- Centurion Member
- Posts: 875
- Joined: Thu Apr 30, 2009 2:32 pm
- Location: Texas
About 10 years ago I was roughly $35,000 in debt -- all of it credit cards. This was 2-3 years after having moved to a new city for a higher-paying job. I experienced the "wealth effect," and there were lots of new places to spend money in the new city.
While I was a grossly irresponsible spendthrift, I was remarkably astute at managing my debt. This was during the heyday of 0% balance transfer offers, some with no fees at all, etc. I took full advantage of everything on offer. I don't think there was ever a time when I didn't know what the balances were on each of my cards and what interest rates I was paying. I was obsessed.
Then one day it hit me that I would ALWAYS be in debt. I would never be able to pay off the $35k. And I thought, "Oh well, cest la vie."
A few weeks/months went by and I had another realization: I couldn't spend the rest of my life in debt. I knew I would never have financial security lugging my massive debt from one lender to another.
It never occurred to me to default, file bankruptcy, seek credit counseling or anything else other than to chop my spending and plow every penny into paying off the cards. And that's what I did.
I sucked it up and paid every one of those damn things off in full. It took several years. I have never missed a payment/paid late for anything in my life and I have excellent credit because of that. (I'm a bit smug about this, sorry.)
Since then I've run up smaller balances and paid them off. For instance, just yesterday I paid off an interest-free debt on a merchant card, early btw.
Now instead of obsessing about debt, I am neurotic about getting as much CC cashback as I can and saving as much in my retirement account as possible. In a good year when I really stretch I can put away one-third of my gross income.
Right now I owe about $2,200 on several cards, which will all be paid off when the cards auto debit my checking for whatever is owed at the end of the month. I've got more than $160,000 of open credit on a fist-full of cards.
The point is if I can do it, anyone can. Above I wrote that at one time I had despaired of every paying off the debt and gave up for a while. This is an important point. I think it was necessary for me to "give up" before I could commit to attacking the problem. This sounds a bit religious (and I'm not) but I believe in letting go in order to get something you want. I had an almost identical experience when I quit smoking (3.5 years ago). At first I was trying too hard.
The other point is after you commit to grabbing hold of your finances, run your life like a business. If you don't know about how businesses work, find a small business person you respect who can talk to you about cash flow, managing payments, etc. If you learn a few principles of sound money management and put them to use, you will be amazed at the rewards. Then you'll only be encouraged to do more and it will keep getting better.
Good luck. Sorry so verbose.
American Express: Blue Cash Preferred (groceries, 6%; gas, department store, 3%); Gold Delta SkyMiles (Delta Air Lines, 2 miles/dollar, free checked bag).
US Bank: Cash+ (utilities, phone, internet, restaurant, 5%; drugstores, 2%).
FIA Card Services: Fidelity Amex (everything, 2%); Fidelity Visa (everything, 1.5%).
Chase: Freedom (rotating, 5%); Amazon (Amazon.com, 3%); PriorityClub (IHG hotels, 5 points/dollar); Sapphire (not in use).
*All cards are registered with PriorityClub IDine program for 8 points/dollar at participating restaurants.