‘There is Nothing More Incredible Than Being Completely Done With a Huge Debt Load’

Michelle Lemay was born in Ottawa and lived in Toronto and Montreal before moving to Los Angeles, where she works at American Apparel’s HQ (and also blogs). We traded some emails, and I asked her nosy questions about money and she answered them. Girl’s got her stuff together. A+ — LS

Current situation and works in progress:
Trying to pay off debt while building savings and paying for some of the bigger day-to-day expenses that come up, such as a major car repair, is difficult. I’m paying off a government loan I took out to pay for school, and seeing how much I’m paying versus how many months are left on my loan terms is the most disheartening thing ever. I’m also paying for my current degree out of pocket. Sometimes I feel really confident about where I am, but other months I have to dip pretty deep into my savings to cover expenses.

Making your own opportunities, being a hustler, and having a mentor:
I moved to Montreal from Toronto for school, and I took a part-time job at American Apparel. After a year at the company, Dov Charney was in town and all these girls were getting pulled out of the stores to model or go vintage shopping, and they were getting paid pretty well for it. I was like, well I want to get in on this, but I’m never going to be a model.

So my coworker and I decided to come up with a proposal for a marketing plan for Canada, something that didn’t exist at the time. We hounded Dov for days to present it to him. Eventually, he met with us. He liked the plan, but nothing came of it.

But then a couple months later we got a call from the marketing director asking us to come down to LA. I dropped out of school and ended up being hired on as the department’s third employee. Then, through some really great timing and coincidence, I managed to take over an open fashion media position, and then I sort of created my own niche by doing web analytics. My boss throughout all of this has been Ryan Holiday, and I really credit where I am right now with having Ryan as a mentor.

Worrying about money, and then not, and then worrying again:
My father would always tell my sister and me that he never wanted us to worry about money, mostly because of his own upbringing. The weird thing about that is it had the opposite effect — I figured if my dad told me not to worry about something, then it’s totally something to worry about. So I was a pretty frugal child.

But when I started working and moved out on my own, I ended up with credit card debt in my late teens and early twenties, along with other personal debts, and it wasn’t until my mid-twenties that I cleaned that up and started being more responsible about money and how it affected my future. I started to learn through mistakes — which I think is the best way.

The pervasive genius of Heidi N. Moore:
I use the same “it’s not your allowance” philosophy that Heidi N. Moore spoke about, because I’m totally someone who treats my bank account like an allowance.

I pull a large majority of my paycheck out of my main account and put it into savings as soon as I get paid. I don’t do this automatically because every week is different, and sometimes I know in advance that I’ll need a bit more for gas or I have something planned and want a bit of a buffer. But around 60% of my pay goes to savings.

Then when I think I have a bit of surplus in my account, I move small amounts that I know I’ll spend if they just sit there into an “extra spending” account. So it’s there if I need it, but it gets me out of that drive to spend it all.

Seriously, Heidi touches lives:
I’m also a lot like Heidi with purchases; I don’t buy new clothes or go out for dinner or drinks much, so limiting unnecessary expenses isn’t really a problem for me. I did take her advice about spending on experiences, though. I was recently on a trip with some of my best friends, we went camping across the Southwest. They were trying to convince me to stay on the road a couple extra days and go to San Francisco with them. I totally had a mental negotiation with myself and eventually decided,”Well, Heidi says this is okay since it’s an experience!” And I did have a plan to pay it off, as she also mentions.

The joy of paying off debt:
I had a lot of debt from credit cards and not paying bills when I left Canada, so my first priority was getting those taken care of. It was more stressful to pay off the debt than to just know it exists. There were a few months where I’d come short and have to deal with eviction notices (in LA they can give you a three-day pay or quit notice if you’re late by a week on rent). But in the end, I gave up so many bad money habits — by necessity — but they’re gone for good after getting through all that debt.

There is nothing more incredible than your last payment going through and being completely done with a huge debt load.

Credit cards after credit card debt:
I have a credit card, which I just recently got to build US credit.I’m trying to learn from how I used credit cards in the past and pay the balance off before the month even closes. I allow myself to dip into savings for this because I’d much rather treat my savings as a safety net for emergencies (and “emergencies”) than a credit card. I know how my habits are and if I start charging “emergencies” I’ll be back in credit card debt in a few weeks.

Who your friends are:
I know this is so Oprah to say, but paying down debt also teaches you about the kind of people around you. When I had pretty much zero disposable income from paying off all these debts, one of my friends at the time would always guilt me into not going out, or say that I was just looking for an excuse and being cheap. It was one of the major reasons why I had to cut this person out of my life. There’s a lot of personal growth in overcoming something like debt, and this sounds insensitive, but I have a pretty low tolerance for my peers who don’t take debt as seriously.

I treat investing sort of like having a baby: There’s never going to be a good time to do it, so you may as well just start now. So I’ve reduced my savings to start investment accounts and most recently a Roth IRA. It takes a lot to convince myself not to be greedy about a number in the bank.

Spending (and not spending):
I like nice things, so I try to justify them as rewards for doing something great for myself rather than something I can have because I have enough money in the bank. Delayed gratification is great because it lets you weed out the things you didn’t need at all. I also try to go through my mental inventory of necessary expenses before I buy something. Like, “Okay but I need to register my car next month and I need to start saving for a trip home and I haven’t opened any of our bills from last week. Drinking, eating, and clothing are the worst wastes of money to me, so I’ll try to make my own clothes or cook insane meals rather than going out. And my rule is, don’t pay for a hangover unless you’re in attractive company, seriously.

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