Don’t Drown in Debt!

Have you ever been in a conversation where someone was saying something entirely inappropriate, and then realized it, but kept talking – and in trying make the situation better, they just dug themselves deeper into the hole?  Okay, have you ever BEEN that person?

You just want to say to them (or to yourself) – You’re in a hole! Best bet…..Stop digging!!

Why on why do we find it easier to keep digging a hole when we’re already in one?

We not only do that in conversation – (Okay… am I really the only person who’s done that?) but lots of us do it with our finances too! Pay Day Loans and Title Loans businesses count on it! And where you think you would not fall for something like a Pay Day Loan, credit cards are not far behind in how ridiculous the interest rates are.

Credit card offers are everywhere, and they start as soon as you turn 18. Every time I go shop at a department store, the clerk offers me a credit card for their store. Save 20%, she says with a smile! Knowing that I’ll come back more often and spend spend spend money I don’t have if I have the card, and that I’m likely to keep a balance and pay an exorbitant amount in interest.

If you’re still not convinced, I’m going to tell you five reasons you DON’T want to get another credit card!

  1. You already have debt – adding another bill is going to overextend you. Do you already have a car loan? Student loans? Credit card debt from an existing card? Don’t go deeper in!
  2. You think the credit card is just for emergencies – but the temptation is great to use it for other things. I’ve struggled enough with extra pounds to know this about myself. If there’s ice cream or candy in the house – at some point I’m going to reason with myself that it’s fine to eat it just this once! A credit card in your wallet can be the same kind of temptation. If you have it – even if it’s just for “emergencies,” – when presented with something you really really want, and don’t have the money for – it’s just too easy to whip out the plastic and buy.
  3. You don’t want to pay even more for something than it is worth. When you pay interest on a credit card, think of it as increasing the price for the item you bought. How would you like it if you went to the check out counter at the store, and found that there was a 20% markup on everything you bought? You’d probably walk away. But paying with a credit card will mark up your purchases through the interest rates and late fees if you don’t pay it off each month.
  4. Credit cards lead to a debt spiral. Your goal should be to get OUT of debt and live debt free in a Ramsey-ish kind of way. A few credit cards, student loans, car loans, late fees and unpaid bills, and you’re in the spiral before you know it.
  5. Hidden fees and changing interest rates will kill you. Don’t be fooled by promises of 0% interest. Credit cards know that most people DON’T pay things off each month, don’t pay on time, and otherwise will miss reading the fine print that jacks the interest rate up to a ridiculous amount. Don’t fall for it. They’re making money or else they wouldn’t be in business. Just don’t let them make it from YOU.

If you have true needs that you’re unable to meet in your current financial situation, you may need to rethink your lifestyle, get a different job, or get a side-gig. I talked about that a few weeks ago in a two-part blogpost/podcast How to Cut Expenses and Increase Income.

Get on a budget (you can download a simple budget template HERE) and begin paying OFF your debts – not increasing them!

Think of me – seeing you running toward a cliff, and I’m waving a red flag! Danger Danger Danger! Don’t run toward the debt cliff! You’ll fall off and it will take a long painful journey to get back to high ground. Best debt policy – don’t get sucked into the credit card game!

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