Annabelle*, 33, got into debt at age 23. Working at a mid-level company and taking home about $30,000 a year, Annabelle supplemented her income with freelancing. At one point, she made nearly six figures as her take-home pay. However, her high cost of living in Brooklyn, New York, meant she spent nearly one-third of her monthly income on her $2,000 a month rent. Also, as her freelance paychecks increased, so did her spending. By the time she got laid off from her job at age 30, she had realized she was in five figures of debt and needed a plan to pay it off.
Here, she shares her story, including the lessons she’s learned to make sure debt doesn’t happen to her again.
The highest amount of debt: $21,375
Time to pay it off: 2 years
Credit cards: 6
Income: about $110,000 at the height of the debt
How I got into debt
I was lucky to never have student loans — my parents paid for my college education in full. As an undergrad, I had a credit card connected to my parent’s account. I was supposed to use my judgment for how I used it. This card was used for course books, gas, occasional grocery runs, and haircuts. They never denied a charge, and I never saw a bill. But when graduation came, and I got my first job, my mom asked for the card back.
For the first two years out of college, I supported myself on $30,000 a year, which paid for everything, including rent, transportation, and gym membership. Luckily, my entry-level job had perks that included event invites to dinners and cocktail parties, as well as theater and movie tickets, so I never felt I was missing out. All my friends were in the same boat as me, budget-wise, so we were always really good at scouting out cheap events or having fun parties at our various shared apartments. But when I was 24, I decided to get my own credit card. I think I did it because I had started traveling more, and wanted to get reward points. Also, my older brothers and some of my friends had credit cards, and I felt like getting one was just another step in becoming a “real” adult.
I remember the first time I used that credit card. I was out to dinner with two friends, and the bill came. They had cash, and I suggested I put the entire tab on my card. I remember my friend Marisa asking if I was sure, and having a sinking feeling that it wasn’t a great idea. But I threw my card down anyway.
Five years of higher credit limits … and higher bills
Once I opened the first card, the offers for others started rolling in. Over the next five years, I applied for and got four more. And once I started using credit, that initial sense of unease washed away, and it became easier to swipe. For the first six months, I was careful to pay off balances and only to use the card minimally. But then I moved from a shared apartment to a studio apartment. I needed a bed, and the price of the futon I found was $650 — more than I had in my bank account.
At the time, I had also picked up a freelance writing assignment that was contracted for $10,000. So I felt I “had” $10,000 — it just wasn’t in the bank yet. I planned to use my credit card to help me cover the gap. And that was a significant mistake.
By the time the $10,000 came, I had already racked up almost as much on the card. I was in charge of organizing a bachelorette party and bridal shower as part of my bridesmaid duties for a friend’s wedding and felt a lot of pressure to put on fancy affairs. I was the only bridesmaid in the group with a steady job, and I ended up spending several thousand dollars on a catered lunch at a restaurant, as well as party favors. This was the moment where I truly got into debt — and it took me over five years to come out.
More money, more debt
By the time I was 26, I was making $75,000 a year between my day job and freelance assignments. While the number felt high, my expenses were also high… and I was living paycheck to paycheck. The rent on my one-bedroom apartment was $2,000 a month, and I went on several international trips a year. I justified the trips by claiming they were “research” for the novels I was working on (and they were, which helped me write them off on my taxes).
I also spent a significant amount of money on furniture for my apartment, as well as over $2,000 on dental work including a root canal after I maxed out my insurance. At the time, I didn’t realize it was possible to shop around for dental care or ask my periodontist for a payment plan. I just paid what he told me, and put it all on the credit card.
A windfall … and relief (for a bit)
When I was 28, I got a $75,000 contract to write three books. That money immediately went to pay off my debt, which at that point had reached nearly $20,000. I remember seeing my balances at zero and wondering how long they would stay there.
Meanwhile, I was having issues with the books. I was working with a new editor, and we weren’t getting along at all. At one point, her boss — a VP at the company — intervened, suggesting I wasn’t working hard enough. I was so angry and wished that I could tell her the contract was canceled and she could have her money back. But I couldn’t do that … because I’d already spent it.
That made me realize just how much debt can trap you. I would have loved to have returned the money and walked away since the project was making me miserable.
