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Thursday, March 06, 2008

Why I Tend To Overspend

I am currently in credit card rehab – my loving husband, who admitted me, is also the chief of staff. We are in the process of getting out of debt for good, so there has been absolutely no credit card usage allowed, period. It’s been like this for quite some time now, and I have to say, I didn’t think that I would make it this long. Paying off debt while ceasing from creating new debt seems like an obvious solution, but putting such theory into practice is harder than it seems. When we abruptly stopped charging purchases, I began to show withdrawal symptoms, which is why I am here, cleaning up my act.

Although I went down kicking and screaming, I always understood that my husband was right for putting a halt to all credit card spending until we were ready to be responsible users. We did what many newlyweds do – we got a joint card almost as soon as we got married and bought things that we thought we needed for our new life together. The problem was that we didn’t have the money to get those things outright; thus, the use of credit. This kind of spending put us in a vice that really began to squeeze when unexpected situations arose, pinching our finances so hard that accounts became delinquent.

How did that happen?

I believe that, at least for me, the problem began when the foundation was laid for my conceptual understanding of credit. Besides the fact that my teacher was an eighteen year old girlfriend, there were negative influences and temptations on every side. College campuses are now lairs for predatory lenders with magic plastic cards, giving you a free t-shirt or tote bag for books in exchange for your credit application. Hip, trendy boutiques make it all too easy for young people to obtain store credit. So, my belief system concerning the purpose for and availability of consumer credit was corrupted from the very start.

I bought into the idea that credit was a pipeline as opposed to a lifeline. From what I had gathered from my friends and the credit card companies, consumer credit was there so that I could purchase things I couldn’t afford and simply pay for them later. As long as I made small monthly payments, I could buy whatever I wanted, up to my credit limit. Credit was a money pipeline, creating cash flow in the present based upon resources from the future. I could keep the pipeline going, so long as I put a little cash into it on a regular basis.

While that sounds good, it’s a shame that it’s completely untrue!

Consumer credit was originally developed as a lifeline, primarily for the well-to-do and business owners in order to purchase necessary equipment or other assets that would either appreciate in value or help them turn a profit. That’s a far cry from getting some new clothes (that I really can’t afford) this week, even though I don’t get paid until two weeks from now.

Well, after living a while with this “pipeline mentality”, I soon came face to face with the realities involved with racking up debts that I couldn’t pay, and then being denied the help I really did need in the future because of past indiscretions. Then, I turned around and started fresh again when I got married. Apparently, I hadn’t learned my lesson in college.

I sure did learn it during my stay in credit card rehab, though. It’s actually been a couple of years now. I honestly believe that I have been rehabilitated. But, just to be sure, we don’t plan on getting another credit card until we know exactly what we will use it for and that we will pay the balance off every month that we use it.

The pipeline is officially closed.

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Blogger Erik said...

We bit the bullet a while back, ate a lot of rice and beans at home, wore last season's fashions, etc and paid off all of our debt.

There is no feeling like it.

Oh yeah...and we don't care what our FICO score is because we don't take on debt anymore.

I wish you an expedient and painless journey to being paid for having money instead of paying people because you don't have any money.

Thursday, March 06, 2008 11:29:00 AM  
Blogger TAMmommy said...

For years, my loving husband has tried to help me with this same problem. It wasn;t until recently, we enroll in a class at our church called Financial Peace University by Dave Ramsey (who has been there, done that, got the t-shirt to prove it).
I finally learned that I was spending to fill and emotional need, low self-esteem.
We are working on paying off the debt, not creating more debt and funding an emergency fund and a retirement fund and later college funds for the kids. For once I feel secure in the future knowign that we are getting out from under the debt.
Congrats and good luck on your journey.


Friday, March 07, 2008 3:05:00 PM  
Blogger Dee said...

I'm also a fan of the Dave Ramsey approach. I have been dutifully keeping a spreadsheet on my computer for a good part of a year. I remember trying to cooperate with one credit card provider, asking for a lower interest rate and instead I got a credit limit increase. Yeah, dig the hole deeper.

I find that if you have two credit card companies at YOUR whim (funny thought), try forcing them to compete. Take advantage of one's 0% APR for a fixed period, then switch over all of your balance. Repeat with the other card if an offer comes. And just keep on trying at it.

I budget all of my expenses. Whatever extra is leftover, I can use that money to my discretion. I have enough things so I just turn it all back over to the card.

Good luck!

Saturday, March 08, 2008 10:37:00 AM  
Blogger Erik said...

I have been out of debt for a bit, my parents on the other hand were buried to their ears. They, too, have been listening to Dave Ramsey and it has been making a huge difference. I don't agree with all that he says, but he has some wonderful strategies for helping people to overcome their debt.

Wherever you are Dave, thanks for helping my parents.

Monday, March 10, 2008 4:33:00 AM  
Blogger FeelessBalanceTransfer.com said...

> being paid for having money
> instead of paying people
> because you don't have
> any money...

Hehe...I like that...very quotable.

Monday, March 10, 2008 10:23:00 AM  
Blogger I.C. Jackson said...

Thank you all for the well wishes...

We plan to start Dave Ramsey's "Total Money Makeover" soon. His products are apparently very good - just look at all of you.

I love his website.

Does Dave owe us some money for all of this advertising?


Tuesday, March 11, 2008 7:29:00 PM  

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