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    How did you get into debt?

    If you were ever in debt how did you get there? How did you get out of it? Were you aware?

    So personally for me and DH we knew debt was bad. But we considered it part of our necessary evil to take out student loans to get traction on our degrees. Now that I've added it up i'm horrified I had no idea we had borrowed so much. Part of it was that we borrowed it separately and part of it was that we did stash most of it in our EF and tapped it for living expenses but we also had deferred student loans at a ridiculous like 1.8%. I had ~$10k in student loans from undergrad which I never felt was excessive. To give me skin in the game for my parents. I borrowed the maximum $2650 x 4 years.

    Then started grad school in 2002 and borrowed $8500 in subsidized loans for the next 8 years. $68k, i think only needed it till 2005 and then from 2005-2010 I saved it and ended up using it to pay for DH's mba who then borrowed another subsidized $8500 x 3 for his part-time MBA so that was another $25.5k. That we paid everything off by 6/2010 basically cashing in our entire savings account. We had been cash flowing using my loans, his bonuses, my income to pay for private school mba plus trying to save, going down to 1 income and having a baby. So I today tabulated we basically borrowed $105k in student loan. OMG. I don't think we contributed to the headline news of $100k student loans because it was between two of us. But we did contribute to the increased average student loan number.

    Then DH borrowed $5k in 2000 to buy his ford focus. We kept that at 0.9% to build his credit (new to states) for 3 years. After that no loans until 6/2010 when we bought a subaru outback and borrowed $20k put down $4500k or 20% on it for a new outback. Kept that for 5 years at 0.9% till 6/2015. Then borrowed $6k to buy Sonata in 2012 and kept that until 6/2015 (3 year 1.9% loan). Then we got another car in 1/2016 Subaru legacy lease at 1.9% but we bought it in 2019 at the end of the lease for $18k on 28k car so we borrowed/leased $10k. Then we borrowed $22k at 2.9% 4 year loan in 12/2017 which we paid off 9/2020. So now we are finally off the car debt cycle. But i mean we borrowed easily $66k over 20 years of buying cars. We were only without a car loan for 7 years! And I hope to be done, but i'm pretty sure we are. We will buy other cars but I think I am going to lean to just buying it cash outright and making it hurt.

    So we've made our mistake. We definitely have been in debt and i'm not even going to touch my debt for housing. It's never been good and something I've always been embarrassed about. But let's say it's also six figures and substantial.

    So how do you get into debt? Well you just ignore it. I mean I ignored our student loans and had no real idea what we really borrowed. I knew we spent a decade under car loans and it's embarrassing that we did. Doesn't matter the interest. It still sucks.
    LivingAlmostLarge Blog

    #2
    We've had student loans, car loans, a HEL at one point, a HELOC at another point, and a mortgage. Some of those are self-explanatory.

    The HEL was taken out to consolidate some other debt at the time - a car and some student loans - as the terms were more favorable.
    The HELOC was taken out when I left my last practice and had to pay a 15K one-time insurance premium.

    We've never had CC debt except for one month in 1992 after our honeymoon.

    My goal for the student loans was to repay them in 10 years. It took 12 mainly because I switched jobs after 7 years and was out of work for a few months so it took a little time to get back on track.

    We paid off our last debt, the mortgage, in August 2019, and have been debt-free ever since.

    We've never had any issues managing the debt. We've always paid more than the minimum on any debts we had. I paid off my last car in 12 months. I paid off the student loans in 12 years but the schedule was 25 years. We paid off the mortgage in 25 years. If I had to do it all again, I'm not sure there's a whole lot I would change to be honest.
    Steve

    * Despite the high cost of living, it remains very popular.
    * Why should I pay for my daughter's education when she already knows everything?
    * There are no shortcuts to anywhere worth going.

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      #3
      Car loans, credit cards and mortgages.
      Got stupid a couple times when we were young on automobiles and credit cards, but all of that stuff is in the rear view mirror 20+ years ago.
      Regarding mortgages, we always did 15 year (or less), fixed rate, with no penalty for early payoff.

      Bought our business on an owner financed deal and paid it off in about 7-8 years. In business, my partners and I rarely borrowed, did everything cash & carry.

      Comment


        #4
        I got into my current level of credit card debt ($7,200) through making poor marital decisions and failing to live within my means.

        Update: I'm not counting my mortgage, really, here. At least its tax deductible.
        james.c.hendrickson@gmail.com
        202.468.6043

        Comment


          #5
          Gratefully, my only debts have only ever been a $30k "career starter loan" @ 1% coming out of college, and a few car loans (one at a time). I've also had a total of 2 mortgages. Never carried CC debt, and never got any student loans (myself).

