Hubby and I are BROKE. Very broke. We’re trying to pawn stuff to make rent broke.
How’d we get into this deplorable situation? By being a pair of those stupid kids that got sucked into debt.
Hubby and I have, about, 200,000 dollars worth of debt. About 6,000 dollars of that debt is credit card debt, the rest is student loans. See, back in the day, Hubby turned 18 and went of to school to be a pilot. The very first day, they offered him a free t-shirt and some other things just to fill-out his information. Hubby went “what the hell. They can’t possibly approve me, I have no credit”. A little while later, a credit card with a 7,000 dollar limit came in the mail for him, and a 22% interest rate. Hubby went “Holy fuck. Well, it’d be nice to have an emergency stack of money on hand; I’ll just keep it at home, just in case. And, I heard having a credit card helps build your credit score.”
A few years later, he’s trying to finish a spring course, in an attempt to keep up with his aviation classes. Finishing classes is hard- taking aviation classes literally depends on the weather. It’s harder when you’re also trying to work one or two jobs so that you don’t have to take out extra loans for living expenses. And, if you don’t finish the flight course in a certain amount of time, you have to retake it (which is more time and money). So, he signs up for a few summer classes, and applies for summer loans…which are late. He goes to the horrible green trolls* at the loan department at our alma marter and asks what he can do. The only person who has the authority to give him an extension on his tuition is out for the summer. He asks what he can do. They say “I’m sure you’re loans will be in in plenty of time, after all, you used a reliable bank”. Another week or so passes; loans are still not in (this was actually a refrain for most of my friends and I for college; no matter how early we applied, they were still ALWAYS late. By my last year, I just had the forms for tuition extension filled out at the beginning of the year- it was just another thing to do). In the meantime, he needs money to continue flying and so, he makes the decision to use the emergency credit card to pay for the flight fees, with the idea that he’d pay the credit card off the second he gets his loans.
The last day to pay tuition lapses, and he still doesn’t have his loans in, so they drop him from his classes. He goes to the HGTs to see what he can do. A HGT goes and finds his loan approval sheet, and there are the loans. Hubby goes “Great, can you sign me up for classes again and give me the loans?” HGT goes “You can’t get loans unless you’re registered for classes.” Hubby goes, “Well, put me back in the class and I’ll be registered for it”. HGT says “I can’t register you for classes until you pay your tuition”. After going over this Catch-22 exchange a few times, up three different levels of authority, Hubby leaves in a fit of frustrated passion.
5 years later, we’re still trying to pay down that credit card. Hubby has never missed a payment, but Hubby has also never been able to pay off more than the minimum amount, either. We were doing okay (if still accruing debt), until I left school and we moved down. Now, I have loans to pay off too, and 2 months of unemployment combined with a job that doesn’t pay nearly enough to make ends meet means things are getting tight. Some days, I almost wonder if going to college wasn’t a shell game- if I would have just been better off not going at all. But, too little, too late. Some days it gets bad- Hubby will go off in rages because he doesn’t know how to fix this. Occasionally, I break down and cry a little; over the money that we don’t have and need, and over my lack of ability to help anyone else because I can barely help myself and my tiny family. Most of the time the analogies of debt is a mountain that you slowly chip away at, but to me it always seemed like a looming black hole that I’m throwing money into- maybe the bottom of the hole is actually getting closer, but it’s still so deep that I can’t see the bottom to check. It doesn’t help my depression, that’s for sure; more than once I’ve looked into the law to see what would happen to my debt if I were dead.** Compounded by this is we were both raised in the “don’t every go into debt” style of money management; which may have been possible for our parents (though, since both sets have had mortgages and car payments, I rather doubt), but were not anywhere possible for us.
I’m very glad the credit card bill was passed, even over the objections of people who think we should spend the rest of our life in debt, and that usury is just the free market. People occasionally wonder why I take politics so personally, and the answer is because it is personal. When you tell me that 28% is a reasonable amount of money to charge, and that’s it’s tyranny to have the government control it, you’re telling me that because we made a mistake, we deserve to be in debt forever. That’s personal. When you tell me that women just aren’t as good as men, in all the myriad of ways that people say that, that’s personal. When you say that good health and life is a reward for the rich and not a right of a person living in a modern society, that’s personal. This isn’t some amorphous group of “other” out there, this is me, my friend, my family, my life. And I can’t think of anything else that is more personal than that.
