12 Millennials Reveal How They Got Hooked On Debt

Photo: RonaldWong

Millennials have no shortage of money issues these days—they’re getting crushed by student loans and even helping their parents get by.A recent comments thread on Ramit Sethi’s personal finance blog, I Will Teach You To Be Rich, reveals just how dire the situation has become.

Keep reading for twelve shocking confessions of how Gen Y found itself swimming in debt and feel free to share yours in the comments.

'While my soul hurts from such ridiculously high loans, I am still comfortable enough with my debts that I always max out my Roth IRA and I carry an investment portfolio worth about 10k instead of paying down my loans.

'I am assuming that I will meet my minimum payments in the future and that the good ol stock market will return higher than 5% so that my investing will be more profitable than repaying my loans for the time being.

'My big decision was whether to go to graduate school in my (small) home town for free, or to attend law school in a big city at a total cost of over $40,000 (in loans) per year. Already $20,000 in undergrad debt, a full ride to grad school seemed like a much more reasonable choice. However, as a lawyer in a big city, I could be making $55,000 MORE per year than I would be making working back at home with a graduate degree.

'In the end, I decided to go with law school and take the initial $100,000 slap in the face in hopes of prospering in a few years. If law doesn't work out, I will simply stand outside of various buildings in the financial district solving rubik's cubes all day until someone hires me as a stock broker.'

This comment by Hope appeared in a long thread on I Will Teach You To Be Rich.

I am 23. I have over $300K in unsecured debt. I got into some really bad investing habit (forex trading) and made some terrible mistakes.

'I have a small business that I used to get more funding for my trading addiction.

'I finally started to come to grips with everything a few months ago. It's been pretty hard, to say the least. My business brings in around $7K a month, but my expenses are still around $9K a month at the moment with all the debt payments.

'I have a house that I am short selling, hopefully that will be going through soon. You can read my journal at: http://www.debtkid.com.'

This comment by debt kid appeared in a long thread on I Will Teach You To Be Rich.

I am 24 years old and two Sundays away from graduation with a B.A. I have $11K in student loans, $8K in auto loans and $1,500 in credit card debt.

'Student loans: I went to community college for four years, got two associate's degrees, and finally figured out what bachelors to get. I have worked throughout my college career and paid everything myself.

'Community college: used the college's instalment plan and paid everything off. State college: loans for all tuition. Paid room/board for my junior year and books for both with cash/credit -- a total of about $8,500. This kept my credit around $3K for about 18 months, which was stressful on my income. I had to continually scrimp to pay it down, just to make room for more bills.

'Auto loan: Commuting finally killed my car that I had since high school, and I was without a car for six weeks in the winter (in NJ, not a good thing). My mechanic dad talked me into a Buick. Not a sexy car at first, but it drives nice and looks mature. It gets 19 mpg in the city though, so I may sell it.

'With my student loan refund I was able to get my CC debt down to $500 in late February. It's about $1,500 right now due to new tires and taxes owed.

'I'm feeling pretty good about my debt. My goals once my job (regulatory consulting) adopts me full-time at $40K are to kill the CC debt, double car payments to reduce the length of the loan from six to three years, max out a 401K and move out.'

This comment by Tracie appeared in a long thread on I Will Teach You To Be Rich.

The worst year for me financially was 2003.

'Got married and my wife had a preemie baby all in the same year.

'My son spent his first few days in the hospital ICU until he was strong enough to come home. By year's end, we had racked up about $15,000 in credit card debt.

'Decided all along that my wife would be a stay-at-home mum, and my govt salary was barely getting us by paycheck to paycheck. Fortunately, I invested in the gov't TSP plan from day one, so it continued to pull pre-tax money since I started working for them in 2000.

'In 2005, I accepted a transfer to Japan, which came with a lot of benefits … many financial ones (rent and utilities paid, tax free allowances for cost of living, etc.). I also got a three-month salary advance that helped us get over here from the USA. Part of that I used to pay down debt' the rest we used to get settled in Japan.

'By early 2006, we were completely out of debt. I maxed out my TSP and put additional money into a money market account each paycheck so we can save for our future first home's down payment.

'Now, we've got about $100K in my TSP retirement account, another $10K in my son's 529 college savings account and nearly $15K saved up for our future home's down payment.

'Best thing is that in the next three years, we plan to see much of Japan and also visit China, Thailand, Singapore, Australia and New Zealand.'

This comment by Mike appeared in a long thread on I Will Teach You To Be Rich.

I'm 29, got a $280,000 +/- mortgage with my spouse and as of lunchtime have about 18 bucks on my credit card.

