The Cycle of Debt

by Staff Writer on May 21, 2012

While looking back at how I got into debt I’ve realized one thing, it’s my fault.  Read the rest of the post and see if you can relate.

This story is not just mine.  Almost everyone I know that is around 30-38 years old can relate to almost all of it.  It’s light reading, I hope it will make you smile and laugh.

The Beginning: College

For most of us our debt cycle started in college.  We got hammered by the credit card companies from our first day on campus.  Get this cool t-shirt just for signing up to receive this piece of plastic.  So we signed up and got that cool shirt.

We rationalized our decision with “the card can help us in an emergency”.  The crafty credit card salesperson also tells us we can cancel the account later and still keep the t-shirt, but not many of us do.

We have now participated in using the easiest form of debt ever invented, the credit card.  Instead of tucking that card way and keeping it for emergencies we started to use that new piece of plastic.  Pizza anyone?  I’ve got my new card and I want to try it out.

The bill comes the next month and we chose to pay the minimum payment because we need to conserve our cash for the rest of the semester.  The bill is only a few dollars so we  just pay the minimum.  Again we rationalized this by saying the money we make on our semester break will be used to pay the card off.  The good old “Buy Now, Pay Later” mindset is beginning to take form.

And so it begins, the cycle of debt.

Life after College

After college we walk out with credit card debt and student loan debt.  Since we were so good at paying those minimum payments the credit card companies have decided to raise our credit limits.  Yes I said limits with an s.  By now you’ve received a Frisbee, another t-shirt, and a slinky for signing up for more credit cards at school.

We get our jobs and start making some money.  There are no more dorms or fraternity/sorority house in the real world, so we need a place to stay.  We find a nice place to rent and fork over the security deposit and first month’s rent.

We can’t sleep on the floor so we roll on down to the furniture store and begin to purchase our bedroom set, kitchen table, and living room set.  Since we used all our cash to obtain the rental, we use the in-store “buy now, pay later” credit program to fund the purchase.

Don’t forget about the new car we purchased or leased because we deserved it.  I mean going through school is hard.  The last purchases we made in that week were the TV, DVD, CD, and gaming console required for decompressing from our 8 hours of work that we are now required to perform.  Life can be sooo hard.

There is one other fact to consider after college, college loan debt.  Just another way the cycle of debt is keeping you down.

Life Continues

Now it’s a few years later, we start to settle down with a partner and begin the process of buying a house.  Most of us use little or no money down to purchase a house.  The housing market has been booming and the interest rates are favorable.

Our parents have been telling us to buy a house and stop renting.  The media is telling us the time is now to buy.  All indicators are pointing to a rise in home value for the next 100 years.  People all around us say to purchase the largest house we can afford, sometimes even saying to overextend ourselves because the values are climbing so fast.  As the value climbs our house is worth more and we can sell it for profit or take out an equity loan to pay off our credit card bills.  Many of us do just that.

Of course we have to start the furniture cycle again.  I mean who wants to use the furniture from their rental in their new home?  So it’s back the furniture store to acquire more stuff, some times we haven’t even paid off the first furniture purchase yet.  Don’t forget those new flat screen TVs that are out now.  We are working so hard now we need to relax and watch a TV that is the size of a movie theater.

Oh yeah, that new car is getting old and the “new car” smell is gone.  Time for a new one.  We’re doing better at work now and are earning a little more, so we should upgrade while we’re at it.  $40,000 SUV here we come.

Reality begins to set in

We’ve been paying the minimums for quite awhile now.  Yes, we’ve taken those tax refund checks and paid down some debt.  Yes we’ve started to apply our overtime and bonuses to the debt.  These debts can be  fairly large though.

Then one day we sat down and added all the debt up to get an “overall picture” of the situation.  After recovering from our heart attacks, we start to wonder how this happened.  We look for who to blame.  After looking in the mirror, we realize that it was us.  We were the ones doing this to ourselves.  We are to blame for it.  Then it happens, we realize this has got to stop.  If we don’t change we won’t have money to retire with, fund our kids college fund, or get that new house we want.

The Search

And the search begins, the quest for debt freedom.  We start looking everywhere for help and advise on how to stop spending.  How to begin paying down this mountain of debt.  How to “live like no else so later we can live like on else”(Dave Ramsey).

We read that budgeting and planning are the answers.  How can we pay anything down without knowing the ins and outs of our money.  We draft our first budget and have the family meeting putting everyone on notice.

The Realization

This sucks.  It’s going to take forever to eliminate all this debt.  Again we start searching, we find out that there are others.  Other people who are taking the same journey as we are.  Other people who have taken the journey and who have reached “debt freedom.” We read, watch, and listen to all these stories.

We are inspired by the actions other have taken.  We learn from others and post our stories.  We get energized because the community is so huge.  We realized that this is not just a journey, it’s a life changing event.  We make the sacrifices.  We do what is required to get out of debt.  We run like a gazelle running from the lion (Dave Ramsey again).  We work harder, faster, and smarter than we ever have before.  We just keep going, and going…………….Why?  Because we are sick of it.  We want a life that is not tied to the cycle of debt.  We want to be able to retire wealthy, and be able to support our kids in college.  We want to educate our kids with all the knowledge we’ve gained.  We want to be happy.

The Cycle of Debt is Broken

Congratulations!! We did it.  Now sit back, smile, and think of all the possiblities that will come our way…

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