How I ruined my credit score, and how it didn’t ruin my life

This article is part of the “reader stories” feature at Get Rich Slowly. Some stories contain general advice; others are examples of how a GRS reader achieved financial success — or failure. These stories feature folks from all levels of financial maturity and with all sorts of incomes.

Like J.D., I once had a big problem with debt. Unlike J.D., I didn’t dig myself out from under that problem gracefully.

About eight years ago, I was a college student, living in an apartment near campus, and working full time while going to school. I felt like I was on top of the world. Here I was, seeing all my friends making $6 or $8 an hour, while I was making about $17. That seemed like a lot of money. It was about $35,000 a year — not just a college student’s salary, but a real salary. I felt like I deserved to be living it up a bit, especially considering all the work I was doing with a full-time job and a full time class load.

I went overboard. I spent well beyond the $35,000/year I was making (it wasn’t as much money as it felt like). I bought a Mustang, and modified it into an amateur race car. I had the latest laptop and a desktop computer with a flat screen display (in 2001). My $35k/year salary was enough to live on, but it wasn’t enough to support spending $1500 on a laptop computer and on a desktop computer and on high-performance cylinder heads, but that’s what I did.

I bought all of them, and more.

This kept up for a year or two. I kept justifying these purchases to myself, and my credit card balances slowly rose along with my required minimum payments. A bout of bad luck exacerbated the problem. I was mugged outside my apartment, and having no medical insurance, ran up an emergency room bill. My race car was stolen, and being 21 and owning a race car, I couldn’t afford comprehensive car insurance, I had liability only. I bought another car to replace it, again with borrowed money.

Things fall apart

Eventually, I realized I was in over my head. I was gasping for air. I couldn’t make my credit card payments and also pay my rent and buy groceries. I was driven to the edge, and I gave up. I stopped paying all my credit card bills, and they went into collections. I voluntarily surrendered my car to be repossessed. I figured if I was going to ruin my credit score, I might as well go all out — I even hired a bankruptcy attorney. She managed to stop the incessant flood of phone calls from creditors, but I found I couldn’t afford even to pay for the bankruptcy proceedings, and so that process stopped shortly thereafter.

At this point, I owed approximately $30,000 on about four different credit cards, the medical bill, and the car loan, all of these in collections. My credit had been destroyed, but my creditors had been silenced by the bankruptcy attorney. I decided to get my life in order and worry about paying back the debts I owed later. It was easy to justify — I could barely put food on the table and the credit card company was still bringing in billions every year. They didn’t need an extra few thousand dollars as desperately as I did. So I let my debts ride, and worked on running my life in a sustainable way.

Turning things around

The first thing I did was give up credit cards entirely.

I decided to only spend money I actually had, and so my purchases of toys slowed dramatically. My extravagances in life dropped to going out to eat with my roommate a couple times a week, and not at particularly fancy places. I got into bicycling as a hobby, on a used, mid-range road bike — not a brand new, high-end model like I would have bought before. And there I sat, content with the computer I already had, my modest bicycle, and the occasional trip out for dinner. I was living quite comfortably on my salary with my new outlook on life. For the first time in years, I felt comfortable with myself. I actually managed to save a few dollars from paycheck to paycheck instead of spending them!

I did decide that I needed a car, though. I hadn’t enough money to pay cash for one, and I doubted anyone would give me a loan, so still being young and in school, I asked my parents to help. This time though, I was much more conservative.

I borrowed about $5,000 from my parents and created a definite plan for paying them back. I bought a nine-year-old but well-maintained Honda Accord, and I stuck to the payments religiously. This time if I were to fall behind, not only would I give up my newfound peace I’d made with myself financially, but I’d be letting my parents down instead of faceless mega-corporations.

No credit needed

Shortly thereafter, I finished school, and took a software engineering job in San Francisco. Rents were higher in the city, but my salary doubled. My brother needed a car, and I worked out a deal with my parents to give him mine, along with the rest of the payments on the loan. I wanted to get a brand new one.

I went down to the car dealership with my pay stubs from my new job, and my ruined credit score, and a pre-approval I’d gotten online for a loan of up to $26,000. I was determined to make something work. As it turned out, this was easier than I’d anticipated. Car dealerships will do anything to sell cars, and that includes selling cars to people with horrible credit and a repossessed car on their credit report. I bought this car with no money down, which in retrospect, is the stupidest financial decision I’ve made since I began my financial recovery.

Still, it wasn’t a horrible decision — I now made a salary that could justify a car like this. Sure, I got a crappy 12% interest rate on the loan, but I eventually refinanced the loan to 10%, and a shorter term, and then I paid the loan off early, about two-and-a-half years after I first bought the car. When I called the bank to pay off the first loan (when I refinanced), they were practically begging me to take a credit card from them, seeing as I’d overpaid my car loan every single month, on time, for the life of the loan. But still, I wouldn’t break my ‘no credit cards’ rule, and I refused.

Renting an apartment was another thing I was scared to do with bad credit, but it turned out easier than I thought, as well. I got my first new apartment with my ruined credit when I moved to San Francisco. I decided to share a place with a friend of a friend. We found a two-bedroom place listed on Craigslist, and went to see it. It was a four unit building, quite common in San Francisco, owned by a little old Chinese lady. She didn’t care to even run a credit check. Two well-dressed young men showed up, with pay stubs indicating an above-average combined annual salary, and job titles of ‘Software Engineer’ and ‘Accountant’. She was more than happy to rent the place to us for $1800/month.

I continued my life living the way I had since I’d given up on my debt a few years ago, but now on a much larger post-college salary. I bought few toys, aside from the car and some furniture. I’d go out to eat with friends sometimes, or I’d go out for drinks occasionally with my new coworkers. I actually found money piling up in my checking account because I was making it faster than I even wanted to spend it. I had nothing I needed to buy.

After a year, my roommate took a promotion that had him moving from San Francisco to Denver. I decided that I wanted to get my own place, but $1800/month was too much for me to spend by myself. The little old lady who’d been our landlord actually asked if we’d reconsider staying, and if I could find another roommate, as we’d been such good tenants, but I told her I had to leave.

I was questioning my ability to get lucky with finding an apartment a second time, but figured I’d done it before, and I could do it again. I looked at one place I like, and decided to take it, but was turned down by the rental agency due to my bad credit. I found another place a few blocks away that actually ended up being nicer — It was an old Victorian house divided into two units, one upstairs and one downstairs. The family that owned the place lived upstairs and rented out the downstairs.

Wary because of my bad credit and previous rejection, I wrote down my story, and gave the owners my bank statement showing the money I’d accumulated in the last year I’d spent living below my means, and the phone number of the landlord that’d asked me to stay in San Francisco. In light of this information, they rented to me regardless of my credit score, and they too ended up extremely happy with me as a renter.

The road to recovery

Several years after I’d given up on my credit card bills, I was finally contacted again by one of my creditors (or really, the collection agency to which they’d sold my debt). They demanded, in a rude and threatening manner, payment in full of an outstanding debt over $10,000.

My girlfriend (now my wife), who worked at a law firm, asked a co-worker of hers to help me out. He was an attorney who had previously worked in this specific area, representing clients being sued by creditors, and had no sympathy for a threatening collection agency. With a single phone call on my behalf, he had the collection agency offering a settlement of about half their initial demand. I paid it in full from the surplus I’d been accumulating.

Slowly, over the course of several years, my other creditors would contact me, and we’d agree on a settlement like this. Eventually, the statute of limitations for them to collect on the debt through legal channels expired. After that, all I needed to mention to creditors was that I knew it was too late for anyone to sue me, and I’d have a reduced settlement offer.

Now, at the beginning of 2010, it’s been nearly seven years since this whole mess started, and these old marks are due to start dropping from my credit report soon. Surprisingly, I’ve found in the intervening time that I haven’t been impacted much at all by my poor credit — certainly not as much as you would have thought, given the emphasis the financial media puts on credit score.

  • I paid maybe 5% more than market value for the car I financed, not a huge deal.
  • I was turned down for one apartment rental.

I’ve since rented one other place, where I live now, in a manner similar to the second — it’s a privately-owned little house with landlords that live next door.

I told them my story, showed them my bank statements and pay stubs, and they were happy to rent to me, and I love it here. Aside from the lousy car interest rate and a single apartment rejection, I haven’t even noticed my poor credit score. Employers haven’t cared. Cell phone companies haven’t cared. The electric company hasn’t cared. For the most part, nobody but myself has even looked at my credit score for the past six years.

While all this has been happening, my life otherwise has been going fantastically. My career has progressed well, I make roughly four times what I did when the story started. I got married. I moved back to my hometown, which I love. I’ve been traveling a bit, to five other countries and various places in the US. My life is going as well as I could hope.

Strangely enough, I’m not sure that any of this would have happened if I hadn’t given up on those debts years ago. That began a change in lifestyle — a focus on experiences instead of things, on making do with what you have instead of needing the latest and greatest. Those lessons have shaped my life since then, and I don’t know if I would have learned them as well without going through that experience.

Final words

I was originally hesitant about sharing this story. I was afraid of being judged for the method I used to pay off my debts. I’m not proud about having done this, but at the same time, I don’t feel bad about it.

These credit card companies were willing to do everything in their power to make a profit off me. They had teams of actuaries calculating the exact interest rates and credit limits that would maximize profits from their customers, and they had the legal system at their disposal if they thought it would have been beneficial. I used the same tactics. I was never sued and in the end, I came to mutual agreements with my creditors that satisfied both parties.

Was it an ideal solution for either party? No, but once I was in in over my head, there wasn’t a realistic ‘ideal solution’. The situation was eventually salvaged, and now, years down the line, it’s water under the bridge.

This article was written by Tyler K. Tyler is an active commenter at GRS and is never afraid to share his opinion!

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There are 160 comments to "How I ruined my credit score, and how it didn’t ruin my life".

  1. DreamChaser57 says 14 March 2010 at 04:47

    Good Morning, GRS Universe! Well-written post, I found myself anxiously hitting the “down” arrow to get to the end. Tyler illustrated an important point – you do not have to have a glowing fantastic credit score to live a satisfying life. The sky is not going to fall. You won’t be forced to live under a bridge like a troll and wave to the passersby in their cars living a normal life. Even if you get an uncompetitive rate on something like a car loan, you can still refinance to get more favorable terms and/or aggressively overpay to rid yourself of the loan. Lives should not be planned around a FICO score. There are a lot of things I love about Suze Orman, but she is too credit score oriented in my view. I think it’s a mistake to push youngsters into getting credit prematurely to “build” their credit. I like the ideas of other financial gurus, living with no credit cards, having enough cash and other assets to be self-insured – credit does not always have to be a middle class household’s lifeline or emergency fund.
    There is clearly life after repossession, bankruptcy, or just a tough time with bills. I personally don’t have a problem with the way you settled your accounts. Businesses leverage their bargaining positions all the time. I do think that judgment invites judgment – and Tyler’s commentary on several different posts is often perceived as excessively harsh or brutally honest-but always interesting. Anyway, congrats to freeing yourself from the shackles of consumer debt!

  2. Tom says 14 March 2010 at 05:20

    Bravo!
    A positive net worth, zero debt and a positive cash flow are the first steps toward financial independence. Get a good investment program going and you should do OK.
    I do think you should feel a little guilty about how you liquidated your debt, though.
    The credit card companies are just bean counters. They pass losses from customers like you onto other consumers. Ultimately you haven’t hurt the credit card companies but your friends and neighbors.
    I’m not suggesting that you go back and settle your remaining debt, that’s water under the bridge. I am just asking that you recognize your predatory borrowing is as much to blame as their predatory lending for the general destruction of wealth that resulted.
    Thank you for sharing your story, and get that investment program going.

  3. Deborah Johnson says 14 March 2010 at 05:21

    Tyler,

    Thank you for sharing your story. I find it very inspiring, and your honesty is appreciated.

  4. Andy Hough says 14 March 2010 at 06:53

    I declared personal bankruptcy in 1996 and it didn’t have much effect on my life either. It was a stupid thing to do but that is the past. I still have credit cards but never carry a balance. I have no doubts about being able to use credit responsibly now.

    Also, I love your rental house.

  5. Aaron Davidson says 14 March 2010 at 07:04

    Inspiring story. I think that a lot of people have been there and are unsure what to do in regards to turning around their life. Way to go.

  6. Sam says 14 March 2010 at 07:10

    I think this article demonstrates that a bad credit score doesn’t necessarily mean you can’t get a loan or buy a car, etc.

    There is nothing wrong with a 12% loan for a new car when you are $30k in debt (wait a minute, what, this is crazy). How about there is nothing wrong wit ha 12% loan if you are going to pay it off early.

    I recognize that the credit cards, and other creditors, will settle for much less .50 on the dollar or less once you default or go into bamkrutcy, but I’m troubled by this system since it raises the costs for borrowing for all of us. Especially in a situation where the person has the means to pay off the debt and simply chooses not to or uses that money for new cars, travel, etc.

    It sounds like the OP eventually learned his lesson and changed his ways, but this is the type of story is similar as to what was trotted out when the bankruptcy laws were changed to make it harder for people to discharge debts (which ignored the fact that most people end up in bankruptcy due to medical bills).

  7. Erik says 14 March 2010 at 07:25

    I was slightly less inspired by your story. Just because they are “faceless mega corporations” doesn’t mean you shouldn’t pay them back. By getting a credit card, you assume responsibility. Now you’re bragging about how easy it was and how little consequence you faced blowing those responsibilities off. I think it’s unfortunate that people think the way you do. That credit card debt is not worth paying off. The statute of limitations is not something you should be proud to use as a defense. I’m sorry if I don’t think that you cheating credit card companies was “inspiring”.

