What was your first step to debt and why did you take it?

 Going into debt was more like falling into it instead of deliberately stepping into it! But everyone needs a car, right? That's probably the first step for many as it was for me. That's all I owed on, though, until I married and he was in debt, so it came with the package.

Beware credit cards and beware "window shopping" for anything.  

My first step into debt was back when I was 18. My first credit card. A dangerous tool in the hands of a shop-a-holic. It had a low balance but I would pay just the minimum to be able to charge on it again. "Emergencies" became "it's on sale." I carried myself this way even when starting out while living with my parents (rent free). School loans were piled on top of that along with a beat up car with payments. I have been through 2 debt managements (paid off with settlements/inheritance) and no longer carry the plastic (except the debit card). Both times on management was about $10,000 in credit card debt. I now live the philosophy of no cash - don't need.

(Right now in amounting debt; living on student loans while "renting" from my parents. By the time I am done, I will owe the government over $20k in student loans and my parents over $40k).  

 I had no debt when I married but my husband had financed his car and had a credit card. I then got two credit cards of my own. We got rid of the car and cut the cards years ago.

Our recent path to debt began with the need for credit so we could rebuild our lives and obtain housing. It began with financing a truck and then a credit card for my husband.

My first step was a sm student loan. Paid off then credit cards and paid them off....then more credit cards but the house mortgage was the first major debt. Credit card debt now is more cost of living etc which we are working on.

I too first stepped into it via student loans at age 16. Many advisers classify a student loan as good debt since it has a potentially valuable payoff. It's true college grads on average earn more than high school grads. But, these days, a significant portion of this extra earning power is consumed by their graduation companion... a mountain of debt.

The following table shows the percentage of students borrowing and average cumulative debt per borrower (excluding PLUS Loans i.e, Parent Loans) according to type of educational institution. 

Graduate and professional students borrow even more, with the additional debt for a graduate degree ranging from $27,000 to $114,000.

I say, find another way, if at all possible. Working and going to school is hard, and it might extend graduation date by a year or two, but this kind of debt can last your whole life.

-------------------
Greg Moore is the Creator of the Wealth Building System
'DebtIntoWealth -- Lessons from My Journey to Debt Freedom'

  'I finally see a light at the end of the tunnel and this
    time it's not the train coming at me! My Debt-Free
   date for my $54000 is January 2010.  That's only 3
    years away!  Not bad for a single mom with no income
    but my own.' -- Dianne D., Texas.

Get LESSON 1 FREE now:
http://www.debtintowealth.com/stretcher.html

Greg, I am hearing more people say they are struggling to pay their loans back. Apparently they rack up debt then get a job that doesn't quite cover adult living expenses and the debt pay off. Is this becoming wide spread?

 Yes.

http://finance.comcast.net/personalfinance/view.html?x=debt/advice/gradschool

Thank you for sharing that..all I can say is wow.

It sounds something like a gamble. Which is not to say college is bad but taking loans out hoping to make the money to pay them back is.

I went to an expensive school to get a degree in art therapy- and found my financial aid went down every year, dramatically for grad school- so I had lots of debt and a 5 month old baby girl when I graduated- I had her inexpensively with midwives in a freestanding birth center, but had to pay lots out of pocket for that-Blue Cross wouldn't preapprove it, although it was much cheaper than a hospital birth, and it was over the state line, since I was at school in another state, so I paid 55% of the birth,  they let me pay slowly-

But in my career I was president of Iowa Art Therapy Association, had one of the highest paying jobs in the state, but topped out at just under $32,000 in 1994- then was laid off, moved, moved, had 6 more kids, and ultimately rolled my student loan debts into the house.   I worked in the field for several years, I guess I would recommend trying to get college cheaper- my oldest, the baby I had in grad school, is in her second year at a state school-

I was talking to a friend of mine, we both thought we'd have more financial comfort by now, not be struggling and still have debts.  Neither of us feels that we have been out of line with money, and yet we are not where we thought we would be when we got good degrees and sought after jobs- we worked together in mental health units for several years.

Other debt- with the job, a dependable car, then a house (good buy), daycare, etc, etc, etc.

Unexpected debt- car repairs- who knew cars cost so much whenever there is a problem?  Medical costs, I thought health insurance covered most, didn't know about deductibles for everyone.  Gas, food, etc, whild unemployed, sick, during stressful times, etc.

 How much do people budget for the unexpected?  I know you should have 3 months saved, we have only a few hundred saved at any point- I try to budget $200 a month for unexpected.

Tracy