If you are new to the blog, click HERE to start at the beginning of my story.
The first 90 days of debt settlement are fairly uneventful. You are making a lot calls to your creditor, retelling the same story over and over and logging everything that is said. The action in debt settlement starts to happen around 100 days.
This post will address some of the bone-head mistakes I made with my credit cards.
Let me say upfront, credit cards are not evil. Neither are guns. But both can be abused and both can kill you. I was one of those consumers that loved to charge stuff. Never did I consider the true cost.
When I was making tons of money, my thinking was, “I will pay this in full at the end of the month.” And I did. When I was NOT making tons of money, my thinking was, “I need this now. Money will come in and I’ll pay for it later.” But the money never came fast enough. Never does when you think this way.
There was a fundamental idea I was misunderstanding. We have all been told this, but it doesn’t make sense until you are facing bankruptcy and you try to figure out how you got there. Here is the simple truth.
CREDIT CARDS ARE VERY EXPENSIVE –
UNLESS YOU PAY IT OFF EACH MONTH.
You have heard the following explanation before, but if you are reading my blog because you in trouble, it’s likely you didn’t absorb the idea.
Let’s say you have $10,000 on a credit card at 15% interest (a modest rate these days!)
If you make the minimum payment plus 1% of principal, you will pay $225/month. At that rate,
It will take you 335 months to pay it off.
You will pay $11,979.29 in interest.
That is absurd. So that jacket on sale for 50% off that I just HAD TO HAVE really cost 20% more than retail. I would have been better off paying full price in cash. Wow cash, what a concept!
TOP 7 MISTAKES I MADE WITH MY CREDIT CARD
Spent more money on my card than I earned that month – I ACTUALLY DID THIS!!!
Opened as many cards as I could, just in case I needed them.
Played the shell game with 0% cards
Justified spending because of airline points – completely idiotic!
Used them on luxury items for retail therapy.
Used them for business expenses that I didn’t really need for my business.
Yo Yo spending. Maxed out the card. Paid it down. Maxed it back up.
There are million ways to abuse credit cards. Now, I have 3 credit cards with minimum balances and low APRs. I have them strictly to build my credit and use in case of an emergency. Everything else is paid for using my debt card or checks. There is no overdraft protection on my bank account. So, if I don’t have it, I don’t spend it! What a concept!
Stay tuned. Stay afloat. Wealth and freedom are in your future.
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