I guess with anything in life, history is an important element. You really do have to know where you’ve been in order to figure out where to do. Since this blog is currently about my debt, I figure I need to go back to the time when debt began.
I received my first credit card my freshman year in college, 6 years ago. What did I sell my credit-virgin soul for? A school T-shirt. Granted, that was one extra day I didn’t have to wash clothes, but it was hardly worth my current agony. I sometimes wish I could view back in time to see who else was wearing that particular shirt. I wonder if they also have credit problems now.
At any rate, I was a fairly intelligent kid. Went to a great school, always excelled in book smarts. I even had a budget. However, there’s something about that little piece of plastic that can twist your intelligence, making you think “oh, I can spend $500 here, it’s only like 20 bucks per month”. And I was right, I could have paid that off. However, that $500 grows into $1,000. That’s not even too bad, I could afford it then.
The kicker was when I had a bad month, or really a bad year. I lost the scholarship I came to school with, and was forced to take loans. However, I was in an apartment, and still needed money to live on, as the loans only gave me about $400 to live on that semester. You guessed it; credit card to the rescue! And one was no longer enough; I got a 0% interest card to move my balance to. It was smart at the time, but it assumed I would be able to pay it off somehow in the next year.
That’s the assumption most people have before they have to “grow up”. I don’t claim to be fully grown yet, but I have reached the epiphany that I’m probably not going to win a lottery, create the next billion-dollar idea, or magically inherit a million dollars from a long-lost uncle. I grew up without money, nobody in my family has money, everyone I grew up around was also in debt. I think the magical money rescue is never going to happen. I may be wrong; it might happen. But I can no longer live my life as if it’s a guarantee.
Anyway, that $2k balance quickly turned into $3k, and into $6k. Before I knew it I had 4 cards and was already starting to miss payments here and there. Fees started coming, my interest rates skyrocketed, and it placed me into a position where it will now be next to impossible to easily pay them off quickly. It’s going to be quite difficult. Furthermore, it’s ruined my credit and left me in a position where if I marry soon, we’ll be lucky to get a house in the next decade.
On top of all the credit card debt I have the obligatory car loan, and student loans from the 4 years I went there. However, the car loan is less than my credit cards right now since it’s under my father’s name, and my student loans are still under deferment since I’m still in school (dropped out temporarily to work full time; the result of bad credit decisions). So, neither of those are posing an immediate threat to me. It’s the credit cards that need to go, and soon.
The kicker is that during all that, there was a 12 month period where I made about $60,000 while in school! Even after having to maintain two apartments (I was away on contract and still had an apartment back home), that would have been plenty of money to erase all my credit card and student loan debt. But, I was stupid, and used it all to eat at nice restaurants and buying a new gaming computer, an ipod, a car stereo system, things like that. It’s amazing how far $60,000 won’t go when you’re spending it on that sort of junk. The thing is, none of it is around now! Oh, it makes me sick. By now, with the money I’ve put towards credit cards in the years after, I could have a solid down payment for a house, and no car note at all if I would have paid it all off then. Not to mention no student loans haunting me now.
So, there you have it. No amazing reason I’m in debt, just the general deceptive nature credit has, and the psychology of a person who grew up without having everything he wanted. Oh, I made up for that by buying everything I desired, but quicky realized it’s not worth the stress it causes down the road. It’s totally worth living in a poopy house and going without things in order to get finances together. If I put that $400 for an ipod in mutual finds, I can buy 10 ipods when I retire. I’m a scientist and mathematically-oriented person, and those numbers make sense to me. Saving money instead of spending it at my age gives you a whole order of magnitude more money down the road. I’m just glad I’m starting this at 24. Beats trying to figure it all out after a family comes into play, and I have ample respect for those who do.