'Paying down the mortgage at a fair clip gives me a good kick.

'College loans keep coming up in the comments here, so you might find this interesting. I'm from Ireland, where your first crack at third level education is taxpayer funded (if you want a second degree, you pay). Never ceases to amaze and upset me to see young people starting out in life with thousands in college debt. I've probably said it before here, but I won the birth lottery for sure.'

This comment by guiness416 appeared in a long thread on I Will Teach You To Be Rich.

I am 27, and up until last year I had $135,000 in debt. $71k is mortgage, $15k is credit card debt, $14k is a car loan, $10k personal loan from the bank (at 10% over the 3 year loan) and $25k is a student loan.

'I recently had twin boys, so I ended up using my credit cards to get things that the boys needed, plus I had a Sears card to get new windows put into my new house to get rid of the draft and noise for the kids.

'Luckily, my job put me in a position to get extra money by going on assignment in another state. Currently I have paid off all of my credit cards and I have set up an IRA. I am getting rid of all but one credit card for emergencies. I have been saving money in an emergency fund, but I am still keeping a card just in case.

'All I have now is a student loan, mortgage, car payment, and my personal loan (which is almost paid off too).'

This comment by Donald Kennedy appeared in a long thread on I Will Teach You To Be Rich.

I'm 25. I have ~$165,000 in student loan debt, ~$20,000 from undergrad and the rest is from law school. My student loan payments are about $1,800 a month.

'Yeah, it stresses me out big time. They loan you the money like it's growing on trees, they don't warn you about paying it back. It's also inconvenient because I can't get a home loan. I find that ridiculous because I pay $800/month rent and I've heard of some people having house payments in that range. So I have a place to live, but that money isn't being invested into anything.

'My interest rates on my debt range from about 4.5 -- 9.1%.

'I haven't consolidated my federal loans because I'm hopeful the rate will go down in the future. My understanding is that once you consolidate you can't consolidate again … so I'd like to get the best possible rate available, even if it means waiting a couple of years. (I'll be paying for that long anyways.)

'Besides paying it down from highest to lowest interest rates I'm just paying everything I can on it. Anyone have any great tips for student loans?'

Source: John Doe appeared in a long thread on I Will Teach You To Be Rich.

I'm 25. Two years ago I was debt free. Scholarships paid for college. Parents paid living expenses. My car was a graduation present from high school.

'At 23, one year after graduating in business, I was given a diagnosis of possible Multiple Sclerosis. In the last two years I've built up more than $20,000 in credit card and medical debt.

'But most of it was travel related. Might as well travel while I feel good. Why the hell not, right?'

This comment by brint appeared in a long thread on I Will Teach You To Be Rich.

I'm 19 years old and I am $148,000 in debt. I go to a private school that costs me $47,000 per year. My parents were kind enough to pay the first year of tuition for me, but I am on my own after that.

'The only reason I am staying in this university is that I have an unbelievable job doing research at a nearby Ivy league material school. My only option to remove this debt is to transfer to a state school, which I can't bring myself to do.

'My solution for solving this debt: 80-hour work weeks for startup companies in exchange for equity only. I'll give myself three months at a new startup to see if it will make it; if not I'll move on. I will likely start my own company in a few years, once I learn from the mistakes of the others.

'If anyone that is reading this is interested in a smart, enthusiastic undergrad to join their startup, please don't hesitate to contact me. I'd be more than willing to drop out if the opportunity strikes.'

This comment by allan appeared in a long thread on I Will Teach You To Be Rich.

I came to this country at the age of 20 to pursue my bachelor's degree.

'I did two years community college back home, so only had two years left. Fortunately, I come from a society where it is the responsibility of the parents to pay for the child's education. (I value this tremendously now).

'I had no clue about finances and started applying for credit cards so that I can get the free T-shirts on campus. Ended up getting over 10 credit cards and racked up around $6,000 in debts spread over the cards. I could not afford to pay this as a student so i said eff it! I was hounded for, like, six years by credit card companies and third party credit agencies to pay up … but I never did.

'Fast forward eleven years, my credit score is now at 719, I have about $350K in savings with no debts (apart from the severely late debts accumulated long time back. I have the capability to pay now, but credit companies that I defaulted don't even know what im talking about when i talk to them and besides a financial guru once said that its no use paying them back if you have gone into serious collections unless it makes you feel good to do so.)'

'I'm 31. So those people out there who effed up, don't worry, there is still time to salvage the situation (but only if you realise the problem and never repeat it).'

This comment by Nony-mouse appeared in a long thread on I Will Teach You To Be Rich.

I found myself pregnant my last year of graduate school.

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