My Debt Blog

I’ll start out by saying that I do have some student loans. In college it felt like I had no choice but to resort to getting a loan to pay for education. I could have put education on hold while saving up the money, but the problem with that is actually going back to school.

Growing up my parents reminded me to save my money for college. So I saved a lot of money, spent very little of it, always paid my bills, and stayed debt free throughout grade school. When I got to college and the bill came, I paid it from my savings. After three semesters that money ran out fast. Then I did something really stupid, paid for college with a credit card! My girlfriend (now wife) had been borrowing money the whole time thus far and urged me to get a student loan. Signed up for a loan, to cover school related expense so that I could the (beer) money from my student job for myself.

Graduate college with a bunch of credit card debt and now student loan debt. At least my student loans are consolidated into a nice low rate under 3%. Living on credit cards in college is about the stupidest mistake I could have made. Now I am paying, and then some, for that mistake. The student loans in my opinion are not a mistake, just necessary at the time to get to the point to get a job. I still remember that first paycheck from my salary based job and thinking I’ll be able to get out of debt in no time. Bills came in and then I realized how little I had left after the basic needs have been met.

Once the credit card debt is gone my next priority is paying off these student loans because I’m not going be paying these things for 20+ years. I set my goal to pay off my credit cards by March 2009, we will see how well that date is come this time next year. After that is gone I will be debt free except for the house. Are student loans worth it? I think it would take me longer to be at this point in my life without them.

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Answer is typically looking back in the mirror. I keep track record of my statements and I looked back, way back to some in 2003. Why in the world I bought some of this crap with a credit card is beyond me, but I’m paying for it today. Some of the things on the statement can be half justified, like books or supplies for school. I had a part time job in college making $8 an hour, but living like I was making $18 an hour. Moving forward though and getting this mess cleaned up will help though. Live always throws different things at us though.

Now I get to the interesting part. My wife and I are approaching our one year anniversary and it sort of falls into my hands on figuring out what we should do and how to finance it. She likes ’shiny things’ and we have talked about for a few months about an anniversary band. I can probably pay for about half of this but the other half would have to go on a credit card otherwise I can’t buy it. When she’s not happy, I’m not happy, yet at the same time I’m not happy about debt. My birthday is coming up here at the end of the month, she asks me what I want for my birthday, I tell her I don’t want anything, she laughs. I’d rather be debt free than pretend to own things.

Now so far this year I have made some great personal accomplishments paying for stuff. I own my stove, the furniture package for my living room, and this month her earrings. It is getting to the point where I simply don’t want anything unless I can pay for it. Back in March I got stuck in Best Buy playing Guitar Hero 2 for Xbox 360 and thought it was great. Waited until April to decide to actually buy it because I figured out that I had enough money in gift cards (I hate gift cards!) and finally a reason to use them. I love this thing too.

Maybe I am being selfish trying to budget our first anniversary. I always seem to make sure everything stays on track in the end though. It just halts paying off debt as quickly as I would like. Gears are always spinning here, trying to figure out what to do.

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I messed up big time for not catching this to begin with. My wife has been very busy April finishing out her last semester of her graduate program since she will be doing student teaching in the fall of this year. At any rate, she basically forgot or didn’t pay any of her credit cards. Now we have a huge problem regarding very inflated payments for May. I was upset a first about it but I understand how stressful things get at the end of a semester, but it shouldn’t justify not keeping up with other responsibilities.

This blog I setup mostly for myself, but being married of course the finances merge into one big mess. I’m a huge advocate of making sure bills are properly paid, before or on their due date, to avoid any fees or problems. By no means am I saying my wife is lazy, she messed up and it too late to fix it right now, given I just found out about this tonight. She feels that I should handle making sure her credit cards get paid on time, which I don’t mind doing because I’m the one who handles our finances. We have to take it easy this month to make up for about $300 worth of payments on top of what is normally due. I thought April was supposed to be a bad month given all of the extra expenses.

This month is going to take some extra belt tightening, on the budget and probably my actual belt because I am losing some weight. I’m not sure how many out there have had a curve ball like this just blindside you. Just as much as I want to be debt free, I share the same goals to eliminate my wife’s debt too so all the money we pay our cards with builds wealth and that we will eventually live the life we want.

