My debt story

Today I feel like telling part of my own personal financial history. I’ve alluded to it on this blog, and those of you who follow my other, more personal blog already know my story. I’m not sure if it will be a cautionary tale or just a good horror story. Either way, I thought it would illustrate the reason I’m so dedicated to personal finance, and show why one of my greatest passions is eliminating debt.

I hate debt. I almost always have. At first, after graduating from college in 1996, when my first debt appeared in the form of student loans, it didn’t seem that bad. But then a couple years later, broke and dying for amusement (and food), I got my first credit card. Maxed it out. Got another credit card. Maxed it out. Got another one with a 0% intro rate so I could transfer both balances to it. Maxed all three out. You get the picture. Then my partner went to college and didn’t qualify for federal aid, so I took out a private loan to help with tuition. Plus she got some private student loans. Then we racked up more credit card debt.

Then we bought a home, essentially zero down, by borrowing the down-payment money from my dad. We also took out a home-equity loan for the amount of the down payment (on recommendations from our mortgage broker and real estate agent; this was the kind of advice naive home buyers got in the heady days of the housing bubble). Used part of it to pay back part of the debt to my dad, but the bulk went to furnishing our new condo.

I would have periodic battles to get the debt down, though I never seemed to get anywhere. I’d write all the debt balances on a Post-It note and carry it around in my checkbook, I guess for motivation. Of course, my impulsive purchases were always via credit card or cash (drawn from my overdraft, usually), so I never saw the debt list when it might have helped me resist spending.

My debt-reduction attempts resembled unsuccessful dieting, where I’d curtail my spending so strictly I’d eventually freak out and go on a spending spree just so I wouldn’t feel so constantly deprived of everything I saw around me. Other times I’d plod along, only taking on a few bucks of debt or even paying off a little, but the lack of progress was depressing; I could see no way out.

Then Anitra and I started an international courtship with Neil, our eventual third partner; we really threw caution to the wind. Plane tickets to England! $500 cellphone bills! Gifts shipped back and forth with shipping costs that rivaled the cost of the contents! Immigration application fees! When he joined us, I was the only one with a steady job for a while. Still in the honeymoon phase, we ate out all the time, and Neil bought home décor to make our place feel like home.

I started having a nervous feeling that we were reaching the end of our rope financially. There was only so long you could make all the minimum payments on debt when you kept borrowing to cover it. I hadn’t checked my amounts in probably over a year; it was time to take a good hard look.

I don’t remember exactly what spurred me to do it, but when I did, I realized we probably couldn’t have gone another month in the same fashion without starting to miss payments. Without actually defaulting on our debt, we had reached the end of the line. The house of credit cards was coming down.

So I started to claw my way out, little by little. But even as I started to see a bit of progress, I was becoming aware that there was a whole other financial crisis brewing in England, with Neil’s debts and dwindling savings account covering it. He hadn’t checked his account balances in months either, and he too had a weirdly psychic feeling when it was time to check. When we logged in to his main account, it was pretty obvious his next payments to his debts would max out his reserve line and he’d start to default there too.

We quickly transferred some money (with a gutwrenching transfer fee and a whopping service charge) to cover the next month. But it was clear my actions had to be far more drastic than they had been. I added Neil’s debt totals to mine and Anitra’s. That’s when, I think, I truly made it my life’s mission to get out of debt. That total number was transfixing, terrifying. I didn’t know how I was going to do it, but I was going to devote all my effort to making it go away.

That all happened in early 2007. In the 11 years since graduating from college with only student loan debt to my name, everything had gone horribly wrong in the financial part of my life.

I guess I’ll end there, with a big dun-dun-DUN! Things have gotten better for us, drastically so, in the past six years. But this was probably our lowest point.


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