  8. myfinancialobjectives says 14 March 2010 at 07:54

    Wow thank you for telling your story. Unfortunetly I think that a lot of young people are in a similar mindset at that age. Personally I would have gone with a cheaper vehicle, but I’m used to compact cheap cars, not mustang quality race cars(which I bet was amazing!)

  9. Jan says 14 March 2010 at 08:08

    Your article was well written. I think one of the keys here is that you were young and could write it off as a learning experience. I will share it with my nephew who is going through a similar thing. I would not show it to my 40 year old niece with a family. We are, instead, helping her out of her hole with Dave Ramsey. One can “afford” to make this type of mistake (bad ideas in college-future career with much more money) the other cannot (bad ideas in college while married/future career with not much money).
    I understand your idea with the creditor (which are ultimately the people who are reading this blog- since “we” are the bank who loaned you the money). One idea my father had for those he counseled through bankruptcy is the “debt to society” issue. He asked people who went bankrupt to go ahead and choose a charity and put in some hours….Just a thought.

  10. Nicole says 14 March 2010 at 08:12

    The ideal solution is to be a highly educated highly paid professional. Credit doesn’t hurt as much then. The only time I’ve ever had a credit check run on me was to get credit cards and to buy/refinance our house. Heck, I know someone with a McArthur genius grant who destroyed his credit just by forgetting to pay the bills (the stereotypical absent-minded genius)… hasn’t hurt his life much either (nor that of his equally absent-minded Phd roommate).

    It reminds me of how I could get away with telling teachers they were uninspiring in front of the entire class but a lower income kid who wasn’t “academically talented” got suspended for 3 days for writing “For a good time call Mr. Hammerberg, 555-NUTS” on a sheet of paper.

    In DH’s family one of his cousins has horrible credit. That means: They have a 10% mortgage on their house that they cannot refinance ever. They have an insane interest rate on their cars. They don’t have credit cards. And worst of all, when she got laid off, she couldn’t even get even a minimum wage job anywhere in town because they all run credit checks now. Which meant she couldn’t keep payments on her car, which destroyed the credit they were rebuilding. Bad credit when you do not have education beyond high school can destroy your life. Some of that is bad choices they continue to make (they shouldn’t have gotten such an expensive second car in this economy), but even if they hadn’t gotten that car she still would be unable to get a job.

  11. Rachel211 says 14 March 2010 at 08:18

    I think that a lot of people use the “but it will lower my credit score!” as a way to justify keeping any open cards they own active.

    Unless you are planning to buy a house in the next year, and if your credit is already all jacked-up anyhow, getting rid of your cards to keep yourself from using them anymore is definitely the way to go.

    BUT – I do think that just walking away from your debt and waiting for the statute of limitations to pass wouldn’t work for everyone. Plus, isn’t just walking away from all that illegal?

  12. Ken Siew says 14 March 2010 at 08:23

    Bad things happen, it’s definitely a great learning experience for you and for all of us reading. As much as everyone is telling you to have excellent credit score and that you will have a terrible life if your score is ruined, this post certainly shows that there’s always a way out. The light at the end of the tunnel won’t be always out.

    Do you want to get your score ruined? No of course. But if you did, like Tyler, it’s not the end of the day. Tyler you seem to be doing relatively well right now, congratulations man!

    In fact, I think it could be a blessing in disguise because it happened back in college times, when you were still young. It definitely gave you more time to recover, and people are also generally forgiving of young people who managed to turn over a new leaf.

    Full speed ahead!

  13. reinkefj says 14 March 2010 at 08:26

    There but for the Grace of God … …

    I too did many stupid stupid things on credit and credit cards.

    I read the story. Twice.

    The only observation / criticism is that the author did “steal” from the credit card companies. Some one had to “pay” for that.

    I’d like to believe I’d have made good if I was in that position.

    Karma?

  14. Karen says 14 March 2010 at 08:29

    I work for a debt settlement company, and I see people’s credit reports all the time. I’m always amazed at how much “old debt” they can be carrying around and how few of these creditors actually take anyone to court. I guess it must not be cost effective to do that, or they would. Still, you always run the risk that someone will get a judgement against you and possibly garnish your wages (it does happen), but it seems more likely that it won’t. As for people not paying their debts, while it is easy to argue that everyone should be responsible and pay what they owe, I can’t judge people for doing what they think is best for themselves. It is also easy to argue that we pay more for goods and services because some people shoplift, but that’s just the way the world works. Sometimes I get frustrated that my husband and I are paying all our obligations while some simply walk away from them, but we could choose the same path if we wanted to. Still, I admire the writer for stating what I have always known, that it is possible to live your life with a less than stellar credit score, except for when you get ready to buy a house. I lived credit free for many years after my bankruptcy, but we were only able to buy a home because of my husband’s good credit.

  15. cherie says 14 March 2010 at 08:30

    All I can say Tyler is good for you.

    I’m glad things worked out as well as they did for you – we all make mistakes when we’re young and even when we’re older – thank you for sharing your story.

  16. kath says 14 March 2010 at 08:34

    Thanks for sharing your story.

    What bothers me about stories where people accumulate debt and then don’t pay it back is that someone somewhere paid for it somehow… and it trickles down to bite other consumers like me who live within our means and don’t expect others to indirectly pick up our tab when we overextend ourselves. Do we really think that debtors settling for pennies on the dollar with a big corp doesn’t impact all the rest of us? The big corp is not going to just absorb the debt, they are going to spread it around, and that impacts the burden on all of us.

    Getting out of debt is inspiring… but doing it in a way that leaves the debt mess for others to clean up is not.

    • DigBickRunner says 18 November 2014 at 14:35

      Instead of demanding that the consumer change his behavior, it would be more useful to demand that the company change it’s. These companies work of models that are predatory. They set the rules to the game and they make a killing off of these rules. It’s not on another consumer to concern himself with how much a corporation is going to charge you for goods and services. It’s on the corporation to not offer a young kid a line of credit in the first place. It’s pretty ridiculous to think that Tyler K has affected you one iota. “Honoring your obligations” with a bank is akin to honoring your obligations with the Devil. And for this reason, I don’t borrow money Period. And furthermore, I absolve Tyler K of his sins against evil.

  17. Autumn says 14 March 2010 at 08:43

    This was an excellent post-I hate posts where someone does everything perfectly blah blah blah. I have made a lot of mistakes and it’s refreshing to know others have-and how they fixed them!

  18. Mike says 14 March 2010 at 08:45

    I love this post. Agree with Autumn (#17) that it’s nice to see someone make personal finance mistakes and recover from them.

    Keep up the good work.

  19. sethanie says 14 March 2010 at 09:00

    I would think it’s not cost effective for creditors to take someone to court, because if you just don’t have the money, you don’t have the money. A court order to pay it doesn’t change anything if all you have is $50 left to your name.

    This may have not been pretty, but the poster did not continue to make the same old mistakes. That is the biggest personal victory.

  20. Chett says 14 March 2010 at 09:07

    Great writing Tyler.

    I’m not sure about choosing not to pay off debt that you clearly had money to pay off. It seems as this old debt laid there your income was increasing tremendously. It seems your decision was more about “sticking it to the man,” rather than an inability to pay for your outstanding debt. Oh well they probably milked two weeks worth of income from someone on social security so I guess it all equals out.

    Regarding “passing on the cost,” or “spreading out the expenses:” Do you really believe credit card companies would be conservative in their interest rates and lending practices if everyone paid off their debt? The only reason credit card companies have as much restraint as they do (which isn’t saying much) is because of the government. Once the government loosened up restrictions to the credit card industry in the 1970’s and again in the 80’s the credit card companies had a hay day with interest rates and fees. I don’t think they chose to be greedy bastards because we pushed them to it.

  21. Patti says 14 March 2010 at 09:08

    Thank you for the post. I had to make a painful decision to save my house or pay on 2 credit cards. The company I worked for was 8 mo behind in paying me my earned commissions. I tried to negotiate with the credit card companies and they were in a non-negotiable mode. I had no choice but to go into default. Eventually the debt was sold and resold with each collection agency being just as nasty and unscrupulous as the last. They are in the business of making money but telling me that a warrant for my arrest was in route is a bit over the top.

    I’ve written to my Congressman and Senators about each collection agency’s ability to change the account # and ping my credit report making it look like I had 5 or 6 bad debts when in fact it was 2. I was able to get most removed but it took letter after letter to the credit bureaus and lots of time.

    Eventually like the poster I was able to save enough to begin negotiations to settle the accounts. Not for the faint of heart as they want you to believe they are attorney’s acting on behalf of a “client” so they try to use legal type tactics. Don’t buy into it. If they ask to verify where you work, address etc. don’t. They don’t need it. They don’t need to know where you are getting the money as they claim. They only need to know you have some and are willing to negotiate. If they don’t negotiate to the level you can, don’t agree to payments. Just tell them you’ll save more and call back. If they do negotiate make sure you get a letter right then stating the terms and when it will be removed from your credit report. This is a must.

    Unlike the poster, I found the credit score DID affect me. Most employers are running them now for jobs. I had to write 2 letters of explanation for my job. Don’t try and hide, be up front and disclose from the beginning.

    The cost of everything is higher but this experience has taught me that the credit score game is just that a game. I believe the rules are written by the credit card companies and they change depending on how smart we consumers get to the rules. (Not long ago having too many open accounts hurt the score. Consumers like me started closing accounts and the companies saw the trend so the rules changed; now not having several open accounts hurts your score.)

    I had 47 accounts in good standing on my credit report but those 2 (less than $8,000)did hurt me. It was embarassing and it meant that for a few years I had to pay cash for everthing. This limits even short getaways, emergencies, etc.

    I’ve recovered and it didn’t take me long to see light at the end of the tunnel but it did have a negative impact on the business side of things and my self esteem. If you are sinking in debt sit down and look honestly at your outflow. Honestly.

    I got myself onto a wealth building system that will work if there is only $50 a month of discretionary income. Best move I ever made. I’ve learned much including yes, you can recover. My goal now is to be completely debt free and the system I use has me on track to have my mortgage and student loans paid in 1/3 of the time.

  22. Robin L. says 14 March 2010 at 09:11

    Very interesting. I agree with Mike, Autumn and others who think it is good to read about other people not doing everything perfectly. I was in my 40’s before I woke up to being financially responsible. I may not have much time left and I am very happy that I don’t live it in fear of creditor phone calls or the fear of something breaking that I can’t afford to replace. There may not be trips to exotic places in my future but I won’t have to live in fear either.

  23. Superbad Advice says 14 March 2010 at 09:12

    Awesome story. Thanks for sharing it – that took guts.

    I think a lot of people feel entitled because of all the garbage TV shows that promote consumerism all the time. The media machine makes people aspire for more stuff, more toys and so on. Then you have the goofs who will show you how to make tons of money by flipping houses. Then a system that allows predatory financial sales practices.

    Life was simpler before TV and access to information, oddly enough.

  24. Adam says 14 March 2010 at 09:15

    Sorry, I’m not sure I like the moral of this story at all. I’m glad you settled a few of the bills you ran up, but you should have paid them all in full. Stealing is wrong, even from a faceless credit card company.

  25. Laura T says 14 March 2010 at 09:24

    Tyler,

    I know that you said that employers didn’t care about your bad credit, but this might have been because of your profession..Software Engineer. Your former roommate the Accountant or any other person who handles money (from a cashier to a financial mgr)might have had more trouble because of a poor credit score as they handle money. It also can create an issue with getting security clearances.

    That said, my husband has NO CREDIT SCORE. He got into some debt problems about 15 years ago including a really stupid foreclosure and swore off credit cards. Since then, he pays cash for everything including his used vehicles. The next time he tries to get a job without personal contacts, I told him to write an explanation of why he doesn’t have a credit score on the paper where he signs a release for them to check it.

    Laura

  26. KK says 14 March 2010 at 09:27

    I do not know what to think of this story. I have very mixed emotions. On one hand, it seems that it is very logical – shouldn’t we all be allowed to have one youthful mistake and move on? On the other hand, I look at my own life and feel like I cannot agree with these actions.

    My story in a nutshell is that I am 41 years old and am still paying off debt which in one way or another has trickled down from the first time I got into debt during college 20 years ago. I graduated owing over $6K in credit card bills plus about $20k in student loans (which was a lot in 1990 and we were in a recession with very few entry level jobs available – my friends and I worked at places like The Gap – remember “Reality Bites”…). Creditors called everyday and I felt desperate. I spent years paying off the debt and then saving a small amount of money but was still not prepared for emergencies, unexpected expenses, or life events (graduate school, wedding, uncovered medical expenses). So guess what I did – I used credit – then paid it off – but never was able to save up enough of a financial emergency cushion. So, I always went back to credit. I will be out of debt finally by this summer and will also have enough saved to FINALLY end this cycle.

    Except for the 2 year period right out of college, I have always paid my bills on time even when I was in way over my head (even if that meant 70 hour weeks). I never once considered bankruptcy because it felt like stealing. I know that lenders are predatory with policies akin to loan sharks, but I used the credit . No one put a gun to my head. Paying my debts has always seemed like the right thing to do, but when I hear of stories like Tyler’s I feel like an idiot. I feel like I would have been so much better off financially by now and the credit card companies probably would not have even been impacted.

    Any thoughts?

