M is for Money

I think we’ll start off with one of my Money Mistakes, and boy is this one a doozey. First off, credit cards are merely a tool and are not inherently good or evil. In the right hands a credit card can earn you some great rewards, get you through an emergency or help you track your spending. On the other hand, credit cards can be that siren call that leads you to your financial shipwreck. I fell into the latter category by carrying a balance that grew to huge proportions. I’m ashamed to admit how high the balance got and to this day very few of my friends (and none of my family) know how deep I was in it – it’s only under the anonymity of a blog that I’m willing to out myself. I’m not entirely sure the highest balance achieved, somewhere between $20,000 and $22,000, and that was only a small fraction of my overall debt at the time.

How Did I Get Here?

My love affair with credit started when I was 20 and in college. I was super poor in college and could barely afford food and rent let alone have any fun or go out shopping with the girls. When that guaranteed, pre-approved credit card offer arrived in the mail I didn’t hesitate a single second, all my problems were over. Why pay now when I could pay it off later in small increments, woo hoo Nordies here I come. I’d had a secured credit card prior to that point, but those were no fun, you actually had to have the money in your account so the word “credit” was a misnomer. I think my balance at the end of college was around $2500, the limit on the card.

That first card went on to spawn a dozen or more Visas, Mastercards, department store cards (with 23% interest) and even a Thomasville card for a new couch. I’d pay a bit of it off and then something would come up, again I’d take the easy way out - put it on credit and worry about it later. Most of those charges were for things I wanted, not things I needed, but I didn’t have the discipline to distinguish the two. I’d rationalize the purchase, that this was an investment in my future or this purchase would help me earn more later. The schemes and dreams never pan out but the balance is still there. I’d calculate how long it would take me to pay off the balance, 5 years, 7 years, 10 years, it was too much to face and I started to think I’d have this debt my whole life. Two years ago, after a series of financial misfortunes including a $3000 emergency vet bill, I realized I had to get off of the debt treadmill. In my next post I’ll go over how I paid off over $20k in credit card debt in one year.