Note: This is the introduction post sent in by Ashley in her quest to be the next blogger for BAD. Please feel free to ask any questions and express your opinions in the comments below. You can find out more information about the blogger position here
Hi! I’m Ashley!
I grew up in a middle-class family in Austin, Texas. While my parents instilled in me the value of money and taught me the importance of saving, we never really had any discussions about debt. When I was 18 my mother urged me to open a credit card so I could start building my credit. But I always spent less than I earned and was careful to pay off the card in full every month.
Fast forward 4 years. It was 2007.
I had graduated from college and was accepted to a graduate school in Boca Raton, Florida. I had bought a brand new car (a Kia Spectra – nothing crazy) for a reasonable price and paid off the 5-year loan in a little over 2 years. By the time I moved to Florida I was 23 and had zero debt to my name – no car loan debt, no credit card debt, no student loan debt, nothing. Plus I had a couple thousand in my savings account and over $10,000 in money market funds (my entire life’s savings! Remember – my family instilled the importance of savings and I was always stashing money away, having worked from the time I was 15).
I arrived in Florida with no job, no prospect for getting a job (graduate school is full-time!) and nothing but high limit credit cards to get me through. I also had lots (LOTS!) of student loans, too.
To be fair, my husband Chris (then boyfriend) had moved with me too. He was lucky to find a job the first week there and started working immediately. But even though he made pretty decent money (in our 23-year-old minds, “pretty decent money” equated to $15/hour), southern Florida was $$$$$ compared to Austin. His income barely covered his half of the bills. I still needed loans to (a) pay my tuition, (b) buy books, and (c) cover living expenses, including my half of bills and groceries.
I got my Masters degree in 2 years. During that time I also managed to rack up over $70,000 of debt. Here’s the breakdown:
- Tuition = approximately $1,000 per credit unit x 12 units per semester (24 per academic year) x 2 years = $48,000 just for tuition.
- Living expenses = about another $10,000 for the two years.
- Credit debt = about another $15,000 for the two years.
Clearly, this is where things really fell apart. I went from ZERO debt, to having my credit cards completely maxed out. In addition to my new debt, I had also drained my savings and depleted most of my money market account (I had about $2,000 remaining).
Some of my reckless spending included:
- Multiple trips to Orlando
- Trip to Key West
- Trip to Europe (England, France, and The Netherlands)
- A cruise out of Miami
- Countless nights out with friends and trips to the beach
Okay, so while these are really, really dumb things to do when you have no money – I can chock those up to being 23 and having no idea how to handle all the credit I was given. These things didn’t feel reckless to me (though, clearly, they were)…they just felt like “living.” But there were a few other really, really dumb things I did during this time that even I could recognize were very poor financial decisions…
- At one point Chris was in an accident and his car was totaled. I bought a used car….on a credit card. Yes. I paid $4,000 for a used Cadillac that lasted approximately 28 days until it died. Thankfully, there is a 30 day lemon law, so the dealership was legally obligated to fix it, but it was a lemon of a car. The problems continued and we only had the car for probably 5 months total before it was donezo. That $4,000 balance, however…..still on my credit card even now (6 years later).
- But that’s not the only ridiculous thing we’ve paid for on credit. One January we didn’t have money for rent (because Christmas spending had been out of control), so we put our rent – $1200 – on a credit card.
- To finance these disasters, I would play the balance transfer game. I’d get a new card with a fancy 0% introductory APR and transfer balances from other cards. Only….I was unable to pay off the new card, so when the introductory APR expired, I was now slammed with a 17.9% APR! Yikes!
I don’t know how things got so out-of-control so fast. In just the span of 2 years I went from zero debt and decent savings to no savings and loads of debt. I was constantly stressed about money, but I guess since I had no income I felt like there was no way to improve my situation, so I just said “screw it” and went on with my reckless spending.
In 2009 we moved to Tucson, Arizona to continue my graduate career, pursuing my Ph.D. I made the decision to switch schools and move cross-country because my new school offered tuition-reimbursement and a small living stipend (about $300/week for the 9 month academic year). The tuition reimbursement alone was enough to make the decision for me. We had no money for a U-Haul this time around (a cross-country move costs close to $2,000 for the U-haul alone, not including gas and moving supplies). So we left everything behind. We loaded up my Kia Spectra with whatever could fit, and vowed to start fresh in Arizona.
I knew something had to change. Getting to Tucson took everything we had left in our meager savings and money market accounts. When we arrived we were flat broke, credit maxed out, and had no new credit available to us. It was the poorest I’ve ever been, and a very scary time. We had absolutely no “safety net” in case of any emergencies.
Flash forward 5 years to present day.
I’m now 30 years old, Chris (now my husband) is 31, and we still have a LOT of debt. Along with the debt, we also have 19 month old twin girls to care for. And we had not been expecting the 2-for-1 baby special. Daycare costs are exorbitant, as are costs for diapering, clothing, and everything else that comes with having young children (e.g., frequent doctors’ trips, etc.).
We’ve had a few other set-backs life has thrown our way, too. An unexpected (and very costly) medical illness for Chris, needing to invite my brother-in-law to live with us for several months, and the fact that I graduated (in August 2013) and have still been unable to find full time employment (though I do have an income doing consulting work part-time). On top of that, my husband owns a small business (a flooring company), and his pay is variable. When there’s a lot of work he does pretty well, but we can never “count” on the next big paycheck because there’s no guarantee of anything.
But even with the curve balls and commission-based pay, we’ve finally really committed to tackling our debt. My number one goal is to pay off all of our credit debt (currently approximately $10,000). We also have other debt to eradicate, including an expensive car loan (new, larger car to accommodate the growing family), medical debt, and….the whole student loan situation, which is currently in deferment.
We have been renters my whole life (outside of living with my parents), and I would love nothing more than to own a home. But, at this point, I feel as though we need to improve our credit scores (mostly by paying down debt), and save up a large down payment instead of falling into the zero-down, high (or variable) interest interest trap that many first-time homebuyers succumb to.
So that’s where we are. I’m new to the debt-repayment game and could use all the advice I can get!