  27. schoash says 14 March 2010 at 09:31

    The picture of the house was reused from another post…

  28. Suzy says 14 March 2010 at 09:32

    So the moral of the story is to make sure you make enough money to not have to rely on your credit score when you finance fancy foreign cars, and blow off your debts until the statutes of limitation pass? I don’t think I’d be patting myself on the back. In fact, we’ve done the former, financed a new car with bad credit, based only on my husband’s impressive income and our fancy Ivy League education. I’m not proud of it at all, that was a stupid decision and we took advantage of a biased system that favors the elite. We do at least pay off all our debts in full, though.

  29. Meredith says 14 March 2010 at 09:40

    Using a credit card and not paying the full amount back is still stealing from the credit card company. Justify it however you want, but it is what it is.

  30. Ed says 14 March 2010 at 09:43

    For those who are criticizing Tyler for “ripping off” the credit card companies; banks generally “charge-off” (write off) credit card debt if “minimum” payments are not received for six months. At that point, a collection agency buys the debt for about 10 cents on the dollar.

    By the time Tyler was in a position to pay the debts, he was paying collection companies, not the original creditors. If a collection company settles for 50% of the debt, they are still making 4 times their investment. So, the collection company is hardly being ripped off.

    Banks that issue credit cards figure charge-offs into their business calculus; and credit cards have been very profitable for those banks.

  31. Lefty33 says 14 March 2010 at 09:44

    “The ideal solution is to be a highly educated highly paid professional. Credit doesn’t hurt as much then.”

    Exactly.

    If you have money or are making a good buck then you can live your life with a bad credit score because you can afford to make up the difference that you indeed will pay.

    With a bad score:

    1. A mortgage is out of the equation. Or the interest rate will be 3-4% higher than what you could get.

    2. You will pay at least 5-15% more for auto insurance/home insurance.

    3. As already stated by the OP auto loans at 10%+, as opposed to 5-6%.

    4. When a future employer runs your background/credit you had better be hopeful that they are understanding. In the current job market most employers will use any reason under the sun to disqualify candidates.

    It all adds up.

    “I paid maybe 5% more than market value for the car I financed, not a huge deal.”

    It’s not a huge deal because of your income.
    If you had spent the same way and were making the salary of a trash collector in Cleveland that 5% would matter to you a hell of a lot more.

    While I always like your posts Tyler, this one smacks of a bit of economic elitism.

  32. JJ says 14 March 2010 at 09:45

    I have to support KK from comment #26. While it is nice that Tyler is now paying his obligations and that he was able to recover from his poor choices, it remains true that he took out loans which he promised to repay… And then he did not honor his promises because it got too hard. That is shameful.

  33. Harrken says 14 March 2010 at 09:45

    I have to tell you that you are the kind of person that makes me worry about the future. If everyone decides that they are not accountable for their debt and other mistakes the world will be a much worse place. Just look at Wall Street, the banks, and the government now. Their attitude is “screw the other guy” and by your actions you are buying into that attitude. I think it is great that you are out of debt and doing well, but morally you are as corrupt as any of the others who shirk their responsibility.

  34. E West says 14 March 2010 at 09:50

    In many ways this story makes me resentful. Avoiding debt by letting it expire, having a $17 an hour job I college… You never mention student loans so I assume your college was paid for another way. You were very lucky multiple times. You had friends to help you manage creditors, parents to give an extra loan, and landlords that didn’t run credit checks. Your story is more about relying on a support network than improving your credit on your own. Most people lack he resources you had and thus would have far harder time surviving a horrible credit score. Even still, thank you for sharing. Interesting story.

  35. MossySF says 14 March 2010 at 09:51

    History has experimented with economies without bankruptcy — and where people were put in prison for not paying their debts. It simply works out better for society where those who don’t have any serious hope of repaying can restart with a blank page. Otherwise, you pretty much end up with people who simply refuse to be productive because they know every dollar they earn will be taken to pay creditors. So not only do you have uncollectible debts floating around forever but you have more people depending on government welfare. (Ie, person who has a court order to garnish wages either decide to work under the table or just stop working altogether.)

  36. Karen says 14 March 2010 at 10:07

    I’m not sure the poster realizes how much he was helped by being “clean cut”, apparently not african-american or hispanic, and by having wealthy parents willing to help.

    Try being a single black woman with children and getting a no-credit check apartment rental from a Chinese landlord with a dispossessed car in your past just by fast talking and charm! No way.

    He also was helped by being very knowledgable and savvy about working the system.

    This odd because he’s naive/stupid enough to get into debt in the first place, but then he knows enough to realize that all he has to do is hire a lawyer to get the creditors off his back? I’m guessing his wealthy parents gave him advice, as well as probably his college degree.

    I don’t think the credit card reform act was actually intended to help people like him. *sigh*

  37. Steven says 14 March 2010 at 10:20

    It’s great making the money. People see you in a different light. Look at what showing your bank account balance did.

    But seriously, the credit score is SUPPOSE to be a measure of how likely/able you are to repay your debt. Landlords and banking institutions would like to see a higher score to minimize risk. With the landlords situation, they probably saw a youthful mistake and you’ve changed your ways. A ~5 figure bank account certainly peaks their interest, as they know you have money, and aren’t as likely to default on payments.

    Now, on the topic of not repaying the loans for so long, it’s not illegal. Unethical or immoral? Maybe. But get this, when business run out of money, they just declare bankruptcy. They just close down, not caring whose lives they destroy in the process. Look at the investment banking industry. A lot of people scream of lack of personal responsibility, and yet, it’s the same laws that allow companies and corporations do the same. Many people are underwater on their mortgages, and are unwilling to walk away, due to “person responsibility” and fulfilling that contract. If it was a business, probably walked away without a second to think.

    The main thing is to be able to live with who you are. I’m glad you shared your story, as this provides more insight into your life and your perspective.

  38. Jean says 14 March 2010 at 10:27

    Yow, there are some pretty harsh comments here, and now we’re getting into assumptions about Tyler’s background and skin color as well as his morality. In his many comments and his previous posts, Tyler has let us know he now lives within his means and earns a good living. His way out of his earlier indebtedness is not the way some of us would choose, but it was a way out, and he hasn’t apparently repeated the mistakes he made when he was younger and less savvy about finances. I would not have chosen the solution that he did, but I would also say that these days he appears to be a net contributor to society. So, good for you, Tyler, for learning from past mistakes.

    This guest post was meant to be primarily about poor credit scores, not about how someone did or did not pay back his debts. Who’s to say what else he’s done to make good on those debts? He may have stiffed the credit card companies, but that may be balanced out with all sorts of good actions.

    Oh, and excellent point, Mossy (few posts above).

  39. Lefty33 says 14 March 2010 at 10:31

    “He also was helped by being very knowledgable and savvy about working the system.

    This odd because he’s naive/stupid enough to get into debt in the first place, but then he knows enough to realize that all he has to do is hire a lawyer to get the creditors off his back? I’m guessing his wealthy parents gave him advice, as well as probably his college degree.”

    Isn’t that being a bit too harsh?

  40. Bridget says 14 March 2010 at 10:47

    The original poster says his credit history only affected him two times in his purchase decisions–and that he paid very little on the dollar of what he owed. He then rationalizes his behavior in the past and his subsequent walking away by blaming the credit card companies. While it is commendable that he has not gotten himself into the same position, I don’t think that his contention that it won’t affect him in the future is a correct one. Additionally, I don’t think that only the credit companies were hurt by his actions.

    I just received a notice from my insurance company that they will be using credit information/history along with their traditional actuarial processes to determine my insurance premium. I am not concerned as I have good credit, however, for those who do not have good credit histories, I believe their rates will be increasing.

    Lastly, his behavior has affected many others – by having their rates raised/prices raised to cover the business loss due to theft. His actions did not just affect the ‘big, bad, mean credit companies and collection agencies.’

    • John says 02 February 2018 at 19:52

      IT’S NOT THEFT!!!! Theft requires intent. He fell on hard times. It wasn’t intended.
      Credit card companies do not lose money and they don’t raise their rates due to defaulT Have you ever gotten a credit card offer that blamed someone else for the interest rate? Funny, I got a 0% offer recently and they didn’t even mention this author. Weird!
      I have never had my credit score affect my employment or car insurance.

  41. Quotes says 14 March 2010 at 10:50

    Perhaps we might better learn from other parables… Say, a final philosophical maxim, on the financial responsibilities of man, as uttered by Socrates on his deathbed:

    “Crito, I owe a cock to Asclepius;
    will you remember to pay the debt?”

  42. Tyler Karaszewski says 14 March 2010 at 10:54
    I expected the disapproving comments — it’s why I included the last section of the article. I anticipated that many of you would disagree with the way I handled this, and you’re mostly right. But at this point, it’s handled. My debtors and I have settled things, and there’s nothing more I can do about it. I stopped using credit to avoid ever getting into another situation like this. Maybe I’m morally flawed, maybe I don’t live up to some of your standards, but there’s nothing I can do to change it at this point.

    I know that none of you have heard about this before today, and so today is the first chance you’ve ever had to tell me “shame on you”, but for me, this all happened in the past, and has been settled by all involved. The scolding I’m getting feels a bit like you might feel if you told a story about something you did in high school (got drunk, stayed out all night, took the car without asking, shoplifted, got pregnant, whatever you might have done) to a friend and they came back calling you “shameful” and criticizing your family background, as if you hadn’t come to terms with it in the intervening years. I’ve had years to contemplate this and have learned many lessons. It’s helped to make me who I am today, as cliché as that sounds.

    And I’m not going to apologize for having family or friends who helped me just because not everyone has that. I can only tell my own story, and this is where I come from. If you want a story about someone more disadvantaged than me, I’m sure you can find one somewhere, or you can submit your own, J.D. is still accepting reader stories for Sunday posts.

    • akoilady says 16 March 2015 at 14:13

      Tyler, I’m new to GRS, and just came across your posting about dealing with a low credit score and surviving. Thank you for taking the risk in sharing it. It helps those of us who are just on the start of the road to financial freedom.

      It’s easy for people to be critical in this anonymous forum. I hope the positive comments outweighed the negative.

      Good luck!
      MM

  43. mmeetoilenoir says 14 March 2010 at 11:03

    His story was great. What’s not so great are the people here who seem to think it’s their job to be this man’s moral compass.

    Guys, his bad debt was charged off and sold by those poor, poor creditors *sob*. Trust me, they made their money (and then some!) on that debt. Those companies will tell you that you, the righteous, good consumer, is paying for others’ old debts…but, you’re not. They get tax breaks and sell those obligations over and over again.

    Businesses default on debt all. the. time. While there is a moral obligation to pay stuff off, you’d best believe that credit companies play on the moral angle in order to create a sort of peer pressure that will bring about their desired outcome. However, they use this for the individual, using a privately-created FICO score as an arbiter of character.

    Yes, it’s best to pay your arrears. Of course it is. Tyler even knows this. You’re not telling him anything he doesn’t know. Would you rather have had a post of him donning a virtual hair shirt and begging for your forgiveness? Yes, he had good breaks along the way, but it’s stupid to be down on someone for the advantages that they have.

    All in all, great post, Tyler. Congrats. I’m glad you learned from this, and hope to successfully fix my credit morass 😛

  44. Sarah says 14 March 2010 at 11:11

    I thought this was a really good post. Thanks for sharing Tyler.

    I don’t thing that Tyler ever said his parents were wealthy. They loaned him $5,000. Although I would love to have the means to loan someone that much, I don’t think it would make me wealthy. He never said where they got the money from. Who’s to say they didn’t borrow the money themselves?

  45. Sarah says 14 March 2010 at 11:14

    I don’t think it makes sense to moralize about money, so I don’t see any problem with what you did.

    I do feel compelled to point out that it might not matter much what your credit score is if you make $140k/year, but the average US salary is about a third of that, and for those people credit matters more. We can’t wow our landlords with huge paychecks.

    And for people who make a lot less, it matters a whole lot more. Many of my disabled clients can’t get telephone or electric service without putting down a big deposit first because of their credit. And of course they can’t put down the deposit because they’re disabled and living on $674/month in social security in a city where the lowest-priced studio is $500+.

    So, yeah… if you plan to be rich, don’t worry about your credit score. If you’re going to be a schoolteacher or a social worker or even an architect (they start around $40k) you might want to think twice about it.

  46. Bill says 14 March 2010 at 11:24

    Ed @#30 has it right and Karen @#36 is just proof that some people will make anything racial. The color of skin is irrelevant here; it’s the green of the money that counts.

  47. Nicole says 14 March 2010 at 11:46

    #46… with all due respect, there are a ton of audit study experiments (where they send in paired actors) that show that race and gender are both very important in credit and purchasing situations (not to mention hailing a cab…). Ayers has a very prominent one. It’s easy to say that race has nothing to do with anything but that isn’t true empirically. It may be irrelevant to Tyler K’s situation (a well-dressed black man making his amount of money and doing similar actions might have a similar experience, but might not), but race is definitely not irrelevant on average.

  48. Holly says 14 March 2010 at 11:48

    Some of us probably could have (should have?) declared bankruptcy several times over when we were younger: $35,000 student loans, $24,000 new car loan, $5000 investment gone bad, $9800 credit card debt, $3500 Home Depot credit…etc., etc., etc. All before 35 years old.

    I personally know people who have defaulted on large Federal student loans; those same people are now marketing directors and aerospace engineers making WAY over six figures. No, they never paid off the loans and still brag about it to this day.

    But NO, I am a goody-2-shoes, I suppose…I would be too ashamed to have creditors knocking. That’s why there are many who abhor this post.

    In this case it seems Tyler’s bad luck (car stolen, mugged) was evened out with some good luck…no judgment, just a little jealousy at his ‘savvy’ nature (to put it kindly).

    c’est la vie, c’est la guerre.

