My Money Story: Victor – “Sometimes you end up falling into financial pit holes”

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My Money Story: Victor – “Sometimes you end up falling into financial pit holes”

In 2015, Credit Karma went to Austin 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.

If there's one thing Victor has learned from his experience with finances, it's to be patient.

When Victor, an IT recruiter, got married, both he and his wife were making decent money in their respective careers. They decided very quickly to buy a house to kick-start their lives together and show what financial success looked like to them.

The only problem was they didn't have much money saved for the down payment, so they had to get private mortgage insurance (a type of insurance many lenders require you to have if your down payment is less than 20 percent). This ended up being extremely expensive, as mortgage insurance typically costs between 0.5 percent and one percent of the entire loan amount every year.

"It would've only taken us six months to save what we needed to avoid the mortgage insurance," Victor says. He wishes that someone had been there to guide him through a big decision like this. "Someone could've coached me and said, 'Be patient. You don't have to show success right now. Just wait until it's time and you'll be able to enjoy the fruits of your labor.'"

Victor's mortgage experience wasn't the first costly financial lesson he's learned. When he was a high school senior, he applied for a credit card after being pre-approved for $500.

"I just thought it was free money," he says.

So when he got the card, he started to buy things he couldn't truly afford, not fully understanding that this money had to be paid back. And to make things worse, his credit card's interest rate was around 22.9 percent. Victor started making monthly repayments of $13, but quickly realized that it'd take a long time to pay back $500 this way.

The credit card went into default, which damaged his credit and affected him when he went to college: "I was unable to get a cellphone, and when I finally could, I had to put down $500 of my own money to get it."

Victor felt trapped in a downward spiral, but now he looks back at that $500 credit card bill as an important life experience. "I'm becoming more mature in the decisions I make," he says.

Victor and his wife now save for his kids' college funds, retirement, vacations and rainy days. Saving, he says, brings him a sense of satisfaction -- which is completely different to how he felt when he was spending on credit cards and racking up debt. "(Things we buy using our savings) are appreciated a lot more because we actually put some effort into saving for them."

He believes that in order for people to manage their personal finances and their credit well, they need to be educated early - preferably while they're still in high school. "If I'd had that exposure to (personal finance education) early, it would've been amazing."

About the Author:Korrena Bailie is Credit Karma's Managing Editor. She's been writing and editing personal finance content since 2012. When she's not scanning personal finance-related Google Alerts, she's climbing, traveling to countries where it rains all the time (ahem, Ireland) or talking to her cats as if they're people.

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INSPIRING!!!!!    Yes, mistakes were made, but lessons learned.

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We're so glad to hear you enjoyed Victor's story!

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