Debt has a way of creeping up on you. It wraps it tentacles around you and suffocates your very soul. It can make you feel helpless and alone. Without a doubt debt can overcome the very best of us. Throughout time, people have engulfed themselves in a sea of debt. Oftentimes in desperation people seek help and fail over and over again. Never able to dig their way out. Debt comes to us in many ways.
Student Loan Debt
Throughout time, many have committed suicide in their despair and grief. Student loan debt is one debt that has claimed many young lives. Student loans are unforgiving. There is no way out except payment of the loan. Unfortunately, when students enter college or grad school, they are young. They are not thinking about the reality of payback time. They go about their lives, enjoying their freedom and college buddies. Many, not realizing just how much their future has been compromised.
According to the Department of Education, student loan default rates are at an all time high. Many of these students once in the workforce will realize that the grace period to repay their loans comes extremely fast. Many of these students will fall into deep depression or even resort to suicide as a way out.
Credit Card Debt
Often people make bad choices, choices that can lead to a series of unfortunate events. With credit cards, you can take vacations, pay bills, buy fancy clothing and jewelry. What is not to like about a credit card? Seems like free money until you max them out and realize just how far in the hole you are. Sometimes it can take decades for people to realize what they are doing. Society doesn't help either. The credits card offers flow like water. Often, in a single week there can be 5-10 offers in the mail. Offers for credit cards can even come through E-mail and online pop-up windows. When you are shopping online- they suddenly popup with special deals. Who wouldn't want an offer for a free airline ticket for signing up for their card and making your first purchase. How easy is that? When you shop at the mall-many stores offer a special discount if you sign up for their "free" credit card. And, every time you use that card-they will send you more offers when you use their card. Wow, It's amazing how nice they are! All of this easily available cash.
Purchasing a home can be one of the most rewarding debt's we have. We use our homes every day. Banks will give you more money than you should be able to qualify for just so they can get your business. It is amazing how easy it is to get a huge mortgage. Many banks have been revealed in the sub-prime mortgage crisis. They offered huge loans on overpriced houses that people couldn't afford. Now, many of those houses are worth much less than their mortgages. Foreclosures are at an all time high, people are losing their homes in record numbers.
Why Not Refinance?
Oftentimes, when people get in over their heads, the advice given to them by friends, family, bankers and the like is "why not refinance?" Refinancing is an easy way out. Right? This is where I first got into trouble. I had purchased two new cars for approximately $35,000 each. I had been paying them down little by little when the great idea of refinancing my mortgage and consolidating my bills came into the picture. The refinancing interest was only going to be 8%. "Doesn't that sound great?" I was also given the option of taking out extra money. This was a great idea! Now I could have my yard landscaped! Definitely something I thought I needed to have done at the time. So, I used the money on landscaping and with the leftover money, I decided I would invest in a new start up company. Of course this company had a great product that was sure to have me rolling in the dough in no time.
This wonderful company would really make me bundles. On occasion they had share holder meetings and of course, would always ask for more money to keep operations running smoothly. I always found money to give them. Even if I had to take it out on my credit cards. I would be getting it back anyway. With my investment I would receive my money sooner.
OK, long story short, the company went belly up because of bad business choices (of course the president had to have that new Cadillac with all the extras!) They filed bankruptcy and I lost it all. Fortunately, I did still have my credit card debt. (Hint of sarcasm.)
The Next Chapter
In the past I have had fiends that would always offer to pay for dinner or a movie, concerts and even vacations. What I didn't think of at the time is "what is this doing to my friends credit?" They would whip out the credit card without a thought. That's how it happens. Credit cards are not like really paying with real money are they?
I really needed lots of vacations. Hawaii, Cozumel, California, Florida, Italy (twice), and many other prime vacation spots along the way. I had lots of credit cards to pay for it.
Problems in My Little World
2012 was a bad, bad year. I would like to erase it entirely from my experiences. Murphy's law came into play that year. Anything that could go wrong, did. Everything broke-washing machine, toilet, dishwasher, central air-conditioning, both cars, me (several times to the ER-most likely stress induced.) I also needed thousands of dollars of dental repair and there was water damage upstairs and downstairs, none of which was covered by insurance. To top that off my husband had to have rotator cuff surgery and was laid up for 6 months! How did I deal with all these catastrophes? My savior was the almighty credit card!
It's Payback Time!
Once reality set in, I had to make a plan and stick to it. I thought about asking friends and family for help. I decided I didn't want to involve them. I have always been private about my financial affairs and wanted to keep it that way. I was depressed and feeling hopeless, I wasn't sleeping and I felt burnt out. I searched online for answers and fortunately stumbled upon a little site called Ready for Zero. To sign up, all you have to do is enter your debt information, credit cards and their interest rates. At first I was leery about giving up all that information, but I thought-"what else can I do?" It was worth a try. The site keeps track of your credit cards and loan balances and presents them to you in a super easy (If I can do it anyone can) sort of way. All cards listed will be shown in the order of which card to pay off first. It goes by the highest interest card and suggests minimum payments on all others while the high interest card is paid off. This was so easy! It also keeps track of how much each debt is costing you per day. And, my favorite part-as you pay off each credit card, they put a golden trophy on each paid in full debt!
Due to the length of this article- I will make this short. I looked for money everywhere and anywhere I could find it. I paid off as much as I could possibly handle. I cut back on my bills, ate out less, raided any accounts I had a penny in and I took any extra work I could get. I refinanced my mortgage and got a low 3.25% interest rate and I paid zero fees to refinance. I bugged the mortgage refinance man until he didn't charge me a penny to refinance. I think he just wanted to be left alone. I paid off over $40,000 worth of debt in 13 months and I was able to save $23,000 in the process!
Don't Lose Hope
If someone would have told me a year and a half ago that I would have money in savings and have no debt within 13 months I would have laughed in their face! today-I know better.