I Maxed Out a $10K Credit Card When I Was 18 — And Spent My 20s Paying for It
October 19, 2017
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We all have regrets — money regrets, that is. But, like all mistakes, we wouldn't be who — or where — we are today without them. In our "Money Fails" series, real people share how they bounced back from financial slip-ups, and what they learned along the way.
Here, we chat with Jason Hillard, LearnVest’s office manager, about how he maxed out his very first credit card as a teen — and spent his 20s paying for it.
When did you get your first credit card?
When I was 18, I moved from Nashville to New York a month after graduating high school. My grandmother agreed to pay for a year of my schooling — which was very nice of her, and I’m very grateful — and deposited $15,000 in my account to help cover costs. She and other family members continued to send money over the next few months to help with school and New York City living costs.
Not long after, I got an application to open my first credit card. I’m not sure what happened, but I think the bank saw the money deposited into my account as income — but it wasn’t income, it was gifted money to help pay for college. (My *actual* income came from working in the school library for $8 an hour and as a stage manager for $10 an hour.)
So, when I got the card application, I thought, “Sure, why not?” They immediately approved me for a credit limit of $10,000. I got the card in the mail after a couple of weeks. So what did I do? I immediately went shopping.
What did you buy first?
Clothes! From Zara — not even high-end stuff. Then I just kept buying more things.
How did it feel having a credit card at such a high limit?
At first I was really nervous about it. I didn't want to get into debt because I knew eventually I’d have to pay all this off out of pocket. But then again, when I was 18, I had nothing in my mind telling me, “This kind of spending can hurt you in the long run.” Because it can. And it did.
After that summer, I moved out of the dorms and into an apartment in the Financial District. I was buying clothes, going out, paying for an expensive apartment. It was all adding up. Then the max hit — I spent all $10,000.
How long did it take you to hit the max limit?
Less than a year. In the beginning, I paid off most of my balance each month. Then I started making minimum payments. After a certain point, I just didn’t care anymore, and I missed payments. Then I'd have to work with my bank to try to negotiate a grace period. Then I’d pay it and everything would be good with my bank, so at least I was intelligent enough to recognize at the time to do that much.
Every time I’d charge something to my card, I thought, “It’s fine, I’ll deal with it later.” As soon as I made a minimum payment, I’d rack up the balance again.
After graduation, I became a personal assistant in the nightlife industry. I was making good money, but I was also surrounded by clients who would blow through money at the club.
I was staying at my boss’s apartment (it was part of a whole deal because I was working so much), which means I didn’t have to pay rent. Instead, I would spend thousands of dollars at the drop of a hat to keep up with the lifestyle around me. I had no concept of money. I thought, “What’s another $300 on my credit card?”
During that time, because I was bringing in so much, I was able to pay off what I spent. I also started to chip away at my balance. By the time I was around 21 or 22, I’d paid off $4,000 of my credit card debt, but I still had $6,000 to go.
I decided to leave the nightlife scene and take a job as a receptionist in a corporate office — making a quarter of what I was making before. At that point, I realized I was still in debt from this credit card I got when I was 18 years old.
What was it like transitioning jobs and taking such a big pay cut?
After a few months, I got super stressed. I was still spending like I was making the money I used to. All of a sudden, I realized: “How am I going to pay for rent now?”
Did you talk to anyone about your situation?
I didn’t tell my parents about this — they still don’t know all of it. I don’t think they even understand how much debt I had accumulated or how much money I was actually making. I thought I would stress them out with the kinds of insane things I did with my finances at the time.
None of my friends knew, either. I only told one friend because we used to talk about finances a lot, actually. Her dad is a financial planner, so after I told her about my debt, she introduced me to him. He offered me free advice, and I’m so grateful for it.
He created a financial plan for me and said, “You eat out too much, you buy clothes too much, you go out to bars too much.” That’s when it hit me that I had to stop. So I stopped going out so much to bars. I started trying to cook. He told me how much I had to save, and he told me to relax with the spending.
Did you do anything else to save money?
I slept on a friend’s couch in Hell’s Kitchen for six months. It really helped, even though it was awful. The apartment was so tiny, and I was sharing it with another human. There was no privacy whatsoever. I had a storage unit and put everything in there and just lived out of a suitcase. I had to go to the storage unit to change out my fall to winter clothes. But it was worth it, because I was able to speed up the payments.
I also didn’t go out out for a solid year in 2015. People who know me now would think that was crazy. But I would stay at home, or I would do free things in the city. If I did go out, I made excuses to have only one drink. So I was mostly eating at home and doing free stuff in the city. You can lose a lot of friends when you don’t have the money to socialize the way you used to.
When did you finally pay off your balance?
I finally paid it off last October, about a year ago.
How did it feel? Did you celebrate in any way?
I sat in my room and bawled my eyes out because it was such a release to get something that awful and all those mistakes off my shoulders. I still have the credit card, but it has a $0 balance now, and that’s just phenomenal. If I want to go on a trip or if something bad happened, I have a backup plan. I never really had a backup plan before.
Has this changed the way you use credit cards?
I have three credit cards now. I don’t even carry them around, though. Usually I leave them at home, and I don’t use credit in the same way. I’m never out at a bar or a restaurant and think, “Oh, I don’t want to pay for this right now. I’ll pay for it later.”
Instead, I use them to build points through travel. So when I rent a car, book a hotel or Airbnb, when I take trips — I put it on my credit card. But I pay it off right away. I only take trips and charge it to my card when I have the money to pay for it already, so I don’t have to worry about not paying the balance in full when it’s due.
What’s your advice to other people working to get out of credit card debt?
You can do it. It’s going to be hard. You’re going to have nights in your room and you’re going to think, “How did this happen?” You’re going to question yourself, but know it’s going to get better, and you’re going to pay it off, and you’ll be so happy. Keep going little by little — and if you can make extra payments, make extra payments. Above all, pay your bills on time. It’s going to be so worth it in the end.
And get a financial planner. It’s like having a doctor. If you go to a financial planner, whether you know them personally or not, tell it like it is. Be honest about your finances and what you don't know. If you don’t know anything, you don’t know anything. But they can help you.