How to Handle Debt: A Personal Story

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The other day, I posted on Hipstercrite’s Facebook page that I had just finished paying off my car, and in a several months, my credit cards too.

I’ve written about debt before; like many twenty-somethings, I’ve been strapped with school loans, credit card and car payments for most of my third decade.

When you’re facing debt, it’s often difficult to see the light at the end of the tunnel. In fact, many mornings you wake up in a cold sweat, suffocating from the heavy blanket of your finances.

I was raised by a fiscally conservative mother who always paid her bills on time. When she pushed me forth into the world that was the only advice she gave me. Fresh out of college, I landed a salaried position in Los Angeles and thought I was set. Boy, was I dumb!

My debt was established in several steps: 1.) I often used my credit card to go out to eat (I was very sad and lonely in LA and didn’t want to be at home) 2.) I foolishly put the down payment of my new car on a credit card and tied myself with six years of monthly payments 3.) I had two credit cards and applied for a third in hopes of condensing my balances down to one card, but the third card would only take part of the balance and I ended up with three credit cards 4.) At 25, I left my salaried job due to being burnt out, made less money working temporary “soul-searching” jobs, fell slightly behind and was afraid to communicate with my creditors about falling behind.

By the time I moved to Austin, Texas to reexamine my life and career (with $500 in my pocket), the creditors had slapped me with 29% APR and I couldn’t make the minimums payments. That first year in Austin was a challenging one. I’ve managed to push this out of my memory, but I now recall working two jobs totaling 70-80 hours a week to try and catch up.

Listening to your heart instead of your brain doesn’t bode well for your finances. I compared myself to my friends who had gone a more traditional route, who acquired good-paying, salaried jobs and stayed with them. Why couldn’t I be more like that? Why was I so restless and had to leave my career and fall behind? Getting multiple phone calls from my creditors a day didn’t help my already suffering self-esteem. I felt like a huge loser and I was frustrated that my career confusion was making it difficult for me to catch up.

Tired of feeling like a turd and being harassed by creditors, I got serious and researched ways that I could get my finances under control. I discovered a non-profit credit counseling service that helped me get my credit cards under control. They were able to negotiate with my creditors lower APR rates and put me on track for an affordable four year pay-off plan. I’ve religiously made payments and by the end of the year all my credit cards will be paid off.

Within five years, I will have paid off my car and credit cards and owe less than $5,000 on my school loans. After that, I will be debt-free (until I want to buy a house or maybe go back to school…sigh). The point of this post is that I know how terrifying debt can be and I know many of us have it. What I didn’t realize back then is that all my friends who took the “safe” road, the road I envied, still suffer from debt. Their excellent educations often equated to costly price tags and some pay upwards to $1,000 a month for school loans. Though I became disillusioned with my career early on, many of them are becoming disillusioned at thirty, but are terrified to leave because they have debts that their current job can only afford.

We’re all in this boat together. If you have debt, you are not alone. You are not the only person getting multiple phone calls from creditors and sending them to voice mail. You’re not the only person who is having their car or house threatened to be taken away. You are not the only person in this current economy facing pay cuts and job loss that may affect your finances. You are not a failure. Everyone, rich and poor, are faced with debt and foreclosure and bankruptcy (except the rich can get by a little more easily). Instead of ignoring your debts, take the action you need to wipe it away. Five years ago I never thought I would see a debt-free day, and now it’s right on the horizon.