          Before we got married, DW had ~$20k student loans and her home mortgage. We paid off her SLs almost immediately after we got married, and sold her house ~1.5 yrs later (after renting it to friends for a little while).
          The car loans were never more than ~$15k, which I killed fast (1-2 yrs) out of cash flow, because it was easy to see I was getting screwed. The second/third car loans only happened because I was buying a house at the same time, so I'm each case I was preserving cash for the DP to stay above 20%.

          The personal loan was silly to take, and much of it got wasted in poor decisions, but everyone was doing it & they were sold heavily as a great choice. Live & learn. I think I hung onto it for ~3 years before I decided it had to go, and wrote a check for the remainder out of savings.

          My first mortgage, we kept for ~7 years, with ~$100 extra principle every month. I (then we) lived in the house for ~4 years, then rented the house when we left. After a few years renting, the risk of negative cash flow during vacancy bothered me enough that I decided to sell some investments to clear the remaining mortgage.

          The second mortgage we had concurrent with the first, and being in Alaska, was more than double the balance ($330k at outset). When we moved 3.5 years later, we sold that house, paid off the mortgage, and bought our current home in cash. Hopefully never have debt again.
          "Praestantia per minutus" ... "Acta non verba"

          Comment


            #6
            I've had student loans from grad school, auto loans multiple times, a mortgage, and a little credit card debt here and there.
            What go me there?
            I think it just crept up on me slowly over time due to me not paying enough attention to finances.
            I always saved and invested, but I turned a blind eye to the debt portion of the equation

            Thankfully I woke up before I got too deep
            I now only have a mortgage.
            I'm debt free otherwise
            Brian

            Comment


              #7
              Currently only a mortgage. But at 19 I had a small student loan (3K) from dropping out of school. A couple personal loans (under 3K) for car purchase in early 20s. But the most expensive lesson/mistake was getting into gambling with sports around 24-25. Embarrassed to say I ended up owing just over 10K. I paid off bets using credit card transactions, and took at least 14 months to pay off that balance which was the only time I ever paid CC interest. Also took extra jobs whenever I could, basically didn't have much a social life during that time.

              I call those horrible choices at that point "the dark ages" in my life. After I buckled down to pay off, I looked at focusing on long-term goals with a home purchase, and never made that mistake again.
              "I'd buy that for a dollar!"

              Comment


                #8
                I first got into debt when my dad used my social security number when I was a kid and never paid anything - ruined my credit (interestingly he just died and it turns out he did the same thing to my mom's credit which we are now attempting to dig her out of). Spent years paying off his debts (this was before the time of the internet and as a 17 year old I didn't know what else to do except work and pay them off; the creditors all told me it was my responsibility even if I hadn't been aware). As soon as my credit score was good enough, I had to get a car loan so I could get to and from work - my old car had broken down so many times that I never knew if I'd get anywhere safely and I spent lots of time stranded on the sides of highways waiting for random nice people/truckers/cops to stop and help me get it running again because I couldn't afford AAA or anything like that. Of course that loan for a crappy used car came at a high interest rate. And then I got started with credit cards as soon as I was able. Eventually add student loans to that and so on and so forth. And then a car loan for a nicer car. And as I earned more and more income, I did things to keep up appearances like getting an EVEN nicer car because I did a lot of client facing work and wanted to have a certain image. So even though my credit got better and better, the debt number got bigger and bigger. I guess I always knew that debt was a thing you should stay current on the payments for, but I never had the time/energy until I was much older and our debt number was super high to realize you just shouldn't have it at all. Now we're debt free and plan to stay that way forever. And FWIW, the current car I drive is a $22k Honda that I paid cash for last year and got a hell of a good deal on.

                Comment


                  #9
                  Originally posted by HundredK View Post
                  I first got into debt when my dad used my social security number when I was a kid and never paid anything - ruined my credit (interestingly he just died and it turns out he did the same thing to my mom's credit which we are now attempting to dig her out of). Spent years paying off his debts (this was before the time of the internet and as a 17 year old I didn't know what else to do except work and pay them off; the creditors all told me it was my responsibility even if I hadn't been aware). As soon as my credit score was good enough, I had to get a car loan so I could get to and from work - my old car had broken down so many times that I never knew if I'd get anywhere safely and I spent lots of time stranded on the sides of highways waiting for random nice people/truckers/cops to stop and help me get it running again because I couldn't afford AAA or anything like that. Of course that loan for a crappy used car came at a high interest rate. And then I got started with credit cards as soon as I was able. Eventually add student loans to that and so on and so forth. And then a car loan for a nicer car. And as I earned more and more income, I did things to keep up appearances like getting an EVEN nicer car because I did a lot of client facing work and wanted to have a certain image. So even though my credit got better and better, the debt number got bigger and bigger. I guess I always knew that debt was a thing you should stay current on the payments for, but I never had the time/energy until I was much older and our debt number was super high to realize you just shouldn't have it at all. Now we're debt free and plan to stay that way forever. And FWIW, the current car I drive is a $22k Honda that I paid cash for last year and got a hell of a good deal on.
                  I never could understand how someone could it to their kid? I also had friends whose parents said they would pay for college then didn't. Leaving them scrambling in college sometimes.
                  LivingAlmostLarge Blog

