Free Yourself from the Vicious Cycle of Credit Card Debt

by Deborah Brown

According to the United States government, Americans are deep in debt. To view the latest government statistics, go here. The figures are scary!

Most of us know that we Americans love our plastic. The report and oftentimes our own debt situation proves it. We go into debt in our quest for the finer things in life only to be so overwhelmed by our financial obligations that we truly aren't enjoying all those material possessions we've aspired to acquire. Many of you reading this article are deep in and overwhelmed by debt. Most of you want to find a solution to your own personal debt situation and relief from the stress it causes.

I can empathize. When I was in college almost 20 years ago, I was inundated with credit card offers. As a college student with a low-paying work-study job and no other income, the temptation was irresistible. Before long, I had accumulated several major credit cards. That was a start of what would be almost 10 long years of debt hell--a position I recommend to no one, especially other women.

Over the near 10-year period, I married, had a child, and shared with my then husband a significant debt from 11 major credit cards. All were charged to their limits. This was in addition to auto and personal loans. Even though we both worked and had relatively good paying jobs, more had to go out each month toward expenses and bills than was actually coming in.

During our quest to support a family, establish ourselves, build a nice home, keep two vehicles on the road, and manage the basics of life, increasingly we relied on credit to make ends meet. Since I had the burden of managing all household finances, I felt extremely overwhelmed and stressed by the amount of debt we had managed to accumulate. We didn't have a cent left over for several other expenses, and certainly not the luxury of occasionally splurging on ourselves. Most of our income was being eaten up by debt. It had become a vicious cycle.

Too much debt causes what seems like a never-ending cycle of stress, frustration and depression. You charge in the first place for items you usually cannot afford or choose not to buy outright with cash. Then, your debt becomes so large and the monthly payments so spread out over several credit card bills that they become unaffordable as well. As life goes on, you incur more charges for unexpected items like car repairs or even school clothes for the kids, your bills get behind and your payments seem to double. It doesn't take long before you feel like you cannot see a light at the end of the tunnel. You feel you will forever be in debt--how can you possibly pay all these bills off? You feel like you will never be able to afford most things and you might as well forget about buying a house because your income-to-debt ratio is atrocious and your credit rating will soon be destroyed. One day you may even have to file bankruptcy!

Not only does high debt take its toll on your overall quality of life and your credit rating, it can cause significant damage to your marriage and family relationships. It can cause you to always be in a state of anger and frustration. You also envy or resent your friends who seem to be living the high life, or are at least able to pay their bills and still afford leisure activities and certain luxuries.

When all of this happens, you must recognize that your debt has taken control of your life instead of you taking control of your debt.

When I finally recognized that my debt was controlling my life, I made the unwavering decision to do something about it. That was almost 10 years ago. It took me several years but I managed to pay off all of my debt without having to resort to bankruptcy. I have since rebuilt my credit to the near perfect rating it has now and have stayed on a debt-healthy course for almost 8 years now. I'm a recovered debt-a-holic.

Since reducing my debt, my life has completely changed. I am enjoying a lifestyle that I had always wanted--with more money left over each month than I could have ever imagined. I am saving. I am investing. I am building for my future. And I have been a single mother for all these years of rebuilding. I have no income other than my own to rely on. I make a decent income and live in an expensive community between Baltimore and Washington, DC. I am able to not rely on credit for the things I want or need. If I do charge, it is on my sole major credit card and only for big items I'd prefer not to pay for in cash. I then pay the balance off quickly.

I can walk into a store now without the fear that when I attempt to charge something the transaction will be denied either because I am over my limit, behind in my payments, or the account has been canceled. These days, I want for nothing--for I have it all. I've been able to buy a new $2000 bedroom set, a $1200 dining room set, other pieces of furniture, not to mention new computers, such as the laptop for $2200 I purchased last August--all with cash. Such transactions were absolutely unheard of in my former life! I owe nothing on these items and am not experiencing the stress associated with carrying the debt.

All this on a single mother's income? You betchya!