  49. A says 14 March 2010 at 11:53

    I was one of the college kids heavily marketed to with credit cards (a recently banned practice). I’ve been in your situation twice and am waiting a few more years for some old things to fall off my report. With our economy…My income dropped significantly, never recovered, and I could not pay the debts back.

    Do I feel bad having WAMU “write off” my $5K debt while seeing what their CEO who worked there for two weeks before they were overtaken by the FDIC made? Absolutely not. These companies have insurance for this. They sell bad debt and make money. They are one of the most highly profitable businesses in our country.

    Anyone interested in this issue and for those of you thinking he did something wrong should SEE THIS MOVIE – watch the trailer:

    http://www.maxedoutmovie.com/clips/trailer.html

    Also, I think Karen has a valid point about race and income level and being a single mom. She just didn’t need to make assumptions or make it personal toward the writer of this post but I believe what she says is really true. I’ve seen it firsthand.

    Unfortunately, with credit and renting, race is still an issue that people don’t talk about. I have gone on multiple apartment interviews with friends of mine who are black and they always get a better response from the landlords when they come to look at a place with a “white friend”. If you have any black friends you should offer to do this for them if they’d like. Seriously. It can help them get a place.

  50. Bill says 14 March 2010 at 11:57

    #47, with all due respect, it’s irrelevant when we don’t know if it’s a factor, but just something someone decided to throw in hoping to stir the pot.

    Apparently, mission accomplished on that score.

  51. Holly says 14 March 2010 at 12:19

    I guess we (the U.S.) should see about not paying our loans from China…

  52. Fat Bob says 14 March 2010 at 12:38

    I must say that I’m totally in sympathy with the idea of not paying your debts to credit card companies. To the people who say that they end up paying for it, I say that you are not forced to do so – you have the choice of whether to accept the interest rate or not.

    It’s similar to the question of whether to walk away from an underwater mortgage in a state where the bank can only take the house

  53. Naomi says 14 March 2010 at 12:44

    This is appalling. The sad thing is, in the end, we all pay for this kind of dishonety and irresponsibility. The debts don’t magically disappear. The money has to come from somewhere. Whether it is insurance fraud, healthcare fraud, Wall Street fraud, or Enron, we all end up paying for it, whether we want to or not.

  54. guinness416 says 14 March 2010 at 13:04

    Bankruptcy and the like are one of those topics that almost never get mentioned on moneyblogs (at least the ones I read) except as something for loudmouths in the comments section to wag fingers at. I find it weird that it never comes up as the process is not well understood and so many people have considered or gone through it. I feel lucky that where I was a student in Ireland credit cards weren’t pushed on kids (I couldn’t get one even for emergency reasons for love or money); I’m pretty sure I wouldn’t have lost the head, but who knows. Anyway, interesting story as all of these reader posts are, and some great comments especially by Mossy further up.

  55. Matt says 14 March 2010 at 13:11

    Nice post, Tyler, and nice followup response as well (#42). I suspect everyone here has made a mistake in their life, and it’s great to hear stories about how to move on.

  56. Mariane says 14 March 2010 at 13:31

    Man, not even THINK about being ashamed abt your history – hey, I felt proud reading it, you have done so well! all of us make mistakes on some level or another and it is a real refresher to be reminded that by true perserverance and focus one can overcome most if not even all of lifes obstacles… so thank you for sharing and thanx to GRS for inviting you!

  57. DP says 14 March 2010 at 13:38

    Personally, I don’t feel bad for the banks that allowed a college student to rack up $30K in debt. They chose to make the calculation that on average makes them tons of money (betting on young people that may be too immature or uneducated to know what they are getting into). Let’s remember, that it was the banks that led us to the economic crisis in which we are now.. Granted, people need to be responsible for their actions, but so do banks. And in my experience, the people don’t get into debt because they set out to cheat the banks out of as much money as they can. The banks on the other hand are doing everything they can to get as much as your money, no matter what they do to your life.
    Anyways.. My only comment to Tyler – I was a little surprised that you chose to buy a new (and pretty expensive) car with zero money down.. I would have expected you to have learned and not have gone into debt again.. But it looks like you managed it the right way, so no harm done..

  58. KF says 14 March 2010 at 13:41

    I think it’s great when anyone is willing to work hard and sacrifice, which is typified by people who are willing to work full-time while in school rather than just mindlessly taking out school loans or assuming they are entitled to a “student lifestyle” of lots of partying and free time. (Yes, it still is unfortunate when one spends all of that extra money and then some, but I’m still impressed by the willingness to work as much as it takes.)

    Also, some of the people who have made comments need to stop finding excuses for people who are in bad situations or assuming they are victims. Tyler didn’t necessarily have an inordinate amount of privilege or luck. Anyone who has internet access (which is everyone given public libraries) who bothers to google debt-related issues can figure out how to settle debts and what their rights are regarding creditors. Everyone, regardless of your situation, can find a place to rent regardless of credit score. Plenty of small landlords don’t check them, and there are landlords of all colors and backgrounds.

    Also, people should at least appreciate that Tyler didn’t declare bankruptcy. That’s the ultimate act or irresponsibility and shows an ability to create a giant mess and then totally walk away from it. I appreciate that Tyler at least did something to work toward making his creditors whole (or partially whole).

  59. Steve says 14 March 2010 at 14:17

    You are an inspiring lad. You skipped out on many of your debts, raised the cost of credit for the rest of us and now you preach your financial wisdom. God bless you.

    Any more lessons for us?

  60. Brenda says 14 March 2010 at 14:29

    If the crux of this story is “bad credit didn’t affect me”, I just feel I need to point out that other people’s mileage may vary.

    You make a TON of money each month, so businesses feel safe loaning to you and apartments feel good renting to you based on your enormous pay stubs, knowing they can go after your wages if need be.

    However, for someone of a much lower income, having bad credit coupled with low income will devastate them a lot more than it would you. Just something for folks to keep in mind when dealing with their credit scores.

  61. Ryan says 14 March 2010 at 14:34

    I find the plethora of “not paying your debts means that others suffer” responses comical in this day and age.

    Instead of forcing the big banks and financial institutions to fail (which should happen in a capitalist system), the U.S. government gave out huge bail-outs during our most recent financial crisis. Where did the U.S. government get the money for such bail-outs? From the taxes that we pay. So, we pay taxes to bail-out failing/stupid financial institutions, and are also expected to never renege on any debt we ourselves incur? Must be nice to be a big bank.

    I completely believe that if a person takes on a debt, they should be prepared to pay it back in full. However, if that person hits hard times and can barely pay for basic things such as a place to live and food to eat, do we really want to make their lives miserable just for the benefit of corporations who do whatever they can to squeeze every last dollar out of people?

    Simply put, if these big banks can’t fulfill their financial obligations and require bail-outs, then why should they expect their customers to be any better?

  62. JJ says 14 March 2010 at 15:11

    To Tyler–

    Since some of these comments seem to be affecting you, please consider what to do about it.

    You’ve done wonderfully for yourself. Now legally, you don’t have to do a thing to make up for past mistakes. It seems like you have settled some old debts as they came up, even though you didn’t have to do that.

    You could just feel vaguely bad about it whenever it comes up and try to justify your old actions. You could pay the old debts in full, even though those debts have been sold off to groups that are rather nasty. You could settle to get the collectors to leave you alone, and donate as much of the forgiven amount as you could to some charity that helps out people like you used to be.

    Just a suggestion.

  63. Tom Melancon says 14 March 2010 at 15:19

    I have been fortunate enough to have had continuous employment for many years, so even though I made mistakes and accumulated debt twice in my life, both times I was able to methodically pay it off. That being said, I won’t judge anyone who declares bankruptcy. I think what happens after the bankruptc– that’s important. For instance, I know someone who declared bankruptcy, was helped in getting her credit cleaned up and then turned around and acted irresponsibly with credit again. I do believe being relieved of your debts should be a one-time opportunity.

  64. Anna says 14 March 2010 at 16:16

    I know the point of this story is that you can make bad decisions and it doesn’t have to affect the rest of your life. However, I can’t agree with the story when the person goes out, has a lot of fun then ends up just walking away from thier responsibilities. I like stories from people who did get themselves into trouble then took action and got themselves out of it. Those are great stories to learn from. Not someone who didn’t have to be held accountable for their actions. It was only $30k, on his salary he could have easily paid that off in a few short years if he actually tried.

  65. Mark Branson says 14 March 2010 at 16:36

    JD

    I feel the message this guest post conveys is plain wrong.

    This guy, Tyler K makes 140K per year. Looks like he is also married to a lawyer wife. So I guess his household income would be around 240k per year minimum. He seems to be telling that when you are above your head in credit card debt, it is ok to stop paying it. Nothing will happen to you when you stop paying it back. You can go ahead with your lives normally. I feel it is because of such things that we are presently in this economic mess. People taking out loans to spend lavishly when they know they cant afford it and then game the system. There is nothing called free money in this world. Some one is paying for it. In this case, I the taxpayer paid for it in 2009 by bailing out the credit card companies, because people who took the loans from them failed to repay.

    He was making 35k when he got into debt. He stopped paying it back, but he could have paid it back when he started making 140k per year (or 240k per year).

    Do you approve of his message? Because when you post such guest posts with such messages on your website, in a sense you also put your approval on it.

    Is this the message that you want to convey to your loyal readers? Is this the message you want to convey to your readers who want to get rich slowly by following the law and not gaming the system as the author of the post above did?

    You could choose to stop this message coming up on the message board by moderating it or providing your point of view and help us readers look into your insight.

    Thank you.

  66. Mika says 14 March 2010 at 18:36

    Tyler, thank you for your post. It was brave of you to share this in detail, and it seems that you have definitely learned some lessons from this. Even Dave Ramsey filed for bankruptcy. Does everyone shake their finger and ask him if he paid back *in full* everything he owed?

    I also agree with most of your financial comments that you have posted over time here on GRS.

    For the record, I, too, had a terrible financial life foundation before coming to grips with how I deal with money. I even once went to a “debt counselor” who told me to *let* my debts get charged off and then settle them. We live, we learn.

    Again, thank you for sharing your post. You have bigger c*jones than most.

  67. Chris says 14 March 2010 at 19:00

    In the past, I would have judged someone like Tyler pretty harshly. But I’m coming around to a new way of thinking.

    A lot of people have made mistakes in recent years — guys who got greedy on Wall Street, poor families who foolishly bought homes with no money down, middle class workers who routinely lived beyond their means.

    Now, those mistakes have come home to roost. While government bailouts of the rich and poor don’t seem fair, I’m a bit more tolerant of people who seek government aid or who take a slightly less ethical way out of debt (like Tyler did) IF they genuinely learn from their mistakes and change their behaviors. It appears that Tyler has done so. Bravo!

  68. Tom says 14 March 2010 at 19:30

    I’m sorry, but I’m not sympathetic to the notion that we can blow off debt because it’s painful to us, or because we don’t like whoever we owe. While I’ve little concern for the problems of mega corporations, that’s irrelevant to the ethics of borrowing without repaying. Further, people who can rationalize stiffing a credit card company can also rationalize stiffing, when it suits them, a landlord, a plumber, or a friend. That Mr. Karaszewski didn’t do this (as far as we know) is merely a matter of degree. A wrong is still a wrong, and he won’t win my admiration because he wronged someone I don’t care about. After all, how do I know he wouldn’t have lumped me in the same category had he owed me money?

    I’m sympathetic to those who fall into debt because of bad luck beyond their control. Losing a job or a catastrophic illness can throw even the most responsible person into a financial hole, particularly if that person has a family to support. For them, bankruptcy is an unfortunate but sometimes necessary evil.

    Mr. Karaszewski, however, made his own mess. While I’m glad he learned something from it, I’m less impressed that he made others pay for his education. At the very least, he should keep silent about his past mistakes rather than penning a feel-good inspirational tale. And if he ever needs to borrow a twenty, I’ll think twice about lending him one.

  69. Varma says 14 March 2010 at 19:44

    Hi Tyler,

    First of all – thanks for the fantastic article. You did not choose to hide things and you were very honest from the word get go. You could have sugarcoated your story by blaming creditors but you did not.

    For the all people – blaming Tyler (for stealing) from credit card companies – please get off your high horse. You would do the same if you could get away with that (except one poster- who said he has been trying to pay off his debt for the last 19 years).

  70. Bananen says 14 March 2010 at 19:46

    Fascinating story. It really exemplified that bad decisions can be overlooked by most people, if you are honest about it and show improvement.
    I don’t have a problem with the credit companies wanting to get their money back. They are trying to earn a living and, after all, it is their money. Not paying what you owe is stealing and you did agree to repay it when you signed the contracts. On the other hand I appreciate that one will always try to get off as cheaply as possible, and I assume that you already paid a lot in interests, but you could have done more to settle your debt.

  71. ASW says 14 March 2010 at 20:02

    A lot of people are complaining that this guy didnt pay his debts in full. Yea, it’s not really ethical or fair, but that’s how the system works. That’s why there is a thing in the financial system called bankruptcy which allows people to basically lose everything and start over. If there wasn’t bankruptcy, some people would work their whole lives just to dig out of a constantly deepening hole. Businesses have the same protections in place as well. Everybody receives the short end of the stick, but it’s better than the alternative. The point here is that this guy paid off as much as he could and learned his lesson. $35k is chump change to the big corporations.

  72. Justin King says 14 March 2010 at 20:18

    What a killer story! Thanks Tyler!

  73. MossySF says 14 March 2010 at 21:03

    Economists also have found that bankruptcy laws allow more risk taking and business starting. So the question is whether as a while a society that allows financial restarts benefits more from the new small business activity compared to those who game the system? The evidence says yes so sometimes you have to take the bad with the good.

