Sabrina*, 32, graduated college with $15,500 in debt from student loans. After being laid off from her low-paying job, she racked up another $4,500 in credit card debt while living in San Francisco. Eventually, she had to ask for help in the form of food stamps from the state and moving in with her parents for free housing. She felt like she had hit rock bottom, but that’s when she was finally able to take control of her finances and slowly chip away at what felt like a mountain of debt. Here’s what she learned along the way.
Highest amount of debt: $20,000
Amount of time to pay it off: 10 years
Credit cards: 1
Income (at the time): $35,000
Income (currently): $45,000
How I got here
I went to a state university and my parents paid my tuition, but I had to take out loans and work to pay for my living expenses and for books. By the time I graduated, I had two direct unsubsidized loans to pay off, one for $3,500 and another for $12,000. I was an au pair in Europe for a year after I graduated college, which didn’t pay much — the family gave me room and board and paid me a few hundred Euros a month in cash, which I used to travel. I had some savings after college, leftover from my loans and work, and that subsidized my year in Europe.
When that year was over, I moved back to my parents’ house for a few months while I looked for jobs in the nearby big city, San Francisco. Once I’d found one, as an editorial assistant, I moved out and opened my first credit card. I was making around $35,000 at the time and always paid my balance in full. I was also able to start paying down my student loans a little bit. Although I wasn’t earning a ton, I felt like I was in an okay place financially, able to cover my bills and avoid additional debt. The one thing I couldn’t do was save money. With rent, living expenses, and my loans, I barely had anything left at the end of each month to put away. But that didn’t seem to matter at the time.
Things get worse
My lack of savings became a real problem two years later when I lost my job and couldn’t get another full-time one, no matter how hard I looked. I did get some part-time work, but that only paid about $200 a week, and only lasted about six months. I was bored, stressed, and slowly going broke. After my unemployment ran out, for the last four months of my lease, I paid my rent with my credit card—$4,000 in all—and made just the minimum payment on my card and my student loans.
That credit card had a 29 percent APR. I qualified for food stamps, and being able to buy groceries without adding to my debt was a huge relief. During the last month of my lease, a year after I’d lost my job, I called my parents and explained that I was still essentially unemployed, in debt, depressed, scared, and broke, and that I couldn’t support myself anymore. “I have to move back home,” I said, “if you’ll let me.” Lucky for me, they did.
At the time it felt like I “had to” move back home, and I was so embarrassed. But looking back, maybe “I was able to” is a better way to put it.
Before it gets better
Although my cost of living had drastically decreased, things were still pretty bad financially. I owed so much and had no income, and I had so little money in my checking account that my bank started to charge me to keep it open. This was infuriating, but it spurred me to take action I should have done years earlier: I moved my accounts to a credit union. That was better for my fiscal health and my mental health. No institution that holds your money for you should ever charge you for basic services like a checking or savings account, even if you only have $24 in one and $550 in the other.
Even more help
My parents offered me both direct and indirect financial support, like letting me stay with them rent-free and borrow their cars. I was able to put my student loans in forbearance for 12 months, which was a huge relief as well. Even more: When my forbearance expired, my parents took over repaying one of my loans. I’d say it was embarrassing to ask for this help, but being in my late twenties, broke, and unemployed and living in my high school bedroom was the more difficult part for me. I felt like I had failed at life. Without all my parents’ help, I don’t know how I would have been able to get back on my feet.
Cash in hand
I managed to cobble together some short-term, part-time work—waitressing, weekend secretarial shifts, tutoring—so I had some money coming in, maybe $500 a month. It all went to transportation and paying down my debt. I didn’t really see my friends very often since I wasn’t living in the same metro area as them anymore, and I had plenty of “professional” clothes from my previous life as an independent person with a full-time job, so I hardly had any expenses. I still couldn’t save any money, but at least I was able to start somewhat supporting myself again.
Finally, a break
After two years of little-to-no employment, I got a job in my field! Unfortunately, it was not exactly convenient: My commute included a drive, two busses, and a train each way for a four-hour round trip. Also, the job was four days a week, so not quite full time, and so my salary, $37,000, wasn’t super high. But I had a real income and meaningful work for the first time in over a year, and my parents were still letting me live with them, so I could hardly complain. Plus I had my loans to keep paying, and my credit card debt to pay off.
Which I did! Eventually! It actually took me another two years, during which time I got a better-paying job and moved across the country, but I paid off my credit card and my loans. With the money I’d saved living with my parents plus a higher salary, I was able to pay down my loans in bigger and bigger chunks. It was hard to add money to my savings, but ten years after college graduation, I had no debt at all. Now I’m able to put the amount I’d been paying towards my loan into savings each month.
My debt lessons
1) Ask for help
I suspect I wouldn’t have accrued so much debt on top of my student loans so quickly if I had asked for help sooner. My parents were able and willing to help me, and I didn’t need to insist on my independence and try to make it when I was just racking up debt and failing to get a job. Pride is costly, even more so when you don’t have to do it.
2) Get a hobby
When I got stressed, or bored, or stressed from boredom from being underemployed and broke, I compulsively shopped. Not a lot, but every unnecessary purchase hurt. To curb this, I took up knitting. That cost a little to start, but having something to do with my hands was a healthy distraction. It didn’t solve my problems, but it did help stop me from compounding them.
3) Know that support comes in all forms
Don’t feel embarrassed if you can’t do it all on your own. If you can, be honest with your friends and family about what’s going on. I wish I had been more open about how much I was struggling at the time; maybe then I wouldn’t have felt so alone and scared.
*Name has been changed