In 2015, Credit Karma went to Charlotte, NC and invited people to talk to us about their experiences with money and credit. We talked to people with many different backgrounds. Some were Credit Karma members, others were not. Participants were told in advance their stories might be shared online. These stories helped us understand the financial struggles that many people face. We thought they might help others too.
These are real stories, told by real people in their own words.
They received a financial gift for sharing their stories, but we want to take this time to thank them again. Check out our My Money Story series on YouTube.
Money trouble can strike anyone - even people who work in finance.
"We were professionals in the financial services industry, but we were financial messes," David says ruefully.
A year and a half after John and David started dating, they noticed that their family, friends and peers were buying houses and cars - something they "couldn't fathom doing." They decided to take a hard look at their finances and discovered that they had $51,000 of credit card debt.
"So while we were helping people with their finances, telling people where to invest and what to do with their money, we were a mess," John says.
John and David were living in a basement apartment and owned two "mediocre" cars. So how did they end up in so much debt?
In a nutshell: keeping up with the Joneses. To the outside eye, they were living a carefree financial life. But in reality, they were spending on luxuries they couldn't truly afford.
"We were going out to nice dinners. Happy hours on Friday and Saturday nights. Hanging out with all our friends. We had the right clothes. ... That was the kind of lifestyle that put us in that spot," David says.
"My jeans never cost less than $300. In hindsight, that was ridiculous," John says.
During this period of high spending, David got laid off from his financial services company. He got a generous severance package, so he made a plan - take a couple of months off and enjoy the summer, pay off some debt, then get back to work.
Five months later, he had actually increased their debt and his severance money was all spent.
The couple asked themselves, "Why are we spending our time doing things we shouldn't be doing or spending our money on things that don't really make us happy?" They realized that the things they were spending money on only brought temporary happiness. It was time to get serious.
"I figured out where I was spending every bit of my money and it was shocking. We were spending $500 a week at the grocery store, but we were also spending $600 or $700 going out to dinner and hanging out with friends," David says.
They both agreed: Let's get out of debt.
They made a lot of changes; instead of spending $500 a week at the grocery store, they'd spend $150. They also stopped going to happy hours and clubs; instead, they would host friends at their place.
David says, "One of the things that John and I did early on is practice something we call NSE - 'Not So Expensive.' The idea there is to go out and find things you enjoy doing, but find them at a discounted cost."
It took them 2.5 years to pay down their debt - they beat their target of three years - and now they're both focused on building a financially secure future.
"Using debt as a way to finance your lifestyle -- you're really anchoring your future to the past," David says. Once you start putting your money toward the future, "you'll get rid of all that stress and you're not anchored to something that doesn't mean anything to you anymore."
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