Why I’m Glad I Got Into Debt… And How I Got Out of It.

by Kristina on February 14, 2012 · 6 comments

Very often people think of being in debt as a bad thing, I don’t necessarily think that is true.  Debt can definitely be a burden if we can’t afford to make our payments, but we can learn many financial lessons from getting into debt as well as getting out of it.  We may have got into debt because we were financially irresponsible (or at least I did), but paying of our debt(s) makes us financially responsible.

Paying off my debt definitely sucks. I can think of many other things that I would rather do with my monthly payments, but I guess that is the price I paid for learning the hard way.  I don’t regret getting into debt, although I definitely don’t recommend it.  I wish that I could have learned to be financially responsible without carrying thousands of dollars of debt; but unfortunately  I have yet to see “Introduction to Personal Finance” being taught in elementary schools and high schools (although I am trying to work on it).

How did you learn your financial responsibility?

As a kid I had to help out around the house and I definitely had to do chores, but I never really had to work for my money until my parents decided to get divorced.  Money was just kind of always around when I was a kid.  As I grew older and I didn’t have enough money to buy all of the things that I wanted, I used my Credit Cards to buy them.  Unfortunately this bad habit helped me accumulate thousands of dollars in debt with high interest rates at a very young age.

I was making minimum payments on all of my Credit Cards and I was not worrying about the interest costs.  As soon as I made a payment and my credit became available again I was out spending money and maxing out my Credit Cards.  This bad behaviour went on for several years until one day I decided that enough is enough.

How did you get out of debt?

I continued working two jobs throughout University and after graduation I decided to get my finances in order.  I set up regular biweekly payments to all of my Credit Cards.  My primary financial strategy was to make the largest payments on to the Credit Cards with the highest interest rates and the largest balance.  I stopped lending money to friends and I stopped offering to pay for meals. I started tracking every single penny that I earned and spent.  I also set a “get out of debt” target date.

Nowadays if I can’t afford to buy something I think twice about how much I really want it.  If I can live without the item then I just forget about it.  However if I really want it then I save up to buy it.  But usually I decide that I don’t really need or want the item.  I admit that living without everything I want really sucks, but it’s a lot better than being thousands of dollars in debt.

Subconsciously, maybe this is why I enjoy renting and don’t want to buy a home.  Maybe it’s because I don’t want to have a mortgage.  I know that buying a home can be a good investment, and I know that people think that renting an apartment is throwing away money. But if I can’t mentally cope with being thousands of dollars in debt how am I going to mentally manage being hundreds of thousands of dollars in debt?!

Photo by Tom Newby

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{ 4 comments… read them below or add one }

1 Nicole C. February 14, 2012 at 11:11 am

I can’t agree with you more. I graduated college with 18k in student loan and 5k in credit card debt. I worked 2 jobs to pay off the credit card debt, then a year later, I paid off my student loan as well. I feel so relief to be debt-free, and I am glad to learn this very important lesson when I am still in late 20s.
I believe “a mistake is made to be made” . It is a wake up call that we have to recognize it, re-do it, and hopefully, we have the time on our side to do so.

2 account receivable factoring February 15, 2012 at 12:05 am

Lucky person indeed if you got out of debt that easily. I think Financial debt is just like a spider’s web, more you struggle to get out of it more you get stuck.

3 crashdamage1957 February 21, 2012 at 12:56 am

I’m of the mind that a little manageable debt is not a bad thing. I know that currently the popular sentiment of most PF sites and PF blogs in particular espouse the ” zero debt ” mantra, but i think a lot of that is an over-reaction to being in excessive, unmanageable debt. A long held rule of thumb used to be to keep your monthly debt servicing costs at no more than 30% of your monthly take home pay. And that number means ALL debt, including total mortgage payments, ( principal and interest ) credit cards, car, student loans etc.Then, manage ones finances so that the debt number drops, rather than increases, over time. I don’t know why that thinking has fallen out of favor.

4 James December 18, 2012 at 8:38 pm

Hey Kristina,

I’ve often thought that people who are really into personal finance like reformed alcoholics, they’ve hit rock bottom with debt and have found the motivation to deal with their problem.

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