How I Got Rid of the Plastic

creditcard 

Today, I want to take you on what has been my personal journey with little plastic cards of debt, mainly credit cards.  Do note that these cards represent a lot more than what most people take them at for face value.  In fact, these little cards have been responsible for putting people further and further in the hole every month, fights about finances and debt that has even led to bankruptcy in millions of cases.  There’s a lot more going on behind the scenes than what meets the eye with credit cards. 

A Personal Look at Credit Cards

For the most part, if you think about it, credit cards are marketed to be great things in your life through mediums like TV, radio, brochures and the like.  Many of them tout reward points, much better credit, lower rates and a convenient credit lifestyle.  Here’s what I actually don’t like.  Usually, on the other side of the fence, those low interest rates become teaser rates that many times get much higher after a trial period, the convenient lifestyle actually becomes a debt trap cycle and the touts of better credit can usually go out the door if your FICO score plummets when you start missing payments.

Why I Got Away from the Plastic
When I got my first credit card it was a nice, shiny American Express card with no limit and many benefits to use one (Read: a good bait and switch).  However, in checking it out, I found out almost right away that things are usually not what they are cracked up to be.  The first month, I racked  up a measly few hundred dollars on what I thought were necessary items such as gas, groceries, a few bills and what not.  At the end of the month, I also found a stipulation to owning this card; you have to pay this card off every single month in full.  Not so enticing, but I did pay it off in full every month.  Now, when an emergency came up, I racked up thousands on this card to make a nice story short.  That month, no longer could I pay the balance in full due to other financial commitments, but instead tried to opt for a payment plan.

My Debtors Became Debt Collectors

When I explained my situation to the nice folks at my card company to give me a payment plan, I was instead met with angry, ruthless debt collection type gremlins.  They wanted nothing of the sort, even though I paid a majority of the balance that month.  I was verbally harassed and called all types of times in various time zones (can you say as early as 7 AM).  This led to a very bitter taste in my mouth.  What happened to all of the dancing people skipping through fields of flowers with credit cards in hand?  Reality had set in, I was just another mindless number caught up in a vicious cycle of debt and a mindset of where it was always in the back of your mind. 

Here I was straight out of college, a decent job and already in consumer job.  Somewhere in this mess, I decided to take a stand.  I mentally prepared myself for the anguish I might go through and the sacrifices I would make to pay this card in full but knew it had to be paid.  Here’s my brief strategy that I chose to tackle this debt:

  • Pay as much as I could afford towards debt and still be able to live ok.
  • Ate a lot of sack lunches.  Cut eating out every day and use that towards the debt. 
  • Cut entertainment and miscellaneous spending, these are wants vs. needs – so easily adapted to this one.
  • Picked up overtime as I could or supplemented my income through things such as garage sales and so on.
  • Determined to rid myself of further debt, I finally cut up this card and told the card company some less than livid words about how I felt and how I felt unfairly treated when I was not defaulting on payments.

 

These are just a few of the tactics that I put in place immediately and started seeing an improvement as more time passed by.  By month two, after applying the above tactics, the card was paid off and I rid myself of this card for good! I was debt free from stupid debt which was amazing.  Wish I had this post to read when I was ridding myself of this plastic: Shred Your Credit Cards – Win Some Cash.

Not a Bed of Roses

It’s also imperative to note that once you get rid of the credit cards, you are a recovering debt builder.  I think of this as something akin to an alcoholic that finally got clean using something like alcoholics anonymous – which turns out to be a lifelong journey.  In fact, It must be a lifetime journey to make much smarter decisions about what you know could harm you mentally as well as financially.  It’s a proactive journey of what you do and how you can help yourself from racking up unnecessary and harmful debts.  In fact, the story above wasn’t my last time that I got the debt roller coaster.  I figured it was the card that I was using instead of people out to get me for more debt. 

My second time of owning what I thought was a more robust card that gave me flexible options to actually pay it off whenever but at least meet the minimum payments.  I thought this was great, I finally had the card I thought that would give me freedom to build some credit and give me the convenience of pulling out the card for when I didn’t have the cash. 

Man, was I wrong, this was just another debt instrument that was basically a wolf in sheep’s clothing.  Not only that, but the interest rate fees were predatory!  I call anything over 21% interest on short term or long term debt predatory.  This is basically like loan sharking, except your debt bosses wear business suits.  Again, I found myself in a predicament seeing that my loan balance was growing month to month and before I knew it, I again thousands of dollars in debt from unwise choices like most credit card holders. 

Luckily, I, just like our alcoholics anonymous guy from above, also now had the skill set and experience to deal with this bad debt.  I then employed many of the same tactics from above to cut the debt like a samurai sword through Swiss cheese.  I was now a debt fighting ninja that took no prisoners!  Make sure to also read, “How to Minimize Loan Shark Tactics“ as a quick guide to separate yourself from less than unscrupulous debt masters.

I was able to finally clear up that card as well and had a reward ceremony when I was able to cut that card in many pieces.  This card represent quite a few years of built up debt, including being hog swindled into a timeshare that I couldn’t really afford and place the balance of the timeshare on this credit card.  Sheesh, talk about dumb debt decisions – that’s basically chasing debt with more debt!  I should also mention that not only have I had credit card consumer debt, but was also carrying personal debt and even a mortgage to boot.  Want to know the interesting thing, except for the mortgage; I have rid all of these other debts weighing me down like a lead anchor.  I figure I have rid myself of debts in the low-mid, five figure range which by no means is any small feat.

Stay Away from the ‘Perks’

If you haven’t been tempted by big credit card business and players yet, you more than likely will be.  I remember back in college where I would receive pre-approved credit cards with my name on it for a certain limit that just needed to be activated.  This to me, is nothing short of preying on people in order to entrap them further into debt.  Many of these card companies will try to pull you in with such crap like become a passenger on an air fighter jet for only 140,000 points and so on.  Here’s a tip, the true value of these rewards are not as great as you think.  I once saw in a cigarette catalog (no, I don’t smoke) how to get a free leather jacket with the company logo on it (more free advertising for the company) for a ridiculous amount of cigarette pack vouchers.  You could more than likely buy that jacket for a lot less than that and your Health to boot!  When you check out the perks of credit cards like airline miles and so on.  It really isn’t worth racking up huge amounts of debt just so that you can redeem them.

Practice Makes Perfect

Let me go ahead and end this post by saying that everything you do really matters.  In fact, to keep yourself debt free, you need to practice a certain amount of mind mechanics and physical techinique just like a golfer would practice his swing.  Over time, these mechanics of keeping yourself debt free would actually lead to you developing a type of ‘muscle memory’ for your brain, where your subconscious would associate going into debt as a type of pain that stifles your life freedom.  As I’ve practiced techniques like we talked about earlier, I’ve even helped my wife rid herself of her credit card as well.  She carried a balance of less than $1K for a few years and we decided enough is enough and got rid of it completely.  This is the power of applying what you already know.

Cash vs. Credit

Just a little more food for thought, did you also realize that carrying cash or a debt card tied to your bank account hurts more than using plastic? What do I mean by this?  Simply that you actually feel purchases more when you are using your own cash or debt card vs. credit cards.  Credit cards, because you are given credit for a month usually, tend to make their users spend a lot more than they normally would.  So, really take into account.  I personally use cash or debit card for normal purchases these days.  A few benefits, no bills for these at the end of the month and I’ve never been denied for any of those options like a credit card.

So, tell me, do you have a story to tell?  Have you been able to get out of credit card or bad consumer debt yourself?
 If so or if you haven’t, go ahead and share it with me by commenting.
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Category: Debt Freedom, Financially Elite Blog