How Debt Management Can Tame the Credit MonsterPosted on: July 07, 2008
The monster is pure terror. It stalks you everywhere you go. It keeps you from sleeping at night. It eats all of your food; well at least the money you put aside for food. What we are talking about here is the hideous credit card monster. Left unchecked, it will devour your house, your furniture, your car and basically everything you own. If you have to choose between paying high credit card fees and a health insurance premium, it might actually kill you. So how do we fight back?
Like many horror stories, my own experience with the credit monster started in my carefree college days. Who could forget college? Lecture halls, fraternity parties, new girlfriend. Textbooks, beer pong, incense burning, coffee shop poetry and beaded doorways. Of course, who had to worry about money when you had a dining hall meal plan and spending money from the bank of mom and dad?
It was a warm autumn day. I remember an outdoor poster sale on campus. I must have been wearing my new college hoodie, cargo shorts and a pair of worn Jesus sandals. Enter the dark agents of credit. They greeted us with smiles and clipboards preaching the benefit of having a credit card. Things like APR and annual fees didn't make a whole lot of sense to someone already overwhelmed by the transition to college. Not knowing the horrors that would haunt me for decades to come, I signed up for two cards that day and bought enough movie posters to turn my dorm room into one of those dollar video stores from the 80s. I still have the Al Pacino poster.
Between late night Chinese food, drinks, movies, video games and housing costs, there really wasn't any "extra' money during college. I promised I would use the credit cards only for "emergencies". I wasn't a complete idiot. But seeing Dave Mathews in Concert is an emergency right? Then there was that snowboard and that entertainment system I couldn't live without. There were CDs (I'm dating myself) to buy and gym memberships to pay for. If you had to book a flight and hotel for spring break, you needed that credit card. Before you knew it, my $30 a month credit card bill shot up to $40 a month. Then, after missing a payment (by a day), my APR went up to 23% and I was paying $50, then $80 a month. The credit monster was growing nicely.
After college, if you don't get a job right away, you're bound to miss a payment here and there. It was during this time that I was feeding those two creatures $100 and $120 a month. They were getting fatter and I was getting skinnier. You never plan on eating Ramen noodles after college, but this is the way of the world. I think the tipping point finally came when I realized I couldn't pay $500 a month for credit cards. I was drowning in debt. To add insult to injury, I didn't have a single item to show for this debt. My snowboard was gone, the 12-string guitar was sold and all my CDs were converted to MP3. The concerts and beer parties were over. All that remained was me and this fat, happy credit card monster. When you think nobody in the world cares about you, try missing a payment.
Between the two cards, I easily racked up over $20,000 in credit card debt alone. No matter how many times I barely paid the minimum balance, they kept raising my credit line. I guess I was a "preferred customer" after all. This doesn't include student loans, housing and car payments. To climb out of the hole, I obviously needed help.
If you're in a similar situation, now is the time for a debt management service to step in and help you fight that monster. You will have to sit down with a representative with all the gory details of your debts, records and personal income information. Do not lie to these people; they are trying to help you. They won't laugh at you. However gruesome your story, an experienced debt management counselor has seen worse. They will either recommend Bankruptcy or talk with your creditors to arrange a realistic payment plan. Your debt will be consolidated and your credit history will slowly recover. You will make one payment instead of several. Your payments will also be capped at a fixed rate. Eventually, the credit monster will starve and die. Then you can be happy.
The sad reality is, they don't teach about the credit monster in school. Maybe they don't want to scare us. Maybe it's a conspiracy to keep an entire generation as corporate slaves or maybe it's just a Darwinian way of weeding out the suckers. Your parents and your elder siblings will warn you, but it isn't until your credit monster is tearing up your living room that you'll believe them. After credit counseling, you may or may not be able to have a credit card ever again or in my case, until 2012. Just in time for the end of the world! Maybe I'll just get one more card.