I listen to friends of mine I have known for years who are my age or older who are still experiencing great difficulty with debt due to unfortunate circumstances in their lives and poor debt management. I obviously empathize because I've been there. It doesn't have to be this way, though. We all have tools at our disposal for managing our debt. I wish I had such tools back in the 80s when I was struggling for ways to manage my money.

If you are experiencing a high level of personal debt, you may feel as though you have no extra money to apply toward the balances beyond the minimum required payment. You may also feel as though there is no light at the end of the tunnel.

Not true.

To better manage your money, I recommend the following:

1. Don't live beyond your means. Be patient. Gradually you will acquire all of the material possessions you need and wish for. If you try to get it all now, you'll spend the next decade buried deep in debt. Get those material things that you want and think you need to live comfortably on a gradual basis. If you must buy now, don't sacrifice quality--a well-made piece of furniture is going to last you a lifetime. Having to buy from the local thrift or from yard sales might render you a piece of furniture cheaply, but I can pretty much guarantee that piece of cheap furniture will need to be replaced within a short period because it doesn't last (unless you truly luck out on well-made pieces at reasonable prices!).
2. Examine the unnecessary extras you spend money on each month and eliminate them for the period of time it takes to pay off some of your debt. Some of these extras may include dining out, premier cable television (scale down to basic cable), premier cell phone plans (reduce it to an emergency only plan), and more.
3. If you are a college student, DO NOT respond to the credit card solicitations you will be inundated with. There will be plenty of time in your life to acquire credit--wait until you have graduated from college and have a steady job before taking on such a burden. If you have a child in college, advise them of the same.
4. If you have a PC at home, sign up immediately for your bank's PC Banking program. PC Banking is a software application you install on your PC that allows you to dial into your bank to monitor your checking and savings accounts, to set up bill paying, perform transactions and other account activities, run reports, and more. Many banks also offer personal banking via the Internet as well. Select whichever is comfortable for you.

This tool has been essential for me for several years now. I know what I need to pay each month so it's easier and more convenient to pay the mere $3-6 monthly fee to have a service automatically mail my payments for me than to have to sit down and write out oodles of checks, sort through which bills are going to be paid when, fill out the forms and stuff the envelopes, adhere postage and transport those puppies to the nearest mailbox or post office. What busy woman has time for all that nonsense these days when she has the perfect tool at her fingertips?!

5. Set up an accelerated plan to pay off your debt, starting with the debt with the highest finance charges first, regardless of balance. If you need help with this, consider a Debt Reduction Planning service. After experiencing and recovering from an overwhelming debt situation myself, I now offer such a service for women (and men). I would like to see others succeed in reducing their debt and still live the lifestyle they desire.
6. Once you pay your debt down to a manageable level, or completely, consider applying the extra money you have each month not on frivolous items, but toward your retirement through investing. If you have a 401K plan through your employer, increase the amount of money you contribute to it. If not, open a traditional or ROTH IRA. Consider stocks, mutual funds, and other investment avenues. Do something with your money that helps your long-term goals rather than blowing it on things you truly can do without. Because we women live longer and typically earn less than our male counterparts, it is essential that we establish long term goals and stick to them in order to prepare for our retirement years.
7. Commit to treating yourself to one major excursion per year. It could be a shopping trip where you limit yourself to a certain amount of spending money, a trip to some far away place that you have always dreamt of visiting, a weekend get-away to the ocean or the mountains, whatever. As long as you take care of you during the period of debt repayment and after your debt is paid off, you will feel much better and feel as though it has all been worth it. This is your reward for better managing your money. Oh, and I should mention that your excursions should be paid for in cash, not credit, so start saving for it well in advance. Save? Yes, save.
8. Don't try to keep up with the Joneses. Nine times out of ten, they're in just as much debt as you are.

I cannot emphasize enough the relief you will feel once you are less burdened by debt. Begin your debt repayment plan today.

See you in the Caribbean!

-----

Copyright 2000 by Deborah M. Brown, founder of AllforWomen.com and HerDebt.com. After nearly 10 years of high debt and almost 10 subsequent years virtually debt-free and living better than ever, she now helps other women work toward a better quality of life with a Debt Reduction Plan tailored to their specific financial situation. Take your first step to a debt-reduced, stress-reduced, lifestyle.

-----