How I Finally Paid
Off a Lifetime of Credit Card Debt
Catherine Fitzgerald
I've
been a debtor all my life. My parents first met at a financial loan office—my
dad issued loans, my mom worked in the office. They divorced when I was 10 and
my mother was left to raise two daughters in Cincinnati, Ohio on a $20,000 a
year salary. Money—or the fact that we didn't have any—was a constant topic of
conversation. My mother turned to credit cards to feed, clothe, and house her
daughters.
Wasn't
$20,000 kind of an average salary in 1983 (since you said you were 19 in 1992
and your parents divorced at the age of 10)?
So when
I was a 19-year-old freshman at Ohio University, I didn't see the danger of
debt. When a credit card company arrived on campus to sign students up for
cards, I grabbed a clipboard, filled out the paperwork and got my first card on
the spot. My only income was a campus job that paid minimum wage—$3.85 an hour
in 1992. I also had student loans since I was paying my way through college.
But I didn't see the potential trouble of having a credit card of my own. To
me, credit meant power.
Those
on-campus vultures are true low-lifes. "Hey Kid! Come sign this paper and
we'll give you a credit card and a free T-shirt! 0% rate (sure it jumps up to
25% if you so much as sneeze wrong, but don't worry about that, or the fact
that you have no income)."
If
you’re reading this, there’s a good chance you have credit card debt or have
had it in the past. Even if you think you’ve got it all under… Read…
In my
skewed, adolescent logic I decided I would pay for food with cash and
everything else with my credit card.
I lived in a student dorm and so bought things like a crock-pot with my card,
inching closer to my initial $10,000 limit.
By the
time I graduated in 1995, with a degree in social work,I had $15,000 in credit
card debt and owed $52,000 in student loans. As the first person in my family
to graduate from college, I was proud of my accomplishment. I moved to New York
City to start my life. That first year, I earned $21,000 working three jobs,
one at Old Navy. The credit card company bumped up my limit to $20,000.
Living My
20s in the Red
If you
received a raise tomorrow, what would you do with the extra money? Most people
would celebrate—maybe with a nice dinner out or a great bottle… Read…
The
debt didn't worry me. At 22, I decided would be just like my mother and live my
life in the red. Looking back on it now, I realize I was rationalizing
self-destructive behavior.
I was blaming the universe for my own decisions. But I also have compassion for
that younger me. I had never had a good, financial role model—I didn't know
another life.
In
1996, I started graduate school at Hunter College in Manhattan, taking out
$13,000 in student loans to pay for a Master's in social work. My 20s became a
blur of debt. I was working two or three jobs at a time just to pay my credit
card bills. I was juggling multiple credit cards, moving debt whenever I would
get a 0% interest teaser offer. By my late 20s, I owed $50,000 in student loans
and $25,000 in credit card debt.
I also
smoked, drank too much, and gained weight. On top of that, I found myself in a
bad marriage (I had even paid for the $8,000 wedding on my credit card). I paid
my $1,200 attorney fee for the divorce with a credit card, too. But what
difference did another thousand dollars make? I could never live the life I
really wanted anyway because I had this albatross hanging around my neck. I was
a slave to a big, red number that just kept growing and I didn't feel able to
control it.
Signing a
Contract With Myself
By
2000, debt was no longer the empowering liberator I had once imagined it to be.
Instead, it had become my prison. And my job in social work had shown me that I
didn't want a long-term sentence. All day long I worked with homebound elderly
patients; I saw what it was like to be old and poor, and I didn't want that
future for myself.
Whether
it’s consumer debt on credit cards, student loans, or a mortgage, most people
find themselves weighed down by debt at some point in their… Read…
So, one
day, at age 29, I took out a piece of paper and wrote a promise to myself: By
my 32nd birthday, I would have a job that would earn $50,000 a year so I could
begin to crawl out from under the weight of all my debt.
I would not just work to live, but find work that was rewarding, both
financially and personally. Writing that pledge made it real. Accidentally, I
had a signed a contract with myself and I didn't want to break it.
