That four letter word everyone has heard of and affects many people’s financial wellbeing — DEBT! Debt is a scary subject to think about but I want you to know, you don’t have to be afraid of it. In fact, I am going to share with you over multi-part posts on how I literally destroyed the debt monster.
Part 1 of Destroying the Debt Monster
Back when we were kids the word Debt wasn’t even in our vocabulary. Whether you had money or not growing up, we knew whether or not you were able to get something. Now, where it came from or what it was bought with didn’t matter. Even though the reality was it was purchased with either cash or credit.
I remember for my eleventh birthday I asked for a bicycle. It wasn’t any ordinary bicycle, it was fancy with decals all over it. And, it had front and rear brakes – not the kind where you press backwards on the pedal to stop it. I will never forget the day when I got it. I was completely shocked and couldn’t believe it. Not sure how it was purchased, nor did it matter but I got it and I was happy. From that moment and many other similar ones during my childhood, I learned within reason that I can get whatever I wanted. Sure some extravagant things I didn’t get but I thought that was quite normal. My financial mindset was not at all limited.
In fact, over the years as I would get money from doing chores, birthday gifts, or money from the holidays, I would save it up and with my brother we would pool our money to buy things together. We did that many times for things such as video game consoles, games, or sport memorabilia. I still had an abundance mindset even if it meant I had to learn about saving patiently. But eventually that started changing the minute I had to grow up.
And, my first job exposed me to the debt monster
My first paying job was at a Hallmark store where I was a stock boy. I hated it (but that’s another story for another day) but they were nice enough to give me a paycheck each week even if it was peanuts. I remember when I got my first check and it had all of these crazy deductions on it. It showed my gross pay (which wasn’t at all gross) with line after line of deductions to leave me with they called net pay.
I couldn’t believe it, I worked all of these extra hours after school during my free-time to get paid what, NOTHING!
Then I learned about debt
I learned these deductions was something everyone had to deal with. Some of these deductions went towards paying off other forms of debt the government was responsible for such as paying retired and current government officials — plus a number of other areas too.
With what little money I had, I did save a portion of it. Once I had enough saved up I wanted to buy something everyone at the time had – a beeper! Oh man am I aging myself. I’d get a phone number assigned to the beeper where people could get a hold of me.
Anyhow, with this desire to buy this beeper, I decided to take the plunge. I went to the local telecom store and picked out the one I wanted. When I approached the customer service clerk, he stated they needed to run a credit check and they needed my personal information.
Huh, credit check? What the heck was a credit check? Why do they need my credit? I just want a freaking beeper!
Without really knowing what it meant, I said ok but unfortunately I didn’t have the information with me. So when I returned to the store with my personal information they had me fill out an application (with a bunch of crazy questions). They said it will take about 10-15 mins to run a “credit check” and they would know if I was approved.
Now at this time my financial mindset still believed I could get whatever I wanted until they said to me, “I am sorry but you don’t have any credit and we won’t be able to supply you a beeper today.” I was devastated! What was I going to do?
So, I set out to figure how one can go about getting credit and soon realized I needed a credit card. And that is what I did. I got one of those teenager credit card (what the exact name was I don’t remember) where a parent co-signs for you and holds you accountable. Yes, it had a low limit so I couldn’t go crazy with it.
At first this credit card was great because I could buy whatever I wanted (as long as I didn’t hit my limit) and pay the minimum each month to establish my credit. Unfortunately, this meant I had to carry a balance and every month the balance kept going up even though I was paying the minimum. I was confused and clearly I didn’t understand what having a credit card really meant. For me the only person that could teach me about credit was my dad.
He taught me what it meant to have good credit like, “Make sure you pay your bill every month on-time and to at least make the minimum payment amount.” Despite the monthly balance not really changing, I did eventually establish good credit and was able to get that beeper.
What I didn’t learn is the responsibility that came along with credit card debt. I didn’t know that I should have only bought things on the credit card I already had money for. Not, get whatever I want even though I did not have the money and did not have any intention of paying it off in full before next month’s bill.
These series of bad behaviors followed me around all the way through college where I got more credit cards. And what didn’t help outside of just paying the minimum was I used it on some frivolous things. To make matters worse, I had no money to pay for college so that meant I had to get a school loan – which did not help my situation. So, by the time I got out of college I had mountain of debt.
To say I had a monster of debt was an understatement!
So what did I do about it?
I did what any other person would do, find a way to make more money. Right out of college I got a temporary job and worked on what I thought was paying down the debt. Want to know what I did?
I paid more money to my debt each month and I, get ready for this… Continued to use my credit cards. Boy did I not know any better! I was messing things up and sure from a payment consistency perspective I was a good credit card steward by paying on-time but the debt was not going down – except for the student loan.
Shortly after college I got married and with our combined income I knew I could pay it down even quicker – even if I still used the credit cards. What do you think happened? That’s right – Nothing! The credit card debt did not go down and the problem solver I thought was did not know how to solve this problem.
I had to look back on my life and try to figure out where I went wrong. I soon learned the mindset I developed was not empowering and my lack of responsibility for credit put me in this position.
I had to do something about it and that is exactly what I am going to cover in Part 2 of Destroying the Debt Monster.
What has been your experience with debt?