Digging My Hole

Year one…

When I started college I had one Capitol One credit card with a $500 credit limit, and it was the only credit card I had during my first year of college. I had applied for the credit card in the beginning because I wanted to begin to build a good credit history. I remember my first big purchase was my college textbooks: $460… At the time, I had not heard of Half.com, Amazon, or Campus i (now DealOz). I remember walking up to the counter, handing the cashier my credit card, and saying, “Charge it.” Twenty days later I received the bill, sent in my payment of $460 within the grace period, and was back to a balance of zero.

Year two…

At the end of my freshman year of college, I had two credit cards:

  • Capitol One: $500
  • Washington Mutual: $1500
  • Student loans: $4000

As you see, I had $1500 of credit to play with. In my mind I knew that this was more than enough credit to do some major damage if I was not careful. Careful, I was. Each month I set a limit of $200 between the two cards. At the end of each month, I paid the bill.

One might say, “Wow, you’re pretty good at this whole credit game.” I seemed to be educated about the evils of credit. I had no bills. I had no monthly expenses. And every time I considered paying with credit, I made sure I would have the funds at the end of the month  to pay the bill.

Year three…

  • Capitol one $500
  • Washington Mutual: $2000
  • Citi AAdvantage: $1500
  • Student loans: $13,000

Going into my Junior year of college I had a total credit limit $4,000. How anyone would lend $4,000 to a college kid working a minimum wage job 20 hours a week is beyond me. My credit limit was half of my annual income at the time. I still kept a zero balance on all of my credit cards and I still followed through with paying my bill at the end of every month.

In the summer prior to beginning my third year I got smart. My home and my family were in California, but I attended school in Texas. I did not have a car, so I traveled by plane between semesters. I decided to apply for a rewards card that would give me points to use toward flights. I had taken out at $13,000 loan to may tuition. I signed up for a payment plan, made all charges to my credit card, and used the money I received from the loan check to pay off my bills.

By the end of my third year, my available credit was pretty high

  • Capitol One: $500
  • Washington Mutual: $2500
  • Citi AAdvantage: $1500
  • Student loan debt: $21,000.

I had $4,500 in credit available and I was already $21,000 in debt due to student loans. Considering credit, I was digging myself into hole by taking out student loans. But that’s about it. As far as credit cards go, I was digging a small hole at the beginning of every month and then filling it back in at the end of every month.

The summer before I started my Senior year of college, I had received letters from my credit institutions which decided to increase my credit limits: Total, I had $6,500. Too much damage could be done with that much credit. But I was confident that I could handle  the responsibility. After all, I still carried a zero balance on all of my credit cards. I was already in debt due to student loans, but that did not bother me too much since I knew I could find a high paying job as an engineer… right?

As confident as I was, I was not ready to handle what the next year had in store for me…


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