Tuesday, September 8, 2009

D-E-B-T: A True Story

I have randomly mentioned (more than once, I believe) that my husband and I weren't so good with our (lack of) dollars back in the day. A long time ago, back when we were in college, it seemed normal to buy $80 jeans at the Express and $45 tees at Abercrombie (I will not even mention that I lived in Abercrombie in college) while working 10 hours a week on campus making $8/hour. Ryan apparently thought it was ok to put bar tabs on a Discover card (I will not even mention that this was a weekly occurrence) and thanks to Visa, he had quite an impressive DVD collection. This was all ok, though, because after college we were going to get real jobs with real paychecks, right?

Wrong. We both went to grad school.

People will tell you to go to grad school and just get a graduate assistantship - you can go to grad school for free! So we did. And now, I am here to tell you that while your graduate assistantship may come with free tuition, the rest of it is hardly free. There are student fees to pay, plus those things that people like to call "Living Expenses": rent, utilities, food. You know, the basics. And while these things were free in college (ie your parents paid for it), they are not free in grad school. So you think you will pay for these Living Expenses with your GA stipend... and then you find out that your stipend literally covers just rent. Barely.

This, my friend, can leave you in a pile of debt. And then the thinking goes like this:

Well, I have a bunch of credit card debt from college, so what's a little more, right? After all, I'm going to get a good job when I'm done with grad school, so whatever.

And all of a sudden you have twice as much credit card debt as you used to have. And this is where it gets tricky, because if you have, say $4,000 worth of credit card debt, what's another couple hundred? And when you live 6 hours from your boyfriend and only get to see him every 5-6 weeks, of course you want to go out to dinner and not order in pizza in his crappy grad school apartment. And of course you want to go home (13 hours by car) for Christmas and you want to buy each other wonderful (ie expensive) Christmas presents. And this all goes on your credit card because you don't have any money (stipend = joke) or time to work (because grad school + graduate assistantship = full time job) to make more money. But no worries, because you obviously will graduate, and full time jobs = lots of money.

And next thing you know, you have D-E-B-T. The kind that you don't want to talk about to anyone because that much debt is just embarrassing. And so you don't. And it just sits there, collecting interest. All this is bad enough, and then you kind of realize that it's not just you that has this terrible debt.... it's your boyfriend, too. And then you feel puke-ish 24/7, but you know that there is still time to get rid of this before it's Too Late (you know, when you want to get married and stuff).

And all of a sudden the minimum payment on your credit card is $267. And then you total up all of your credit cards and you realize you are sending out hundreds of dollars worth of minimum payments and you aren't making any real progress and start to feel puke-ish all the time and it never goes away and you are positive you'll never be able to afford a wedding and you'll never have kids and your life will be consumed by these minimum payments that are really a sick joke designed to squeeze your windpipe shut every time you log into your Capital One site and see the total balance.

Then I realized that I could feel puke-ish all the time (somehow this did not result in any weight loss... I still question my ability to eat through any disaster) or I could do something about it. So I did research. A ton. For like a month all I did was look for ways to get myself out of this black hole that we created for ourselves.

And I found Consumer Credit Counseling Service. Ryan and I made an appointment, and we were so nervous - Would this ruin our credit score? What if we had to buy something and we didn't have any money? How long would it take?

The credit counselor we spoke with was the sweetest lady. She asked us to explain why we were there (too much debt, no hope of paying it off), and she just listened. She didn't berate us or tell us how stupid we had been. She then explained the program and how it could help us. She gave us hope. She made us cut up our cards and told us we wouldn't be able to open up new ones. She said that we'd find other ways to pay for things that we needed (um, cash?) and that if we couldn't afford it, we probably didn't need it. She said that if we made our payments every single month, we'd be out of debt in 5 years instead of the 30 it would have taken if we just closed our cards and paid the minimums ourselves. That was in August 2006.

Three years later, we are married and coming up on our first anniversary. We're still in the program and according to my calculations, we're going to finish a year early... we've got our sight set on August 2010 and plan on being debt free from there on out.

I tell you all of this because at one point, I really didn't know what we were going to do. I imagine I'm not the only one who used their credit cards a bit too freely, and CCCS was the right choice for us (even though I was scared to admit it). Then I came across this article on Suze Orman's website (I am thrilled Suze agrees with me on this one) and thought maybe someone might be able to benefit from it.

Tomorrow's post will be less terrible; I promise.


Molly said...

That isn't terrible! It's a great story! You should be so proud that you are getting it all paid off. It is a good lesson to lots of others.

Grace Matthews said...

OMG! I think we are living the same life. Thank you so much for this article. I am going to look into the Consumer Credit Counseling. We definately need help. Thank you

Pollyanna said...

Congrats on the anniversary and on being sooooo much closer to paying it all off. Hubby and I have been on a self imposed debt payment plan for a couple of years. At first it is very hard to see a difference, and it still is sometimes, but when you look back to where you were . . .