Dollar Jane

Where should I start?

I’m a twenty-something college graduate currently working as a political aide. I live in a major East-Coast US city. I am keenly interested in personal finance. I’ve maintained at least a part-time job ever since I was 16, with a few gaps of unemployment usually lasting no longer than 2 or 3 months.

Although I’ve worked since I was old enough to have a job, I didn’t get serious about personal finance until after I graduated college. That was the first time I became fully responsible for my housing and food costs. It was also the first time I took on significant debt. I had about $3,000 in credit card debt when I graduated college, most of it racked up in the last six months while I was trying to find a job (and spending a pretty penny on interview suits and the like).

I went to a very well regarded private liberal arts college. I will be forever grateful to my parents for completely financing my college education. Except for $8,500 in student loans that I took out in my own name, my parents paid all of my college related expenses. Yet, even though I went to a good school, majored in economics, and had my way mostly paid for me, I ended up graduating broke and unemployed. I moved in with my parents after graduation, and, because of my sheer determination to be financially independent, moved out within a week to a room I subletted in an apartment with two friends. I paid my first two months rent with a cash advance from my credit card (I wouldn’t recommend this). With no real employment prospects, I promptly found a job in the one field I had experience in: the restaurant industry.

This job was at a high-end white tablecloth restaurant. I was hired as a hostess making $10.00/hr. The pay was pitiful but I was so relieved to finally have a job again and know that I could cover my bills. For the next six months, I took home between $350 and $400 a week in tips and base pay. After my car payments, student loan payments, rent, utilities, health insurance (there was no coverage under my parents anymore and no coverage at work), and minimum credit card payments, I lived off of just $150 per week.

I am very aware that this is a lot of money to most people in the world. For me, it was a very strict budget. I spent $25/week on gas, $50/week on groceries (although I worked in a restaurant, sometimes a shift as long as 14 hours, I was not given any free food), and the remaining $75 a week had to be divvied up among clothing needs (clothes for work, hose, dry cleaning, repairs, laundry), entertainment (there were many nights I wouldn’t answer my phone because I was too poor to even afford the cost of driving to a friend’s house), gifts (I always try to manage a small gift or a card for close friends and family), car repairs, doctor co-pays, and the occasional weekend trip (usually to see a friend within driving distance).

After four or five months of this I was fed up. I was counting every penny but couldn’t make a dent in my credit card debt. I would pay down the balance for a while, then blow it (”blow it” is probably not the right phrase) on a car repair, gift, or needed clothing. I was unfulfilled and underpaid.

While browsing jobs online I came across an internship opportunity that seemed right up my alley. But I knew I couldn’t afford to cut back on my hours at my current job. I was barely getting by on the money I made working 50 hours a week. I knew that I could make much more waiting tables rather than hosting, but that I would not get the opportunity to wait tables at my current restaurant. There was a restaurant right by my apartment that was hiring, so I made my move. I applied for the internship and for the new restaurant job, and at the same time gave notice at my current job. The timing was tricky but by the end of 2005, I was training at the new restaurant and getting ready to start my internship.

The new restaurant paid much better. On New Year’s Eve, I made $500. I made in one night more than I had been making in a week! I was ecstatic. I was working even more hours (The new restaurant required me to work no less than 35 hours a week, and the internship was two full days a week, so I was working usually about 50-55 hours a week) but finally making more than enough money to make ends meet. The bonus? The internship was paid. I was making $10.00/hr doing something I liked. The restaurant money was even better. I had doubled my take-home pay.

After so much penny-pinching I began throwing money at my debt like never before. I paid $600, $800 a month towards the credit cards. By August of 2006 I was free of credit card debt, owned my car outright, and had $1,000 in savings.

Then, I had the opportunity to take the internship full-time. It was scary. I had no idea how to negotiate a salary. I did pretty well for myself, at first asking for $30,000 a year (when I sat down and did the math I realized how little this was) and then renegotiating to $36,000 a year.

How did I celebrate? A trip to New York, several fancy dinners I couldn’t afford, and a brand new wardrobe. Yep, I wiped out my savings and got into credit card debt again! Having not fully worked out the pay cut I was taking from leaving the restaurant (I was now taking home $500 a week instead of $800), I once again found myself needing to adjust my lifestyle and live off a budget.

I realized that it was time to get debt-free for good and start saving for retirement. I’ve gotten several pay increases since I started the government job almost a year and a half ago, and I’ve made progress towards my goals. But it’s going to be a long journey. I want to build an emergency fund, get a nest egg for retirement, and save up a down payment for a home. Join me for the ride!