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If last week’s column where I realized that I had nearly six figures in student loan debt upset you, buckle up, because this week isn’t going to be any better. Like cleaning under your bathroom sink or breaking up with a long-term SO, the phrase “it always gets worse before it gets better” applies to my personal financial situation so much it hurts. Finding out last week that I owed nearly six figures in student debt awakened me to just how bad my financial situation was. But once I confronted this mountain of debt, I knew there was something else I had to come to terms with before I could start digging myself out of this hole: my credit card debt.
Before all of you “holier than thou” CPAs out there start giving me shit, I already know that I fucked up. It all started right when I left undergrad and took an extremely low-paying full-time job in order to make ends meet. I was working my ass off when I decided to get a credit card for the benefits, which was mistake #1. My intentions were good: I’d use the free miles from my airline card to pay for the visits to my long-distance boyfriend to help me save money. However, the execution was flawed – as you can probably expect, I started accumulating more debt than I could pay off at the end of each month, but I told myself that I’d probably be making more money soon and could deal with the balance then.
My denial continued over the next several years as I worked low-paying jobs before going back to graduate school for two years, resulting in 3.5 years of my adult life disappearing without having a positive financial impact on my life. As I maxed out credit card #1, I opened up a couple of additional cards and lines of store credit to keep me going through postgrad life and grad school. Since I’m adding up outstanding debt here, I may as well include the payment for the car I purchased last year when mine bit the dust and an additional personal loan. If your heart rate has accelerated just by reading this, you already know what I was oblivious to until last week: I’m in some really deep shit. Specifically, after totaling, $23,600 of deep shit.
I always knew I had debt, but until I added up my totals, I never knew just how much debt I had. For those of you who want to sweat through your shirt, have an anxiety attack, and potentially vomit, I would highly suggest totaling up your credit card balances because you’ll likely do at least 2 of the 3. Now that I know just how much of a problem my credit card debt is, I have to adjust my debt pay down strategy. After doing a fair amount of research, I’ve come to the following conclusion: during the six months of my grace period, I’m going to be working my ass off to pay down as much of this outstanding debt as possible, which should theoretically free up enough cash flow in my budget so that when I start to make student loan payments in December, my quality of life won’t plummet too terribly much.
Obviously, my finances suck, but to watch myself climb out of debt, I’ll be tying monthly hard figures to my tactics to get through this nightmare. For those of you keeping track, as of June of this year, my net worth is as follows:
Student Debt: $98,944.16
Additional Debt: $23,600
Savings: ($0)
Total Debt: $122,544.16
At least I know that things can only go up from here.
Each month, I’ll give updates on my financial situation as I (hopefully) begin to dig myself out of this hole and encourage you not to screw up your own spending in the process. I’ll be trying a bunch of different things to see what works and what doesn’t, and learn a lot about finances along the way. Keep sounding off in the comments on “Getting Out Of Debt” topics you’d like to see covered, and I’ll be sure to include those in my journey to financial freedom (or at least being able to pick up the group bar tab every once in a while). Obviously I have a long way to go, but with using both your support and Internet bullying as motivation, I know that I can get out of this debt. Until next week, I’ll be spending my time researching just how hard it is to become a stripper for side income if your diet mainly consists of mac and cheese, pizza, and wine. .
Respond
Steph W.
Steph W. is a new Master's degree graduate with an intern's salary and six-figure taste. She realizes her expectations far exceed reality, so she spends her days pinning away Loubs she pretends are in her physical closet instead of her virtual one. Her hobbies include attempting to trapping her boyfriend into marriage before he finds out how insane she is and pretending that Black Box wine tastes as good as the kind she could afford when she was gainfully employed. Send her tips for getting out of student debt at recruitchairtsm@gmail.com
@therecruitchair
If you haven’t already, open up a few credit cards with a 0% interest grace period (Chase Slate is a great one) and max them out by transferring balances from your current interest-incurring cards. Then, set the 0% interest cards to autopay the minimum amounts and shove them in a sock drawer until either you’ve paid off your interest-incurring cards or your 0% interest grace periods end, whichever comes first.
Doing this will substantially lower your interest-incurring principal, which will greatly help you keep your debt from increasing as a result of said principal.
Also, doing this will decrease your debt to credit ratio, thus increasing your credit score.
This is pretty much a life hack.
Except it lowers “Avg Credit Age” and increases amount of accts opened, which lowers credit and take longer to wear off. Mint explains the pros and cons in your credit score. Also the chance of your new card having a high enough available credit to cover a substantial amount of your PB making the hit to your credit worth it is very slim. Plus it is based off of both credit and income, and solely off of what i am inferring, both may be struggling. TLDR: Not worth it unless your debt is less than 5k.
