January 28, 2017
I never fully understood the weight of the debt I was accruing while it was happening. What started as opening a simple credit card when I was 16 to begin the process of building credit (something I'm sure we have all encouraged to do at some point in our lives), eventually turned into having just shy of $30,000 of debt ($59 shy to be exact.)
Other than my $17,000 car loan payoff, all of the debt was caused by credit cards. That $500 limit my first credit card had when I was 16 eventually bumped up to a $2,500 limit. And at some point along the way I thought it would be a good idea to get an Ann Taylor Loft credit card as well. "People will often just use their Loft card to get points and the discount, and then turn around and pay it right off," the sales clerk told me. "Oh that's a great idea. I'll do that, too."
I didn't. But I did manage to rack up a $1,650 bill instead. (I know. Don't worry, I wore all those clothes for YEARS.)
My lowest point, though, came when I had managed to rack up $2,000 on a corporate card I had been issued for work (not actually from work, but from American Express, basically because I had a job...they'll issue just about anyone a card.) The card was strictly for work expenses that I could be reimbursed for so I wouldn't have to use my own money to pay for things. It was not something that was sanctioned by work, and so as long as I was only asking for reimbursement on the items I was providing receipts for, they didn't care or know what else was being put on the card. Not good for someone that has a bit of a spending problem.
Eventually, I had a $2,000 bill that I couldn't get paid down, and American Express started calling me. The calls came every single day and would only temporarily subside if I was able to pay off a large chunk (which rarely happened.) I was so fearful that they were going to start calling work if I couldn't get it paid off and that brought feelings of shame and panic. So I went to the bank and took out a $2,000 personal loan so I could turn around and pay off that card. "If I'm going to have that kind of debt, I'd rather it be me paying myself instead of a credit card." Not necessarily sound thoughts, but this was my reasoning.
Here's the kicker, though. I actually had to do that twice. Because two separate times did I manage to get my bill up that high, and two separate times in my life I was being woken up in the middle of the night with guilt and shame and embarrassment and panic. It wasn't a pretty or proud time in my life.
Credit card debt is extremely deceitful. It tricks you into thinking you can keep it under control, and then the next thing you know, you've spiraled. How many times have you thought, oh I'll just use my credit card for this $30 shirt, and I'll pay it off as soon as I get paid, but then you didn't? The next thing you know, $30 has turned into $300 and a spiral has started.
This is why Dave Ramsey is so anti-credit card. He knows and has seen what it can do to people. Even the best well-meaning people. And this is why he encourages all of his listeners, readers, and followers to take out some scissors and starting up credit cards ASAP.
I know cutting credit cards seems quite extreme. I honestly thought I'd never do it, even while I sat in my Financial Peace University class listening to Dave talk about it. I didn't think it was really all that necessary. But then one day I decided to cut one up (the Loft card - such a troublemaker), and it was so liberating that I continued to cut others up as well.
Okay - so what do you do if you have a ton of credit card debt? Where do you even start?
To start, you actually have to just stop. Stop using them, ASAP.
Seriously. Just stop swiping your card. Many of us are likely swiping our credit cards for things we don't actually need anyway, but because convenience and culture tells us that we need everything and we need it immediately, we've found ourselves in this situation. But I promise there is a different way.
(Also - real fast...you don't need to focus on a credit score right now. If you've got a ton of credit card debt, the last thing you need to be thinking about is your credit score. Thinking about your credit score could be what got you into this mess in the first place.)
So, step one - walk away from your credit cards. Instead, actually set up a reasonable budget that you can live within and start following it. Start using the money in your income to buy the things you NEED and WANT (and if you can't afford the things you WANT, start saving for them.)
Stop using your credit card. I promise exactly no one has ever died from not getting that $8 latte they wanted.
Next week we'll talk about my favorite debt-dumping tool. A tool that has helped me go from $29,941 of debt to $8,579, while still managing to have a social life. A tool that shines hope for those of us that have found ourselves in difficult debt situations, but until then, if you have credit card debt that you aren't sure how to get out of, take some time to reflect on how you got there in the first place. Start looking those habits straight on (don't let any feelings of shame, embarrassment, or guilt stop you...many of us have ugly spending stories...hi, two personal loans to pay off credit card debt...and we have to start somewhere) and try to understand where they came from. And then pull out your scissors and start cutting some of credit cards up. (You think i'm kidding.)