Debt

How does a person who is deathly afraid of debt still manage to jump into it?

College

Well in my case it started with school.  Going to college is one of the best things you can do for your career and your life.  But surviving in college can be difficult.  The first and most prevalent difficulty with college is paying for school.   Through scholarships and a lot of help from my grandparents I was able to go to school and only have to pay for about $5000 of it myself.  This put me far far ahead of most people I knew.  Sure there were a few trust fund babies and some athletic and scholastic scholarship students who were set in that regard, but most people were like Vanessa where every semester meant more loans.  Vanessa didn’t have help from anyone and, after 1 year at a private school, 2 years at a community college, and 3 years (including her masters) as a state school, she ended up with $35,000 of student loans–even though she worked 20, and in the summer 40, hours a week.

My college debt was more my fault.  I did have help, and I did have a scholarship, but there was still a matter of living.  Most of the bills that you pay in the “real world” you also pay in college, but in school, at least in my major, you don’t have time to work and pay them.  My first year in school I did ok and only managed to rack up about $1000 in credit card debt, that I then worked off during the summer.  The next year though I started doing a lot of driving home a lot, I accidentally split lemonade in my computer, and I got sick of every meal being at the dining commons.  I don’t remember what the issue was, but in the end I think I ended up taking out a student loan to pay off debt incurred from these things.  Some would say that this is living beyond your means, and truth be told so some extent it is, but what are you supposed to do when you have a computer scient class and you just friend every component in your machine?  I’m not trying to say that all of my debt comes from a glass of lemonade, but when you are a student, and on the track team, pretty much all of your time is taken up.  Add to that the fact that as a Math/Computer science student my books each semester usually added up to about $500.  So I did it, I put everything on a credit card, and I got later got a student loan to pay it off.  I think I did this twice until I got a job that I could work around my schedule.  Once I had that I just started working 30 hours a week when taking classes and 50 hours a week when not taking classes to keep my head above water.  All in all I racked up $20,000 in student loan debt, but it could have been much worst.  Twenty thousand is a very modest sum compared to the majority of recent graduates these days, and I don’t mind it at all.

The Feeling of Landing a Real Job

As a CompSci major at a top 25 school, you kinda feel like your running a race and graduation is a finish line where you get handed a big salary and a cushy job, and that all you have to do is make it there.  When I finally landed that job, it was pretty cushy, and it had what I thought was a big salary.  I was making 3 times what I had ever made in a year.  I threw 5K down onto a 0% card to get vanessa a new car, threw another 5K down on a 0% card to get me a new car, bought a $1300 bed, a $1300 TV, $400 HD DVD player, $300 surround sound system, $400 weight set, $400 elliptical, and I didn’t care about any of it because, I was making more than I could ever imagine.  Let me step back for a second.  Computer Science was always my closet fantasy major.  I was a math major first, and I was going to school to be a teacher.  When I was a freshman I thought that $50,000 was more money than anyone ever needed in a year.  When I decided to switch to CS I though that if I could just handle it I would leave school and be ritch.  Now lets fast forward back to my decision to buy all of those things.  I thought, well I don’t have 5K now, but I have this shiny new 0% credit card with a big spending limit, lets put a downpayment on that so that our financing interest rate won’t attack it.  I’m making so much money, I shouldn’t have any trouble paying it off.  Great plan, if you pay it off.  Well, I was 2 days late on a payment a few weeks ago.. so now I’m paying 9% interest on 7,000 on that card rather than the 0%.  There goes the savings.

Oil and Insurance and Houses, Ohh My!

I was still doing ok at first.  After 2 months with all that debt (on 0%) I was paying things off and everything was going according to plan.  Then there was Christmas and well now that I have a career I shouldn’t skimp… there goes a couple thousand.  Vanessa and I got sick of burning $ renting and not being able to do things to the house cause we were renting, so we bought a house… there goes about $10,000 (down payment, closing, etc.).  Oil bills = holy crap,… there goes a couple thousand.  Excise tax on two new cars = holy crap… there goes a thousand.  Insurance on 2 new cars… there goes a hundred… a month.  Living in framingham, working in watertown/malden + gas and tolls… there goes 500… a month.  The fact that the house was a foreclosure, because that’s all we could afford, so it needed a ton of work… there goes a couple thousand.  Ya see where I’m going here?  When you’re in school, you look at what people make and you’re like $50,000, that’s like $30,000 more than I make, dude you should be drivin a beamer!  Little did I know.

Summary

Well, here I am.  Doing much better than many people, but still very frustrated.  I have a house, a new car, a big TV, and yet all I do is stress about how I pay XXX dollars a month in interest toward the $40,000 I have in debt (not counting the cars or vanessa’s stuff, then we’d be well over 100K).  The moral?  Wait a year people, save up $, and buy things with cash.  Credit is a great convenience, but if you don’t have the cash to back it, when you buy something on credit, you’re paying it’s cost + interest for every month between that day and the day you pay everything off.

Peace, I’m off to find a way to get rid of $20K in debt.