanted to help people like him with their finances. He was blogging on the side until 2013, when he was able to switch to doing it full-time.
Jon doesn’t spend money to prove his love in his relationship either. Instead, he and his wife are working on a larger financial goal together: an early retirement. They’re also striving to do work they love, not work they feel obligated to do to earn money.
How to conquer your spending problem
Think you might have a spending problem? Here are a few resources that could potentially help you get to the root of the issue so you can take control of your spending:
- Talk to a trained active listener at 7 Cups for free
- Use Zocdoc to find a therapist near you
- Reach out to a financial therapist through the Financial Therapy Association
Remember, the road to financial success is rarely straight and missteps can even happen to experts.
But by addressing his mental well-being first, Jon was able to create a debt payoff strategy that he could sustain. Once he paid off more than $10,000 of his credit card debt, he never let a problem with spending money get in his way again.
And that’s what happens when an issue is worked on at the root, not at the branch.
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 2.98% APR (with Auto Pay) to 5.79% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 5.64% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of July 31, 2020, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 7/31/2020. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.
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2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.
Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.
Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.
Interest Rate: A simple annual rate that is applied to an unpaid balance.
Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of September 9, 2020. Information and rates are subject to change without notice.
3 Important Disclosures for SoFi.
4 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount.
The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.
To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of September 10, 2020.
5 Important Disclosures for CommonBond.
Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.16% effective August 10, 2020.