Debt Stories #2

Jul 10, 2014 by

debt trapDebt Stories is a Money Counselor series presenting readers’ real life accounts of their fight with debt. Some have won the war, some are still battling, and some may have conceded defeat. But all have experiences with which we can relate and learn from.

My Debt Story: It’s Not You, It’s Me

I got into credit card debt in college. But not because the greedy credit card companies gave some poor kid a line of credit he couldn’t afford. I got into credit card debt because of my issues and myself.

When I got my first credit card, it was my freshmen year. My credit limit was $500. I was smart with my credit card spending. I would buy a random CD online or buy that semester’s books. Regardless what my balance was, I paid it in full each month.

Fast forward to my sophomore year and things changed. Because I was a good customer, my credit limit was increased. Again though, my use of the card was smart and I paid off my bill each month. Then in early winter, I met a girl. She was my first girlfriend. At the time I had self-esteem issues (I know this more now than at the time). As a result, I thought the only way this girl could love me was if I bought her things. I took her to dinner. I would buy her gifts. She never asked for any of this (she was the farthest thing from a gold-digger) but I thought I had to do it. In other words, I thought I had to buy her love.

Slowly, I stopped paying my balance in full each month. By the time I went home for the summer, I was in debt around $2,000.

My Fatal Mistake

I worked that summer, as I did all summers, to earn money for books and other living expenses for the school year. But instead of saving the money for the upcoming year, I paid off my credit card debt. To some, this sounds like a smart move. And it would have been if I had an income while in college, but I didn’t. I ended up not having enough money to survive the year to buy books. Unfortunately, though, not only did I need to buy books, I continued the need to buy love. By the end of my junior year, I was in the hole close to $4,000.

My senior year I fared better. I no longer had a girlfriend and I had a job, though it paid a measly wage. I was able to keep my debt in check and graduated with $4,500 in credit card debt. I then moved back home with my parents to start looking for work. This is where things get worse, much worse.

The Spiral Of Debt Gets Out Of Control

Upon moving home, I had great hopes: I would land a high paying job, get out of debt and be on my way to financial freedom in no time. Months went by without me finding a job. I became depressed. My outlet for my depression was to spend money—money that I didn’t have. In the end, I had about $10,000 in credit card debt.

More Fatal Mistakes

Along the way, I made some mistakes that had good intentions. First, I opened up a second credit card. I transferred my balance to this new card, which had a 0% interest rate. I was going to save money on interest while getting out of debt. Sadly, I continued spending with the first credit card. Now I had 2 cards with balances.

At another point, I thought I had enough. I wanted to change things. I found a part time job so I had some income coming in. I opened up a third credit card and transferred the balance from the first card to this card, again to take advantage of the low interest rate. But 2 things happened:

  • First, I created a budget that had me living on $25 per month. All the rest of my money went towards bills and my debt. I couldn’t live on $25. I got discouraged and resented my debt. I was putting too much money towards my debt and not allowing myself to spend and go out once in a while with friends.
  • Second, as a result of the above, I started over spending again. I began to get a balance on my first credit card all over again.

My Moment Of Clarity

I was out shopping for a new jacket—even though I had 2 and never wore the one—when the light bulb went off in my head. I asked myself why I was buying this jacket when I had 2 already. I put the jacket away and thought on my drive home. I admitted to myself that I was depressed and wasn’t happy. When I got home, I took all of the things I bought over the months and piled them onto my bed and took a picture. I carried this picture with me in my wallet to remind myself of what I got myself into whenever I had the urge to buy.

Getting Out Of Debt—Finally

After I had this moment and decided to get out of debt, I started to work on increasing my self-esteem. I also landed a full time job, which helped with my depression from not having a job. I kept the part time job and used that income to help me get out of debt faster. I also sold a lot of the things I bought and used that income towards my debt. After a little more than a year, I was able to make my final credit card debt payment.

Now that I had control of my financial life again, I was able to start investing for my future and work towards financial independence.

What I Learned And I Hope You Have As Well

There are a few things I learned about debt because of my experience. They are:

Getting out of debt is hard. You aren’t going to get out of debt tomorrow. It will take time. You have to be patient. In most cases, you didn’t get into debt overnight, so what makes you think you will get out overnight?

You will fail. I failed many times when trying to get out of debt. Sometimes I learned from it, other times I didn’t and ended up repeating the mistake. Don’t feel bad when you do fail. Learn from it and grow. Don’t see failure as a negative, but as a positive in that you are going outside of your comfort zone and are becoming a better, stronger person.

You won’t get out of debt until you acknowledge the real reason why you are in debt. I think I failed at getting out of debt at first because I thought I simply had a spending problem. I didn’t want to face facts that I was depressed and had low self-esteem. For many, you don’t have a spending problem. It’s not as simple as that. You need to dig deep down to get to the root of the issue, otherwise you are going to stay in the debt cycle for life. It’s not fun admitting you are depressed, but it was what needed to happen if I wanted any chance of overcoming my debt.

Author Bio: Jon blogs at Money Smart Guides, a personal finance blog whose goal is to help readers get out of debt and start investing for their future. While it is important to get out of debt, many forget to take the next step and start investing so that they can be financially fit.

Please send your Debt Story to Money Counselor. My email is kurt(at) or use this form.

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