Yesterday, I came across a post on the Words of the Web called “How Regular People Fall Into Debt” and the four paragraphs I found under the headline hit surprisingly close to home. I have always thought of post-grad debt as something that could never happen to me. It just couldn’t possibly. And yet now, I have been out of college for almost three years, and I know more than a few people who graduated debt-free and now have a substantial amount of credit card debt, even though they would never have anticipated having a running credit card balance. Though I am very fortunate to not have credit card debt, I am in debt technically, simply by virtue of having a car loan, which I’ve taken on since graduating college. I make monthly payments that I wish I didn’t have to fit into my budget.
Because we graduated into a shaky job market and economy, a lot of my peers did not graduate with high-paying jobs, and incurred debt to move to a new city. And even those of us who stayed in small towns had to deal with additional expenses; I had to buy a flight to interview for a job (with no guarantees I’d get it), which is something I prefer not to tell people. My point is that in our first few post-grad years, most of us, myself included, have experienced a time when expenses got the better of us.
Words of the Web is a content hub that publishes short, unique excerpts from writers. Flipping through is a bit like looking through pages of different people’s diaries, with a few Wikipedia pages interspersed. The post “How Regular People Fall Into Debt” caught my eye not only because I instantly thought of TFD, but because I’ve never seen anyone offer up such a frankly-worded explanation on this topic. This isn’t written by a financial expert, or even an authority on the subject. In fact, it’s not signed at all. It’s just one person’s opinion, and all we can do is assume they have experience with post-grad debt because of the specificities the author uses. They write,
“It’s a few years after graduation and you’ve got your own apartment and a decent job. Out of nowhere, your car starts to fall apart on you. You work too hard to deal with a junky car so you take out a $300/month loan for a new one. After all, you work hard and you deserve it. That’s on top of your $750 rent each month. Toss in your utilities at $300/month and you’re looking at $1350 each month. You’re just getting by but things are starting to get tight.”
What strikes me so much about the author’s opening is how pertinent the details they provide are to my life. I pay a car loan, the author’s got my rent ballparked perfectly, utility costs drive me insane, and my health insurance is $200 more expensive than it should be (in my opinion). The situation they are illustrating isn’t a circumstance in which someone gets stuck with a large medical bill, or has to pay an unexpected deductible because their car was dented in a hit-and-run. It’s about expenses adding up, and finding yourself in a situation where your budget or paycheck hasn’t caught up. The author continues,
“A few weeks later, you drop your phone and it dies on you. You’re ticked. Your main lifeline is now out of commission. Living without it isn’t even an option so you charge the $250 to get a new one. Then your cable bill jumps and gasoline prices start to rise. Suddenly, you’re getting to the end of the month and there’s no way you can make ends meet.
You start to pay more and more using your card and the balance keeps rising. You’re still making the monthly payments and it’s only a matter of time until you can get a better job. Right?”
In my opinion, the three biggest things that can prevent a scenario like this are saving an emergency fund, living within your means, and making sure you’re getting compensated fairly. Unfortunately, a lot of people who find themselves in a scenario like this are the ones who prioritize spending over building a comfortable savings cushion. Of course, we all make mistakes, and assuming we are immune to spending temptation doesn’t help anyone. But if you are worried about a situation like this, it might be worth it to start setting money automatically aside for an emergency fund. In tandem with this, it’s best to start thinking through each purchase before pulling the trigger on it. Spending beyond our means (whether that’s signing on for a too-expensive apartment, or a car we can’t quite afford) could give us trouble in the long run. I used to live in a much more expensive apartment, and lowering my rent has added some ease to my budget that I wouldn’t trade for the world. Of course, we all have different things we would nip and tuck in our budgets, but taking a more conscientious approach to spending is just one more way regular people can stay out of debt.
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