At 33 years old, I was in a lot of debt. When I say a lot of debt, I am not talking factoring in a mortgage, a car loan or student loan payments. I am talking about credit card debt. $30,000 of debt. Debt that began during the housing crisis of 2008, 8 years before I was put on this journey. I had 11 different credit cards, all with high interest rates, with balances that totaled $30,000 dollars. To add further insult to injury, I was also going to cash advance agencies monthly. The worst part of this whole situation was that $30,000 debt total wasn’t even in my name. It was in the name of someone else who had tried to help me. I am specifically not naming the individual who carried some of my debt for their own privacy.
I want to stop here and point out something very important. If you know someone who is struggling with credit card debt, do NOT take on their debt, do NOT pay their debt for them, do NOT loan them money no matter how much money you have or how much you love them. I say that for a couple of reasons.
(1)The fact that someone else took on a portion of my debt has caused significant damage to that relationship. They took on my debt to try to help me. The fact of the matter was I didn’t have the knowledge, skills, or dedication to solving my debt problem when they did this. Additionally, they put themselves at great risk because now their “debt to income ratio” a big part of your credit score which provides purchasing power was now unrepresentative of themselves and extremely high.
(2) If you do take on someone else’s debt or pay it for them, you are NOT solving their problem. You are putting a band aid on it. I would venture to say that the majority of people in credit card debt do not know how to manage their money or live within their means. For me personally it was both. Think about the weight example I provided in the previous article. If I don’t know, have the willpower, or the tools to manage my weight through diet and physical activity, I can’t succeed. In order for someone to truly get out of debt and stay out of debt, they need to have the knowledge, willpower, and dedication themselves to do so. Therefore lecturing and shaming isn’t helpful either. Encouragement, knowledge and resources are powerful tools you can provide to someone, but ultimately the decision to change has to be theirs.
As if being $30,000 in debt wasn’t enough, part of this journey was also about my credit score. When I started according to Credit Karma (which after lots of research I have done, uses a scoring model that is typically a lot lower than what most lenders use) was a 523 which is in the very poor range. Of course my credit utilization was extremely high and I had a lot of inquires 14 to be exact all from the same day from various banks that were run when I needed to purchase a new vehicle.
The interesting thing about all of this information, is I knew my situation was bad, but I didn’t know how bad, how fast (and by fast I mean 1 year) I could change it, or how much hard work, dedication, and willpower it would take to do so. There was a moment and a specific person that put me on the path to healthy finances. My next article will explain just what happened.