How a Woman Who Didn’t Know She Could Use Credit Cards Does Money

Sagan (not her real name) is 29 years old and works in educational technology in Tucson.

So, Sagan, tell us a bit about your finances.

My finances are really simple, I think. I have a normal salary that covers my very minimal normal bills and then I save heavily. I do a bit of freelance work which is irregular but lucrative enough, probably an extra $20,000 a year. Most of the time I keep that money in a checking account and that’s what I live on day-to-day and what I make dumb decisions with.

I have kept my finances simple for two reasons. One is that I was broke as a joke for a long time, and the other is because until very embarrassingly recently I didn’t know you could do things like take out student loans, have credit cards, etc. So I just kept it as easy as possible.

Oh, interesting! Did nobody mention student loans or credit cards when you were growing up?

The only financial advice my parents have ever given me was this: Around my senior year of high school, my dad told me never to take out student loans.

So I listened. I’m almost certain there was no conversation; he said it, so I did it.

I guess I also assumed for a long time that credit cards were for people with money. Which I didn’t have. I realize how that sounds now…

You know, your dad’s advice and your assumption about credit cards may have been better for you in the long run, though.

Oh, definitely. I had no idea how lucky I was!

Did you make it through school without loans, then?

I did. I was just barely able to live on part-time jobs and got through undergrad and a first round of grad school on scholarships and grants.

I took out a student loan when I went to grad school for the second time. It was really small, just $1,500.

That was the first credit I had ever had. It was around the time that I became interested in finances and thinking about buying a house, so I was paying attention to my credit score—and when I opened the loan account my credit score went waaaay up.

Funny how that works. Did you end up buying the house? Or were you just thinking about what you’d have to do to buy one?

Not yet. Just thinking about it now. I’m afraid. The area that I want to live in is within my price range, but is more than I want to spend, blah, blah.

Not committing to bills for 30 years is pretty cool to me right now.

I almost think it would be easier to pull the trigger if I had student debt. It’s “the good kind,” right? So buying a house wouldn’t feel like selling my soul to a lifetime of debt.

It is always hard to go from having no debt to having some debt. Then it’s easy to go from having some debt to having more. So you may still be making the smarter choice in the long run!

Yeah, I agree. But that’s easy for me to say.

What is your living situation like right now? Are you happy with it?

Very happy with it. I live in a small rental house that is really close to work and in the only area where I would want to live right now. Everything is walkable and the weather is nearly never bad.

I have been in this place for almost five years, ugh, that sounds sad when I think about it.

But I like it, it’s a bit too small, I would like more windows, a garage. The landlord is great, I haven’t been in a lease since my first twelve-month lease expired, and the rent has gone up like $10 a year every year. I’m comfortable in a good way, I think.

It sounds, at least from our initial discussion, that you have your finances pretty well managed. Are you also saving money, saving for retirement, and doing all of those “good things?”

I think I am. It’s hard to know what to do once you check all the boxes though. I have the emergency fund, I max out both of my retirement accounts. I don’t have a ton of money left after that, but it’s enough that I know it shouldn’t sit in a savings account. Or is it? I don’t know where that line is. And I’m afraid of it not being enough so it’s a little paralyzing.

It’s obviously not a real life problem. It’s just hard to find specific advice at this point, which is why I’m fascinated by what other people do.

It’s a good question, because there aren’t a lot of great options for extra money. Savings accounts and CDs pay itty-bitty amounts of interest, so it’s not like you’re going to put your money to work for you there.

Have you thought about just investing it? Not in a retirement account?

I have. And my goal for the first half of this year is to learn enough that I’m comfortable throwing maybe $1,000 into an investment account. It’s just confusing to know where to begin.

I don’t think I can afford to have someone manage it for me, I’m not at that point. But do I want to do it myself? Couldn’t I just make more money with some side job in the amount of time it would take me to learn all of this stuff?

What would you recommend?

Well, I’m not an investment adviser, but I think you’ll probably get some advice from our dedicated team of commenters!

Perfect!

I do agree that hiring someone to manage $1,000 doesn’t make sense.

Even if it’s something automated and I could just pay 5 percent to have it taken care of, I’m not sure. I’m also not sure if that option exists in this world.

I think the question about making more money vs. learning how to invest the money you have is a good one. Like, how much can you make in an evening vs. how much can your money make for you? Of course, as you noted earlier re: credit cards, maybe we’re both thinking like “people who aren’t rich.”

It’s definitely a mindset that holds you back. You’re far more risk averse when you know exactly where every penny came from.

Investing is the one place where learning how to do it is probably worthwhile. But I weigh a lot of extraneous purchases that way. I mean, if I’m being honest, I could change the oil in my car. Or I could make more than $50 on my laptop in the Jiffy Lube waiting room.

Wait, aren’t those ten-minute oil changes? What kind of work-from-home scheme have you found?

Well, the first thing you need to know is I only do normal human maintenance things at the worst time, aka Saturday mornings. So even though I hear oil changes are supposed to be quick, I’ve never experienced it.

Neither have I.

What world do those people live in and how do we get there?

But how do you make $50 from your laptop?

I do a few different things, mostly lately it’s website optimization for mobile. My market is local small businesses because I’m not really qualified to do it and they don’t know any better.

But it’s a steal for them and a racket for me. A few years ago I read somewhere that having a business whose website isn’t mobile friendly is like having a store without a door.

Hey, food trucks are doing GREAT right now.

Ha ha, true!

But I’m glad that’s working out for you and for the small businesses.

It’s too good of an opportunity to pass up and the market for it won’t be here forever.

For sure. The freelancing world and the internet world keeps changing, faster than we can keep up.

It’s so true. I’ve done a lot of little things like that in a freelance style for so long but none of them are sustainable. Which makes it fun but you know.

So what do you wish you did better, financially? Besides wanting to learn more about investments. Do you have any financial vices?

I wish I did a lot of things better. I wish I knew ten years ago that I needed a credit history. I wish I didn’t spend any amount of cash that is on my person in record time.

My two main vices are coffee and yoga. I let myself spend more than I need to on both of them because I know I could have worse addictions.

I work on a campus so going to get coffee is a productivity booster, I get exercise and fresh air. But I could also make coffee in the pot in the office and take a lap while it brews. I just don’t.

I could also do yoga for free on campus, but I like the studio with the free deodorant samples where I don’t see people from work.

These vices make sense, and once again I am not interviewing a person who is, like, blowing their cash on stuff that doesn’t have anything to do with their life.

I used to be that way. Money would just disappear. So I just quit spending cold turkey and never went back.

I want to work on the coffee thing really. But the thing is, if I saved that extra $200/month on those two things, I don’t have a job for that money.

Drink your coffee! I give you permission. Last question: what advice do you have for Billfold readers?

Don’t take advice from me first of all. Contrary to what I just said, spend your money! Do all the things you have to do financially, but then have fun with it. Be the asshole who goes to the fancy yoga studio.

Just don’t be the asshole who double-parks in the yoga studio parking lot.

Support The Billfold

The Billfold continues to exist thanks to support from our readers. Help us continue to do our work by making a monthly pledge on Patreon or a one-time-only contribution through PayPal.