  74. sam says 14 March 2010 at 21:30

    i don’t think the OP’s point was to promote the concept of avoiding repayment of debt, but rather to highlight that there are alternative methods of living your life after mistakes. the systems promoted by credit counseling agencies, financial gurus, etc., are not the only means of regaining financial freedom.

    if the OP feels badly about the manner in which he settled his debt, he should find some sort of restorative means of repayment. there are lots of charities that could use some IT work that would really help them provide services to the disadvantaged. however, i don’t think it is productive or justified for commenters to characterize the OP as immoral or unethical.

  75. Samurai says 14 March 2010 at 21:33

    Tyler,

    Congrats for taking advantage of the system by getting a haircut on your debt!

    Fun story to read, and it teaches many of us that it is OK to spend money we do not have because we will be bailed out.

    Blaming the car salesman for making you buy the car is the correct thinking. Blaming faceless corporations for getting you to go into debt is also excellent.

    Your post is an excellent example of the American wa. It’s great you’ve changed your ways bc ultimate all of us pay for your unpaid debts.

    Thanks again. The post was very entertaining!

    Best,

    Sam

  76. Ryan@TheFinancialStudent says 14 March 2010 at 21:55

    This was a really interesting post! Thanks for sharing.

    I don’t really have an opinion to give, which I’m sure you’re thankful for!

  77. Anna says 14 March 2010 at 23:57

    Thank you for this inspiring post.Very interesting, I seldom have the patience to read a post from the top to the end, but your post catches my eyes.
    I don’t it focus on teaching us how to find an escape out of credit debt.I think it is to tell us, when you are faced with a terrible financial condition there is always a way out, so we should be optimistic and try our best to find the way out. Although Tyler ruined his score and failed to pay his debt, he managed to live though that difficulties, it’s far better than those who fell down and never get up. Every one can be faced with problems that can’t be solved perfectly because we are not perfect, Tyler is also not perfect, but he had done his best.

  78. basicmoneytips says 15 March 2010 at 04:36

    I was glad to see that this writer was able to pull himself out of the debt hole.

    I have seen other evidence that ruining your credit may not necessarily mean ruining your life. However, the writer was young and single, so I think that probably made this story a little more plausible. However, I will applaud the maturity in his decision. He stuck to his guns, got a roommate, drove old cars, stop spending etc. How would the experience had been had he been a young father with a young wife and kid? Perhaps he would have wanted a house rather than an apartment, which may have made things hard. There would have been more expenses because he had a young child, so his ability to save would have been impacted (and he wouldn’t have had as much in his account to show a perspective landlord). A lot of what ifs I know… but I think this story might not apply to everyone. Again, my hats off to this young gentleman for cleaning up his financial closet, we do need more folks out there like him.

  79. Kevin says 15 March 2010 at 05:31

    “These credit card companies were willing to do everything in their power to make a profit off me. They had teams of actuaries calculating the exact interest rates and credit limits that would maximize profits from their customers”

    Didn’t your insurance company behave the exact same way? They also have “teams of actuaries” to calculate the precise rates to charge you in order to maximize profit. It even directly impacted you when your car was stolen. So how come the credit card companies (it’s actually the banks, not the credit card companies) are depicted as the villains, but insurance companies get a free pass?

    There’s nothing evil about capitalism.

  80. Kevin says 15 March 2010 at 06:14

    @A: “These companies have insurance for this. They sell bad debt and make money. They are one of the most highly profitable businesses in our country.”

    That must be why banks never go out of business, right?

    Oh, wait. Literally hundreds of banks have failed over the past 2 years. See for yourself. Maybe all that “bad debt” isn’t the cash cow you think it is? Or would admitting that make you feel guilty about stiffing WAMU for $5,000?

    @Mika: “Even Dave Ramsey filed for bankruptcy. Does everyone shake their finger and ask him if he paid back *in full* everything he owed?”

    For the record, Dave Ramsey did repay everything he owed, in full, even after they were discharged in bankruptcy. At least, he claims he did. He’s mentioned it on his radio show before, and says he felt compelled by God to fulfil his promises and repay his debts completely.

    @Varma: “For the all people – blaming Tyler (for stealing) from credit card companies – please get off your high horse. You would do the same if you could get away with that”

    I absolutely, unequivocally would not, and I’m offended at your assumption that I would. I live my live as honourably as I can, and I always live up to my obligations as fully as I possibly can.

  81. Jessica says 15 March 2010 at 06:58

    Good grief, the man settled his debts for less than he owed after some time. What do you think corporations do every day when they can’t pay their bills? Why should individuals be held to a higher level of “moral” conduct than companies making millions each year?

    And for those of you who say “other people are having to bear the costs” of the difference between Tyler’s settlement and the outstanding debt, that’s semantics. You could say we are bearing the costs of the CEO of Citibank’s bonus, the annual conferences Chase senior executives went to for years, the expense of redecorating the headquarters of Bank of America … but you don’t. You choose to focus on what is likely $15K or so of debt after Tyler’s settlement payments. Stop the sanctimony! Companies are allowed bankruptcy and “re-organization” plans – that’s what Tyler did. He reorganized his debt. Get over yourselves.

    I’m glad to see someone say a bad credit score doesn’t ruin your life. I too am tired of all the financial new articles making it seem as if Armageddon will come if you have bad credit. Kudos to the moderator for posting!!

    I agree that the reason Tyler wasn’t impacted more is that he now has a well-paying job. In my experience, that makes all the difference. But that is true in general – it is easier to pay off debt and save like crazy when you have a healthy income. Saving on $30k a year is a a real exercise in discipline that I would guess most of us reading this cannot say we understand. Does that makes us bad people because it is easier for us to save than lower income folks?

    And yes, I agree being a clean cut (presumably white, according to the above posts?) man helps when you are renting. Being an attractive woman helps when you want free drinks and dinners and having a cute puppy makes folks at the park more friendly. Taller, thinner people have a easier time getting jobs, according to career counselors. I don’t mean to minimize the economic impact of race/gender biases, but that is a public policy debate that goes far beyond the scope of this posting. And beyond recognizing that his genetic profile may have helped him rent, what do you want the poster to do about that?

  82. Kara says 15 March 2010 at 07:52

    Well.. for all of you who say that it can not be done if you have kids and a low paying job, it can. While in college my husband and I racked up over $15,000 in credit card debit and $30,000 in student loans. While in college we thought that we were all right. We could make the minimum payments from our jobs. When my husband graduated we moved bought a house and found out that I was pregnant. Since my husband was the only one working at the time, we were making less than we were in college. In fact that first year teaching he made $27,000 after deductions. I could not find a job, after I disclosed to potential employers that I was pregnant. We could not pay the minimums. We went to a debt collection counseling. They tried to turn us away because the minimum amount that they would have to collect was over 30% of our monthly income. We convinced them to take us on as clients. We lived as cheaply as we could. No cable, only a prepaid cell phone for road emergencies, a low food budget and no entertainment, and clothes were purchased second hand. We kept the internet and phone. As soon as I was cleared to work, I took a waitress job that paid the hospital bill and the few credit cards that we did not consolidate. It is now 4 years later, we make a combined income of $42,000. This month we made the final credit card payment, we have sold our house and have rented from two different landlords, neither did a credit check. We have not had a credit card in that time or taken out a loan. I was able to finish school. We were recently approved for a home loan, from a company that does manual underwriting. We have decided to wait on that purchase, because we still have student loans and would like to get them done before we buy the house. So yes, you can pay back you debit and live with out a credit score even with children and making less then 125K.

  83. Nicole says 15 March 2010 at 07:59

    #81… I don’t think that anybody is telling Tyler K to change anything fixed about his life (some people disagree with how he settled his debts, but whatever). Personally, I wouldn’t want a student who isn’t in his situation reading this post and thinking, “Gee, I can spend all I want now without getting into trouble later. Ruined credit isn’t important.”

    What I’m finding really ironic is that as much as I love the posts, the redoubtable Tyler K’s standard post to anything here (including reader stories) is: “This post doesn’t apply to my life because I am different.” Allow some people to give the same response to his… because, you know, he IS different.

    p.s. The taller/attractive people is research by Hammermesh, the thinner people is new research by Rooth.

    p.p.s #82 The job DS’s cousin lost was a waitressing job. Since there are no more waitressing jobs in their town (restaurants are closing), she cannot get a minimum wage job because of her credit.

  84. Mika says 15 March 2010 at 08:01

    @Kevin:

    Mr. Ramsey’s faith notwithstanding, was his debt repayment dollar for dollar? Or did the creditors settle? If they did, his debts would be considered completely paid. One of Ramsey’s most notable talking points is that debts sold to collection agencies can be negotiated. Quote: “Meet them somewhere in the middle.”

  85. philo says 15 March 2010 at 09:17

    I don’t understand. You owe money. You’re earning well. Pay it back.

  86. Jen says 15 March 2010 at 09:31

    Good job, Tyler! Yes, you made a mistake in racking up your debt, but in my mind the important thing here is that you learned from your mistake!! You didn’t repeat history.

    As for repaying your full debt, I like Jan’s father’s suggestion – doing something for the charity of your choice. I think doing that may have a larger and broader impact over time than paying back all your financial debt.

  87. Rob M. says 15 March 2010 at 09:55

    I must say that I was not inspired by your story; in fact, disheartened would be the term more appropriate.

    However, sharing this story did take some guts, and I will applaud you on that.

    Moreover, I liken your story to a person, let’s call him Fred, that borrows a friend’s (let’s call him Jim) $30,000 car and ends up wrecking it (for the simplicity’s sake, Jim only has liability insurance, and Fred has no insurance). Fred signs a letter stating that he will pay Jim back for the car.

    At first Fred makes regular payments, but then falls on hard times. Jim calls Fred to see what’s up. After several of these “annoying” phonecalls, Fred changes his number so Jim can’t call anymore, problem solved.

    Several years goes by and Jim tells his cousin, let’s call him Mike about the debt Fred owes him, but can’t collect. Mike buys the debt off Jim for pennies on the dollar.

    Mike tracks down Fred’s new phone number and calls about the debt. Fred tells Mike that the statute of limitations has expired and he can’t sue; however, Fred will pay him a fraction of the original debt.

    It’s pretty much the same story as Tyler’s except that Tyler was called “Fred,” the original creditor was called “Jim,” and the collection agency was called “Mike.”

    Doesn’t sound very nice when it happens to people instead of “faceless corporations,” does it?

    My problem with the story was the justification at the end, “these credit card companies were willing to do everything in their power to make a profit off me.” If you never paid back your debt in full, how did they make a profit? Sounds like they made a big fat loss to me.

    Now, you may be fine with that; however, you must realize that your original creditors likely didn’t make a dime off you (negative ROI), but it was rather foolish of them to loan that much money to such a high risk (which the actuaries should have clearly stated).

    Myself, I doubt I would be able to sleep at night, knowing that I had welched on a debt. Now, people might consider this being on my “high horse,” but you know what?

    I had about $25K in student loan debt graduating college in 2003. I racked up about $10K in credit card debt in my first job, through sheer foolishness. In late 2007, I was laid off from that job. I had house payments, credit card payments, and a student loan payment. I fiercely budgeted what I had, balance transferred the credit card debt to a 0% APR card, all while I was looking for a new job.

    After I got a new job, I continued to pay down debt and finally managed to pay off my credit card debt. I am still paying monthly payments on my student loan and mortgage.

    @Varma (#69): “…please get off your high horse. You would do the same if you could get away with that…”
    I did not, but it sounds like you would.

    If more people have opinions of responsibility like Tyler and Varma, I weep for our children’s (and grandchildren’s) future.

  88. KittyBoarder says 15 March 2010 at 10:05

    Some people are feeling resentful because Tyler has a college degree, wealthy parents, and support system to help him getting out this whole mess. Even his skin color is to be blame.. Well, guess what.. that’s the exact reason why those who feel resentful can’t get out their own mess. It’s the victim mentality that traps them in (i.e. Oh, I am single black woman, so it’s harder for me.. Or, I dont have wealthy parents…etc…).
    Anything is possible for anybody if you try to make it happen. So DONT blame your parents, your background, and your skin color.
    BTW, I am a colored person if you have to use this word… And I don’t think that ever stopped me from doing anything..

  89. Ed says 15 March 2010 at 10:20

    @Rob … your story needs one addition. Jim, the car owner (bank), has about 800 billion dollars in assets, so he’s not going to waste his time chasing $30,000. He’ll worry about the billions that he’s making on all those who are “renting” his other cars.

    The fact is, Tyler’s $30,000 was probably not all principal balance. By the time the debt was written off by the bank(s), those dollars probably included penalties and fees. The banks usually get quite a lot of the principal balance back off credit cards by raising interest rates (to the default rate) and by charging late fees, over-limit fees, etc. So, the final balance of the account may be inflated.

    Also, banks project some account defaults on credit cards. As long as the default rates are not too high, they are fine. Credit cards have been a cash cow for banks for the last 20 years. Credit cards are taking a hit now due to the weak job market, but the banks have adjusted their numbers and their business model to compensate.

    So, Jim is probably not too unhappy. He’s still making money and he’s still paying out hefty bonuses.

  90. Samantha says 15 March 2010 at 10:27

    The point of the story is for us to learn from Tyler’s mistake, not for us to judge him. I appreciate the story.

  91. Gholmes says 15 March 2010 at 10:30

    Thanks for sharing that story. Good for you for digging yourself out

    I am hoping of ruining my fico score by not having any debt. My last being my mortgage.

