Managing Debt

Bankruptcy at 23: How I Survived It

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For as long as I can remember, my father warned me about the dangers of credit cards.

After I got my first job the summer after high school senior year, it became clear just how irresponsible I was with that minimal income. The second I got paid, I would spend it.

It’s not as though I was buying anything I needed because at the time I was living at home. However, that didn’t stop me from figuring out ways in which I could burn through my funds.

As a result, my parents suggested I never ever get a credit card, because it was guaranteed to lead to trouble. “Not only is math not your strong suit,” my dad warned, “but you also have zero concept of the worth of a dollar.”

He was right.

I was only a few weeks into my first semester of college when a credit card company in the Student Union Building lured me in with promises of “building credit,” “learning responsibility,” and, more importantly, access to invisible funds that were not mine. I was sold. I put down my parents’ combined income (since I was a student, after all), and received my first credit card a couple weeks later. I didn’t tell my parents because I was 18 years old, mature and ready to prove them wrong.

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Me and My Card

Being a grown-up means starting a credit history (of course) so I made my first purchase: shoes.

That was fun and easy, I thought.

I waited until my first paycheck—I had a work-study job—paid off the shoes in their entirety, then bought some more shoes. With a minimum payment of $15, I decided I could buy lots of things. I also bought clothes. And treated my friends to lunch if they didn’t have the money.

Check Your Credit For FreeOnce the pizza place started taking credit card numbers, I ordered pizza for me and my roommate almost every night instead of going to the dining hall. Have you found yourself in a similar spending spiral? Learn how to stop it here.

By the time sophomore year rolled around, I had two credit cards and a couple of thousand dollars in debt. But hey, I got a part-time job at the Gap, which paid a whopping $8.50 an hour; in other words, I was about to hit the big time. However, working at Gap meant wearing their clothes. Before my first day, I bought several “key” pieces in preparation for my fancy new job.

Retail comes with some major perks, especially if you’re a college student who firmly believes you can never have too many clothes. I felt it my responsibility to take advantage of my 50% off regular-priced items and 20% off sale stuff.

Enter: Credit Card Number Three

I got a third card because I was pushing my limits on the other two. I had things to buy, a new gorgeous boyfriend who was an art student in Boston, and someone had to pay for things!

When you’re applying for a new card, hey, I figured, just put down your parents’ combined income and “pad” it a bit with what you assume you’ll eventually be making with your fancy degree in English. Voilà!

A few weeks later, I could feel the sturdiness that comes with a new credit card in the mail. My fella and I would be going to Bella Luna—a great little restaurant downtown that we college kids usually only hit up when our parents were in town— this weekend after all!

My monthly minimums between the three credit cards were only around $150. No problem! I had a job, and if I couldn’t swing it, I’d call Mom and Dad for grocery money. Problem solved.

[Related Article: The Stages of Debt: Which One Are You In?]

… And Then a Fourth

Once I reached senior year, the boyfriend and I had broken up and I was in need of retail therapy that could only be accomplished with a fourth (and final) credit card.

By this time, my parents knew about my cards, my father had done his fair share of yelling and had bailed me out several times for my monthly minimums already. But with my credit balance pushing $18,000, I was only given a $1,000 minimum.

Considering my previous lifestyle, $1,000 wasn’t going to cut it. I bought myself some shoes, Grey Goose vodka, pizza and went home to drown my sorrows (with my shoes on, of course, as they cost a pretty penny).

By the time I graduated from college, I was somewhere between $20,000 and $25,000 in debt, thanks to not only my complete and utter lack of responsibility, but also to late fees and ridiculously high interest rates.

What Was I Going to Do About $25,000 in Debt?

My parents had washed their hands of helping me, because I ignored their warnings, and, frankly, it was not their responsibility to help me if I was too stupid to realize what I had done.

True to form, I defended myself: I’m an English major! Numbers are not my thing! Credit card companies are liars! But really, the only person lying to me was myself.

After graduating, once that first college loan kicked in, I knew I had royally screwed myself. Not only was I in debt to the credit card companies, but I was also in debt to the University of New Hampshire for a hefty sum, too. Don’t let debt get the best of you. Start working on it today with our free Get Out of Debt Bootcamp!

I moved back to my parents’ house and tried to come up with a game plan. That plan? I was going to finally move to New York City to be a writer!

“You’re not going anywhere,” said my father. “You’re going to get a job here, fix this mess, save up, and then you can do whatever you want with the rest of your life.”

“But I can’t be a writer in New Hampshire!” I protested.

“You should have thought of that when you were blowing money left and right.”

[Related Article: Six Dangerous Words If You Are In Debt]

How I Decided to File Bankruptcy

Living at home, I got a job in the admissions office at a local college, which didn’t cut it financially, even if I was living rent-free at my parents’ house.

So I decided to file for bankruptcy.

A friend of the family suggested the idea. As the friend, who worked in finance, explained, there was no way I was going to get ahead money-wise if I didn’t try to wipe clean the slate of my “youthful mistakes,” and start anew.

Initially, I was completely against this, as were both my parents.

But, this friend explained, the debt had gotten so out of control I’d have to start making well over $100,000 stat (and still live with my parents) to just get even with the creditors. All that before I could even start dealing with my student loans!

After the judge approved the bankruptcy, I walked away with a clean slate … and the inability to have credit cards for the next seven years. It seemed like a fair deal considering what I had done, so I reveled in the weight that had been lifted. I also felt embarrassed it had come to that point.

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Ten Years Later: What I’m Doing Now

Looking back, I clearly see not only the irresponsibility on my end, but the selfishness. I believed my parents would bail me out, as they always had, but I just kept taking and taking.

A few years after moving to New York City, I applied for a credit card again. Surprisingly, I got it. Before I could get into the same mess again, I bought a couple of things, paid them off immediately and cut up the card. The only credit card I have in my wallet these days is a Bloomingdale’s card with a very low minimum that I keep just in case I want to treat myself to something small.

It’s been ten years since I filed for bankruptcy, and although I’d like to be able to say I learned a lesson about money, that would be a bit of a lie.

I did learn that when it comes to money I am, for lack of a better word, an idiot. I have yet to discern the meaning between need and want.

However, as someone who is now completely aware of this, I do make a valiant effort to be wary of how I spend my funds. I make sure bills are tackled first, groceries second, savings third and only then will I indulge in things I want but don’t technically need. Apparently, people don’t need over 30 pairs of shoes. And sadly, for me that has been the most difficult lesson to learn.

Image: RogueSun Media, via Flickr

This piece originally appeared on LearnVest, the leading personal finance site for women. Need help managing your money? Our free Money Center will help you create a budget. Our free bootcamps will help you take control of your money, cut your costs or get out of debt. And you might even be interested in one of our premium financial plans–managed by LearnVest Certified Financial Planners.

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