Have you ever done something that you weren’t proud of? Or been in such a bad place that you didn’t know how you were going to crawl your way out? I have.
My name is Tahnya Kristina. I am a certified financial planner™, and for a long time I kept a secret that almost cost me more than just the interest charges on my mounting debt.
When I was 25, I graduated from Concordia University in Montreal, Canada. I had a full-time job working as a financial advisor at a bank and within just four years I found myself over $50,000 in debt. I couldn’t talk about my debt with my co-workers and family because I was ashamed that—especially given my career choice—I couldn’t manage my money responsibly.
When you are working with money and giving financial advice to clients, it is expected that the financial advisor has a better-than-average financial situation. No one wants to take financial advice from someone who can’t even manage her own money—so I kept my debt a secret.
I became a financial planner because I was fascinated by money. I spent four years of university and two years of additional financial training learning how to advise people to manage their money and achieve their financial dreams; unfortunately I was too naive to take my own advice.
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How I Got Into So Much Debt, So Fast
Some people may say I accumulated so much debt in such a short period of time because I was young and didn’t know any better; but the truth is, I did know better. I had a university degree, and every single day I saw the damage that using credit irresponsibly can do to a person’s life, yet I still spent money uncontrollably.
I know you’re wondering why. I wish that I could say that my $50,000 of debt was well spent, but that wouldn’t be true. I started accumulating student loan debt while I was still in university; after I graduated and started working full time at the bank, I also started accumulating credit card debt for no other reason other than I wanted to go shopping. I thought that having a lot of credit made me credit worthy, and to a certain point it did, but it also added the temptation of wanting to spend money on anything and everything.
I knew that the balances on my credit cards were increasing, but I wasn’t worried. After all, I had a full-time job with a six-figure income. I knew I could afford to pay off my balances—I just chose not to. Every paycheck something more important took priority, and I ended up spending my debt repayment money on other items.
Accruing Bad Financial Habits
I ate out at restaurants too often, because it was a way to spend time with co-workers outside of the office. I shopped too much with friends because it was a social activity, and because as a financial planner, we were expected to look a certain way. I went on too many vacations just because I wanted to be a part of the group.
I bought new furniture for my downtown apartment because I liked sitting on my couch looking at my accomplishments. Then, in June 2007, I bought a brand-new Honda Civic. I didn’t actually need a car but I thought that a 27-year-old young professional should have one, so I went to the Honda dealership on my lunch hour and bought a new car. It may seem irresponsible (and it was) but when I wanted something, I had to have it.
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I was a recent graduate with a good job and a wallet full of credit cards to prove my independence, but, in the end, that freedom didn’t make me responsible, it almost ruined my life.
Realizing How Big of a Hole I’d Dug
After the market crash at the end of 2008, I was thankful to still have my stable job, but, needless to say, my income took a hit along with the market. My six-figure income quickly dropped by 30% because people stopped investing, and I stopped making commission.
One day, at 28 years old, I woke up and realized that it was the first of the month, rent was due and I didn’t have any money in my bank account because I’d spent my entire paycheck making the minimum monthly payments on all of my credit cards.
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As I sat down on my very expensive couch (that I couldn’t afford but bought anyway), I realized that I didn’t want to live like this anymore. I was so overwhelmed with emotion that I started crying. It was the only way to release my anger, sadness and disappointment in myself.
Still in tears, and fearing I’d be evicted by 5 p.m., I put on a suit and headed to work—I couldn’t exactly afford to take a sick day, I reasoned. There, I spent the entire day advising people how to plan their budgets, save money and manage their credit responsibly.
The irony of my reality gave me a headache like I’d never had before.
I knew that my debt was out of control. I was financially savvy enough to know that I was spending all of my money on minimum monthly payments, and it wasn’t helping pay down my debt. In most cases, the minimum payments were less than the interest charges, so my balances kept rising even though I didn’t have any more available credit.
Deciding to Make a Change
The day I actually sat down to calculate my debt I couldn’t believe how bad the situation actually was.
At 29 years old, I had $13,000 of student loan debt, $20,000 of credit card debt and $25,000 of debt with my car financing. I didn’t know what to do, so I cried (again). In fact, I sat in my apartment for an entire weekend crying and feeling bad for myself because I knew I couldn’t afford to pay off my debt.
It’s hard to explain how I got in this deep without even knowing it. In my defense, all I can say is that all the education in the world can’t combat the power of denial. In my case, it wasn’t until that moment, sitting on my couch in gale-force tears, that I realized I had a problem. Intellectually, I knew that I had credit cards; I knew that the balances were increasing, but I never actually accepted the fact that I had a spending problem.
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I realize now that this was probably because if I accepted my debt, it meant I’d have to start paying it off. Oh, the hypocrisy: I had no problem telling other people how to avoid this exact situation I found myself in, but I couldn’t do it for my own finances. Maybe being a planner made it worse: I didn’t want to accept the fact that I was one of those people who spent beyond their means. In order for me to get out of debt I had to make big changes, and now I knew it.
Embarking on a New Financial Life
The first thing I did was consult with a bankruptcy agency. After getting all the details about which assets I could keep and which debts would be included in the bankruptcy, I decided bankruptcy wasn’t for me.
First, it wouldn’t solve my financial problems because not all debts (like my student loans, or my auto loan) would be included. And if I was going to have the stigma of a bankruptcy follow me around for years to come, I wanted it to wipe out all of my debt. After 30 minutes of debt counseling from the surprisingly very likable bankruptcy agent, I made another decision: I got myself into debt, and I was going to get myself out of it because that was the responsible thing to do.
That’s when I started making changes in my life. With each change, my heart broke a little bit more because the lifestyle I’d once enjoyed was crumbling before my eyes—and I had no one to blame but myself.
Five days before it was going to be repossessed, I sold my car privately, and even made a little ($200) profit which helped me buy groceries that week and make an extra payment on one of my credit cards.
Next, I found a second job working in retail sales at a women’s clothing store. That gave me extra money to pay off my debt and a discount so I could still afford work clothes. I worked part-time, evenings and weekends, and my entire $400 biweekly paycheck went toward paying off debt.
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I’d never had a budget before because I’d always just “had money” (or so I thought.) That changed, too. I cut my expenses by moving to a cheaper apartment and allocated the extra $200 of monthly savings to my debt repayment. I cancelled my home phone and opted for a very limited cell phone plan; with two jobs I didn’t have a lot of time to talk on the phone.
Finally, I changed my eating habits and only let myself eat out once a week—for lunch. My reasoning: Lunch breaks are timed, so there’s no risk of spending excessively on drinks as I sat and chatted with friends. I only bought clothes from the store where I worked so that I could buy them with my 50% employee discount.
Why I Don’t Regret Being in Debt
Now, five years later, I am 32 years old and, by the end of this year, I should be debt-free. I am thankful that I got into debt, and I am proud that I got out of it because it is a huge accomplishment.
I no longer think about my debt as a defeat, but trust me when I say that I am taking precautions so I never get into that situation again.
Today, other than the basic necessities of food, clothing and cleaning supplies, I rarely spend money. My old motto used to be, “It’s only money, so spend it”; my new motto is, “If I don’t need it to keep clean, stay warm or be full, then I don’t need it.” I think twice before I spend any money, and before I purchase anything I weigh the cost versus the value.
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There is one vestige of my old life I held onto: My couch. After all, when you factor in the cost, the quality and the number of years I will own it, it actually turned out to be one of the only good investments I made.
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