Meet April: $93,177 in Debt

Hey,

I’m a 25 year old mother of a 3 ½ year old daughter (Boobie) with another girl on the way. I’ve been engaged to my daughter’s father (L.I) for 3 years (I believe in looooong engagementsJ). We live in a suburb outside of Minneapolis and I work  in Accounting for a tech company.

How My Dysfunctional Relationship with Debt Began

I’ve had some type of debt since I was eighteen years old. I opened my 1^st credit with Macys (gotta love their 21% interest rate and 6 month automatic credit limit increases) on my eighteenth birthday. Since then I’ve added more credit cards, several student loans, and a couple of auto loans to the tune of about $93,000. I rationalized my spending in college because I would always pay the balances of my credit cards in full every couple of months with money from part-time jobs, summer internships, and extra scholarship money. However, after having my 3 year old while a junior in college, I stopped paying my credit cards balances off in full, but I kept on spending like nothing had changed. I even thought I was doing well by transferring balances whenever I received a 0% credit card offer (It would have been good if I stopped using the cards, but of course I didn’t). Now my purchases weren’t just frivolous stuff, it was frivolous stuff plus all the stuff I thought my daughter needed. Even though my fiancé was working, I wanted do my part and I always managed to pay my half of the bills, even if that meant using a credit card or student loan money to do so.

Money Issues Always Have Roots in Childhood

As I’m writing this I realize that having my own money and spending it on whatever I wanted was important to me because money was tight growing up. I was raised by a single mom who worked as a teacher and didn’t have a lot of extra money to spend on extra stuff.  She didn’t received regular child support from my father and I’m sure most you know that being a teacher isn’t the most lucrative job in the world. At the tender age of 9 I started selling homemade crafts at local craft fairs in order to contribute to my school clothes fund. From then on I’ve had some type of job. Craft-seller, babysitter, park attendant, fast-food cashier, shoe salesperson, pharmacy assistant, department store sales associate, etc. I’ve done a little bit of everything. While they were not always jobs I enjoyed I enjoyed earning my own money and buying what I wanted with my hard earned money. Money made me fill independent and like I could do anything I wanted if I worked hard enough for it. Credit cards to me were just a faster way of getting what I wanted. As long as I (eventually) paid them off, I didn’t see a problem with my ever-increasing use of them.

The Joys of being an Adult

Let’s fast forward to 2008. After graduating from college in 2007 I landed a well-paying job with a Big 4 Accounting firm. The job wasn’t my dream job but making more than $50,000 straight out of college was more important to me than being happy in my job. Hell – I had a lot of credit card and student loan debt to pay off. As the story sometimes goes, my income went up, and so did the cost of living the life I thought we deserved. In April 2007 we moved into a luxury apartment (vaulted ceilings, exercise room, and swimming pool), and put Boobie in a great but expensive Montessori preschool. For a 23 and 25 year old, we thought we were living the Good Life. All our friends thought we “had it going on” too. We ate out 3 to 4 times a week, shopped for stuff we didn’t need on a regular basis, and in general lived for the “Now” versus “Later.” Both L.I and I had debt, but we weren’t in a rush to pay it off. We wanted to eventually buy a home but the path to becoming homeowners seemed waaaaaaaaaay in the future.

No Home, Folks Home, Our Own Home

On September 11, 2008, we lost almost everything we owned after a fire destroyed our apartment. To this day we don’t know how the fire started but the fire inspector suspected a faulty Glade plug in. Unfortunately, there was not much left to prove his theory. Although we had apartment insurance (Please, if you do not have it, please get it today!), our losses were not fully covered because we had just moved – 32 days ago to be exact and had not yet updated our address on the insurance policy. The insurance policy had a wonderful clause stating that if addresses are not updated within 30 days of the move, policy holders can only get 10% of the maximum payout. For us, that meant $3000. While it was our fault that we did not update our policy in a timely manner, it still really sucked to get $3000 on a claim of $12,000.

Boobie and I moved in with my mom and L.I moved in with his parents. Life was really sucky at the time and it just kept getting suckier. The following week L.I found out he had been fired from his job for an unexcused absence. He called his job but he did not come in the day after the fire. He had been on probation at his job after getting into an argument with a coworker who had sold him a faulty Nintendo Wii. The stress of the fire and L.I losing his job took a toll on our relationship and we decided to take a break.

I hadn’t hit rock bottom but I was getting pretty close. I was partying a lot and drinking just to numb the pain. After a heart to heart with my mom, I reluctantly realized that I needed to stop feeling sorry for myself and be thankful for what I did have – a healthy daughter, a job, and a roof over my head. I decided to end the pity party and I threw myself into what I thought would fix everything – becoming a homeowner.

I started looking for a home in October and closed on the house in February 2009. The road to owning a home wasn’t easy for me and looking back there were definite warning signs but I chose to ignore them.  I wanted my family back together so badly that I didn’t care about that nagging feeling in the pit of my stomach. I assumed (and hoped) that L.I would find a job by the time I closed on the house. I put together a budget and underestimated our expenses so that I could justify buying a house. I also did not fully understand all the unexpected expenses that are just part of the territory when you own a home.

What Now?

So after buying a house that I shouldn’t have given my current financial situation, I’ve realized possessions and the appearance of having it all won’t give me the happiness I’m searching for.

L.I and I are back together. We also found out soon after moving into the home that we will be having another daughter in October. Since  L.I lost his job in September, I have been the main income provider in the household. He’s done temp work here and there but he has yet to get a full-time job. Finding a job right now is hard for everyone, but I believe (and this is just my opinion) that high school graduates have a slightly harder time right now. L.I has enrolled in college and will be starting in August but right now it’s really hard really for us financially. It’s been difficult for me to make more than minimum payments on my debt because after paying the mortgage, utilities, groceries, preschool, fuel, and cell phone bills there is not much left over. We’ve cut out a lot of expenses – no more cable, no house phone, Boobie goes to preschool only 2 days a week right now, and we’ve been sharing one car after mine was totaled. We do not want to take on any more debt so we’re saving up the cash to buy the car out right.

Right I don’t have a long-term plan on getting rid of about $93,000 in credit card, car and student loan debt. I’m just trying to take it week by week until things in my household are more stable. I don’t expect or want pity from anyone reading this. I just want to hold myself accountable and hopefully stop someone from doing the dumb stuff I’ve done. This was a long one so thanks for hanging in there.