  92. Shel says 15 March 2010 at 10:52

    Good tip on how to steal $15,000 worth of stuff over the long term…

  93. chacha1 says 15 March 2010 at 10:57

    Thanks Tyler, I feel like I know you better now! You really brought out the haters though … good thing you have a healthy ego. 🙂

    Leaving out personal morality, because it’s none of my business, there are several things that Tyler did wrong in this story, and the PF lessons are: First, don’t underinsure your car; Second, carry at least a catastrophic-care health policy (most college students can get one pretty cheap); Third, don’t use credit for toys.

    There are several things on the other hand that Tyler did right, and the PF lessons are: First, work while you’re in college; Second, live with a roommate; Third, don’t rent or buy more space than you need.

    It would be nice to think every holier-than-thou commenter had never done ANYTHING “wrong,” but that’s statistically improbable. If people wouldn’t be so quick to throw stones, this world would be a better place.

  94. Ely says 15 March 2010 at 11:01

    I agree that a lot of commenters are being sanctimonious and unnecessarily harsh. Debt is a business transaction and there’s nothing moral about it. Stuff happens; you deal with it and move on. Whatever you say, Tyler did not get off scot-free, there were in fact consequences to his actions and the mistakes he made. The difference is, he’s not STILL paying for his mistakes years later. If you think it’s noble to pay for the rest of your life for screwing up at 21, you go right ahead. But in real life there’s no need for it; our society is set up to take these hits. It’s not a perfect system, but I’m pretty sure there’s no such thing.

  95. Kevin M says 15 March 2010 at 11:44

    Post #93 is a good takeaway. I’ll focus on the positive of Tyler’s story – he didn’t repeat his mistakes after the slate was wiped clean. There are parts I don’t agree with as a 35 year old, but as a 22-23 year old I probably would have done roughly the same thing, so I’m not going to cast stones.

    Another issue I see that he didn’t mention was the fact that a lot of employers are now running credit checks as part of the hiring process. Not sure if this was done back then, but it COULD affect you now.

    Thanks for putting yourself out there, Tyler.

  96. Aleks says 15 March 2010 at 11:57

    First of all, other people are not paying for Tyler’s default. That default risk was priced in when he borrowed the money, he paid his share of it in higher interest (prior to defaulting, obviously). If you have flawless credit, you’re not paying more because of people like Tyler. And if you have poor credit you’re paying more because of the risk that you’ll default, not anyone else.

    The main thing that stood out to me was when he got rid of the cheap car, before he’d even paid back his parents, and took on a new car loan at 12%. Even 10% is a huge amount. The only time you should take out a car loan is if the interest rate is lower than your savings account interest rate. Otherwise, the amount you can afford to spend on a car is the amount you have in the bank, same as any other depreciating consumer purchase.

    When I read the line “Still, it wasn’t a horrible decision – I now made a salary that could justify a car like this” I thought to myself “you haven’t learned a goddamn thing.” Sure it all worked out, but taking on a $20,000 car loan at 10 or 12% interest does not count as giving up credit. If there was nothing wrong with the old car, there was no reason to replace it. The fact his brother wanted it was just an excuse. He’s still using credit to spend money he hasn’t saved.

    When you buy a new car with cash, that’s when you can say you’ve got your finances sorted.

  97. Michelle says 15 March 2010 at 12:58

    Interesting story. I highly suspect if Tyler had tried to buy real estate, he might have discovered that his bad credit had more of an effect. At least in terms of the interest rate he would have to pay. Also, remember that these were the days of easy credit. In today’s world, Tyler might have had a very different experience.

  98. ebyt says 15 March 2010 at 13:07

    Definitely an interesting story! I am getting close to paying off my debt (which was largely accumulated by stupid spending) so I can’t exactly judge you. I like hearing stories about people turning their lives around. Makes me feel better that I am not the only one who spent stupidly in their early 20s and recovered 😉 Who knows – I might share my story when I am out of debt.

    As far as it being unethical to get out of debt the way Tyler did, I can’t say I really blame him. I don’t know what I would do if I were in such a massive mess. It followed him for years afterward so I don’t really think he got off scott-free. I have been paying my debt off the old fashioned way, but I can’t say I’d rather pick Tyler’s way.

  99. KittyBoarder says 15 March 2010 at 13:53

    Agree with #98. Tyler didn’t really get off so easily even if he didn’t pay back the full amount.
    I rented a corp housing under my name while I was consulting and when I moved out, there was still a $60 utility bill outstanding but I never got it and moved on to my next assignment in a different state.
    After a few months, I got sent to collection for that $60. It was such a mess to deal with it. My credit score lost like 100 points because of that.. It was very stressful. So for Tyler’s situation, I just can’t imagin the trauma he went through to deal with all the collectors.

    For those who have never been collected by these shark agencies, stay that way.. It aint fun

  100. Chris Johnson says 15 March 2010 at 14:23

    As much as I dislike people not paying all they owe, and I’ve represented many of them in BK and debt negotiation, it may help to look at how much of that debt was principal vs. interest and other junk charges. Especially when collection agencies buy the debts, they have a tendency to add lots of “fees” just to pad the amount and give them something to negotiate away.

    Coming out of a divorce, I had plenty of debts too (all paid with none negotiated) and an ugly credit score that’s climbed back to somewhere between “very good” and “excellent.” Along the way, I had to convince landlords, and later mortgage lenders, that I was a good risk, and pay extra interest.

  101. Dan says 15 March 2010 at 14:29

    Quite literally, Tyler agreed to make his payments OR have his account sold off to a collection agency. *That* is the agreement he made. And the collection agency has the authority to settle that debt for less than the principal balance (and the difference becomes taxable income, too.)

    I’ve been in Tyler’s shoes, I’ve had bad debt, I’ve had it sold off, and I’ve settled accounts with junk debt buyers. I won’t apologize for working within the system, and neither should Tyler. Banks get bailouts, individuals get screwed. That’s the way it is — we can accept it and deal with it, or we can flame people on blog comment areas.

    As for me, my credit report is finally clean (after seven years of on-time payments). Clean credit helped me go to grad school at an affordable rate. With it, I was able to attend full time and borrow money through the Stafford Loan program. Most schools give tuition breaks to full time students; part time students pay by the credit, making it more expensive. If I had to attend part time, I would have to pay the opportunity cost for not having the job I have now (which would be substantial) AND I would have paid more for tuition.

  102. KB says 15 March 2010 at 14:33

    I have to agree with the commenters who are not a fan of Tyler’s method for getting out of debt. He could have easily paid off his debt with his new higher income and chose not too and somehow got away with it. Maybe part of this is jealousy. I also racked up significant credit card debt in college and grad school and am now on a strict budget to pay it all off.
    I don’t even understand how this happens. You just stop paying your bills? And then you get a bankruptcy lawyer to stop collections without actually filing for bankruptcy and within a few years you can settle for half the cost? This seems way too good to be true.

  103. stephanie says 15 March 2010 at 14:50

    I don’t agree with most of the negative posts. Yes perhaps it was not the right thing to give up on paying the debt. I think it is wrong the way credit card companies target college students for credit cards without requiring any proof of income. Hopefully that changes with the credit reform bill. The bottom line is that you settled your debts (even if it was late, better late than never) and managed to live a productive life. Make no mistake-the banks are making thier profit, or else there would be no such thing as the outrageous executive bonuses. I won’t personally ever default on a loan as long as I can work, but the thought had occurred to me more than once. You have to do what is right for you. Again, the key thing is he eventually settled the debts and he has not repeated past mistakes.

  104. Bobby Huang says 15 March 2010 at 15:48

    Ah, great article.

    I remember that picture of the house in an older article about JD and smaller houses and downsizing, I’m glad to hear the story behind it.

    I’m helping my girl right now with a similar situation, we didn’t let her payments slip too far and she has student loans which I hear are hard to avoid.

    Did you have any student loans or all credit cards and car debt?

  105. Sue says 15 March 2010 at 19:52

    JD – this series is really insightful. Thank you!
    Tyler, thank you for sharing your story. My husband and I are likewise digging ourselves out of debt that was graciously dropped into our naive, college-aged laps. We often argue whether to make financial decisions to “preserve our credit score” or to take care of what is best for our family RIGHT NOW. Thanks for sharing your story of making your best choices, given your options/opportunities. I’ve been thinking my husband is right to not prioritize our credit score. Thanks!!

  106. Joshua Heckathorn says 15 March 2010 at 20:39

    Thanks for taking the time to tell your story Tyler. We clearly think differently in many ways; however, I always find it intriguing to get a glimpse into how others perceive credit and its value in their life.

    I recently bought my first home, and I have never in my life been so thankful for a good credit score. It sounds like your credit may be headed in the right direction now, and I suspect you’ll have a similar feeling if you and your wife ever decide you’re sick of renting and ready to own.

  107. Tyler Karaszewski says 16 March 2010 at 00:35

    I’m going to add one final anecdote to the comments on this thread, and then I’ll probably leave it alone after that. I can understand some of the angry people (although not so much the presumptuous people — because my wife once worked at a law firm doesn’t mean she makes $120k/year, and she’s not a lawyer). I remember once when I was really angry. I mentioned that my car was stolen in the article. I was scathing. EssentialIy that car was my entire net worth. I didn’t know who did it, but I hoped he got hit by a truck. He was never caught (not for stealing my car, anyway).

    If I met that guy today, and he said, “sorry I put you through that, I did some stupid things when I was younger,” and he legitimately seemed like he had his life mostly in order and wasn’t stealing any more cars — I could sincerely tell him, “you know, it’s water under the bridge. I’m glad you’ve worked out your problems, I hope you do well from here on out.” I wouldn’t sue him to recover the value of the car, nor would I insist he needs to serve time in jail.

    I got over the loss of that car long ago. Even that theft was a learning experience that helped make me the person I am today, and I don’t feel the world owes me anything because of it. My creditors implied they felt the same way when they agreed to settle those debts years ago. When they said “thank you for your payment, have a nice day” and then marked those debts as ‘paid’ on my credit report, they were essentially saying, “alright, good enough, you’re free.” And the funny thing is, these people were *never* mad about it in the first place. This was just another day at work for them. They crossed me off their todo lists and moved on to the next guy. They didn’t stay up late thinking about how much I had hurt them, because I hadn’t. Still they’d done the closet thing to forgiving me that they could do in their corporate actuarial way. My debts were legally forgiven long ago, as was the theft of my car (the statute of limitations for grand theft auto is actually shorter than for unpaid credit card debt in California). The world, and the lives of all involved, has moved on.

    And because some people asked, no, I never had student loans. I went to a state school that was fairly inexpensive (about $4000/year tuition), and paid it out of pocket (my [middle class, not wealthy] parents helped).

  108. Doug says 16 March 2010 at 04:36

    Wow, way to go turning things around. Your story gives everyone hope that even when things do not go as plan that there is always a way to make good things happen, thanks.

  109. Holly says 16 March 2010 at 06:22

    Deadbeats are all the rage; don’t worry about child support; and don’t forget to underinsure yourself, that’s what taxpayers are for. Oh, and laugh at your roomies when you just can’t pay your half of the cable bill, etc.

    The latter is what happened to me with 2 roommates; they left me w/3 months of phone bills, cable bills, and rent payments, but ‘hey’ that’s all ‘water under the bridge’.

  110. brooklyn money says 16 March 2010 at 07:49

    I think you got lucky on the credit score not derailing you from receiving job offers. Story in WSJ today about how more and more companies are running background checks/checking credit scores. Especially if you work in a sensitive industry such as security or finance. http://online.wsj.com/article/SB10001424052748703909804575123611107626180.html?mod=WSJ_hpp_RIGHTTopCarousel

  111. Shara says 16 March 2010 at 09:32

    Hm, I definitely have strong opinions, but I doubt I’ll effect anyone’s opinion one way or the other, so I’ll try to just say things that haven’t yet been said. Though I think the point of ‘bad credit hasn’t ruined my life’ has been lost in the discussion. There are two issues here: living with bad credit, and Tyler’s specific story.

    Regarding Tyler’s story, what struck me the most was how he was playing hide and seek with his creditors. If they were tenacious enough to find him he’d settle, if not he was happy to let the statute of limitations run out. It doesn’t appear that he felt any sort of obligation to pay, but he dealt with the hassle when it popped up. That’s an attitude I can’t sympathize with.

    Regarding the ‘credit cards are huge, so one little debtor doesn’t matter’, I’m not sure what the point is of saying creditors plan on some defaulters. If Tyler hadn’t defaulted someone else would have won the lottery and been allowed to default to fill the statistic? The sum of defaulters are supported by the sum of payers. Yeah, credit card companies make money, but they are competing and seeking a margin of profit. If expenses were lower due to fewer defaulters competition would drive the expense to consumer down.

    And for those saying ‘the creditors can afford it’, I don’t get that either. Five years ago I loaned a friend $500 because her furnace went out in the middle of winter. She was a secretary and she and her husband were bringing in ~$40k with two kids while my husband and I had no kids and were making ~$120k. She re-paid me $200 then defaulted. Is that okay because $300 is small money to me? Is it okay because it’s a lot of money to her? How about if I made a million dollars? What if I loaned her $5000? Why should the numbers ever matter?

    As Tyler said it’s far enough in the past, and I prefer settling debt to full out bankruptcy. If any of the people who owe me money would offer to pay me half of what they owe I would be stoked. But I get a chill at the blase attitude people have toward debt. As another poster pointed out, it’s a slippery slope. If you don’t honor a debt to a corporation will you honor a debt to a small business? A sole proprietor? A stranger? A neighbor? A friend? Family? Where is the line drawn on who it is ‘okay’ to not pay what you have agreed and who should be paid?

