When I found out that I could spend a ton of money right away on the things that I want with the option of paying for them later on, I was absolutely thrilled. For a shopaholic like me, this was a dream come true. Flash-forward to 15 years, and here I was, with a boat load of debt. Little did I know that the simple credit card that I signed up for would come with so many strings attached, eventually leaving me broke one day. Despite all odds, I made it and will share with you this amazing story of elation, disappointment and recovery!
The beginning of the problem
To go to the absolute beginning would be the day I turned into an adult (according to government, at least) and was eligible for a credit card without my parent’s consent. To me, this day was like no other and I had eagerly waited for it ever since I heard half truths about credit cards. Being a teenage girl, I didn’t know any better than to sign up for a credit card so I could start shopping right away. I had a part time job at the time and was barely making enough to buy all the things that I frequently dreamed about.
As soon as I turned 18, I headed out to one of the banks with all the flashy cards and big fonts marketing these so called credit cards. I figured that if so many people around me are using plastic money, it must be a very good alternative for me to consider. Since my parents were not really giving me much money to begin with, I decided that using a credit card to get what I wanted right away didn’t seem like such a bad idea. After all, the credit card companies even claimed to give a reasonable amount of time for paying off the balance.
Before long, I completed a credit card application and was approved for a card with a credit limit of $1000. Wow! For an 18 year old, that is a lot of money and as you could imagine, my mind started wandering about all the things I could buy for that much money. I was told that I could pay the money back in installments so my plan was to gradually earn the money back with my part time job which would be a piece of cake! I had no idea what awaited me from this point onwards.
Being a teenager, I really had no clue about how money worked and how challenging it can be to budget and repay money that you owe, especially with very little resources! Before I knew it, I had maxed out my credit cards and began receiving threatening mail from the credit bureau demanding that I repay the debt or suffer the consequences. I was really clueless and did not know what to do. This probably would have been a good time to tell my parents about the card so I could ask them for their help.
The problem continues
Fortunately, my parents bailed me out this time, and I was grounded for quite a long time for getting a credit card behind their back as well as for my irresponsible spending. Unfortunately, my punishment did not tame my shopaholic nature and the spending began once again. Once I started going to college and had a better paying job, I signed up for more credit cards and was happily indulging in my shopping binges. I just could not help myself and eventually accumulated a massive amount of debt, which would haunt me for a very long time. At this point, I was quite helpless and knew that I could not rely on my parents to bail me out a second time.
Desperation
I needed help and had to resolve my debt issues before it was too late. Unfortunately, by the time I realized, I was neck deep in debt and was at risk for losing my car and my house, which I had painstakingly built with loans from different sources. I had literally hit rock bottom and was in need of a solution quickly. Fortunately, I found the courage to begin facing my problem so that I could finally regain financial control. My husband helped me quite a bit and together, we devised a brilliant plan to resolve my financial problems once and for all.
Light at the end of the tunnel
To start off with, we had to address my shopaholic nature. I was spending money I didn’t have on things I didn’t need. Our solution was to make a list of things I can buy, things I should put on hold and things I should avoid. This list made a significant impact on how I managed my money and to date, I keep a list with me to help me gain control over my compulsive spending habits.
Next, we needed to get rid of the massive debt that I had accumulated over the last few years. We began by identifying the amounts that were critical and gradually paid them off one by one. As each card was paid off, the associated accounts were closed, and finally the cards were discarded for good. Believe me, this was not an easy task. Many of these credit card companies are simply unwilling to cooperate making it absolute hell to break free and achieve financial freedom from their grasp. Horrible customer service leads to frequent transferred calls, making you, the client, extremely frustrated so that you eventually hang up the phone abandoning all that you had set out to do….cancel that credit card!
Having someone to support you during such trying times is a good thing. Although you can do it on your own, it can take a real physical and emotional toll on you. My husband as well as my close friends helped me tremendously in this regard and ensured that I had access to all the help that I needed. This helped decrease my frustration during this whole process. Together, we managed to free myself from some of the ridiculous policies that I was unaware that I was bound by.
Fortunately, with a lot of hard work, I was able to repay most of my debts and am now leading a debt free life, without any worrying about losing my home or my car. Although my old shopaholic nature does tend to come up every now and then, I am now the one in control.
Tips to get out of debt
After reading my story, I know many of you can relate to the way I was feeling. Many of you may be wondering how it might be possible for you to get out of debt. Well first let me tell you that you are not alone. A significant number of people today are neck deep in debt, which is why it has become quite essential to understand how to fix these problems so that you don’t end up losing hope and doing something drastic and unnecessary. Listed below are some handy tips that you can implement and make use of to successfully get out of debt for good.
1) Number of cards
One of the first things that you might want to consider is how many cards you need. Having more than the necessary credit cards is definitely a bad thing and can lead to a lot of trouble. Managing several cards becomes challenging and you might end up losing track of one of them, which is sufficient to throw you in crisis. Be sure to keep a tab on the number of cards you have and do not exceed that amount. One or two cards should be sufficient for everyone.
2) Credit limits
Having a good credit limit is a great idea to control your spending and to avoid going overboard with your expenses. Many people seem to think that credit limits hinder their spending ability. This is not really true and you should know that having good credit limits can help ensure that you don’t end up spending too much money. You will find it easier to repay these loans and won’t have to worry about keeping track of several different due dates, interest rates, and debt amounts.
3) Sticking to a list
If you suffer from impulsive spending, then you should follow a list which identifies items based on a needs system. Hence, if the item that you are buying is not on the list, you can ignore it and purchase something else. This policy is applicable for anything that you are thinking of spending your money on. Just think of it as a way to stay in control of your spending. After all, you should be the one in control!
4) Using cash
If you make a purchase, try to pay for it upfront using cash. The less you use your credit card, the lower your chances of being stuck in debt. If you pay for your purchases right away, there isn’t much that you would be worried about. You can easily get what you want without incurring the possible debt associated with it. For individuals that are finding it really hard to stop their impulsive spending habits, another solution would be to bring only the amount of cash that you can spend and leave the rest of it along with the credit cards at home.
5) Deposit with a friend
If you find it too difficult to control your spending, another option is to leave your credit cards with a trusted friend. In this way, you might think twice about buying something, as the friend will only give you the card when you need to buy something important. This can prove to be a guaranteed solution, provided you have someone close to you that you can trust. It might also be a good idea to share your list with your friend so that they know the difference between your necessary items and your additional items.
6) Saying no
Having self control and learning to say no can help you avoid getting into debt. It is important to recognize offers that are beneficial to you as well as the ones that you should avoid. Shops and credit card companies are always going to have mind-blowing offers, just remember to stick to your list and avoid all unnecessary items, even if they are on sale!
7) Paying off debt regularly
If you use your credit cards, then you should also learn to pay off the debt right away. This will help you avoid consequently having to pay off a big debt in a short period of time. The secret to remaining debt free today would be by paying debt little by little and not accumulating it to a point where paying it back becomes an impossible task. Set up a payment routine that you can follow so that you are not left paying a massive amount of debt on your own.
By implementing the above tips and learning from my story, I hope you have a better idea of how to take control of your debt, especially from an early stage. Be wise with your money and educate your loved ones so that they too are able to spend their money responsibly while avoiding the stress of being in debt. Many people feel that spending habits are difficult to change but you would be amazed at what the prospect of bankruptcy can do to people. Hopefully, you wouldn’t have to worry about ever reaching to this stage in your life!