Back to revolving balances
I wish I knew where the rest of that $75,000 went. A big chunk went to taxes, but a lot of the money just went to my keeping up my lifestyle. I was 29, taking pricy fitness classes that cost $32 a pop, and wore $400 shoes and $200 dresses. I worked in a fashion-adjacent industry, so I justified frequent shopping trips as the cost of doing business. I was also stressed from my day job and nights working on the book project, so I made a lot of “I deserve it” purchases. At one point, I had a $200 massage every month.
At the time, my day job paid $60,000. I was regularly buying breakfast and lunch around my office, and it wasn’t uncommon to spend $25 a day on food. It was easy to spend $100 on weekend days, in between brunches, dinners, drinks, and workout classes.
In short, I wasn’t careful with my money, was living beyond my means, and pretty quickly found myself relying on my credit cards again.
A crash — and a lifestyle change
When I turned 30, everything changed. I celebrated my 30th birthday with a blowout, open-bar party that cost about $2,000–and which I put on my credit card. A month later, I lost my job due to some major restructuring at my company. To make matters worse, my book client and I had decided to go our separate ways after we had friction over the three-book project.
I negotiated a severance settlement that doubled the initial offer, and I realized that I needed to make a major lifestyle shift. I was burned out on working a corporate job and knew I wanted to take some time to see if I could make an entirely freelance career work.
I used the severance money to pay off my credit card debt, buy a car, and put some cash in the bank as emergency savings. I decided to move to Savannah, Georgia, where the cost of a one-bedroom apartment was $750 a month — just over a third of what I’d been paying back in New York City. I ended up giving away all my furniture and realized how silly it had been to have bought new furniture in the first place. I put the majority of my belongings in storage, and as I did so, felt sad that I had spent so much on stuff that had little meaning in my current life.
Five years later, looking back
I still have credit cards but have become a lot more strict about how I use them. I’m not perfect, though. There have been periods where balances carried over from month to month, and I still feel stress relief when I click “purchase” after a hard day. Even though I’m in a position to pay off my balances in full now, I still cringe when I see how high a bill is and realize that I barely remember the purchases listed on the statement.
As for travel rewards, which were the reason I got the cards in the first place? While I appreciate perks that come with certain cards, such as free checked bags or airport lounge access, I don’t think they were necessarily “worth” the stress the cards brought me. I wish I could tell my younger self to hold off on credit cards for longer.
Now, when I get a windfall amount of money, like from a freelance assignment, I put some in an emergency fund and the rest in an investment account. I love feeling the money is “mine” when I get it — before, I felt like it belonged to the credit card company as soon as it hit my bank account.
My debt lessons
1) If you can’t afford something, it’s okay to say no
I keep thinking about the bridal shower I couldn’t afford. There are so many things I could have done differently. I could have gone to the bride’s mom and asked for her input. I could have planned a potluck picnic. While I wanted to celebrate my friend, the last thing I should have done — and the last thing I think she would have wanted me to do — was go into debt.
2) Shop around and barter
It’s possible to get discounts when you pay cash, and it may be possible to set up a low- or no-interest payment plan with a local business or service provider instead of assuming the price is locked in. I was able to negotiate a 30 percent discount with a dentist because I was paying in cash (rather than through insurance, since at the time, my insurance didn’t cover dental). I also was able to get free yoga sessions in return for helping the instructor expand her social media presence. The more creative you are, and the more you consider potential non-monetary offers, the more people may be able to do for you.
3) Think of secondhand
I bought so many new pieces of furniture when secondhand would have been more than fine–and would have kept me out of debt. I wish I had thought more realistically about my timeline: I was in my mid-twenties, and it was unlikely I would be in that apartment for years, or that the furniture I liked in my mid-twenties would necessarily be the same furniture I would have wanted in my mid-thirties, even if I had stayed in the same place.
4) Let the small purchases slide
Even as I look back on my years in debt, I don’t regret the lunches I bought. Sure, I could have saved money. But I don’t think that overpriced sandwiches brought me into debt. Sure, they contributed to me living beyond my means, but I think what I needed to do was make major shifts, like lowering my rental costs.
5) Don’t beat yourself up
Do I wish I had never opened a credit card? Yes …. and no. If I hadn’t gotten into debt in my twenties, when I was single, I worry I may have been more vulnerable to debt in my thirties, when I may have had people depending on me. I think I learned a lot, and I think the knowledge I earned has made me more financially savvy.
*Name has been changed