My story isn’t unique. I grew up in a lower-middle class family….sometimes lower class, depending on the year. I graduated from high school with the high hopes of doing better for myself. I went away to college, and the first day I walked through the courtyard, I was hit with a credit card offer. A week later I had my first credit card.
I was pretty responsible at first, but by the end of the year my money was running out, and I needed the card to charge necessary (or so I thought) expenses. Still, I kept the balance under $1000, and I paid the minimum payments on time.
Two years into college I had to take out my first student loan. I was one of the lucky ones. Most students need student loans all four years. I only needed them for two. I graduated in 1993 with a B.A. in Sociology, $4000 in student loans, and $1000 in credit card debt.
In 1993 I met my future husband. In 1994 we started dating, and around Christmas of that year he proposed. We set the wedding date for June 1995. Since none of our parents had any extra money to help with the wedding, we financed it ourselves. I charged my $800 wedding dress to my credit card, along with other wedding expenses. On our wedding day, we had $6000 in student loans (my loans plus his) and $2000 in credit card debt.
The week after we got married, I started graduate school. Graduate school is expensive, and there isn’t that much financial aid available. Enter more student loans. A week after we were married, our student loan debt increased to $16,000.
In October 1995 my husband got a new job in a town 100 miles away. I dropped out of grad school, and we moved. The next year we made $30,000 total, between the two of us.
In 1998 my daughter was born. I quit my job to be a stay at home mom, a decision I don’t regret despite the financial ramifications. That year we made less than $20,000. We put the student loans into forbearance, not understanding that the interest would continue to accrue. We charged car repairs on our credit card. By the time our son was born in 2002, our student loan balance was slowly creeping up, and our credit card debt had increased to over $4000.
In the years since my son was born, our income increased and so did our expenses. At the beginning of 2007 we had $17,000 in student loans (remember that interest that was accruing?) and 3 credit cards with around $5000 total owed on them.
Every time my husband’s income increased, we had the intention to pay down our debts, but we always found new ways to spend our money. We would try to save, but we’d pull money out of savings for vacations and other frivolous things.
My husband’s father died in late 2006 and left us a small inheritance. Before he died, he told my husband to use the money to get out of debt and stay out of debt. We received most of the inheritance in early 2007. We used the money to pay cash for a new-to-us van, because my husband’s car was on it’s last legs. We also paid off our credit cards and put a big chunk toward the student loan.
It’s hard to break old habits, though. Our computer died in March, and we knew the rest of the inheritance money would be available in May. So we charged a new computer on a 0% interest rate card, thinking we’d pay it off in May. We charged a few medical bills, too, thinking we’d also pay them off in May.
We learned a hard lesson when my husband lost his job in the middle of May. Suddenly we needed the rest of the inheritance money to live on. So we’re still carrying a $2000 credit card debt plus $7500 in student loans.
Fortunately my husband quickly found another job. Unfortunately it’s a commissioned sales position. I don’t worry about my husband’s ability to earn the commission, because he’s done this sort of sales for years. There’s always a ramping up period, though, where your income isn’t enough to live on. That’s where we are now. Slowly going through our inheritance for daily expenses.
The good news is for the first time in our married lives, we’re in the black. My husband’s 401K had just been vested before he was let go, so between that and the inheritance money, we’re a couple thousand dollars in the black.
We are now firmly committed to getting and staying out of debt. We rent our house, and our cars are paid for, so when we get the student loan and credit card paid off, we’ll be out of debt…forever.