Guest Post: Getting Out of My First Debt Pitfall

Meet Josh Wilson, a personal finance blogger who runs the site Famiy Faith Finance.  Josh is a Millennial who is working to become his generation’s personal finance thought leader. Josh dreams of a day when all Millennials can thrive through financial literacy and patience.

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Getting stuck in a debt pitfall

Getting stuck in a debt pitfall happens to plenty of people. It is easy to fall into one, but it can be extremely difficult to get out of it. If you happen to be one of these people, just know that you are not alone! 

Some of the most common debt pitfalls stem from car payments, large mortgages, credit card debt, and student loan debt. If you were to ask any stranger about these, they would likely say they had one or more of them. They are some of the most common sources of debt. The thing is, sometimes they are a necessity. After all, most people need a vehicle to commute to work, a place to live, and an education. However, sometimes debt pitfalls happen when people just want to buy something with the plastic in their wallets.

I have had my own experience with debt pitfalls. Two of them came from credit card debt and student loan debt where I was stuck deep, with a long road ahead. Let’s take a look at my situation and what I did to make it better.

Student Loan Debt

When I graduated from college, I carried a student loan balance of $31,000. That is a hefty amount and about in line with the average that a student graduates with today – give or take. I was ashamed of this debt, but I had no choice but to accept it. After all, if I was going to work in my field, then I needed a degree to help secure a job. So, I went to school. Since I did not have significant savings for it in any form, I had to fly solo and take out student loans. Hence the student loan debt.

Fast forward to today: I have paid down most of my student loan debt, but how did I do it? Out of college, I was lucky enough to get a job in my field, so I could handle regular payments. That wasn’t quite enough however, so I looked for any side hustle I could find to supplement my income – which led to mowing lawns, freelancing in IT, and even selling baked goods! I know, it sounds like a lot, and it was.

While establishing more income is one of the simplest ways to crawl out of a student debt pitfall, there are other ways to speed up the process. One is student loan refinancing. I refinanced my debt when I had about $12,000 left. Refinancing my student loan debt was the best thing I could have done because it dropped my interest rate which saved money and gave me better flexibility with my finances. Successfully making student loan payments (with the help of my side hustles!) was a big factor in my ability to refinance. I’m still working on it, but it’s less of a problem now. I have only $5,000 left to pay!

Credit Card Debt

While I had student loan debt, I also had credit card debt which was to the tune of $1,500. This credit card debt was racked up during college, and it definitely plagued me after college. I was not happy about my credit card debt. While it may not seem like a lot today, it was a big deal for me at the time. I did not have the $1,500 on hand, and I knew I needed to make a change before getting stuck in the minimum payment cycle.

I decided to search for a balance transfer credit card that offered an introductory rate of 0 percent APR for the first year. Long story short, I was approved for one, so I transferred that $1,500 to a new card and saved money on interest (just like student loan refinancing!). There are other ways to reduce your rates, but this one was my solution.

I would suggest that you do this if you carry a balance on one of your cards. The trick here is to make sure you pay the amount you transfer off before you reach that introductory offer expiration. In my case, my side hustles helped me to pay the card off in full before the expiration. 

Kiss Your Debt Pitfall Goodbye

Now is the time for you to kiss your debt pitfall goodbye. I knew that I did not want to be stuck in debt forever, and this meant that I needed to make changes. Some of those changes were easier than others, but they all allowed me to get to where I am today.

While I still have a little bit of debt to pay off, it is nowhere near what it used to be and I am thankful for that. Here are couple takeaways for kissing your debt pitfall goodbye:

  • Find new sources of income.
  • Look into reducing your interest rates!

Are you stuck in a “debt pitfall”? Have you ever been? Your comments are welcome.


Image courtesy of Flickr.

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12 CommentsLeave a comment

  • Sounds like good choices. The only thing I don’t like about balance transfer credit cards is that the issuers are sometimes not fully upfront with the balance transfer fees. The ones I’ve seen are usually like $50 or 3% of the balance, whichever is greater. For big balances, that can be lots of money.

    • I’m a little skeptical of the whole transfer strategy because people who struggle with debt so often get deeper into debt while trying to use them. 0% for a number of months can be tempting bait for someone with stubbornly bad spending patterns.

    • I’m also so happy to see young people get it. Staying out of the debt trap will have such a positive impact on the lives of people like Josh. (I hope Josh answers your question re. “pf thought leader.” I want to know too.)

  • I graduated in 2008 with $50k in student loan debt. While attending the school I went to is the reason I worked for the employer I did, my degree wasn’t worth that much. Partially this is because I changed career paths halfway through college after a summer internship. I was stuck with the “Now what?” dilemma that nobody wants to encounter.

    I teach high school now and I tell my students to really think about college and not do what I did because everybody thinks that getting a 4-year degree is the only step after high school. I do encourage them to consider cheaper community colleges first, get technical training, or even take a year off to think about what they want.

    • Thanks Josh. You have such a great personal testimony about all of this. I’m glad that you changed career paths – even though it meant such a huge reduction in your salary. You will have a lot of real life wisdom to pass on to your students. There is not only one way of doing things – and that’s good news!

  • I’ve totally used that credit card trick. And it makes me so worried how many people carry student loan debt. It’s awesome that so many people in the PF space prioritize it, but I imagine many people wallow in it. Can’t blame them. It’s just worrisome at a micro and macro level.

    • Thanks, Femme. I wallowed in debt – though not student debt – for a long time in a kind of fog. Wallowing is an awful, powerless state – and I speak from experience. For me, it took clarity, and an acceptance of the fact that it would be a slow steady process to healthy finances. And then confidence grew! I wish that clarity and acceptance and confidence for everyone feeling powerless over their debts.

    • Thank you for leaving a comment, Stephanie. As someone who lived for too long thinking that debt was “OK” and “normal”, I would add that low interest rates must be used as an aid to paying off the debt more quickly – not as something that lessens the importance of paying it off – or that gives more room to borrow. Many who succeed in minimizing their interest rates still don’t succeed in tackling their debts.

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