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Minimum Balance = Forever

Have you ever had your debit card declined in the check out line at the grocery? I have. Many years ago, this scenario happened a LOT. It was embarrassing and I felt shame. It was on me and I blamed others. I spread my shame in the form of self righteous anger – at the checker, the bagger, and anyone who looked at me with that “oh, honey” look. Then I’d leave the store, angry, usually swearing, leaving my groceries behind.

I did not manage my money well. I did not manage anything well.

I wanted to live large and I did not want to put any effort into earning the money that the large lifestyle required. Have we discussed unearned entitlement and a lack of effort yet? We will – probably not in this post though.

When I chose to give living sober a try – another story for another time – I was $11,000 in debt. And I’d already filed bankruptcy – so I couldn’t do that again (only because I was still in the window of the last filing – because I would have, if I could have). No, I had to clear my debt the old fashioned way – by paying it back.

$11,000 is a daunting number. Here’s how that happened: I’d tried to start a side business with a reputable company selling weight loss products. I got new credit cards – it was suggested I use other people’s money and pay down the debt with my soon-to-be amazing earnings. Instead – solely because I knew nothing about sales or marketing and too much about creative financing – I dove deep into secret debt. Secret because I did not tell my spouse what I was doing to finance this business venture. It didn’t work out and I had a huge debt.

2003 – newly sober and in serious debt – I needed a way out. Here’s what I did: First, I made a budget – every single thing we spent money on and every bit of income we had. Then, I eliminated every non-necessity from the budget. To help you understand that, these were the necessities: groceries, utilities, gasoline, housing. If it didn’t fit into those categories, it was canceled – cable television is not a necessity.

The next thing I did was to list every credit card (It’s been 15 years since then, but I think there were 5 or 6 credit cards). I listed their minimum payments, their due dates and their interest. Today credit card statements come with a nifty little table showing that if you only pay the minimum required payment each month you will never pay off your credit card (or it takes 35 years, something like that). I decided to pay each credit card by multiplying the interest each month by 2, then adding the minimum monthly payment amount to that, and pay that – for each card. This way I paid off the interest and then some, along with the minimum payment. Oh – and I stopped using the credit cards.

I also paid any extra money I had to the card with the highest interest first. (Think: income tax returns, birthday money, any extra cash) Each time I paid off a credit card, I called the company that had issued the card and canceled that card. They don’t let you cancel the card until you pay it.

It took me three years to pay off those cards. Three years to pay off $11,000. There was a time I believed I lacked self discipline. I realize now that I only lack self-discipline about things that I truly do not care about.

To summarize – because I’ve read this and it seems like this could be helpful –

  • List all the credit cards, highest interest to lowest interest, along with due dates
  • Multiply the interest each month by 2, then add the minimum monthly payment amount – pay that
  • Stop using the cards – cut them up, burn them, whatever it takes; pay cash or don’t buy it
  • Cancel each card as soon as I pay it off
  • Practice patience

I’d love to wrap this up by telling you I never had trouble with credit card debt or any other type of debt again, but that would be a lie.

I had to learn a lesson about myself and spending money before I could honestly face this poor habit of credit debt. See you tomorrow.