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Why do people get into debt?


Hooray! Apologies for the loud voice but I TRANSFERRED MY CREDIT CARD BALANCES TO MY LINE OF CREDIT! I was approved for the 4.99% introductory offer. After one year, the rate changes to prime plus 4.5%. Many of you have warned me about the perils of taking on more credit. While I’ve made moderate progress over the past couple of years, I’m taking this opportunity to turn my financial life around very seriously. I want to have enough personal wealth to buy a house comfortably (without stretching myself). I am someone who is both historically bad with money and also quite anxious about not having enough. I’ve been thinking lately… how did I get into debt? 

How did I get into debt?

I’m still working that out, but I am not alone. This AARP article says that “More than half (55 percent) spent equal to or more than their total income including 57 percent of Millennials, 58 percent of GenXers and 49 percent of Baby Boomers.”

Like many others, my debt journey started innocently. On university campus during frosh week, they hand out credit cards like candy! I used it to buy things on eBay and paid it in full. Then a friend invited me to the Caribbean to stay with her for free, but I needed an airline ticket and had no savings. By this time, the bank had increased my credit limit (without asking me, by the way!), and I happily slapped my card down. I would work extra hours over reading week, only a month away. My school was on strike for two months and I had nothing better to do (current me: GET A SECOND JOB, DUMMY!). That was the beginning of a slippery slope.

How do people end up in debt?

Sometimes, people use cards when they can’t make ends meet. I’ve never been in that position, thankfully. I’m just impulsive and short-sighted, but I’ve always made good money. Even in university, I made over 40k a year bartending. $400-600 a night cash on weekends, believe it or not. I worked in some really happening places. I’ve never used a credit card to pay a bill or rent. I just buy stupid toys I don’t need. And that is why I still owe a few thousand for my student loan (unbelievably stupid. I could have invested that money! All that lost compounded interest…).

My bartending days

My bartending days

Ahh, yes. Student loans. Often the first piece of debt someone has in their own name. If finance was taught in high school, kids wouldn’t do what my friend did, which was take out a bigger loan than he needed. He was a popular guy, buying rounds at the bar. The rest he gambled away. He is moonlighting as a waiter to pay these off in his 30s.

Others don’t have an emergency fund. I barely have one (it will be at $2500 as of tomorrow when I get paid). If you can count on anything, it’s that there will undoubtedly be emergencies. I have used credit for car repairs, vet bills, emergency flights, and more. All things that I should have known would happen at some point.

Debt throughout life

Marriage and Divorce are both incredibly expensive if you don’t play your cards right. I’ve been spared of this, but I also have been paying rent alone all my adult life. Sharing expenses sure would be nice. If I ever get married, you bet there’s a pre-nup.

Of course, it’s hard to find fault with people who are hit with unexpected medical expenses. Heath care is something we need to survive, and it’s the leading cause of bankruptcy in the US. In Canada, prescription drugs are usually not covered by government heath care plans, and cancer drugs can be thousands of dollars a month. If you don’t have drug coverage through work benefits, you’re going bankrupt to stay alive. It’s hard to believe we have allowed such systems to exist.

In Canada, reduced income is the leading cause of bankruptcy. That could be due to job loss or a life event. In any case, I’m working hard to set myself up for success down the road. It turns out, I am quite risk averse but have been inadvertently leading a risky financial life!

Thanks for following along so far. It’s really motivating to be honest here about my situation.


  • Reply Shanna |

    This will only work if you DO NOT CHARGE (shouty voice) one more thing on any of your credit cards. You can’t carry the Line of Credit and credit cards too. Having followed this blog for many years I have seen many, many bloggers do just that. Once you transfer those cards, put them in the freezer, your safe deposit box, close extraneous ones you don’t need, take your auto pays off of them, etc. They don’t exist to you.

    • Reply Elizabeth S. |

      Hi Shanna,

      That’s my plan! I am using my rewards visa for all purchases and had planned to pay the balance weekly, but I’m so nervous about carrying a balance I’ve been doing it daily. I use my Visa for groceries, fuel, whatever and then tally up the purchases for the day and transfer from my checking. The other card I hid in my house and removed from my browser for online payments.

  • Reply JP |

    $400-$600 per night is great and cash! Ever thought about doing some weekend bartending again until you get your debts paid off?

    • Reply AL |

      Great idea! Even as a part time gig, that would be much more lucrative that other potential opportunities!

      • Reply Elizabeth S. |

        I can’t, my job requires me to be available 24/7. If I committed to a Saturday night shift and something came up at my day job, I’d have to bail. I could see this happening as often as every other week.

        There are apps like Hyr that let you pick up last minute service industry shifts, but even for that, there are issues The shifts are mostly downtown Toronto which is either an hour of commuting or a 20 minute drive with minimum $20 parking. Ugh, no matter how I try to make that work, I can’t.

  • Reply James |

    A couple of points I would add to this are: addiction problems and possibly also personal disorders, such as ADHD, narcissism or other psychopathology.

    • Reply Elizabeth S. |

      That’s a really good point. It kind of falls under medical but you’re right that it’s completely another kind of issue, and one that cripples people.

  • Reply Sam |

    Happiness equates to “piece of mind” and NOTHING gives you “piece of mind” like being debt free.

    • Reply Elizabeth S. |

      I would so love to be consumer debt free a year from now… that’s the goal!

  • Reply Jessica |

    I’m not typically a fan of balance transfers because I’ve fallen into this trap myself… start out motivated, then that credit card balance slowly starts to creep up again and before you know it you are even deeper in debt than you were before. Please, please, please be careful. I would advise to not use those cards for anything – not even if you plan to pay them off immediately. Cash only!!

So, what do you think ?