There are many reasons people get into debt. They range from developers borrowing huge sums of money to earn more, to people who just feel like they have no other choice. And everything in between.
Here are the reasons I got into debt (and why I got out).
I grew up a pretty typical middle-class Generation X American. I learned something financially in school, and my parents and grandparents taught me things about money. Money was never a taboo subject in our family, so I think I got off to an unusual start in this regard.
But along the way, I’ve also picked up a lot of confusing and contradicting messages on the subject of credit / debt. I learned from the media and from people around me that I needed good credit. I also had a vague feeling that debt was bad.
But somehow it never occurred to me that using credit equals debt.
It never occurred to me to ask myself either why I “needed” to build up credit.
How many people have I got into debt?
Why I got into debt
You know, I wrote a great old thing about my steps on credit and how I thought I was doing the right thing, followed by a series of unfortunate events, but I was bored of myself.
So here are the real reasons.
I chose to go into debt because I:
- thought i should do it to build credit
- believed I was doing the adult thing and was proud of myself for doing it so well
- didn’t think of paying cash for large purchases
- I never thought that my life could gradually change for the worse overnight
- was impatient
- Risk not taken into account
- forget to count for emergencies
- kept forgetting that my makes of cars were due every year (thanks, ADHD!)
- When looking at the budget, make excuses (“well, but that was an unusual month” instead of making changes to the budget)
- When I bought it, I didn’t even think about maintenance, worst-case scenarios, related purchases and unintended consequences
- had trouble saying no
- wanted to show others my love by buying gifts, although I couldn’t afford them (yes, I regularly paid for Christmas gifts with credit)
- I used hope as my payout plan
- Young married to someone who would buy what they wanted when they wanted (and then I got frustrated and went along with it, which made things worse.)
- Tired of paying rent, I realized (then) that my current ex and I could buy a condo for less than the rent, so we got a mortgage on it.
- focused on budgeting for far too long. (I looked for help in books but all they told me was about investing (“using other people’s money”) or how to budget. I had no money to invest, didn’t see how it would help anymore and already knew how to budget. What I didn’t know was how to get out of debt and stay out of debt. But I dutifully focused on budgeting, as so many books say, and then beat myself up when I failed. Again and again.)
- wanted to have fun, go on a trip, or go to a funeral but had no money
- Desperately wanted to order a pizza, ceiling fans, or brakes for my car, but didn’t have the money
- has to pay an emergency room or a vet bill but had no money
- wanted to quit my job and just go to school full time for my final year of graduate school, so I got a student loan and did it
Basically, I didn’t know what I was doing, made a number of bad decisions, and did my best.
I was good at dealing with the money I had, but not very good at other things. Above all, plans for a future that I would never have thought of.
It’s easy to sit down and judge, make excuses, or feel bad. But even more important is making changes, getting help, and helping others.
That’s why I got out of debt
I was sick of it, but that wasn’t enough. I tried years out, to no avail. I would make a little headway, but then go right back in. Usually worse.
What ultimately helped me were 3 things that happened at the same time:
- My first husband and I broke up (and then divorced)
- I blew up the engine of my car
- Reality hit: Nobody else would take care of my son or fix my life
I had a young child, no work, a lot of stress and a lot of debt.
So I started asking people for help, both big and small.
For example, I asked my boss for a raise and explained that I had broken the engine of my care. He given got me a personal check for a new engine and got a raise.
Then I lost my job at Dotcom and haven’t been able to find anyone else for YEARS.
The hard times
Have you ever lived well below the poverty line for years? This is not fun. (One of my super powers is being a master of understatement.)
I had $ 200 a month in child benefit and, for a time, $ 200 a month in unemployment benefit.
But I was in a MUCH better position than most of the people living below or on the poverty line.
I had neither generation poverty nor racism to deal with.
I had a benefit scheme, a house on a mortgage, and a significant other who shared half the common household expenses.
My unemployment gave me time to look after my dying mother and spend time with my son.
I had a paid-for eleven year old car without air conditioning that ran well and looked nifty that I could take with me to interviews. (Even if at one point I broke down and cried when the judge changed the agreement to hold me responsible for bringing my son to his father, it couldn’t even be hired for the minimum wage.)
I had no way of paying my student loan at all.
But most importantly, I had determination and decent health.
And emotions are more important than math.
So I would NEVER BE IN THIS POSITION AGAIN unless the alternative was dying.
I wanted freedom and debt got in the way.
So I stopped borrowing. I married my partner, who also came on board. I got a one-day temporary job that resulted in years of employment.
I learned about money. I screwed up and forgave myself. I learned more, made changes, and tried again.
I kept an eye on the price and only spent money I already had. (I quiet just spend money I already have; that’s the key.)
If I didn’t have the money, I didn’t. I built an emergency fund, used my emergency fund, rebuilt it, repeat.
I kept shoveling money into debt and also started making pension contributions. (And then increase.)
I was lucky. I’ve done stupid things and smart things. I’ve had setbacks and successes.
But most of all, I had determination and a strong why. I wanted freedom and I could taste it. And I never wanted to be in that old place again.
After getting completely debt free, they gave me a retirement party when I quit my job a few years later to do my own thing at 46.
Today I am still so grateful for the freedom. I don’t take it for granted because I know things can change in the blink of an eye, for anyone, anytime.
So I enjoy everything I can. I let the little things go most of the time. I try to help others with what I have learned.
And I’m only spending money that I already have.
Because financial freedom is much nicer than debt stress or the question of how to feed your child. I never want to be in that position again.
(This post was triggered by a comment on my post “Debt is not a moral failure”.)