How I Got Into Debt
Jeremy's Debt Blog
- Posted:
10/29/2007
After high school, I opted to go to take some classes at a local community college while working instead of going away to college, so I was fortunate not to start out my adult life with tens of thousands of dollars in student loan debt. However that did not last long.
Shortly after turning 18 I applied for a received a credit card from Bank of America. I used it on occassion but never charged more than a few hundred dollars and always paid it off quickly. I managed to stay fairly debt free until I got married at the age of 20. Between the wedding and honeymoon I charged just shy of $3,000 on my credit card (my limit at that time). My wife went to college on a partial scholarship, so I also inheritted about $10,000 in student loan debt for a total of $13,000 in debt.
Then came the house. We purchased a modest starter home for about $80,000 and received a few government grants as first time home owners to help pay for the closing costs on part of the down payment. After buying the house money was very tight for a while, we couldn't get approved for credit to get the basic things you need in a home such as a refridgerator, washer and dryer etc, so we had to save every penny to buy these items and as a result made the minimum payments on all our debt until we could buy the basic necessities.
Within a year, the one car we had between the two of us was constantly giving us trouble so we bought a new car for about $15,000. Due to having about $93,000 in debt and virtually no credit history I had to get my parents to co-sign for the car. So within one year I went from having no debt to being over $100,000 in debt.
We focussed on paying off the credit card for the next six months and in that time my credit limit on the card was raised from $3,000 to $7,000. By the time we got it paid off again we were feeling the pain of each working separate jobs on oposite sides of town and having to share a car. We decided we couldn't afford a new car again so we found a used one for $6,500. We didn't want to go through the same process with the banks as before and have to get someone to cosign again, so we opted to pay for it with our credit card. Bad decision!
That was the point in my life when I was in the most debt. About $110,000 worth. We managed to always make at least the minimum payments on time so our credit history wasn't really hurt too much, but it was challenging to get by during this period. Virtually all of our income was going to paying bills.
So that's the story of how I got into debt. I'd imagine it's typical of the average American family. I can't say I really regret purchasing any of the items I did, they were all needed but I feel I could have researched some of them better, saved some money and found other ways to pay for them. I hope you will share the story of how you got into debt as well. I will post later on how I went about getting out of debt.
Comments
