Travel and Debt

March 10, 2012

Debt Prevention Rally 13 Nov 10

This is a subject I’ve been shying away from for some time. Frankly, even my immediate family doesn’t know the full extent of my finances. I’ve also been afraid of hearing feedback like, “How could you be so stupid, spending money like that?” True enough, but everything seems simpler in retrospect. Let’s start at the beginning, which as far as any debt is concerned, is university.

I didn’t and don’t have any student loans. My parents covered my university tuition, while I dealt with incidentals like food and gas. Yes, I know I was spoiled. At the time, it seemed like the most natural thing in the world. I had attended a private high school consisting of 99% affluent children. I was the 1%, whose parents earned a decent living, but it all went into my education. Paying for the University of Texas at Austin was actually cheaper than my kindergarten classes.

Although my parents had warned me of the evils of credit cards and how their greatest wish was that I never know debt, I didn’t really understand what all the fuss was about. I had seen so many credit card companies on campus offering swag in exchange for just filling out an application: “No commitments! No fees!” Looking back on it now, they’re despicable people, preying on a demographic that doesn’t know any better. The world would be better without them, especially in light of the current state of the US economy. Just like saying we know money, and you don’t.

I resisted the swag for most of my higher education years, but when the time came to apply for an apartment off campus, I realized the flaw in our credit system: you have to have a credit rating to do almost everything you need to do in life: get a house, rent an apartment, buy a car, even use a cell phone (in some cases). I couldn’t just apply with no credit history. That was the first time I tasted the power of credit, and I didn’t even realize the hole I had started digging for myself. My VISA cashback rewards card served me well for the next two years; I usually spent $500 for the month, paid it off in full, and thought that would be the end of it. What’s the problem with credit cards anyway?

My first big mistake: I charged my first Macbook Pro before I left for Japan. $2200, all in credit, all money I knew I didn’t have. My reasoning? Well, I did need a new computer, and I just assumed I’d be able to pay off the balance with my AEON teaching salary. Let me stress this point: I could have paid off the balance, but I chose not to. I was having such a grand time in Japan that nearly all my salary went towards travel and food. That’s how it went for two years: my balance didn’t increase by more than the monthly interest rates, nor did I make any significant effort to pay it off. On occasion, I would wire some money to pay the minimum monthly payment. Fortunately, it never occurred to me to use my card in Japan. The whole country is so cash oriented I only made a withdrawal from my American checking account once, and never used my credit card.

I was back in the states in the fall of 2008, and of course, my credit followed me there. I even applied for two more cards, with a total limit of around $14,000. My balance at the time was approximately $4000, and yet I still did nothing. I had a steady job in Austin that paid $2500/month, a cheap room, and I didn’t even try to pay off my card.

Fast forward to New Zealand, where I was living and working on Vimutti Buddhist Monastery in exchanging for room, board, and $400/month. Although New Zealand isn’t as credit friendly as the US, it’s certainly still possible to use foreign credit cards in bigger cities and gas stations. Which is what I did. Every time I visited Auckland, I ended up accruing more debt, from cookies on Queen Street, to booking my stay at the X Base, even indulging in the occasional massage. I even charged my incoming and outgoing flights. Debt was up to $6000, split over two cards. One of which was an Bank of America American Express card with a terrible APR. This was the beginning of the end for my carefree lifestyle, as I realized I had a serious problem.

When I returned to the US for good (seemingly) in January 2010, I knew I had to work in order to get my debt under control. I had to consolidate my debt onto the one card. It would have been a great idea, had my credit not been so lousy that I couldn’t get a limit increase and was unable to combine balances from three cards into one. At its worst, and I stress this, because I know people have had to deal with much more than I have in their struggles with debt, my debt reached $10,500. Ten thousand dollars, for a kid who had no permanent employment and desired nothing more than to travel. I even had to ask my brother for a loan of $600 just to make minimum payments. That’s when I knew I was in serious trouble. So what to do next?

Well, I worked. And I worked some more. I didn’t cut back on my obsession with Whole Foods’ lunches, or my love of the finer things in life, but I was able to at least pay off the balance of one VISA, a paltry $2500. That left me with about $8000 going into South Korea. I’ve blogged about my finances over there, but I never mentioned what it meant to my debt. When I left the country, I had $2000 in debt on one card, and $3000 in cash.

Seems straightforward, doesn’t it? Pay off the credit card right away? Well, not exactly. That certainly was an option, one that gave me no savings, no means to pay for a deposit on an apartment, and I was trying to get a fresh start in San Francisco. So I charged a little more to my credit card, if only to keep that stockpile of cash available for apartments. I’m a little more mature when it comes to debt now; I know how easy it is to just swipe that card, forget about the money. If all goes according to plan, I should be debt free by June. Before my 30th birthday.

So what have I learned from all this? Credit cards are just as addictive as any narcotic, even worse, as you have to deal with their repercussions far into the future. It’s been six years since I made that major purchase of a Macbook Pro, and I haven’t been debt free since then, always dealing with scraping enough to get the minimum monthly balance. Part of the reason I went to Korea was to send money home and pay off that lagging number. If I had to do it over again, I’d still buy the computer, but I’d have made more of an effort saving money in Japan.

I don’t know how my thinking is going to change once I see that balance reduced to zero. Everything will be changed. It’s still weird for me to think that I have less money than that man begging for change on the street. We’re born into different circumstances, and sometimes I think he got the better deal.

I could have saved money while traveling. My expenses were and are significantly less on the road. But it’s also easier to spend when you think you’re an invulnerable tourist.

One Response to Travel and Debt

  1. Day by Day | Once A Traveler on March 25, 2012 at 7:29 am

    […] still probably be spending the next two months in San Francisco getting rid of the last of my travel debt before celebrating my 30th with friends and going off on another adventure. I don’t plan to […]

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