The Story of Debt: Part I

My debt journey started before I reached adulthood. I was raised in a household where things were financed, not purchased. Credit cards were the rule, not the exception. When I wanted to go back to Europe my senior year of high school, my parent’s responded by taking me to the bank to co-sign for a credit card. That was how I was to pay for the deposit on this trip–put it on my new credit card. For whatever reason, I didn’t put a deposit down on the trip and never went, but I kept that credit card. It stayed with me throughout college and into the first years of post-graduation adulthood.

Debt Entering College
Debt
Debt Owner
Amount
 Credit Card
Credit Union
$750
Total
$750
Even though I graduated summa cum laude from a top university, I wasn’t/still am not financially literate. While my more savvy peers were taking lucrative side hustles tutoring, I was trapped in a $7/hour campus job treating myself to a grande iced caramel macchiato every pay day.
For better or for worse, I focused on my education. I wanted to make the most of it, however, that came at the expense of creating a financial foundation for myself. I took out student loans to finance my $400 off-campus rent and pay my monthly sorority dues. I remember in 2013 scrolling through Twitter reading about Bitcoin for the first time, wishing I had an extra $40 in the bank to buy one. I scoffed at the idea of using the textbooks from the library but now regret ever spending a dime on a college textbook, especially the $250 Xeroxed bundle of “essays” we were required to purchase for a freshman seminar.
Debt Exiting College
Debt
Debt Owner
Amount
Credit Card
Credit Union
$1,500
Student Debt
Varied
$35,565
Total
$37,065
I wish I could say the debt accumulation stopped once I graduated. It didn’t.
In April 2013 I was notified I won a $20,000 scholarship to go study Arabic in the Middle East. Everything stopped. My diploma’s certification was suspended so that my matriculation could be extended for one more year (this was a condition of the scholarship). But more importantly: I had to find funding. $20,000 wouldn’t cover tuition (because of the matriculation requirement, my university charged me their tuition price instead of the tuition price of the university I would be attending in the Middle East–big price difference), room and board, plus discretionary spending. I had no idea how to budget or plan for my projected expenses so I guessed: $11,000.
Because I had technically graduated in 2013, but was now also technically continuing on as a unique fifth year, I was not eligible to take out another $11,000 in federal student loans. This money had to come from a private lender. Hello Sallie Mae. But, as I’ve mentioned, I was financially illiterate. I didn’t really grasp the concept of interest. So I took half of the $11,000 out in the form of a fixed rate loan and the other half at a variable rate loan.
My year living overseas was the most formative year of my life. As difficult as it was and as much as the debt burden has handicapped me into adulthood, I still would have made the same decision to go. Sure, there are things I wish I could have done differently to mitigate some of the expenses I incurred in the process. But at the end of the day, the experience I had living in the Middle East is one I will never be able to replicate and for that, I am eternally grateful.
Debt Entering Adulthood
Debt
Debt Owner
Amount
Credit Card
Federal Union
$1,500
Student Debt
Varied
$37,065
Student Debt
Parent Plus*
*My mom asked that I privately repay her for loans she was forced to take out on my behalf
$5,121
Arabic Debt
 Sallie Mae
$11,000
Total
$54,686
My unique skill set–an Arabic speaker with a degree in political science–meant there was only one place I wanted to move to in order to pursue my anticipated career: Washington, DC. It’s been five years since I moved to the District and I am now only starting to grasp just how expensive it is to live here. Because my credit card debt has fluctuated over the last five years, I haven’t done a very good job aggregating it. Instead, here are some brief anecdotes of some not-so-wise financial decisions I made that dug me into quite a deep hole:
  • February 2016: I started dating a guy who loved to go out to eat. This guy also had a trust fund. In my pride to show I was a strong, independent woman, I always insisted on paying for my meal or picking up the tab if he had picked it up the time prior. My food expenses skyrocketed north of $1,000 per month.
  • April 2016: After being annoyed that none of my housemates wanted to resign our lease, leaving me as the sole signature on a $3,400 monthly rent liability, I said au revoir and moved from my $850/month bedroom to a $1,300/month studio three blocks away. I’ve been living in a studio ever since.
  • December 2016: My beloved 2005 Prius was totaled on my way to work one morning. I wanted to get another Prius, but I couldn’t justify spending $8,000 on a used, 2008 Prius with 130,000 miles on it. Instead of doing more research I found a 2010 Audi A4 with 72,000 miles on it for $12,000. So I went with it.
  • November 2017: The guy I was seeing worked for an airline company and bragged about loving to travel. I thought it would be fun to go on a date to Iceland. He bailed on the trip 48 hours before we were supposed to go. Now I will say this experience ended up being a much needed mental reset for myself and I don’t regret going. But it ended up costing me around $1,500 to drive a camper van around southeast Iceland for 4 days.
Getting Out of Debt
The idea of getting out of debt started infiltrating my mind back in the winter of 2015. I was bored at my job when I discovered Dave Ramsey’s radio show. While I disagree with him on a lot of things, I was hooked on the idea that debt was a choice rather than an absolute fate. For the next 3 years I plotted my way out of debt and mapped it out on spreadsheet after spreadsheet, but never committed action to it.
In November 2018 I hit my equivalent of rock bottom. I was on the cusp of becoming personally insolvent. The minimum payments for all of my debt exceeded my incoming cash flow. I’ve never missed a payment on anything. Ever. In November 2018, I was not only on the precipice of missing minimum debt payments, I was also at the point where I didn’t know if I would be able to afford rent at the end of the month.
As of November 2018, my debt looked like this:
Debt
Debt Owner
Amount
 Credit Card
Chase
$15,238.93
Auto Loan
Capital One
$8,250.79
Student Loan
Nelnet
ECSI
$32,530.03
Student Loan
Parent Plus
$3,771
Total
$59,790.72
In the past 4 months I’ve made some modest progress. I restructured my credit card debt by moving high balances from interest bearing accounts to zero interest accounts. My immediate goal is to double down and pay off all of my credit cards by September 2019. If I am able to do that, it will be the first time in 11 years I will not have a single outstanding balance. That will be a huge victory for me.
I have a long way to go, and a lot of bad habits to break, but I am excited to see where this journey takes me.

 

2 thoughts on “The Story of Debt: Part I”

  1. Hi, I don’t know you at all but I really resonated with this post. My husband and I recently got out of debt after spending the first 8 years of our marriage miring ourselves slowly deeper and deeper. We always told ourselves we were trying to pay it off and maybe made extra payments here and there but we didn’t experience the “your debt is an emergency!!” (Via Mr Money Mustache) until we hit rock bottom when our second child was born (honestly I can’t believe we lasted that long) and missed a payment (wrecking my credit) and had to ask my parents to buy us groceries and formula. That was almost 4 years ago and it was honestly life changing. That whole year we had limited income (see: new babe) and yet made more progress on our debt than we had when we were double-income-no-kids. It took us another few years to get out completely. But last year we took a vacation to Europe on savings. And I have felt transformed to be out from under the load of debt. That incredible invisible weight. Anyway, sorry for the novel-length comment. Courage, my dear. I believe in you.

    1. Thank you for sharing and congrats on taking a trip to Europe on savings — that’s a huge feat! The debt is overwhelming and it will continue be that way a while, but I think the biggest thing I’ve learned is that while I can’t always control what happens around me, I can choose how I look at things. The debt is a journey and seeing it as an opportunity rather than a prison sentence is opening my eyes, teaching me to look at life from a totally different perspective.

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