$50,000 in debt at 23? Don't
let it happen to you
By Holly Adams Mitchell
September 20, 2006 | This summer I spent a long time
talking to the manager at the store I worked at. Mostly
because there isn't much to do in a shoe store for eight
hours a day, but also because she liked to tell people
about her personal life.
Every day it was some new problem -- I'm fat, I'm
pregnant, I'm $50,000 in debt.
"What?! You're kidding, right?"
She wasn't kidding. In fact, she itemized it for me.
Cars, hospital bills, credit card after credit card
after Kohl's credit card. Give or take a few hundred
dollars, Ashley was $50,000 in debt at the age of 23.
Granted, she had a baby with no health insurance and
owed thousands on two cars. But she also didn't own
a home and had the worst spending habits I've ever seen.
One day she came to work in tears because she had spent
$23 on a smoothie. The original price was $3 -- the
rest was an overage charge from her bank.
To make matters worse, she worked retail and couldn't
waste that 30 percent discount. She told me she owned
97 pairs of shoes when she hired me. I witnessed at
least five more purchases in my three months there.
She put them all on her credit card.
That was it for me. I immediately transferred a chunk
of money to my savings account. I was never one to spend
money I didn't have. At the age of 21, I still don't
have a credit card. Since I moved out of my parent's
house three years ago, I've gone without anything I
couldn't afford, meaning everything but tuition and
food. But I feel like one of my accomplishments is that
I have no debt.
I see it all around me. So many young people are "in
debt to their eyeballs," as my mom would say. It is
easy to see how they got there, too. Credit cards. They
don't know how to use them. They get sucked in by the
buy now, pay later scheme and don't realize they'll
be paying that $20 minimum payment for the next 20 years
because of the 20 percent interest rates credit cards
Here are a few tips to help you stay out of debt:
-- When you have extra money, put it in a savings
account for future use. Don't touch it unless it's an
emergency or for a down payment on a house to make those
payments lower. Or better yet, put a portion of every
paycheck into a savings account. If you have direct
deposit, ask if they can take 10 percent and put it
into your savings account. Then you never see it and
you are accumulating money without having to lift a
-- Use credit cards only when you have the money to
pay them off immediately -- and set that money aside
until the bill comes. Building credit is important,
but credit card debt is the worst kind of debt. With
interest rates around 20 percent, no one can afford
to pay interest on a credit card.
-- Pay your bills on time. Paying even one bill late
will show up on your credit score. The lower your credit
score, the more you'll pay later on when you want to
get a loan.
-- Start a budget. It's hard for most people to stick
to one, but if you know how much you can and cannot
spend on clothes, food, and entertainment, you will
be more likely to stop spending when you don't have
-- Use cash instead of credit cards. If you have a
real problem with credit cards, take your cards and
put them in a safe place -- not your wallet -- and only
use them for an emergency. Then use cash for everyday
-- Those who end up in debt should look at the different
kinds of debt they have -- student loans, credit cards,
etc. The interest rates will be higher on the credit
cards. Pay those with higher rates first and the minimum
payment on the rest. Then move on and make higher payments
on the others.
The idea here is to keep yourself in a place where
you are comfortable and don't have to constantly worry
about money, because it's always better to be in the