Oh, money. We used to be friends, you and I. But somewhere along the line we got separated. Like most millennials, I was born a saver. Some of my earliest memories are spending hours wrapping change to take to the bank. I bought my first house at age 23, thanks to a healthy double income and an early inheritance which became a down payment.
Sure, I had some credit card debt from some must-have purchases and spendy vacations, but it was under control. I was throwing $700-1,000 at it a month and it was going to be paid back in less than a year. Not too shabby!
Then two things happened. I got a special assessment on my condo for $25,000. And my husband and I split up.
Everyone knows divorce is financially devastating. In my case, I got the house, but also all the debt. For those playing along at home, I now owed the surprise $25,000 plus about $10,000 in credit card debt. I also became briefly unemployed. During this shitshow, I had to put down two months’ rent and a damage deposit on a rental because I could no longer afford the home I owned. My first $3,000 installment cheque for my assessment cleared, and suddenly my credit card debt ballooned. I charged everything: groceries, cleaning services for the old house, moving supplies, a storage unit, every cup of coffee, every round of paper towels and Windex.
I moved into my new apartment less a husband, a job and a plan. Only the force of my own terror kept me going.
Because I had only owned my home for four years, I was nowhere near qualified to draw on my home equity for debt assistance. My bank made sad faces at me while issuing me a third credit card worth $22,000.
That was a year ago. I have a job now, but every spare cent goes toward the lingering assessment bills. ($8,300 left, due in 2016.) Every month leaves me deeper in credit card debt to fund basic needs, despite hefty monthly payments.
Sometimes I ignore my bills because I’m afraid to open the envelope. Some things in my life look fancy – I own a relatively new car – but only because I can’t get out from under them without a severe financial penalty.
As of this writing, my credit card debt is a staggering $17,500. Oh, and don’t forget that $8,300 in assessment money. Insert the sound of nervous laughter here.
This situation is untenable. I know that. So I made up a five-point plan.
- Start using Mint.com. Seems like the obvious place to start. I’ll look at what I’m spending monthly and trim anything with significant savings.
- Sell old things. I did a lot of this when I was moving but I know I could do more on the clothing side. I have a closet full, only half of which I wear.
- Build a better slasher career. That’s account executive/freelance writer/funny t-shirt peddler to you. Alternative income streams: I need them.
- Pay only the minimums on the credit cards. This seems counter-intuitive, but right now I need all my cash flow for the assessment bill. The alternative is foreclosure.
- Hold on until next winter. Next winter I’ll reach the minimum qualification to use my home equity. My home’s market value should have increased by then because of the improvements funded by the assessment. I’ll fold up all remaining debt onto one neat bill. Secret sixth step: Weep in relief.
This may or may not work, but it’s the best idea I have. What do you think? Tell me about your financial fuckery and solutions in the comments.