For this particular post I want to talk about how I got where I am today in terms of the amount of debt I have accumulated. I blame no one but myself and am taking remedies to cure the situation, but if someone can see my story and it inspires them to stay out of debt then it is worth it.
My very first experience with debt was, like a lot of people, in college. I remember the days at the private school I attended where people would be handing out applications for credit cards and you could get “free” stuff if you just submitted an application. Like a moron, I was one of those persons and got an Associate’s Visa Card. The problem with that credit card was that even though I didn’t use it all the time, I never paid it off in full all of the time. There were several occasions when a balance would linger. Then I would buy books or gifts and the balance would grow. I have never missed a payment when it comes to debt, but it doesn’t mean that the debt would not go down. There was a time or two during my college years that I did pay it off but then I would incur small charges (e.g. gas, books, eating out, etc) that would bring the balance right up again.
In addition to this experience, I went to a private school for my undergraduate education. I don’t regret it and had most of my schooling paid for with scholarships and grants. However, during my four years I did take out student loans. My stupidest moment was when I needed only six credits to graduate and instead of just taking out the student loan for that particular amount, I took out the full amount and received the excess from my loan so that I could live on it. What I should have done is gotten off my keister and found another part-time job (or f/t) in addition to the paid internship that I had. I didn’t need to take that loan out, but I did anyway….like a moron.
I ended up leaving my private institution with $16000 in student loan debt. At the time, it seemed like a lot (less compared to others) but a lot when I compared it with my fiancé who had no student debt because her parents paid for her schooling. Immediately, I went to graduate school. I came out of college with the idea that I wanted to work for the Foreign Service or get into some kind of Latin American Studies program and I felt the best avenue to make that happen was graduate school. Now when I applied to graduate school I knew about assistantships and going to school for free (yes, you can go to school for free and I try to steer students to those programs) but the program that I was applying for and got into (International Relations and Political Science) I didn’t receive any financial aid. As luck would have it, I ended up not going to the graduate school of my choice and had to stay in the area where I received my bachelor’s degree. I still had a desire to go to graduate school so I quickly enrolled in a state university program near my apartment. For that first semester, I did take out a small student loan, but soon received an assistantship where my tuition was paid for and I received a small stipend where I worked for the university as a teaching assistant.
One of my jobs as a graduate assistant was to teach my own class. That first time I stepped into a classroom and gave my first lecture I knew what I wanted to do. I wanted to become a college professor. I was hooked. I loved the research, the students, and the interaction with scholarly minds and ideas. I got paid to talk. It was great.
The problem was as a grad assistant you don’t make much money. So during this time I am not paying on my student loans because they were deferred. Because of personal reasons (a girl) I decided to move out to Oregon. Prior to this I had tried for months looking for a college teaching position with a master’s degree. I thought that with a year or so of teaching experience under my belt I would get a job no problem. Yeah, that didn’t happen. So I finished my master’s thesis, moved out to Oregon, where ironically I got a job offer within a short period of time being there, but my relationship went south quickly and I had to return to my previous stomping grounds.
The next two years were some of the best and worst of my life. After the woman I was with left me, I drove over a thousand miles to go back home, but came back during the worst ice storm in history. I had $600 to my name, my student loans were coming due, I had driven my car into the ditch twice during the ice storm and screwed up the transmission on the very first car I owned (a Ford LTD wagon, which leaked oil, that I used to all of my stuff out to Oregon and back). Because I couldn’t afford to fix the transmission (the car wouldn’t go above 45 miles per hour) I could never drive on the freeway. I had to take surface streets and back roads to go anywhere. It was embarrassing. Here I am with a master’s degree, during the 1990s and some of the best economic times in the 20th century, moving in with my brother to share a one-bedroom apartment (which was actually one of the best experiences of my life) for the next couple of years, to work four different jobs to pay down my debt and save for whatever would come.
Ironically, when I came back from my relationship disaster I received my very first teaching offer (part-time but I thought it was a lot of money). It was great, but I still had $16000 of student loan debt hanging over me. Over the next two years, I got on my feet, started saving money, and made some headway in paying down a chunk of my student loans. It wasn’t much, but I was able to replace my car, live in a cheap apartment, and get really close with my brother.
During this time, my mentor convinced me to go to graduate school in another field of study I would eventually make my career. So I went back to graduate school to get another master’s degree. The great thing was that, like before, because of my academic record I got my schooling paid for with assistantships. Now the stipend they give you for an assistantship will allow you to pay rent, maybe some food, and basic bills but that is it. I could’ve gotten a part-time job. I could’ve lived like a normal college student. However, I was 26 and felt I deserved a decent lifestyle (e.g. the ability to go out, drink socially, etc) and proceeded to take out the maximum student loans ($18500 per year) for the next two years. I think back to that time and try to figure out what I deserved? Was it because I was 26 and I that I needed to go out? Was it a consumerist lifestyle that I succumbed too? Was it my need to be social? The truth is I didn’t DESERVE ANYTHING! I hadn’t earned anything, I wasn’t doing magnificent things with my life. Yes I had worked hard in school and at jobs and I had some down times where I picked myself up, but SO WHAT! It should be normal to pick myself up, dust myself off, and move on. I don’t deserve a medal for that. Millions of people do that everyday. And the thing that still bothers me is that I took out student loans when I had my schooling paid for. Am I NUTS?!?! If I could go back and face punch myself I would do it!
In addition to these student loans I began using credit cards again. I racked up close to $12000 in credit card debt during that time. Ironically, the student loan debt didn’t scare me, but the amount of credit card debt did. So I enrolled in one of those credit counseling services that reduces your interest rate, puts it on one monthly payment, and helps pay off your credit card debt, in exchange for a small monthly fee (I think it was $25 for me per month). However, instead of giving them all of my credit cards I only gave them two because if I had given them all three I wouldn’t be able to use them anymore and I thought I NEEDED to have a credit card in case of an emergency. I DIDN’T need one, but I told myself that I might (which caused me to continue to use it. Again, I wish I could someone would’ve face punched me for continuing to use CC as a means of living beyond my means.
I did pay off the credit counseling debt (partly with student loans) and left my master’s program with somewhere in the neighborhood of over $60,000. At the time, I knew I owed a lot of money, but I thought I could handle it. I was getting good student loan debt, I was going to move to a new city to start my Ph.D. and eventually I would pay everything off. However, my debt only got worse. Next time I will talk about how I got deeper into debt, but also began to start turning things around, changing my financial habits, and getting onto what I hope is the right path to financial independence.