Chapter 1: How did we get into so much credit card debt?
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I got in the water in the very early morning before the sun had risen and the water was pitch black. I started swimming and I felt the water hollowing out around me and felt like something really big was swimming below.
I'm Phoebe Judge and this is Love, a show about the surprising things that love can make us do. More than 100 episodes available now on This Is Love.
Crazy that they hand out credit cards to 18-year-olds.
Interest rates are no joke.
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Chapter 2: What are the common pitfalls of first-time credit card users?
Paid for flights to Greece. Pretty incredible.
Americans are in serious debt. Together, we owe nearly $1.3 trillion in credit card debt alone. And our average balance? Around $6,500 each. Owing that much can get really scary and overwhelming. I know firsthand that you can make your way out of it, but it can be really hard.
I spent about $15,000 on furniture when I moved into a new place, and I'm still paying that off.
I didn't know what a credit score was.
Chapter 3: What strategies can help manage credit card debt effectively?
I didn't know what my credit report was. I had no idea what it would affect in the future.
And that credit card ended up in collection.
I ended up having around $24,000 in credit card debt within two years of being in grad school. And it has ruined my life. I am now donating my eggs to be able to pay off that debt.
I'm Jacqueline Hill. It's Explain It to Me from Vox. And this week, how did we get in so much debt? And is there a way to work the cards instead of the cards working us?
Chapter 4: How do credit card interest rates work?
For a lot of people, getting your first credit card is a rite of passage into real adulthood. When Angel Sevilla was 18, he walked into the credit union where he had an account and asked about getting a card. And they essentially just handed me one. It took no time at all. The woman is really friendly and she brings me these forms and I sign away my life and not knowing what I'm signing.
And it really only took about, I think, 15 minutes. And I walked out with a credit card and I felt empowered. I was like, wow, that was easy. Being an adult is great. Do you remember what your credit limit was, what it was for your first card?
Chapter 5: What benefits do credit cards offer if used wisely?
The first card was $1,500. It felt like I could put all of the little expenses on there. All of the $2 and $3, you know, McDonald runs. Swipe. Or coffee shop runs. Swipe. Everything that adds up really quickly that you don't realize. I was like, oh, we can easily just throw that on the credit card and I'll pay it next month. Woohoo, swipe. I was working at a coffee shop at the time, I think.
Chapter 6: What types of rewards can you earn with credit cards?
And I mean, I was making, I think, $8 an hour. I later got a raise for $10 an hour. And this was 2005. My rent was $450. Ugh. Swipe. Swipe. Later on in the year, when Christmas time came around, I was like, oh, I've got Christmas gifts for everybody. Swipe, swipe, swipe. Stuff like that, where I thought I was just being this really great, generous person.
Chapter 7: How can you maximize your credit card rewards?
And I was, but I was just digging myself into a hole. Woohoo, swipe. I was getting bills and I'm paying the bills minimum balance, thinking that I'm going to be able to make a fatter payment later on down the line. And some weeks I'd have overtime and I'd have a little extra, but it was slowly, slowly creeping up higher and higher above my head.
When were you like, wait, this isn't just a thing that I can do? So I was reaching the higher end of my credit limit and I needed more because I wasn't able to pay it off. And I had luckily seen like a newscast where they were talking about credit cards and they're like, you can easily call them and ask for more. So I did that and they gave me more. Yeah, how deep did you get into that?
So about $3,500, something like that, which at this time, I'm like 20 years old, and that's an unattainable mountain that I can't summit.
Chapter 8: What should you do if you find yourself in credit card debt?
I was compartmentalizing the feeling of being overwhelmed by my debt and just shoving it away. And I had started college at the time. So for those four years, I just didn't even think about it because now I've signed up for all these student loans. So I've got an additional load of debt. I'm like, you know what? Just put it all in the back of your mind.
Someday you'll be a millionaire and you'll pay it all off. I get a wake up call when I try to apply for an apartment and I am denied, which was super confusing. I was like, what happened? What's wrong? And I was told that the reason was because my credit score was too low. I'll be transparent, it was $490. Ooh, okay!
At this point, I'm like, oh my god, if they're denying me for this apartment, they're gonna deny me at the next one that I apply for. And so I ended up having to move in with a boyfriend at the time, who I had not been with that long, so I got put in this situation that I didn't really want to be in, because I needed a place to live.
I'm working at a restaurant and there's one of my coworkers who's a real estate agent and I see him just slinging all these homes and I'm like, well, I want a home someday. And now knowing that my credit is bad enough where I can't even get an apartment, I'm like, how do I repair this situation? He actually put me in contact with a loan officer who was great. And she sat me down.
She printed out my credit report. And she used a highlighter line by line. And was like, what are these? Why are these here? Can you pay some of these off? And it will help increase your score. And there's a bunch of $15 charges from the leftover that my insurance didn't cover for therapy sessions for two years.
Oh, wow.
They were mailing the wrong address. She's like, can you pay these off? So I start with those. I start with an old Verizon bill that had gone to collections because the account had closed and I didn't pay it off. So that's kind of how I began knocking things off and chipping things off of the list.
I was also advised to open a secure card, which is the type of credit card where you put forward your own money into an account that pulls up on your credit report as if it was the bank's money. And it looks like you're being given a loan, a credit card, but it's your own cash and it helps build your credit. So I kept that secure card for a few years, maybe like two years.
And after that time, I think I was up to the five sixties. So we're making progress. Yeah. And I know like when you're paying off debt, a lot of it comes down to sacrifice. Are there changes that you made in like your spending habits or you're like, OK, I can't do this thing anymore? Well, I learned that all of the little expenses, the $5 and $10 and $15 expenses add up very quickly.
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