In her book “#GirlBoss,” Sophia Amoruso talks about how she gets a lot of praise for creating a multi-million dollar business (NastyGal) without going into debt to do it. The problem, she writes, is that she’s getting praised for something that she did not because she wanted to, but because she had to.
“When people write about Nasty Gal, the articles almost always note how I built the company with no debt, because that’s a pretty unusual feat in the business world… But what these stories usually leave out is that it wasn’t by choice that I built the company debt-free. It simply wasn’t an option, because no one would even give me a credit card, never mind a business loan.” (Source: #GirlBoss, pgs 104-105)
This might feel very familiar. You’re ready to start over. You’re ready to start paying your bills on time and becoming a responsible adult. You’re ready to not have to turn your couch inside out looking for spare change when you need to buy food. You’re ready for all these things but you’re staring at a mountain of debt; a job that doesn’t pay well and you feel completely and totally stuck.
You’re not stuck. Here’s the secret nobody ever tells you: starting over means doing some prep work. That whole “today is the first day of the rest of your life” feeling is great but unless you know where you are, you’ll never figure out how to get to where you want to go. Here is how you figure out where you are.
It Path to Starting Over Starts With Your Debt
You know that you owe a bunch of money but you aren’t quite sure to whom. The best way to figure out exactly what you owe and to whom you should send those payments is to pull up your credit report. Go over that with a fine toothed comb. Make sure it is mistake free. Verify every debt listed. If a company fails to verify the debt, contact the credit reporting agencies and have that account removed from your report.
It will take a few months to get all of this accomplished but that’s okay. You need to do this to get a very clear idea of exactly what you owe as well as how to improve your credit score and your financial situation. It takes at least three months because:
- It takes at least thirty days for a credit reporting agency to verify mistakes and make changes to your report.
- Creditors (and Collectors) can take up to thirty days to respond to your request for debt verification. If they fail and you report that failure to the credit reporting agencies, those credit reporting agencies require at least thirty days to do their own verifications.
- It takes another thirty days after that for changes made to your report to take effect.
After a few months, you’ll have your numbers. It’s okay if those numbers freak you out.
Now You Need To Look Objectively At Your Income
How much money do you make every month, after taxes? Is that amount more or less than what you know you will have to pay on your debt each month to pay it down, at the very least, on a minimum payment (for now) basis? If so, great! You can set up a budget and move ahead to the learning how to live on a tight budget phase.
If not, you’re going to need to figure out two things: how to be able to pay less each month and still keep the creditors happy and how to bring in more money so that you don’t have to eat ramen every day to be able to pay your Macy’s bill. Our site is filled with things you can do to reduce your debt payments, earn more money, etc. The point is that you need to get to a place where you are bringing in more than you are paying out.
Finally: Make Some Fine Tuning Adjustments
When you’re bringing in more than you’re paying out, even if that amount is small, you’ll be ready to truly start over. You’ll be ready to start fine tuning and improving your credit report (for instance, check out the Facebook page of CreditRepair.com for some great tips).
Then, it’s up to you to figure out exactly what it is that you want to do instead of what you have to do.
That’s your starting point: where you can live responsibly while figuring out which dream to chase. Because while Sophia Amoruso’s story is inspiring, it isn’t the norm and she’d be the first person to tell you that.
photo credit: Pink Sherbet Photography via photopin cc