Thursday, October 21, 2010

How did I get in this Money Mess?

Welcome to my blog about my journey to kick my debt to the curb. A few weeks ago I made a conscious decision to do something about my debt. I have tried budgeting in the past and have had zero changes to my debt. Actually, that’s not true; I have actually gone further in debt! I think my own delusions led me to believe that I was getting further ahead, but the reality was that I was not even close. It got to the point that I had stopped opening my bills, especially my credit card. I was receiving a letter from Student Loans almost every month to tell me that I missed a payment! The payment is only $107.99 for fox snakes! I couldn’t understand what I was doing wrong. At 28 years of age, I came to the harsh realization that I am almost $40,000 in debt! I have zero assets other than my education so this was horrifying to say the least.

I wasn’t always the debt monger that I am today. In the beginning I started out pretty good. I was always a great saver as a child. I opened my first savings account when I was 5 years old. I was so good at saving that I would occasionally be lending my money to my parents to buy essentials like milk, eggs, or whatever else I could to help the family out. They always paid me back eventually and I wasn’t using the money anyway so it really taught me how to save my cash. Growing up with little cash I was never raised to be a spendaholic and I knew all the tricks to shop on a dime, take advantage of sales, and live within my means. When I got out and working on my own, I was able to live on $5.85 an hour in a part-time job. I bet you’re thinking, with all my great saving skills, how the hell did he get nearly $40,000 in debt? Here’s how:

As much as I could “survive” on next to nothing, after 2 years of this kind of work, I decided to go back to school and take a course on web design. My choice to go to school came with a hefty price tag of $14,000 for a 1 year course. I took out a student loan with the federal and provincial governments and I was well on my way to becoming a poor student. I needed a computer so I asked my mom to use her line of credit for me to buy a new computer worth $3,000. It was a great investment since I bought it in 2002 and it’s still working 8 years later. I was quick to pay off my debt to my mom and in about 6 months I had paid her back entirely. Keep in mind that I did this working a minimum wage job, so that was almost half my salary every month. If there is one thing I can’t stand, it's being in debt to family members.

Out of school a year later, I worked my butt off and got my debt from school paid down from $14,000 to $8,500. I was really on track to becoming debt free. After working in a job where I knew I was smarter than my boss made me head back to school. This time however, I decided to go to school without any financial assistance. Thanks to my (former) amazing credit history, I had now been approved for 3 credit cards, an American Express, and Ikea Credit Card, and a Bank of Montreal Airmiles MasterCard.  I was always paying off my balances in full for the Amex and the MC, but I forgot about the balance on my Ikea card and got taken to collections over $300! I was so mad since I had never received a bill from Ikea. I quickly cancelled my Amex after that and stuck to one card – my MasterCard. MC loved me the so much! When I first got the card, I started off with a limit of $1,500. Today, that limit is at $15,700!! Why oh why did I let them do that to me?? I never in a million years thought that I would let myself get to the point where I was reaching that limit. The interest rate on this card was 19.5%! And to top it off, I fell for their stupid “balance insurance” scheme which made my balance climb higher and higher! I had that idiot insurance for years. Combine that with last minute emergency flights home and using my credit card for crap and restaurants, my current owing on my MasterCard is a disgusting $14,581.45 in credit card debt!!

That accounts for $14.5K, so where does the rest of the $40K come from?  Well, as with most students, I built up more debt when I went back to school. I was living in an apartment I couldn’t afford on my own; eating at restaurants like I had been debt free forever; and flying home at whenever I felt like it without any paid vacation and paid for nothing with my own money. I could see myself swirling down the toilet bowl that is debt and now I’m in the sewer with the rats and all my crap. Over the time as a student, I hit $4,991.57 (out of $5000) on my regular line of credit, took out another $9,174.74 (out of $10,000) on my student line of credit, and after paying down all the the interest on my previous student loan it remains at $8,445.36. Add it all up and we’re talking $37,193.12 of debt!

Wish me luck!!!



  1. Hey Jon,
    Just saw this in my news feed - and am excited to follow! I've recently become pretty interessted in finances. And I've got some debt to pay off too.
    You should check out Leslie Scorgie's blog. She's the author of rich by 30, and she's something like 27 years old. Tons of great tips and info.
    Good Luck!!

  2. John,

    Good luck. Took a lot of guts to go the blog route, but studies show that making a public record forces you to actually accomplish your goal. I just recently went debt free (no student line of credit, OSAP, family debt or credit card debt).

    For your credit card debt, I would switch to Capital One Mastercard and transfer your balance...their interest rate on debt owing is something like 6.99% instead of 19% like most credit cards. You don't get any fringe benefits but the low interest rate makes it more than worth it! Also, when a credit card company ups your credit limit without asking you (which they do all the time), call them and tell them to get rid of the credit increase. They want you to spend money!

    Good luck,


  3. I agree with Chris. It takes a lot of guts to put this out there, but I think it's a great way to stick to your goal and make all your friends know what you're trying to accomplish. I know it can be hard with people presurring you to do expensive things. We will do our best to support you. There are so many things that cost very little but are still so much fun. Good luck on your journey, John. I know you can do it!