At the
time, I was making $37,000 a year working in direct social services. It was
difficult work that didn't pay well, and it was emotionally taxing. I began
looking for a new job. That's when I landed my first job in New York City
government, making $41,000 a year. Within nine months, I got a $6,000 raise.
And, a few months later—by the time I turned 32—I got assigned onto a new
project with a salary of $51,000 a year.
I was
determined to pay the debt down. I took out a $10,000 personal loan through
Bank of America with a locked in interest rate of 0.9%. I consolidated my high
interest credit cards into that loan and paid it off in three years. That loan
was a turning point. I acknowledged that debt was money that had been leant to
me and it needed to be repaid. I not only owned the debt, but surrendered to
it, too. At the end of the loan, my total debt, including student loans, fell
to $55,000.
By
2006, my financial life was improving. I was making $60,000 a year when I
decided to take a job in Washington, D.C. working on national health policy.
Two years later, I returned to New York with national credentials, which meant
an improved earning power. At my new job, I earned about $70,000 a year. One
day soon, I would pay off my debt for good.
The Slip
That Set Me Back
And
then life took a turn for the worse. At work one day in 2012, I slipped on a
marble floor, injuring my hip. The injury affected my gait, making it difficult
to stand, sit, or walk. Because the injury happened at work, I went on Worker's
Compensation, so all medical expenses relating to the injury were paid through
the program.
The
folks at medical billing offices? They are very experienced with being stiffed,
lied to, and held out on with payment plans. That's why… Read…
But my
out-of-pocket medical expenses
were huge. In one year, I spent $2,000 for chiropractor co-pays and
deductibles; $1,000 for acupuncture; and $4,000 for physical therapy. It was
tough to find doctors who would care for me on Worker's Comp, so I was forced
to pay out of pocket. And there were unforeseen (and uncovered) costs, too,
like the additional taxicab rides I took because I could no longer stand on the
subway or walk long distances.
My
mother's troubles had also grown. Over the previous two years, she had a stroke
and her third husband left her for another woman. She was $300,000 in debt and
facing foreclosure on her home. I found myself flying back and forth to visit
her in South Carolina, putting airline tickets on my credit card. I sent her
what money I could and helped her to refinance her mortgage, although it is
unlikely she can make the new payments and may still lose her home.
I
watched my credit card bills creep back up, despite my $85,000 a year salary.
And then, finally, I received a court settlement for my injury. I took the
$51,000 and immediately paid off all of my credit cards—a total of $24,000. I
sent my mother $5,000 to help her with her bills. I put $10,000 in a 0.9%
interest savings account, the highest I could find. Another $5,000 went to a
new Roth IRA. I put $500 into a new credit union account. Finally, I bought
tickets to San Diego for a vacation with my mom. I expect the entire holiday to
cost $3,000.
How I
Finally Got Debt-Free at 40
At the
age of 40, I am free of credit cards. I still owe $37,000 in student loans, but
those $212 monthly payments are locked at 4.5% interest with a graduated
repayment plan. I now make $80,000 in a new job where I work from home, meaning
I spend less money on transportation, lunches out, and work clothes. My partner
of over ten years is the superintendent of our building, which means our rent
is included in his salary.
Student
loan debt amounts to a massive $1 trillion across the board, with an average of
$27,000 per person. Paying it off is only made more difficult … Read…
Rather
than paying a credit card bill every month, I am now putting $1,600 a month
into a rainy day fund. I recently began doubling my student loan
payments, paying $420 a month toward the total. I hope to finish paying it off
in less than 10 years. I've become much more frugal—my apartment is furnished
with furniture that neighbors have left on the street for pick up. I love the
found furniture for what it didn't cost me—in money, stress, and anxiety.
I'm
just now beginning to find out what kind of person I am without the burden of
debt. My career, working on implementing the Affordable Care Act, is just beginning to
take off, and I'm excited to see where it will take me. But mostly, I find it
easier to breathe. Now, when I look at my paychecks and bills, I know how it
will all get paid. Finally, I can plan for my future and not just pay for my past.
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