We Need To Talk About Debt
We Need To Talk About Debt
Eeeek! You knew it had to happen. Even as a real human with challenges designed for real humans, we were always going to have to talk about DEBT. If you don’t have any, well done. Feel free to move forward to the next challenge.
Debt pisses me off.
There are so many freaking forms of debt that I’ll have to limit this rant to credit card only.
Here is my take on credit cards. It’s your right to disagree with me; I’ve had this debate before.
First up, I have a credit card. I’m embarrassed to admit I got one so I could spend 6 weeks on an international trip to the USA and Fiji. It had a limit of $7000.
I was only going to use $2000 of it. BUT it was there, and it was easy to upgrade accommodation and transport so I spent the whole $7000.
That was about 7 years ago and I’m still paying for it.
Currently I have this down to $400. I did have it down to $0 and tried to get rid of it but HOLY COW MAN, the banks do not want you to get rid of your credit card. I knew that already but HOLY COW MAN, they make it really hard.
So I got my balance to $0 and cut it up. I didn’t want to pay account fees so I called the bank to cancel it. They told me they couldn’t cancel it because I might have some old payments still to come out. I had to wait 30 days.
I waited 30 days and called back. This time they couldn’t cancel it because I might have some direct debits arranged for it and even though I said I didn’t, they could not confirm it so it had to stay open.
Ummm, so basically I was stuck with a credit card for the REST OF MY LIFE.
I was angry and figured I could get out of it if I went into the branch and saw a real person. This was a huge inconvenience so I put it off until I had a spare hour or two.
In the meantime, I really NEEDED (insert sarcasm here) to order new jeans online and since it was online and I didn’t physically need the actual credit card to place the order – I put the jeans on it. JUST THIS ONCE. About 10 JUST THIS ONCE times later I have a $400 credit card debt.
The thing is the next time I went to my branch, I did follow up and they assured me that they could shut it down for me. Of course I need to get it back to $0 before that occurs so that’s a problem for another day.
While on the topic of credit cards, I want to mention a few comments made when I announced I was shutting down my credit card on Facebook.
Heaps of people commented that I should keep the credit card because it is great for a credit rating.
Yea maybe, but if your credit card is always maxed out, you impulse buy jeans just because you can and it feels like a huge weight around your neck, excuses like this are keeping you broke.
Others said I should keep it for emergencies. Again, I like the theory on this but since my emergencies tend to be “I really need a holiday, let’s go to Bali”, this chestnut just keeps me broke.
Oh, and then there’s the loyalty programs. I have to say of all the excuses, this is the one I find the hardest to let go. I KNOW these programs can be an awesome deal BUT only if you are a really together person who only uses the credit card as per your system.
I know some awesome money managers that use their credit cards for everything, get the points and pay off the balance. It’s a great idea if you can manage it.
I can’t. You probably can’t either.
It’s time to cut the crap and get rid of the credit card excuses that keep you broke.
Are you ready for your next challenge?
Here is how I cut my credit card debt from $7000 to $400. I knew from experience that I always had my card maxed out on stupid stuff I didn’t need. Every time I paid off a chunk I would make a 5 minute call to the bank and reduce my credit card limit by whatever I paid. So if I paid $200 off the card, I’d get the limit adjusted to $6800. The next time I might pay $400 off so I’d get it reduced to $6400.
This made sure I could never use it because the limit was always whatever I had just paid off it. Super easy and it worked. The only issue (with my bank, check with yours) is that you can’t have a limit of less than $500 so once you get to this point, you can’t reduce your limit any further.
Your challenge is to throw as much money as you can at your credit card and then call the bank and get them to reduce the limit to account for what you just paid off.
It will take 5 minutes and it’s the no fail way to cut the credit card debt once and for all.