While I agree with you that both average age and accounts opened also impact the credit score, they don’t factor in as much as as the debt to credit ratio does.
Further, yeah I agree that one interest-free credit card won’t cut it, but a few will. Even if she can reduce her interest-incurring balance by $20,000 split among a few cards, that’s $20,000 less that she has to pay 25% interest on.
Solid plan cause compounding interest is far worse than any Sunday Scary.
I mean, credit score only matters short-term if you plan on making a big purchase soon. Sure, she may take a hit, but I doubt she’s looking to get a mortgage right now. She should use whatever she can get to do Bill’s plan.
I agree with the idea here, but I would add that you should be careful with the extra credit availability. It’s easy to see an extra $8,000 in availability open up and spend it without thinking. If you’re not quite disciplined enough for that, my advice would be to rank your outstanding credit card debts from highest interest rate to lowest, then pay aggressively on the highest interest and pay the minimum on the rest. Do that until the highest interest card is paid off and continue the process with the next highest.
The important thing is to not incur more debt while you’re doing this. Buy only what your paycheck will allow (after all of your debt/rent payments), so your credit card balances don’t go the opposite way you want them to. Eating ramen and boxed mac-n-cheese for a little while sucks, but the long-term reward is worth it.
P.S. As far as your Net Worth goes, give yourself some credit on the Asset side of your balance sheet! Just because you don’t have any “savings”, doesn’t mean you don’t have any assets.Add your car, furniture, personal items, and cash in the bank to your assets. If you have a 401k at work, add the vested balance to the assets side too!
Best of luck getting everything paid off. It’s a process and it takes a while, but it’s worth it in the end.
Recommendation from someone going from a low paying job to a much higher paying job: get a higher paying job.
must be nice to have a dad who can pull some strings.
It’s all about connections
Dear Jesus, help this poor woman. Amen.
Jesus where have you been
In short: life. Long answer: helping gf move, studying for my insurance license, and also trying to stay away from my phone so much.
The lord and savior always coming through with the life saving jams I wish you could really come through on real things though ;(
Is the girlfriend still around?
Dave, help the woman out and give her a raise.
I second this.
Oh honey
Only 4902 PGP articles to write until you are debt free.
I want to see you get out of debt more than I want to see myself get out of debt
Thanks for the encouragement and pray for me and as I put a real budget together for next week.
If you need a budget spreadsheet I made, hit me up on twitter and I’ll get it sent over.
Why trust this random internet stranger? Well, probably don’t, but my credit card debt adds up to about $70 dollars right now (and will be paid off at the end of the month) and my only debt is my house?
send plz @dgfemgineer
I have no debt at all and I’m curious about a budget spreadsheet that isn’t stock off the internet.
Can I get in on these spreadsheets too? Budgeting is the adult skill I’m least talented at, closely followed by ironing.
can I see this too
It’s been quite the journey for me so far. I will say that the toughest part was that it took a complete lifestyle change. It’s similar to getting in shape- the first month is going to really suck but once you see some progress you’ll settle in and things will get easier.
The free “Daily Budget” app really helped with staying on budget day to day. Monetary reality sets in when you track every single purchase. IE: maybe I should buy the $30 dollar bottle of bourbon instead of the $80.
I would highly recommended signing up for Mint, downloading it on your phone, and checking that shit everyday
When that shit pops up on my home screen to tell me I’m over budget I hate it so much, but it’s a necessary evil.
I check Mint & Robinhood on the daily, and I should just stay out of Robinhood since I’m not wheelin’ and dealin’ but I can’t help it.
I like Level Money. It felt easier to organize what I spend money on, and the daily spending limit’s helpful to keep in mind on weekends.
Theres a great app that helps you get out of debt! Called Seeking Arrangement
I would 100% whore myself out if there was an older woman, younger guy version of this.
There is. It’s the same site. They take young guys for older women.
I wasn’t joking, I’m looking into this. Shame is something I don’t have.
Taking username suggestions, I feel this might be more important than I think.
NoShame69
OpenToButtStuff
WilliamJeffersonClinton
Wait have you actually done this or just heard about it? Asking for a friend
I looked into it before…
PGP will have content from this series for 20+ years
No offense but how do you have 100k in student debt but still have a low paying job? Sounds like you should’ve picked a better major.
You can have 100k of debt and still have a low paying job. State prosecutors average 49k/yr.
Those who chose whatever degree she got are the exact type to not realize they have ~$120k in debt by the age of 25 probably don’t make the best decisions. Play stupid games when stupid prizes.
Always good to do a light spell check before you call someone else stupid
Got distracted by my job that pays off my credit card bill
“when” “win” still not a 125K spelling mistake