We’ve made our mistakes early, hopefully we can live to see a debt-less existence. (Assuming, of course, that neither of us has a catastrophic health care problem). And we’ve got some things to our advantage- we’re young, we’re educated, we’ve middle class markers (accents, social norms, dress, et cetera), we’re white, and we’re considered “able-bodied”. Right now, we both have jobs (thought that can always change). We’ve got a leg up on a lot of people.
But it’s still hard to not feel a little desperate, from time to time.
*may be a slight exaggeration. They were more moss than true green.
**Based on what I can tell, nothing. The loans are my own; no one co-signed with me. Hubby and I have kept all of our finances legally separate; we don’t even have each other’s names on our bank accounts. They’d go after my “estate” but I don’t have an estate. They can have my 5 dollars in the bank, and my two coming paychecks. Again, this really isn’t great on the “It’s better to stay alive” ledger of the “kill yourself/ don’t kill yourself” scale.
Pay off the credit card faster than minimum, even if you have to camp in your parents’ back garden in order to afford to live. Otherwise your children will doing it…the ‘looming back whole’ is no illusion – that debt is growing faster than your payments against it.
Mine got into arrears on his under different, but equally unavoidable and pointless circumstances – I eventually cracked and sold things, but should’ve done it sooner & paid less.
Credit cards are brilliant tools for extensions at the end of the month (over here in the UK, anyway, as interest can only be charged after the amount has appeared on a monthly paper statement) – but only when they can be paid off in full, every month, without fail.
Oh and (again, in the UK, anyway) good for major purchases, as the consumer protection is slightly better
The Rules:
Pay off in full every month
If you REALLY can’t pay off in full, transfer to a card with a 0% ‘special offer’
Never spend on a card with an existing overdue debt under rule 2
Never EVER use a credit card cheque. Burn them (and transfer) if they come in the post.
Never withdraw money from an ATM on a credit card
$200,000 in debt? Are you considering Chapter 13 bankruptcy at all? I know I sure would.
Yeah, the funny thing about Chapter 13- you can’t declare it because of student loans. Special, isn’t it?
If the credit card debt is only six thousand dollars, look into those folks that make deals for you. Is the rest all student loans? B/c yeah, no bankruptcy on that. But often the debt management people can cut deals for you. It’s worth a phone call.
I just had a company randomly jack my rate to 34.99% because I was late on two payments. I’ll never get out from under that one. I’m in the process of paying off all my credit and closing all the accounts because I just can’t afford the interest rates. Once mine are done, we’ll work on husband’s, and maybe someday we can get the only bathroom in our house fixed so the tile isn’t falling off the walls any more.
Buttercup-
My husband spent an hour arguing with them on the phone yesterday, and got his rate reduced from 28% to 17% (which is still ridiculous, but a little more manageable). I think the key phrases were getting them to admit that they actually wanted him to pay down the principle (which is probably a lie, but people are weirdly bound by what they say sometimes), pointing out that jacking up the rate is going to KEEP him from being able to pay it down, and mentioning the “B” word (bankruptcy). Then, he also mentioned he can’t wait until November (when the credit card bill comes into effect). Also, make sure that you get a financial officer, not a peon.
I definitely relate. I owe as ass load in student loans, too.
On the credit cards: We were in horrible debt for a while because I lost my job after our first daughter was born, so we were paying our groceries, rent, everything, with credit cards. It’s awful, and I feel for you. I transferred all of our balances to a card with a temporary low interest rate on balance transfers, and then paid like crazy at the expense of other luxuries like food and heat. We eventually got through it, but it was rough.
I’m wishing you the best of luck.
Lighthouse Credit. They deal with creditors and get you a better pay-off deal. They are on-line. No help with student loans, alas.