Like many people, I've made quite a number of money mistakes and getting into credit card debt as a young college student was one of them. I was about 18 or 19 at the time, away from home with a part-time job on campus that paid me $116 dollars every 2 weeks (the only job I was allowed to have as an international student).
Fortunately, my mother supported me by paying my tuition and rent, but my responsibilities were paying my phone bill, buying my own groceries and taking care of my other personal needs. So I paid my phone bill each month (~$30) and bought enough Coca-cola and Ramen noodles to survive every two weeks (~$40) and I was actually fine until...I wasn't. (How I survived on this hideous diet I don't know).
At the time that I was in college, every major event or job fair always seemed to have an agent (of financial destruction) from the credit company with a booth set up decorated with balloons, offering free t-shirts and pens if you signed up for a credit card.
"I remember being lured over to one such booth where the lady told me I could get up to $2,500 of free money!"
I remember being lured over to one such booth where the lady told me I could get up to $2,500 if I only filled out this one form and how I wouldn't have to pay the money back anytime soon plus I'd get this amazing t-shirt with the credit card company's branding on it (to wear where though?).
The credit card company offered me free money....really though?
I immediately called home to tell my mother about the "basically free" money I was being offered at school. Her response? "What could you possibly need in your life that you need to buy on credit?"
Well, the next fair came around with another booth and another agent and again I was lured over by the freebies and supposedly free money. I explained to them my mother didn't think it was a good idea and they were like "but your mother never has to know - we can send your statement directly to your on-campus address", and with that, I immediately signed up and was approved for $2000.
I blew my entire credit card balance
I cannot, for the life of me, tell you what I spent that $2000 on or how I spent it but I can tell you I maxed out that card very quickly. When I received my first statement a few weeks later I was perplexed. 24.99% interest on what? I had sleepless nights for days thinking about my newly acquired debt and the fact that I didn't have a clue how I would pay it off.
To cut a long story short, I ended up having to tell my mother what I had done (before she found out and of course I received the appropriate scolding) and then I had to use my meager savings (and by meager I mean around $75 lol) and the money I was earning at my student job to pay it off (including the hideous interest I accumulated).
As little as the $2000 seems now, thinking about it every day caused me a lot of stress and it took me several months to pay it off but I certainly learned a worthwhile lesson. At the end of it all, I ended up paying back the $2000 plus 24.99% compounded interest which was way more than anything I purchased on the credit card was worth. Stupid.
Moral of this story: Credit card debt sucks if you don't have the means to pay it off in its entirety each month.
Got credit card debt?
We've all make mistakes and maybe running up a credit bill is one of yours. Or perhaps you failed to plan and had to rely on credit for some important circumstances in your life. That's ok. Now it's time to make some changes.
Step 1: Forgive yourself for your mistakes
Step 2: Create a baseline emergency fund of $1000
Step 3: Create a plan to pay off of your credit card debt ASAP. See my post on methods to pay off debt HERE.
Your ultimate end goal should be to never carry a balance over and have a fully funded emergency fund of 3 to 6 months of living expenses.
When it comes to your personal finances, Ignorance is not bliss. It comes back to bite you in the ass eventually. Educate yourself about all your current debt and know the interest rates. Give yourself peace of mind knowing you have a plan to pay off your debt over time and vow you are done with credit card debt once and for all.