How We Ended Up Over $300,000 In Debt

You’ve found us! I should start from the beginning. When we were both in first year university we, like many students, were offered a credit card. A really pretty one with a picture of our campus on it. It was great, personalized just for us, sign us up! And so it began…

Her Story:

I wanted to go to university, actually it wasn’t an option, I was going to university, I just didn’t have any money to pay for it. I grew up in a single parent household and although my mom had a great healthcare profession she either didn’t think about it or didn’t have the money to regularly contribute to RESPs for my sister and I. When the time came for post secondary every single penny went on some form of credit, be it line of credit, student loan or credit cards. I had a part time job but not enough to pay for anything more than my books (which, lets be honest is a huge chunk of money in itself). By the end of my undergraduate degree I managed to rack up $32,000 in student debt and probably $2,000 in consumer/credit card debt. By the age of 21, I had $34,000 debt.

What’s even worse is that, although no education is wasted, my degree wasn’t going to get me much beyond a minimum wage job, the only option I had was to further my education. Back to school I went and although I have  a great career now, and zero regret, by the end of my second degree I managed to add another $15,000 in student loans, another $10,000 in lines of credit and about $13,000 on…credit cards…Yup. I put over $10,000 on credit cards to pay off tuition and books that my loans/LOC’s wouldn’t cover. My program was over $13,000/year, not including books and other incidentals and maintaining a part time job while in this program was not optional. I couldn’t do both and focusing on my overpriced education was priority. I should mention that as of a few years ago you’re no longer allowed to pay for your tuition with credit cards at this particular university. Too late for me. By the end of my second degree, before my life had started, I now had $106,000 in DEBT. ONEHUNDREDANDSIXTHOUSANDDOLLARS!!!! {Vomit}.

His Story:

His story is a lot less scary. Hubby went to university, then collage, racking up a total of about $10,000 total in line of credit and student loan debt. He has a credit card maxed at $2,000, not a huge deal. Then he went and married me and my $106,000 deficit bank account, he must really love me!

Our Story:

To top off my $13,000 in ‘school credit card’ debt, his $2,000 credit card, together we also owe another approximate $5,000 in various credit that we can’t really account for. We have a vehicle loan together, outstanding at approximately $29,000 and a mortgage currently outstanding at about $233,000. We both have good careers but, especially now that we have a baby (and I’m on maternity leave) extra funds for additional payments beyond the minimum for credit cards is near impossible. We have applied for consolidation loans twice for the credit cards and were denied twice because, surprise, surprise our debt ratio is too high.

After years of making minimum only payments, getting no where and being denied the consolidation loans we investigated credit counselling and starting a debt management program(DMP). We’re now in the process of starting with them and paying off our unsecured debt (all credit cards and one line of credit) totaling approximately $24,000, making no additional payments it will take us 54 months to pay off and complete stage one of our debt freedom plan. Our goal is to be finished with the DMP in 36 months. We want to throw every addition penny/tax refund and added income month and cut 18 months off our term. I think we can do it through proper budgeting. Once the DMP is complete we’ll tackle our other debts individually. I will be making up a plan to share once everything is well established with the DMP.

I will add that we have in the last three years paid off three credit cards ourselves that I didn’t add in the above detail and paid thousands off our lines of credit and student loans so they’re currently not sitting at their maxed limit, although still quite high.

Join us on this long journey to freedom and no longer worrying about money!

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6 thoughts on “How We Ended Up Over $300,000 In Debt

  1. WOW! That’s all I can say. You are certainly on a journey to debt freedom although you are not alone. There are many other Canadians out there that end up with tonnes of debt after school. Hopefully during your journey you can lead the way in hopes that other students may learn a thing or two from what you went through. Cheers and a pleasure to chat to you on Twitter! Mr.CBB

    • Thanks so much! It’s sickening how much a good education cost in this country. I have no regret about the education I obtained and like I said have a good career but it’s frustrating. My daughter had an RESP set up before she turned 6 weeks. This is not going to happen to her.

  2. I believe any journey starts with a few steps. I started chronicling my debt payoff efforts 5 months ago. I plan to have my 42k of student loan debt paid off in 36 months / by the time I turn 32. I’ve been chipping away at 3k of credit card debt too (under 1k now). It takes a system and some sacrifice but if you stick to the plan I think you can make lots of progress.

    We have a mortgage but I don’t lump that into the same category as my other debts. We likely will move in a couple years and money that would go toward a mortgage can often be better allocated elsewhere such as retirement, investments or long-term savings. Student loans cannot be discharged in bankruptcy if it ever came to that, but you can always give the house back to the bank and do a short sale or foreclosure.

    I guess my last bit would be to make sure the debt consolidation company is doing right by you. Some don’t pay creditors, making your credit suffer and then after you get behind they do very minimal negotiating once a portion of the debt has already been written off. Not to mention fees. I’m referring to the US, maybe Canada is different. Best of luck to you all!

    • Sorry your comment ended up in my spam- I do believe it is different in Canada our laws alone protect against a lot. The agency we’re using is a not-for-profit agency with a great reputation (A+ w/BBB). There are for-profit agencies as well and my understanding is that they’re ones you have to be careful about. They charge a monthly fee, and a percentage of what you owe to no maximum. It’s crazy. Our agency negotiates a 0% interest rate and our not-for profit fee is only 25.00/month while in the program (which is for paperwork/mailings/admin stuff and a tiny portion to their scholarship fund). You do have to be careful and do your homework!!

  3. Good luck in your journey. I think it all seems so overwhelming when you hit your debt rock bottom, but it looks like you’ve made good steps and are making great progress. I look forward to following your journey.

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