Low credit scores, high levels of debts and a poor financial history can severely limit a consumer’s power in the economy. When negative marks and debts are prevalent, some feel that there is no way out of the mess.
But many previous debtors have escaped the financial perils brought on by poor decisions and now have lower debt balances and positive credit scores. Their path to financial freedom is not always the same, but the end-result and the appreciation for a better financial life almost always is.
These are some of their stories.
Choosing Comedy over Consumerism
Early on, Dan Nainan saw the dark side of the creditor world. When he was in his mid-20’s, he accumulated a mounting amount of credit card debt. Bill collectors used unlawful tactics to get him to pay, such as calling and stating that his parents were in an accident and needed blood.
Nainan said that the creditors were simply doing everything and anything to get payment. He did not know the law, became scared, and eventually ran from his debt collectors. He stayed out of the traditional consumer economy for years. As time went by, many of his debts fell off his credit file. While this allowed him to have a “fresh start,” he wishes he never entered that situation.
Now as a NYC-based comedian, Nainan approaches his credit history “like a hawk.” He has automatic payments set up for nearly every expense in his life.
His younger self, who focused on material possessions and debt, has since transformed. He now focuses on living a more simplistic lifestyle which benefits him and the greater whole.
Debt, he said, is “not only bad for your pocketbook, it’s bad for the environment.”
Although Nainan lives in the expensive borough of Manhattan, he allows the high prices to deter him from unnecessary items such as a car and eating out. His time is now spent in more positive ways like cooking at home and touring the country with his comedy show.
“The more material possessions you have, the more time and money you have to spend on it,” he said.
Past Experiences Fuel Future Careers
Some debtors realize that their intentions and actions do not align. Others build from these mistakes and turn it into a job.
Beverly Harzog knew that she was facing serious issues when her seven credit cards were maxed out at over $20,000 in debt. Despite her profession as a CPA, she admitted that she knew very little about personal finance.
“It just goes to show that this can happen to anyone,” she admitted. “It’s not intuitive.”
Thinking back to that time makes her cringe. Her first symbol of freedom, a department store credit card, was denied buying a pair of jeans. At that moment she realized that her life needed to be straightened out.
“You can’t get out of debt until you recognize there is a big problem and take responsibility for it,” she said.
Harzog, now a credit card expert and author of “Confessions of a Credit Junkie: Everything You Need to Know to Avoid the Mistakes I Made,” said it took her two years to pay off her debt. She benefitted from a comfortable salary and paid off any bill that would fit in her budget. Now, she realizes that sticking to a budget creates more autonomy than spending haphazardly ever could.
“When you are making conscious decisions in your life, you have freedom,” she said.
David Bakke also used his rough financial past to steer him toward a career path. Before his current position as a financial expert for Moneycrashers.com, his credit card debts were so extreme that he could no longer make the minimal monthly payments. His card issuers began to close his accounts.
He realized that something drastic needed to happen and halted all personal spending. He also worked in his spare time to increase his monthly income and use it to reduce his overall debts.