Letters to the Editor
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We have great expectatons for ourselves...
And we get into debt because we imagine we soon (finally!) will start getting paid what we are worth. My bride and I paid off about $85,000 in credit card debt.
We only did it when we finally added it up, as Sarah did, at the start of her article. And we reached some point of maturity where we could not sleep well with that sword hanging over our heads.
We paid it all off, no bankruptcy, in four years. Now, we have about $500 on our Am. Exp., left from Christmas, but we will pay that next week.
Sarah actually deserves applause for being only ten grand in debt. But Sarah maybe should not have written this article until she actually pays off her debts. Sarah, please give us an update later. The interesting part of your story is in the future.
And, my friends, we are only a layoff away from plunging back into that debt hell. And... a recesion is coming...
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I am a math tutor
And one of the things I teach all my students is how to calculate compound interest. Then, I walk them through a credit-card example - "Suppose you owe $1000 on a credit card with a 18% interest rate, compounded monthly; your monthly minimum payment is $20; how long will it take you to pay off the debt, and how much will you actually pay?" It's always an eye-opener for the kids. Seeing the numbers out there in black and white is a lot more convincing than lectures about financial responsibility.
If schools actually taught their students real-world math, fewer people would get into credit-card debt.
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@56etc. re: math tutoring
Exactly! Meaningful, real-world personal finance education should start in 6th or 7th grade. No Adult Left Behind!
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Thanks for writing this article
Just ignore all the snarky, resentful blowholes and scolds on this forum, and know that your willingness to share your story was an act of generosity. People are in terrible financial trouble in this country today, and as long as no one wants to talk about it, everyone thinks it's just an individual problem. This is not to say that there isn't a need for personal responsibility--there certainly is, and you've taken yours on. But there is also a systemic aspect about which too many people are completely naive, because almost nobody gets any sort of financial education. So congratulations for taking on the repayment of your debt. One day it will all be cleared, and then you'll never let this happen to you again. But you WILL be able to listen with empathy and understanding if someone else is willing, as you have been, to lift the curtain and be honest about the financial state of things. All of us living in a country whose major export for many years has been chronic, stupid, life- and community-destroying debt are by definition fucked up around money. You had the courage to show us how this madness has affected you personally. Thank you.
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Bankruptcy Lawyer Has Seen Worse
It could be a lot worse. It could be student debt. The ugly little secret of student loans both public and private is that they are nondischargeable in bankruptcy. I see a lot of people who wouldn't be in bankruptcy if they didn't have their student loans and I turn away clients because as long as they have their student loans they will be insolvent.
For any of your naysayers the code cite is 11 U.S.C. s 523(a)(8). The debt is only dischargeable if you are living near or below the poverty line, have made a good faith effort to earn more, and have no hope of earning more in the foreseeable future. That last bit was case law.
The point is that our financial system screws people. We grow up hearing about how education can get you ahead, then you get an education, get laid off, and can't dump the debt in bankruptcy. In fact, your student debt is listed as nondischargeable along with debts for fraud, conversion, willful and malacious injury, and other sundry wrongs.
Again some people might argue that you shouldn't get a degree that won't pay off. Look at the debt for doctors and lawyers. Those are traditionally two of the highest earning professional degrees and I know quite a few of both that can't service their debt.
The irony is that if you buy a house, refinance and use that cashed out equity you can convert all that student debt into house debt along with your credit card debt and car loan. Once it's rolled into your house, the student debt is dischargeable along with all the rest. We've been financing our debt sodden lives with houses and using them to hide from the reality of our financial system. And look at how great things are now!
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No credit card
I can see all the smug posters now who have never had a credit card and blah blah blah.
I'm one of those people who has never had a credit card, but I'm not smug, I'm scared. I've watched several of my friends do exactly what Sarah did with her credit cards, and I don't trust myself to own that piece of plastic. I make less than $20,000 in an expensive city. I can barely pay my bills. There is always something I need that I can't afford, and I know that with a credit card, I would probably get into debt very quickly on very justifiable purchases.
Everyone tells me to get a credit card. They tell me "just pay it off every month." That I should be building a good credit rating for when I buy a house (right..) They make me feel like I need to just grow up, be an adult, and use credit cards like the rest of America.
And I actually think they are right -- I should be able to handle credit cards. But I just don't think I can. The only way I trust myself to live within my means is if I have no other choice.
I think there are a lot of young adults like me who are just poor. We can't afford the lifestyles we were promised when we went to college. We have shitty health plans, our rent is high, and our friends are inviting us out for drinks. We're not selfish and spoiled, we just want to feel like we're making it when we're not.
I buy those overpriced drinks. When my friends swipe their credit cards, I swipe my debit card. At the end of the month, I can barely feed myself. But I force myself to wait for the next paycheck. Sadly, it's the only way I can keep myself out of debt.