Getting Out of Debt
I started working the first week I turned 16. Since then I have experienced living paycheck to paycheck, substantial credit card debt, gambling woes, paying for lunch with change, binge spending, and taking cash advances on one credit card make a payment on another. At my lowest point, I had over $13,000 in credit card debt. I would try just about anything to make a decent buck, sometimes with disregard for the law and potential consequences. I’ve had stretches of time when money was the last of my worries, but it was just an inevitable cycle before I foolishly spent it all, or worse, more than I could afford. Fast forward 10 years: I can now say I am relatively financially stable, have a good job, and have some sort of direction in my life.
Although we were well off, my dad never spoiled me as a kid, but never really gave me much advice either. Perhaps the thing I am most thankful for is not having to take out student loans. I was enrolled in college for almost 7 years and the only thing I learned is that for me personally, it was a waste of my time and my dad’s money. I am not advocating that college is useless, it just wasn’t for me and is by no means necessary.
I used to have a set monthly budget and did a good job of staying within those boundaries. I paid off my credit card in full every month trying to build good credit. I was then foolish enough to succumb to higher credit lines and minimum payments. There was once I bought a Playstation 3, Nintendo Wii, Xbox 360, and a 46″ Plasma TV all in one week. I would go to Atlantic City and go on $2,000 swings in a single hour. In no time, I was up to my neck in credit card debt; before I knew it I owed $10,000. I’m not really sure why, but instead of opening my eyes and realizing the gravity of my situation, it pushed me to disregard it even more. It was like I gave up. ”There’s no way I’m going to be able to pay this all off, so it can’t get much worse if I maintain this lifestyle.” If you ever find yourself thinking along those lines, stop!
In February 2008, I hit $13,200 in debt. I used up almost all my lines of credit, I was no longer approved for new cards, something had to be done. I realized the problem wasn’t that I needed to make more money, but that I simply needed to start allocating my income differently. I stopped gambling (online and going to Atlantic City), I cut back on going out and picking up bar tabs, I stopped buying stuff I didn’t need (I traded in my TV for a smaller one and sold my Wii and Xbox). I knew it wasn’t going to happen overnight, but I was determined to turn things around.
It’s been exactly 3 years and I have successfully cut down my debt to a quarter of what it was. It hasn’t been easy and it’s not over yet, but progress is evident and I am determined. I have closed 3 credit cards in the past year, started a Roth IRA and am well into building a CD ladder. I have a savings account, an investment account, and there is a decent cushion in my checking account. I still indulge in nice things and trips on occasion but it is much more controlled and disciplined. I believe in saving and living frugally, but I also want to enjoy life at the same time so if I can find a good balance between the two then that’s what I’m going to do. If you want to speed up the process of paying off debt, then move to a smaller apartment and stay in, but that’s your choice.
Don’t let debt hold you down. There are a number of methods to help you manage your debt, but in the end, it’s all about wanting to do something about it and taking action. My story is proof that it can be done and a warning to avoid debt at all costs. Please feel free to ask questions or share your experiences.