Learning from Bad Credit

When your output exceeds your input, your downfall becomes your upkeep.

My mother tried to tell me this, but I wouldn’t listen. At that time in my life, I didn’t realize that keeping up with debt is a downward spiral for people who spend more money than they make. It’s so easy to do; just pull out the plastic, and you can have whatever you want, whenever you want. The minimum payments are manageable, and life is good. That is until the bottom falls out.

It all began after I finished college and landed my first job. I received credit card offers from every credit-card company and retailer known to mankind. I ended up with 28 of them. At the same time, I purchased a $20,000, fully loaded van (a good chunk of change for a vehicle in 1991.) I believed that if you needed more money, all you had to do was apply for another credit card. How easy was that? It was easy to have vacations that were wonderful, clothes that were extravagant, and buy gifts that were generous when I had 28 credit cards in my wallet. Little did I know it was the precursor to impending doom. The downward spiral began within 2 years.

It took me 10 years to overcome $30,000 of credit card debt. It was a hard lesson learned, but I learned it well. Nowadays, if I don’t have the money to buy something I want but don’t need, I don’t buy it, period. I save 10% of my monthly income, which is also used for emergencies. I have one credit card I use for making reservations and on-line purchases. Money no longer rules me; I rule it.

So how does an unknowing victim of future debt avoid the pitfalls created by multiple credit card offers? It’s really quite simple; just don’t allow your income to be overshadowed by your spending. For example, let’s say you make $50,000 a year, but you are spending $75,000, and you possess at least 25 credit cards. When the bills roll in, you are short on cash to pay them all because you have so many other bills to pay in addition to your credit card bills. The Mortgage is due, along with the car payment and insurance premiums. You have groceries to buy and the utility bills due. The kids need clothes and school supplies. Christmas isn’t far away, and there are birthdays to remember too. The unpaid balances on your credit cards continue to mount with interest rates tacked on to them that are sometimes in excess of 25%. It doesn’t take a rocket scientist to figure out how long it takes to get in over your head. Then the dreaded phone calls begin. Debtors want to know why payments are late, or not arriving at all. The phone rings day and night after you become officially overextended financially. The end of a flamboyant lifestyle arrives. All you want to do at that point is go into hiding.

For me, debt problems are a thing of the past. Now that I have my spending habits in check, I sleep well at night, no one is calling me in regard to past due accounts, and life is good. The difference is that now it is realistic as I live within my means.