Why Debt Sucks (Part 4 of Many)

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Debt is always a ticking time bomb….

Sorry for the brief break in posts, folks.  I have been busy at work and dealing with some health challenges. My goal is to post 2-3 times per week, but I may not always meet that target.

When we last left off on my multi-post Why Debt Sucks saga, I was about to sign my life away via a payday loan that I set up thanks to a piece of semiprecious jewelry (A gift left over from one of my college boyfriends, who suffice to say did not have a big budget to spend on jewelry). I signed a bunch of paperwork and handed my ring over to Bubba, without any real concept of what I was signing. All I knew was I needed $500, pronto. Once I handed over the paperwork and my ring was in hock, I had five crisp $100 bills, which were more than enough to solve my temporary problem of getting back into my now-former apartment to retrieve my things, and look for a new living situation while I got my job situation more stable now that I was boyfriend-less.

I paid the lockout fee, retrieved my meager belongings (At this point, now that I was kicked out of my apartment, I owned next to zilch—-my clothes, a broken-yet-still-sleepable futon, 1 cooking pot, and 5 dishes). I used some of my newfound cash to load my pathetic amount of stuff into a cab (I had no car, of course, and this was way before Uber existed) and headed across town to crash with some friends for a few days (which turned into a few weeks).

These friends, a married couple, had known me since college and were more than generous when it came to helping me get back on my feet. (I’m still friends with them to this day, we have all known each other for 26 years now). Thanks to their generosity, I was able to get myself back into a semi-stable employment situation and a new apartment within about 6 weeks. I had a long-term temp job by day, and I waited tables by night. Between the two gigs, I had some pretty decent money coming in. But instead of wiping that old payday loan slate clean (I was paying $85 a week on it, which didn’t even cover the gargantuan interest, and just kept pushing the principal “forward”) I was instead using the cash from my newfound job to buy furniture, dishes, clothes, and other sundries to outfit my new studio apartment so its decor theme didn’t scream Depressing Broke Post-Breakup Girl With Dicey Employment Prospects quite so much. I was also paying on massive student loan debt at this point in time (I had gone to a very expensive grad school where I’d majored in humanities, without necessarily thinking through the fact that humanities graduates tend to be poorly paid in their 20s). I had also gotten the bright idea (snark) to buy a car using a subprime lender, paying yet another ridiculous rate of interest (13.4%) on an economy vehicle, so despite the fact I was probably pulling in $1000 a week after taxes between the two jobs, I was broke. Every dime that came in just flew back out the door to service debt.

And let’s get back to the little matter of that payday loan. After about 6 months of paying $85 a week on it (in person, at the pawnshop, with cash I earned from my night-job tips), I finally decided to demand a full accounting from Bubba on exactly how much debt I had left to pay off. It seemed to me that after 6 months of paying $85 a week on a $500 loan I would have paid it off about nine times over by now. Except I hadn’t.

Bubba looked some stuff up on his computer, printed something out, and then circled a number in red. “That’s how much you owe, sweetie, not including this week’s interest.”

The amount almost knocked me over. It was $3000.

Seriously. 3 grand. I had no idea how that possibly could have been right. I had only borrowed $500 and I had been paying $85 a week for literally months.

“How did this happen?” I demanded. “I didn’t borrow three grand!”

“Actually, you did,” Bubba said. “That’s the principal, plus the 925% APR, plus all the deferred payments you kept making week to week that added on to the principal, plus the interest, plus the interest on the interest. You agreed to these terms when you signed the original loan, ma’am.” Bubba gave me a smirk, as if to say, You must be really clueless to get yourself into this mess, Blondie.

Suffice to say I wanted to kill this guy. Or at least throttle him pretty hard. But I was (and am) not a violent person. So instead I just got mad at myself. “How do I get out from under this?” I asked.

“You pay the three grand, plus this week’s accrued interest, which is an additional $300, this week.”

$3300. It might as well have been a million.

I did not understand how any of this math worked. (Still don’t.) But suffice to say I decided then and there I was going to raise that money somehow so I could get this freaking monkey off my back. I had $350 in cash tips on me from my waitressing shifts that week, and I had another $1400 in my bank account until my next payday. In my infinite wisdom (read: stupidity) I had also managed to get myself a secured credit card at a gargantuan interest rate, so I surmised that I could float myself on that for a few days to try to pay this puppy down. I paid everything I had to Bubba (a total of $1750, which still wasn’t going to get my debt down to zero), then I asked the Big Question.

“How long do I have before another week’s worth of interest gets piled on?”

“Twenty-four hours,” Bubba replied. “You need to get me $1550 more dollars by tomorrow at 8 pm.”

Okay, so I needed to raise $1550 bucks, fast. How on earth was I going to do it?

I could sell plasma for a fast $50, but then I wouldn’t have the energy to work my 18-hour days for the next few days, which would have just put me further in the hole. So I did the next best thing.

I remembered when I read my Temporary Employee Handbook for the new day job gig I’d landed that I had the ability to request a salary advance. $1550 was approximately two weeks’ pay for me at the time. If I requested this amount, it would get deducted from my weekly paycheck (with interest, of course) in an amount I chose until the debt was paid off. (On the other hand, if I were to lose my temp gig and not land another one with the same placement agency within a week, that would throw a bit of a wrench into my repayment plans. But I wasn’t thinking that far ahead, of course).

“I’ll have the money for you by tomorrow night,” I promised Bubba. Tomorrow was Friday, my payday. I left a message for my temp-agency job recruiter requesting the salary advance, and I got a call the next day at my temp job that the advance would be included in my paycheck that day when I went to pick it up.

So now I had the payday-loan monkey off my back (yay). But now I was in debt to my employer.

See where this is going? Yeah, it doesn’t end well. But we’re almost to the end of my Why Debt Sucks story. Two more posts to go on this topic, and then you’ll learn how I finally learned to stay out of debt for good.

 

 

 

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