                  Comment


                    #10
                    I borrowed some money from my Dad to pay for a permit when we were forced to switch from well and septic to city sewer and water. They also assessed our property for the installation at $8k more than the original quote $13k from the plan(there was eventually a lawsuit which the property owners won). We refinanced the house and pulled all the equity out to pay for everything except the permit $1500. I also took a $3600 student loan to pay my last semester of grad school so I wouldn't drain my savings (I was a single parent with a mortgage by then). There was the mortgage. There was that time when my former spouse hid the credit card in my name and took my half of the payment and never paid it. Former spouse kept the money for when they left. No problem with the leaving but I hate paying interest on credit cards. The thing that has saved me is that I hate debt that doesn't make sense. My former spouse's favorite thing was ordering pizza delivery and renting videos. I could never understand why making homemade pizza and borrowing videos from the public library wasn't enough. I never had a car loan in my life. Slow and steady has worked for me but I also haven't had financial emergencies and my family would support me if I needed it. I've been so lucky.

                    Comment


                      #11
                      Originally posted by LivingAlmostLarge View Post

                      I never could understand how someone could it to their kid? I also had friends whose parents said they would pay for college then didn't. Leaving them scrambling in college sometimes.
                      I don't know why most people who do this to their kids would think it's ok, but my dad was a sociopath (not just saying that in jest, he really was a textbook sociopath who has done things that would make your jaw drop), so he thought it was hilarious. Everything in his whole life was just a game to him. That's why I left home at 17, the day I graduated high school, with $60 in my wallet and my broken old car and made my own way in life. Had I stayed entangled, I'd have gotten nowhere.

                      Comment


                        #12
                        I said "I do", and just like that, I was in consumer debt hell. I was too young and dumb to realize it, but I found out rather quickly.

                        Comment


                          #13
                          Originally posted by HundredK View Post
                          I first got into debt when my dad used my social security number when I was a kid and never paid anything - ruined my credit (interestingly he just died and it turns out he did the same thing to my mom's credit which we are now attempting to dig her out of). Spent years paying off his debts (this was before the time of the internet and as a 17 year old I didn't know what else to do except work and pay them off; the creditors all told me it was my responsibility even if I hadn't been aware). As soon as my credit score was good enough, I had to get a car loan so I could get to and from work - my old car had broken down so many times that I never knew if I'd get anywhere safely and I spent lots of time stranded on the sides of highways waiting for random nice people/truckers/cops to stop and help me get it running again because I couldn't afford AAA or anything like that. Of course that loan for a crappy used car came at a high interest rate. And then I got started with credit cards as soon as I was able. Eventually add student loans to that and so on and so forth. And then a car loan for a nicer car. And as I earned more and more income, I did things to keep up appearances like getting an EVEN nicer car because I did a lot of client facing work and wanted to have a certain image. So even though my credit got better and better, the debt number got bigger and bigger. I guess I always knew that debt was a thing you should stay current on the payments for, but I never had the time/energy until I was much older and our debt number was super high to realize you just shouldn't have it at all. Now we're debt free and plan to stay that way forever. And FWIW, the current car I drive is a $22k Honda that I paid cash for last year and got a hell of a good deal on.
                          That's unconscionable.

                          Comment


                            #14
                            -$30ish K Student Loan debt that I paid off early (thanks partially to a student loan payment program that work had if I agreed to sign a work commitment, so that covered over $15K total of the debt over 3 years)
                            -$2kish from my grandparents when I was in college because my student loans capped out based on my crappy FAFSA estimate and it wasn't enough. Paid that off over several months.
                            -$4-6k in CC debt when I first graduated college and was paying to move, security deposits, buying work appropriate wardrobe, etc. I paid that off within a handful of months as well and knew it was very temporary when I did it.
                            -A dang expensive mortgage, but I'm not really worried about that debt because it's low interest rate and I have a secure job and it's easily affordable for me even if every other adult unexpectedly moved out and I had to pay it on my own.

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                              #15
                              Mindless consumer spending.

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