The Twenty-Something and Debt

my $1000 LA studio bedroom...in a closet.

There was a time when I had money.

There was a time when I thought I had money.

There was a time when I thought I had money and acted as such.

There was a time when I thought I had money and acted as such because it was my only option.

This is why I have no money.

When I moved to Los Angeles at twenty years old, I had minimal education on how to manage my finances.

Home & Careers class in high school definitely didn't teach me anything. There I mostly learned how to peel a potato and make soup from a $.55 french onion soup pack. Actually, maybe the class was preparing me for a life of processed food poverty?

My father lived every day as if it were his last, often randomly jumping on his motorcycle and scooting across the US or indulging in fly-by hobbies such a recumbent bicycling or job quitting, so he wasn't a great teacher either.

My mother was the most solid role model in that she informed me I should only put on my credit card what I could pay off each month. This is a rule she still lives by today and my mother has zero debt. The only price she has paid for this is boredom (she lives in the house she grew up in and has lived life by coloring inside the lines).

So, what if you move to a city where you know no one and you'd much rather eat out all of the time and be around people than alone in your $1000 apartment because that is the cheapest place you can find in your new city? What if you have to buy a new car because your old one kicked the bucket and you can't get around your new city without one and the only way you can pay for a down payment is via your credit card because you really don't know that you may have other options when purchasing a car? What if you need a new computer because now you're a player in the work force? What if you promise your mother you'll still take college courses even though you work 60+ hours a week as a personal assistant and you barely have time to go pee let alone study? What if you become so completely disillusioned with your career that you decide resigning is better than daily panic attacks and you take a job that pays less but makes you happier? What if the very little you learned about managing your finances doesn't apply to any of this? What if this is the way you're supposed to learn about your relationship with money?

The average twenty-something has $24,000 in college debt and $5,368 in credit card debt. I'm not the New York Times so accuracy should not be expected here, but considering these amounts are close to my own debts, I would gather this is roughly $400-500 out of pocket for college loans and credit card debt each month. Throw in moving to the big city ($600-$1000 rent) to find a job that you don't get for 3, 6, 9 months while you're working retail just to pay some of the bills though you're falling more and more behind. Right there we're already at $1000-$1500 a month with no stable job. Then throw in credit card payment plus late fees and high interest/gas/food/car maintenance/apartment or house maintenance and let's say that brings you to $2,000 a month. Say you do have a job, but you have $300-$500 taken out of your paycheck in taxes each month? You'd have to make at least $32,000 a year just to pay your bills and have a teeny weeny bit left over. Not enough for an emergency, of course. You break your leg and you have a $500 deductible or you have to fly home due to illness in the family? Good luck. 401k plan? What is that again?

This is the story of many twenty-somethings nowadays. Sadly, I have many peers who don't make anywhere close to $32,000 a year with or without college degrees. The ones that are lucky enough to make $50,000+ a year typically have astronomical college loan debt that they'll be paying for the next twenty-five years. No wonder kids are moving back in with their parents.

Me? I'm now the girl with a cardboard passenger side window. I'm the girl with a compacted wisdom tooth which is making it difficult to eat and soon will be shifting her teeth into looking like that of Steve Buscemi's. Now I'm the girl who has to pass up on dinners with friends, treating herself to a book or movie every now and then, or healthier food options. Now I'm the girl that can't fly home to see her family, to LA to see her friends, or to take a freakin' vacation once in awhile.

Though I'll take full responsibility for the choices I've made in life that have caused me debt (going to college, moving to LA, using my credit card to eat out and put a down payment on my car, leaving my career out of physical and mental health reasons, moving to a new city to start fresh), the rules and fees and high costs and lack of employment nowadays don't make it very easy for young and responsible people to breathe. Literally. At one point when I saw myself not able to make the minimum monthly payments on my credit cards due to the 29% APR they gave me after being late on a payment, I found myself nearly choking from anxiety. How could I go from being fresh out of college without a worry in the world to lying awake at night wondering how I was going to survive?

Realizing that no one was going to answer this for me, I took control of my debt and did my research. I consolidated my credit cards to one low monthly payment on a 4-year payment plan. I talked with the lenders on my car and college loans about other payment options. I worked 75 hours a week to make sure I paid my bills and then some. I realized that this is all a part of growing up and you can either make mistakes and play the victim or rise to the top. Though I'm not exactly sure when I'll be able to remove this wisdom tooth or put glass in my car window, within two years all this griping will be done and over with because I took control. This has been no walk in the park, but I view it all as a life lesson I was destined to make. I talk to peers who tell me they just stopped paying their credit card debt or haven't made a payment to the IRS in years. Their complete lack of concern in managing their debts astounds me. Turning a blind eye to your finances will not make the problem go away and will only cause further stress down the road. If you are twenty-something that has questions about managing your finances, here is some info that could help:

-If you're thinking about consolidating your credit cards, make sure you do your research first. I chose a debt consolidation company referred by the non-profit organization National Foundation for Credit Counseling. There I discovered that there are only two not-for-profit credit counseling facilities in Austin. The first facility was wonderful and helpful, but after discovering that their funding had been cut, I opted to go with the second company. I've been with the second company now for 22 months with no problems. They called my creditors, lowered my APR, consolidated my payment into one lump sum that I send to them each month for a $25 fee. After four years, my credit cards will be paid off. Even before I signed the paperwork with the company they made sure to inform me that I could do all of this consolidating myself if I wanted to. They gave me the tools and the information to handle my credit card debt. I opted to go with the company because it saved me the hassle of dealing with the creditors and now I only make one payment a month (which is easier to remember). 

-Brush up on the Federal Trade Commissions' Bureau for Consumer Protection. There are many predatory debt management companies that guarantee to lower your debt or improve your credit score (which are mostly scams). The website above is a reliable and safe resource to learn more about managing your debt.

-If you're falling behind on your car loan or college loan payments, call your creditor to work out another option. Many college loan lenders let you alter your payment plan or you may be eligible for forbearance. For my car loan, I was able to skip one month's payment and add it to the end of my loan. 

-Suze Orman and all of those snazzy people will tell you to keep tabs on your credit score, so that's what I do. I am alerted if my credit score has changed, why it has changed, and if anyone is running a credit check on me. FreeCreditReport.com will give you access to your credit report and score for seven days, after that you will have to pay a monthly fee. I was able to knock the fee down to $8 a month.

-If the creditors keep calling you, you can request that they stop calling. Either put the request in via phone or mail in the request to the creditor. If they keep harassing you, it could be deemed illegal.

-Don't stress and don't do anything drastic if you fall behind a bit. IT'S NOT THE END OF THE WORLD. Trust me on this one. Take a deep breath, talk to people you love and trust, and come up with a plan on how to manage your situation. It's not the end of the world.