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I was listening to a show on the radio today, a caller with about 30 grand in credit card debt rolled that debt into his mortgage through an equity line. Sure this is just shifting that debt into another form, but maybe there is a benifit to doing this. This guy did not have the best credit before, because he carried a lot of credit card debt, but he had equity value in his house. By refinancing his house, he was able to pull that credit card debt into the equity line, which paid off his credit card companies, and his credit improved. He pays more on that equity line now because he no longer has to pay those credit card companies. In turn, come tax time he can take any interest he has paid and use that as a deduction on his income taxes. You cannot deduct the interest you paid on a credit card because they’re unsecured. The catch is you have to have a reasonable amount of equity in your home first in order to use it to pay your debt. I recently got my house and my loan to value is probably too high to consider this yet.

The show also said to avoid credit card consolidation companies like the plague. I guess when you consolidate all your credit card debt and make settlement payments to your creditors, it is as bad as bankrupsy because those creditors are not being paid on a regular basis while you build your big payoff payment for them. Granted it is best to not get into that bind where you have to resort to thinking about doing settlements or consider bankrupsy.

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As April 17 is looming closer, I’m glad I did my 2006 taxes two weeks ago because today I got my refund. It is almost like an extra payday of my own previously earned money being returned to me like a lost pet. For the sake of priorities, I’ll split it up and use part of it to possibly pay down some debt, start an emergency fund for those situations that can and will arise, and use the remainder to give the checkbook a little buffer.

Although Uncle Sam gave me my money back, Mr. Lincoln thinks I need to pay the state more. I’m still debating if having a tax prep guy was the best way to do my taxes this year. Normally I always do them myself, but 2006 just felt complicated because of my student loans, mortgages, property taxes, getting married, my side business income and the like. For 2005 I used the box and it was pretty simple but I wonder if you really maximize deductions like the tax guy did.

Did you file taxes by the box or have them done?

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Let me start off by going back to the beginning of college. I’m only a 19 year old freshman at a state school. From the $18000 I saved my life for to go to college, half of it has been paid to the university. I have zero credit card debt. Responsibility got me to college, now I figured it was time to have fun.

By my sophomore year of college my money ran dry and my only source of income was loans and….dare I say credit cards. Stupid, I know. I wish I could go back and smack that kid, but we all live and learn. At this point I had accumulated about $3000 in credit card debt. Needed junk for my room and had to go out to eat dinner and stuff with my friends, right? I had that mentality that when I got out of college, having a ‘real’ job will just fix the problem.

Junior year rolls around the corner. I’m living in my fraternity house because it’s cheaper for me. I was putting every expense on a credit card, stupid again on my part, but it worked at the time. Now I’m up to about $7000 in credit card debt, the reality didn’t sink in. My girlfriend (now wife) kept telling me to use alternative student loans instead of piling school expenses on high interest credit card debt. I finally gave in and applied for an alternative loan which helped me free myself from the credit cards, I now had money in my checking account. (Stupid, I know.)

Senior year and I’m living in a really nice apartment, I had loan money to afford it. This covered the living expenses but when that money ran out towards the end of a semester, the credit cards would come in to catch me. Credit card debt climbed again, not as much, but to around $10000. If going into debt isn’t crazy enough, love can do the same. I bought my girlfriend a ring our last semester of college, and on April 14, 2005 I took a knee and asked her to be my wife.

We both rode out the rest of college feeling good about having our very expensive degree in hand (not literally, the thing they give you when you walk is blank, they mail it to you a month or so later) and ready to face the world. Moved up near Chicago, Chrissy was doing an internship and I got a job at a very large communications company as a programmer.

One would think having a lot of credit card debt would limit the chances of doing many things. I actually built up some positive credit long term credit history over my years. We knew that an apartment wouldn’t work for us long term, so the process of buying a house. It was not easy buying my first house, but I made it happen. On June 3, 2006 we were married and took a well deserved week vacation to Jamaica (the most expensive trip I have ever paid for in full ever).

The gravity of the debt situation hit me end of last year that I probably needed to start doing something about my debt. Blogging seems to be the latest trend for information, guidance, moral support, and knowledge sharing. I want to rid my life of the ‘bad debt’ that I have collected within the last 5 years. I’m 24 and have about $12000 in credit card debt.

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