    I believe we all want to do the right thing, and we have an endless ability to justify exactly what that is, and miraculously it’s usually what is is their best interest! I have told the story before but I had a tenant during eviction get really mad and indignant and tell me she wasn’t going to pay the water bill because she was so embarrassed by having the sheriff escort her out. This was very strange to me as they hadn’t paid rent in five months so the water bill was small potatoes. According to her it was her HUSBAND that owed us money, even though she was living in the house (and he wasn’t at the time). She had wound her brain around and around so she wouldn’t have to feel bad about anything. The mental gymnastics were preferable to facing the reality of herself as a deadbeat who didn’t pay her bills.

    I see the same mentality in lame justifications like “They know people will default”, “They prey on college students”, “they make a lot of money, they don’t need mine”, and my personal favorite due to the circular logic “They should have known better than to loan money to me”.

    • John says 02 February 2018 at 20:23

      Your friend had a moral obligation to repay you. I have no moral obligation to repay a bank I’ve already bailed out.

  112. feminismisfun says 16 March 2010 at 09:38

    one issue that hasn’t been touched is that while i firmly believe that one should pay back their debts, credit card companies and other corporate entities have tax law on their side, meaning they can write off bad debts as well as any expenses leading up to the debt going bad. individual tax payers can only write off the interest on their mortgages and student loans. why not the interest on credit cards? why not the expenses incurred in every day life? the tax law gives specific advantages to corporations that individuals cannot utilize.

  113. oc says 16 March 2010 at 09:47

    Thanks J.D. This is the post I have been waiting for for a year on GRS. My debt is about half yours was and yet I am in the same boat: Old broken down car, no health insurance, no emergency fund, but PERFECT credit and about 18k in debt that I service every month like a slave while my youth evaporates and my life goes nowhere. How many of the gray hairs on my head are a result of living like a rat in a cage?

  114. Patti says 16 March 2010 at 10:44

    In response to feminismisfun #112

    Yes they can write off bad debts but this has a trickle effect. Money written off means less in the coffers of society which means if done oft enough higher taxes and less services …..it is a vicious cycle.

    I’m guessing that you are too young to remember when interest on credit cards, cars etc was a writeoff. That changed about 1986.

    Individuals can utilize the same tax advantages of corporations but you must be in business and thus have business expenses. Business expenses are those expenses that are necessary to keep a business in business and thus keep folks employed. It is an incentive to grow and be a productive function of society. People employed means taxes are paid, personal, real estate, sales, etc. People shop and travel, buy new trinkets. That’s why businesses have the advantage of writeoffs that we individuals don’t; they bring something to the table we indiviudals can’t…..we are an economic drain when the numbers are studied. Without a job or income the ball gets a flat spot or two and doesn’t roll very nicely.

  115. Katy says 16 March 2010 at 10:59

    Just feel I need to point out there are several laws in CA that protect consumers from being gouged due to poor credit. So this story may have gone differently if it was in a less consumer-friendly state.

    I’m glad it all worked out. Just thought that should be mentioned.

  116. April Dykman says 16 March 2010 at 11:52

    Thanks for sharing your story, Tyler. I know it’s not an easy thing to do!

    I think it’s important to distinguish between what Tyler did in the past versus what he does now. He’s not advocating that people drive up their debt and walk away, he is simply sharing his past situation and how he managed it. Credit card companies understand the risk they take in lending money, just as Tyler knew about loans and interest. The matter was settled between the two parties, and as he said, what’s done is done. One could chastise, but he can’t change what happened, so there isn’t much of a point.

    The important takeaways:
    -Don’t spend money you don’t have.
    -If you’re deeply in debt, get help.
    -Don’t drastically upgrade your lifestyle simply because your salary increases.
    -If you have a bad credit score, there might be ways around penalties, such as pay stubs and/or referrals.
    -Keep habits that work for you (in Tyler’s case, no credit cards).
    -Focus on experiences over Stuff, and practice the art of “making-do.”

  117. KB says 16 March 2010 at 12:13

    Completely agree with #111, especially the part about lame justifications. I really do not believe that any college student is unaware of what they’re getting into when they get a credit card. Does anybody really think they are getting free money? If so, how did you make it as far as college.

  118. Nester says 16 March 2010 at 12:31

    Great feature. Thanks for sharing. Chalk it up to lesson learned.

    I know folks who bought houses, walked away from them, and are STILL trying to buy through any means necessary (family favors etc). Some people NEVER learn.

    Glad you’ve ended up on a positive note, learned your lessons and moved on. Congrats.

  119. Ryan@TheFinancialStudent says 16 March 2010 at 13:01

    @ KB,

    I don’t think anybody thinks they’re getting free money, but they do assume that their future self will be paying the bills. Obviously, this is a dangerous game to play.

  120. Budgeting in the Fun Stuff says 16 March 2010 at 13:09

    I completely agree with Shara (#111). He should have settled these debts when he was able…not just waited to be tracked down.

    Personal responsibility is important. He made sure to pay back his parents, so why didn’t he pay back the debts in full that he owed for expensive car stuff and a laptop? Just because they are businesses that charge interest rates shouldn’t negate the fact he owed them money, right? Even a college kid can do math…spending more than you earn leads to debt.

    I’m not trying to attack. I just don’t agree with this mentality.

  121. Kristina says 16 March 2010 at 20:40

    Stealing is wrong, and taking something without paying for it is stealing, simple as that. It’s really sad to me that we live in such a world now that a person’s honor means nothing, and his/her code of conduct is defined by nothing more than what he/she can get away with. I sense this more from people in these replies than the author of this article — it really seems to be a prevailing notion among the responses here. What it comes down to for me is not who I would be wronging (other consumers, big corporations, etc.), but what kind of person I want to be.

    • John says 02 February 2018 at 20:25

      Stealing requires intent and he didn’t intend to default when he incurred the debt.

  122. Bridgette says 17 March 2010 at 11:52

    What I learned from this story is that you can still live a pretty good life with a bad credit score. It just takes a little effort and work. I will possibly be hit with a foreclosure on my credit score within the next year because of a misunderstanding when buying a timeshare(a mortgage for a timeshare, who would have thought). I have no other negative marks on my credit and have a score above 700. I was trying to decide if I needed to fight this or just let it ride and hope my score with improve over the years. I own my car(which I paid off early) and will be closing on my first house soon. I am pretty sure I won’t “need” credit anytime soon. I decided that if I need to buy property that may require credit I will just have to start saving now for a huge downpayment or to pay for it outright. I already have a couple credit cards that I was planning to pay off and cancel but will probably keep for an absolute emergency. Basiclly I refuse to lose any sleep over my credit score. You can make mistakes and not be a bad person. There are many ways to work around it and for most people if you are able to save you won’t need much credit.

  123. Bridgette says 17 March 2010 at 11:56

    All those people complaining about the OP stealing and how it affects all of the other credit users, should stop paying their balance in full each month on their credit cards. Basically you are getting a free loan. Because of this the banks are very comfortably about sneaking in increased interest rates and fees to make their money. If you really have the money at that time then use your money. Those perks and cash back aren’t free either. Someone is paying for it.

  124. Cybrgeezer says 17 March 2010 at 11:57

    JD: You need to call a convention of posters because there may never be such a meeting of perfect people anywhere else. All those saying they would NEVER do such a thing and they would go back and pay everyone should be saying “There, but for the grace of God, go I.”

    You don’t know what you would do and I think some of you didn’t do what the OP did because you didn’t think of it or were afraid to get the law involved. Heck, some of you may have been so bad off you couldn’t afford the lawyer or bankruptcy filing fee. That doesn’t make the action — or those who take it — below you.

    But get off the high horse. It’s getting a sore back from all of you jumping on.

  125. Bill in NC says 17 March 2010 at 12:49

    The cost to you is you pay more.

    I probably don’t have the income many here do but with my excellent credit score I can borrow on an unsecured line at a rate a fraction of (non-promotional) credit card interest rates.

  126. Steve says 17 March 2010 at 19:35

    Enjoyed the post. It appears that a lot of people missed the point – How I ruined my credit score, and how it didn’t ruin my life” –

    Some people read a post to pick it apart and others read to see what they can learn from another person’s experience.

    Negotiating a debt is the same as neotiating the purchase of a car. You want the best deal you can get without ripping off the other party (win/win). If you get a good deal on the car or anything else, are you going to look them up later and give them some more money.

    Earlier today, I negotiated a medical bill that was not covered by insurance. Sorry if some of you will have to pay for my 30% discount.

    A lot of the negatives mentioned here are irrelevant. If you can’t relate then find another post and move on.

    I am personally glad that Tyler’s experience didn’t ruin his life and that he learned some valuable lessons.

  127. reinkefj says 18 March 2010 at 04:26

    @Steve Says: March 17th, 2010 at 7:35 pm
    *** begin quote ***
    Enjoyed the post. It appears that a lot of people missed the point – How I ruined my credit score, and how it didn’t ruin my life” –
    *** and ***
    Negotiating a debt is the same as neotiating (sic) the purchase of a car.
    *** end quote ***

    At the risk of reigniting the firestorm, I don’t think it’s the same. A negotiation and agreement was already in place. And, the borrower was changing the deal unilaterally.

    Understandably, possibly for good reasons, and perhaps unavoidably.

    But still after the fact, reneging on an agreement.

    We would NOT permit the “evil” credit card company to do that. But, some how, we sympathize with the other side.

    Lest you consider me Ebeneezer with “Are there no workhouses?” or Saint Joan of Arc the Virgin Warrior, I empathize with the plight.

    But all the “saints” in this discussion are saying is that you must honor your commitments. Even to the point of going back after a discharged bankruptcy and paying them off.

    Not for the benefit of the lender, but for personal honor.

    It — a renegotiation — is different.

    Sorry to light the fire.

  128. Steve says 18 March 2010 at 09:00

    Everybody here knows the difference between a negotiation and a renegotiation. The debt vs buying a car was, of course, an exaggeration.

    I guess that I tend to look at the positive rather than the negative. I have no control over other people and their actions. I pay what I owe but negotiate everything. I do not fault anyone for renegotiating their debt. You have a new agreement.

    I would be happy to accept a small percentage of money that is owed to me. I don’t dwell on it and don’t lose any sleep. Maybe I was meant to be their “Guardian Angel” (I don’t really believe this). The point is that I am not bitter.

    I am retired and “debt free” including the house. I am not rich but have “financial peace”. One reason for this is that I take care of my house and am less judgmental of others.

    I enjoy reading financial posts and continue to learn. Would suggest that we lighten up and keep our eyes on the goal – Get Rich Slowly.

  129. MossySF says 18 March 2010 at 11:31

    One final devil’s advocate post.

    Having some number of people default is healthy for the economy. Without it, bankers and lenders start to assume easy repayment and lend out way too much money on too easy terms. The sea of money then causes asset bubbles everywhere from housing to commodities to stocks and it all comes crashing down when we run out of fools to lend.

    So we need defaulters, we need companies going bankrupt, we need banks going under. We need those who make financial decisions to get their fingers burned on a minor but regular basis or we end up with an economy that only knows bailouts during major disasters. In short, it’s good for everybody to pay a bit extra for credit in an balanced economy to avoid the manic swings of an schizo economy.

    Of course, this is just a wild theory of mine as this kind of financial armageddon is so improbable … ahem.

  130. TJ says 18 March 2010 at 15:16

    Thank you, thank you, thank you! Unfortunately, DH and I are at the point where bankruptcy may be our only option. Due to our health, there was little income last year to pay our bills. The result was our credit card was used. But during the time the medical bills grew and grew, and now we have over $50,000 in different debts, more kids, and no way to pay it all. It’s not the actual debt that we cannot pay, it is all the interest that continues to build. We hope to get things squared away so that we can pay the debt without bankruptcy.

  131. Frank Sinatra says 18 March 2010 at 20:23

    I think this is a very well-written story! Thank you for sharing it!

    As for your debt-settlement methods, I think they are honorable. Once in deep doo-doo like that, it would be easy for anyone to give-up on their debts and write them off completely.

    Instead, you re-paid the companies with an amount to which they all agreed. They could have jockeyed for more … you could have jockeyed for less. In the end, it was a mutual agreement.

    Certainly keep your focus on living beneath your means and accumulating wealth. Money is the means and not the end. However, more than wealth, I wish you peace, love, and happiness.

  132. David Wilcoxson says 19 March 2010 at 17:46

    Thanks for sharing your story, I can totally relate to your story. I restored a Camaro Z28 and ended up going way over-budget. This started a debt pattern that was really hard to break.

  133. Joe McFly says 24 July 2012 at 19:30

    Unsecured means unsecured. It is not illegal to default on unsecured debt in the United States. If you agree to the loan based on your willingness and ability to repay then later find that you are no longer able to pay, then don’t pay, and by all means lose your willingness at once. After six months of inactivity your creditor will write it off. Your credits score will have long since tanked so forget about that B.S. and don’t even look at your score. Anyone who contacts you after six months is just some doofus collector calling on behalf of some scavenger law outfit. Ignore their lame asses. You can go bankrupt just fine on your own without actually filing bankruptcy. All bankruptcy is is a chance for some scumbags to scam you out of your last couple thousand bucks and any cars and jewelry you may have. Nobody wants your crappy I-Pad, reclining massage chair, scuba gear, and they can’t take those ridiculous tattoos, though I’ll bet that secretly you wish they could. Remember, the old saying, “You can’t take it with you.” Well, it applies to debt too. So don’t let this affect your life. The fewer people you tell, the less real it is. If you tell nobody, then it doesn’t even exist. God made Earth. People made money. Interest (money made from money) is, I am certain, a product of the ass-crack-of-hell. If you think you deserve more of it just because you have a bunch of it then you just may be headed where the Sun don’t shine so much. Work for you money. Don’t barrow it anymore. Give away any extra you make. Give it to your Mom, your siblings, your kids, some good charity, but not a f’ing church. God doesn’t want your fricking money… at least I don’t think so.

