A friend of mine, when our conversation fell onto the subject of credit card debt, related to me the idea that carrying any credit card debt in college was stupid. He said this, having no idea of my own financial situation and my own debt sitting on a Amazon.com/Chase Visa card. Of course, it doesn’t make him any less right – it’s stupid. But it gets one to start thinking… how did that debt get there?
A lot of people who obtained their credit cards in college point back to a free t-shirt or a candy bar or some other incentive, sitting out on a table, there for the taking… if only you’d sign up for this shiny plastic thing filled with free money! However, my story doesn’t start there, and it doesn’t start there for two reasons.
A) My college restricted credit cards from selling on their campus. My school wanted nothing to do with those free t-shirts/credit cards. They even incorporated the “don’t get a credit card” teachings into our freshman “enrichment” class, although no one really listened… including me. I didn’t listen because no new information was being given to me.
B) The other reason I didn’t “get the free t-shirt” is because I was very careful about my credit. My mother, whose spending habits and “in the toilet” credit have always had an effect on me, was my main inspiration to stay away from harmful credit card use.
With that under my belt, I managed to go my entire freshman year without ever getting a credit card. But when sophomore year came around, and I got my on-campus job, I was ready to start building my credit by responsibly obtaining and using a credit card.
I spent over three months investigating different offers and interest rates, looking for the card with the lowest rate and absolutely no annual fee. However, I still held off. But in November, I got hit with the incentive. I put every last thing I wanted relating to the movie Serenity (my favorite movie) in my Amazon.com cart, just to see how much it would cost. The total came to $80, but Amazon threw a curve ball at me – if I applied for their Amazon.com Visa Rewards card, I would get $30 off, knocking that price down to $50.
How could I refuse that? I looked into their offer, and the interest rate was no higher than any other card I’d looked at, and there was no annual fee. It was the card for me. The rewards are also nice – for every 2500 points I acquire, they send me a $25 Amazon.com gift certificate.
And for months, I was a very good little girl. I put about $50 worth of stuff on it every month, and paid it in full every time I got a bill. It was beautiful.
Then I got stupid. It doesn’t take much to “get stupid” when you’re in college. It started fairly innocently. As a film student, you’re expected to spend gratuitous amounts of money on supplies, on top of your tuition and textbooks. One class that spring was estimated to cost me at least $500 in supplies alone, plus there were four textbooks for the class. I was also taking a similar class at the same time that promised to cost about the same, and two other classes on top of those.
In my financial burden, I started putting essential purchases on my credit card. If I absolutely needed something for one of my films, and couldn’t get around buying it, then I paid for it with my credit card. The thinking was that although I would accumulate a small debt in the spring, I would use my summer earnings to pay it off and then start saving for the next year’s films. Not entirely great money management, I supposed, but it was what I had to do. Mind you, the expenses of these films were not simply supplies like 16mm film, set dressing, and props, but also food for all of my crew members, including occasionally taking people out to lunch or dinner, including my roommate, as payment for driving me around a lot (I didn’t have my car yet). Also, I didn’t curb my usual spending, so there were some of the usual, frivolous purchases in there.
But it was just the start. The stress of making two films at once and taking two other classes wore on me, and I had another problem… I was in love (still am, although now I’m just closer to my credit limit). My love however, lived 3000 miles away, in Southern California, and I hadn’t seen him in over a year. Nevertheless, we started up a long-distance relationship, and a combination of hearts-in-my-eyes, stress, and carelessness lead me to put a round-trip plane ticket on my credit card, and fly out and see him.
At this point, I had probably only driven my balance up to $500 or so. It was really the summer that followed that did me in. We worked out a way for me to live in LA for the summer, and work. So I put another plane ticket on my credit card. Not knowing my exact return date, it was a one-way ticket, which cost me in the long run, when I returned at the end of the summer (that plane ticket was also on my credit card).
But before I even got to Los Angeles, my grandmother paid for my mom and I to go to England and Scotland for a short vacation. Since we had to pay for all our own meals, I paid mostly using my credit card (as one should while overseas, rather than carrying large amounts of currency or travelers checks), even though I didn’t have the money to pay it off. Still, even in the UK, a girl’s gotta eat, right?
Once in Los Angeles, the stupid blew full force. There’s enough wonderful shopping out there to send a small-town girl into a frenzy. I managed to keep it back, buying only a couple trips to the movies, and some action figures at Things From Another World, and clothes that I needed for my new job. That is, until we went to San Diego Comic-Con International… and I splurged well over a hundred dollars in support of my favorite web-comics and artists. I didn’t put that on my credit card… no, I paid for that using my debit card, money that should have gone to paying my credit card.
Also, at Comic-Con, I made a $300 purchase because I was upset. During the Con, I dropped my video camera on the floor and broke it. I was distraught over the loss of my video camera, and the possible loss of the footage on the tape. So I marched to the nearest Best Buy and bought a brand new digital still camera, so I would at least have some way to document the Con. On my credit card. The last thing I put on it before leaving LA was my new cell phone – a steal at $70 with taxes and shipping.
At this point, my card hit the $1600 mark, where it’s been hovering ever since. As soon as I returned from LA, I hid the credit card in my home bedroom and went back to school without it. It still managed to get charges put on it, when it tries real hard. I temporarily paid a large cell phone bill for my mother one month. She paid it back immediately, but I somehow excused myself out of paying any additional amount off on the card that month. I bought my boyfriend an emergency plane ticket back to Los Angeles when an error left him stranded here while visiting.
But now, here I am. In less than one year I’ve accumulated over $1600 in debt, and I’m chipping away at it, making the minimum payment because that’s all I can afford. My current situation, though, is probably deserving of its own post, later on.
Stingy Student says
Have you looked at doing a balance transfer to a 0% card? There are many out there that offer 0% on balance transfers for a year. That way, at least you’re not adding to your principal with the high interest. I plan on writing an article on credit cards in the near future, but if you want to know more now, just shoot me an email.
I’m considering it. Right now, I’m waiting until I have employment to start making any major changes to my set-up. I want to make sure I can make the payments on a new card before I get it! Thanks for the tip!
At least you can remember what you used your card for…that’s more than I could say.
Bluntmoney: Although there were several things that I distinctly remember, a lot of this was written while carefully combing through my credit card statements. What an eye-opener that is!
Credit card is so convenient and you don’t feel the pinch when paying for big amount. That is the danger I see when one can easily get carried away using credit card. I am just glad that i always give good thoughts especially buying high ticket items with credit card. I will make sure that I am 100% confident that I will have enough money in my bank when the bill comes. So far, I have not been in debt before!
Virtual Scotland says
Paying just the minimum amount per month is exactly what the card wants you to do as you are merely paying the interest. Always try to pay something more, however little more, than the minimum and you will be surprised to see how dramatically the balance will reduce. Keep paying the minimum and it will remain much the same 🙁
Oh Man. I was expecting the sum to be in the THOUSANDS. Let’s just say when I got my first credit card a little over a month after turning 18, I literally lived on credit cards for a year and a half (applying for one after another), paying them off slowly. By August 2008 I owed a grand total of about 8000. Right now I owe about 3,400, and I’m still fighting it off. All my credit cards are shredded. lol.