    OK. I’ve had enough. Who’s next?

  134. Josh says 08 August 2012 at 23:20

    Thats completely ridiculous that you had to settle for half of what you owed. Its nobodys fault but yours that you spent more than you could afford and then you stop paying your creditor. Its people like this thats wrong with our economy. its not morally right to stiff your lender. The only purchase you had to make was the medical bill. if you spend the money.. then pay it back. Its not right that someone else should have to pay for your mistake. Thats bullcrap. You should be responsible for the consequences of your actions. Then you go buy a brand new car when you still owe other creditors. Thats ridiculous. Its called be a man and take responsibility for your actions. How would you feel if you loaned money and they didnt pay it back? I have no sympathy whatsoever for this guy. It sickens me that you would knowingly buy Toys and then not pay for them

  135. Ky says 31 August 2012 at 23:37

    So, all you had to do to survive was get a job paying over $30/hr?! Wow!

    Instead of inspiring anyone, you just made the audience realize how damned they actually are.

    Cell phone companies don’t care? Please. The first thing they do is run a credit check. Poor credit? $750 deposit for one line of service.

    If only we all had $30/hr jobs! Your story has absolutely nothing to do with the average working class person. You are above the average in pay and trying to convince a person like myself with lower than average salary that “You too can make it!” is just insulting.

  136. Brian says 29 January 2013 at 21:08

    To anyone who shamed this person for not paying his debts, and for resolving his financial situation in this manner, may I remind you that debt is not an insignificant contributor to suicide and other types of self-destructuion. This story may not help you responsible folks out there, who have the leisure and self-righteous attitude and hindsight to chide this man, but for someone who is struggling month after month, year after year to pay debts he or she knows full well can’t be paid off for decades, rather than reading other people’s complaints about being in the same position, pointlessly commiseratingto no avail, here they can read a story that actually has a happy ending. Maybe, just maybe there is a way out of hopeless debt slavery (whether they deserve it or not is irrelevant) that’s not as terrifying as what the mind of a depressed debtor can typically conjure up. Something not involving hunger, homelessness, shame, deprivation, prison, etc., etc.

    Kudos to the author, for assuming you had the right to continue living, for doing so with aplomb, for settling-up with third party collection agencies (I would not be so magnanimous), and for sharing a story which may actually make some people feel better!

    And wtf is ‘predatory borrowing’? Never heard of it…

  137. Brian says 29 January 2013 at 22:09

    I would like to share an idea I came up with and have lived by since I was a teenager that may help those of you who are indignanat that someone would ever fail to repay a debt. I saw when I was young how money could ruin a relationship, and I decided therefore never to lend anything of value I couldn’t live without. Please, don’t ever lend money to a friend. Give it to them instead, or if you can’t live without it, then don’t. I’m not suggesting commercial lenders give out money. That would be asinine. I’m only referring to those of you who have shared stories of ‘friends’ not paying you back in order to illustrate how defaulting on debts is wrong. Since when is affording your bills a matter of honor? More importantly since when is it more honorable to hold a friend in your debt than to help them as you are able, with no thought for yourself?

    Comparisons between large-scale lending for profit and small-scale lending to help a comrade are always non sequitur.

    I was inspired by the good parts of this story, and utterly impassive to anything which may have broken that goodness. It’s an art, and a way of life for me. Some of these responses are so bitter! I implore all you righteous zealots, get off the internet and go actualize your superiority in the real world, for the benefit of society!

    (Wait, maybe you should all stay inside so you don’t ruin the real world, too with your intolerable haughtiness.)

  138. Julie says 06 July 2013 at 11:55

    I had a very similar problem. It started out as a good plan and I soon realized I was in way over my head.

    I actually think it’s a good thing that I’m not eligible for a credit card at this point because I still have a problem charging what I don’t need and can’t pay.

    I need to be on a cash basis only.

  139. Richard says 21 August 2013 at 20:54

    Post #111 nailed it. For those of you who think we are “on our high horses”, I implore you to carefully read that post again.

  140. Cindy says 14 November 2013 at 10:41

    Loved reading your story. wish I could do the same. However the only similarity for me is that my credit is ruined and at this rate I have no hopes of it being anything but. I went through an ugly divorce where he as handling the bills and I mistakenly trusted that paying bills meant he was paying all the bills . I ended up having to file bankruptcy. Had my car repossessed and suffered a great deal of humiliation. Never letting anything get me down I surged on. I was doing fairly well in work for only having a GED and no resources to go to school. (couldn’t afford out of pocket and couldn’t get loans because of credit) but work was steady. Then my son committed suicide and I lost it all. My job, my home , my sanity. I ended up on disability due to depression (but receiving only what I paid into the system not on government sup). Now only making 979 a month with no insurance and still bad credit. I had before all this happened managed to pay off a lot of debt only problem is..I paid in lump sums…instead of payments…which also hurt me and my credit.:( Now I couldn’t get a job to save my life. I cant make money because nobody will hire me…I cant pay any debt because I can barely afford to eat and pay for groceries, medications and car insurance. I now live with a friend who took me in and I try and help out with bills there on what little I have coming in. And here I sit trying to figure out how the hell I turn this all around….anyone out there got any answers for me please let me know! Oh yeah and I managed to get a secured credit card to help build credit but now the credit score companies tell me because its less than 2000 that it actually ends up hurting me in the end. I CANT WIN!

  141. sonya says 20 November 2013 at 13:38

    Well, all of this is fine and good…if you’re making around $40,000-$50,000 per year, which it kind of sounds like the author is. Note how he stated that when he was only making around $35,000 per year it wasn’t as much money as it sounds like, and it was during that time period that he went into debt. He then states that after he graduated college and started working, the money was “piling up in his checking account” and yet he still did nothing to pay back his debt. In fact, he actually waited around (hoping it would go away??)for the collectors to call him! When they finally reached him “several years later” as he states (although this whole story took place in only a short 7 years), he then paid them back a cool $5,000…as if it were no problem at all! It was kind of like “oh, you want $10,000? sorry, don’t have it. Oh wait, you only want $5,000? Sure, no problem!” so yeah…this only works if just so happen to graduate from a decent college, have parents to foot the bill for you when things get rough, and then make substantially more than $35,000 a year after graduating…which would allow you the funds necessary to save enough to make a $5,000 payment in one fell swoop. For most people though, the reality is that they’re only making $25,000 a year or less and they’re living paycheck to paycheck. Yes, they would love nothing more than to pay back their debts, but they’re having a hard enough time putting food on the table, let alone giving another $100 per month that they don’t have to a debt collector. I don’t fault the author for sharing his story, however I feel like he’s saying “hey everyone! look at me! If I can get myself out of debt, you can too!” but he glosses over the fact that he was making a high enough income to actually be able to SAVE the money to pay them back. Most of us are not able to save $10 a week, let alone have it “piling up in our checking accounts”.

  142. tony says 28 May 2014 at 00:00

    Tyler i want to thank you for sharing this story, mine is not too diffrent i didnt spend nearly as much as u but i have been struggling in todays economy you gave me hope again when i thought there was none and as for a comment on here erik tyler wasnt braging he was sharing a story something that can and will happen to us all his story inspires hope for people without it and so i say thank you tyler for shining the light in the dark when their was none and as for erik goodday to you sir

  143. Lindan Swanson says 18 June 2014 at 23:02

    Thanks for sharing your story. If we have made financial mistakes we are all ashamed of them but it is a learning process that many of us need to go through. The banks and credit card companies push credit cards at you even if you are up to your neck in debt just so they can make more money. Many of us “over indulge” in spending with all these cards and when we get into trouble have no where to turn.

  144. Nastassja McCullough says 30 August 2014 at 15:36

    Wow what a wonderful tale of financial debt turned into a humbling experience. It was creatively told and kept me interested to read to look to the hills of where I am about to head. Your story was motivational.

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  146. JessicaB says 08 January 2015 at 17:43

    Wow, this was truly amazing and inspiring! So very simple and straight to the point! I’m 24 and I’ve just been so down about the foolish mistakes that I made in those beginning stages of adulthood. Wondering how could I have ruined my life and what can I do to fix it and live a decent life? First thing I concluded was to avoid any getting anything else unnecessary using my credit and to stop spending so frivolous! I’ll definitely be bookmarking this article!

  147. Sage says 04 February 2015 at 19:32

    This is truly inspiring, man. I am working my way out of a pile of collections with significantly less than 30k in debt, and even so I’ve felt like straight giving up. I’ve let myself feel like I’ve made irreparable damage to my livelihood, and that I have some unfixable habits.

    With depression involved, just dying to escape it all has honestly felt enticing. Thanks for showing us that it isn’t the end; that you can make things work, and be more than just okay.

    Cheers.

  148. Cea Cea says 09 April 2015 at 08:23

    So you’re basically saying your life sucks…

  149. Minnette says 13 June 2015 at 10:07

    Congrats! It can be done!

  150. Kiyoki says 21 July 2015 at 14:10

    My debt is WAY less than yours and no one will give me a loan even with a co-signer. But then again I am “African American”. I want to know what else you did because this story seems very unrealistic and highly unlikely.

  151. Chris says 03 March 2016 at 16:09

    Lots of people on the high horse it seems. Let the guy have a fresh start….

  152. lisa gale says 20 March 2016 at 09:37

    I am in the same shoe’s right now! But my situation was, buy insulin and supplies because I do not have medical insurance or pay my credit cards. Me being a Diabetic as put me in the poor house. I did have good credit! I am maybe 7.000 in credit card debit and cannot get out of the hole.I am a type 1 diabetic.very expensive. everything has went to collection. Trying to keep the payments on my car up, that is the only positive thing. cannot get aloan to pay the credit cards, and the collectors are blowing up my phone. My hands are tied. To some people 7,000 is not alot of money. But to me its a million. Thanks for sharing your story.

  153. Shane says 09 February 2017 at 11:32

    Wow, everything above sounds extremely similar to my life! It’s kind of surreal to find this has occurred with others across the ‘pond’ in the same process I’ve had to face. I have about £10k left to pay off (Dropped from £14k). I too was young and foolish, but at 28yo, I am now slowly paying these past burdens I once took for granted.

  154. AB says 09 June 2019 at 15:32

    I’d like to see bankruptcy and debt laws vary with the kind of debt. Giant banks make massive profits and, I agree, individuals should prioritize survival over paying off their debts if absolutely necessary. But when the “creditor” is an individual, I think debt laws should be different. I started a business with an individual a few years ago. He had no money but lots of experience. So I put up 100% of the funds to start the business and did all the legal work (contracts, legal and accounting relationships, registering business with government…) myself and offered him a 50% partnership on the condition that he make minimum monthly payments to me for his share of the partnership.

    Within the first 6 months, he drained our business account, stole supplies to sell privately, and took out loans against the company without telling me. The business loss wasn’t due to unavoidable risks but flat out finacial predation. I had to pay a considerable amount for an attorney to take him to court since my state’s attorney general’s office told me not enough money was at stake to warrant their involvement despite all the accounting and banking evidence I had. Yet it was my life savings.

    My ex-partner never showed up in court because, unless the money’s owed to the US government, these shenanigans are considered merely a civil, not criminal, matter. Now my credit is destroyed, I’ve lost my life savings, and at nearly 50, I’m not an attractive candidate to most companies (I’ve applied to hundreds). As an additional injury, I was left to pay BOTH my and his tax bills for the company and the late fees for his failure to pay his half. The IRS literally told me when I explained the circumstances, “We don’t care. One way or another, we’re going to get our money.”

    So because someone can decide his comfort is more important than paying back his debts to other struggling individuals, in the US we can effectively steal from others without ever having to be held accountable, so long as we can hide our assets OR are willing to relocate to escape courts’ jurisdictions. My ex-partner has since vanished & my state courts tell me I have to pay more money to attorneys and private investigators to find him and bring the law suit again.

    Thanks to the US’ lax debt responsibility laws, many people like me are driven to consider taking our own lives because it costs money to survive and all ours has been stolen with no legal recourse to get it back even when we can prove others’ fraud through meticulous legal and financial records.

  155. Steven Katz says 15 January 2024 at 12:59

    There is another way to ruin one’s credit score, and it is one few people know about and ever fewer can explain. Everyone knows you can destroy your credit score by missing payments to creditors. Very few people know that MAKING your payments, even paying ahead, under the right circumstances, can cost you 100 points without ever being a single day late on any payment. How, you ask?

    Simple, he answers. Pay off a loan. When I paid off my car loan some years ago (a year and a half early) I lost 40 FICO points immediately. When I paid off my mortgage two months later, I lost 60 more points immediately. That’s 100 points I lost in three months. Intuitively one would think that paying off debt is a good thing. After all, I no longer had a $700 a month car payment to make, and two months later I lost a $1,200 mortgage payment to make. My disposable income (and therefore my ability to pay off other debts, like credit cards) just increased significantly.

    The reason – (and I have this from an employee at Fair Isaac who is in a position to know) – FICO’s score is a predictor of how likely a person is to make next month’s payments. If you paid off the loan, then your likelihood of making NEXT month’s payment is pretty low.. Practically Zero, because the loan is paid in full. Since you won’t be making that car loan payment OR the mortgage payment, FICO looks at that like a default. ZAP – away go the points, just as if you had actually defaulted. FICO does not like installment loans.

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