Debt as a Matter of Life

Credit cards make debt, not safety nets

Disclaimer: There are times when going into debt is simply unavoidable. Unexpected bills, a loss of income or major life changes can throw anyone's finances off. Those are not the people I'm talking about here. I'm talking about those who go into credit card debt continually and unnecessarily.

Some time ago, I was sent a link to an article in the Terre Haute Tribune-Star called "Americans Using Credit Cards to Pay for Basics." Unfortunately, the page is no longer online, but it was disheartening to read. It's not because I think times are so tough that people are having to go into debt just to survive, but I hated it because it showcased people who really don't know how to survive without credit cards. It even evokes sympathy for them.

Psst... Wanna get out of debt?

For real?

Here's the key: Decide you're going to.

It doesn't matter if you have 27 cents left over after you pay the bills and buy groceries. It doesn't matter if you're only working part time and it doesn't matter if you've been in debt for the last hundred years. Once you decide you're going to do it, you can. And you will.

And that's the only secret there is.

Of course, there are methods and advice and ideas and some are better than others. A post at The Penny Hoarder called "The Ultimate Guide to Getting Out of Debt: A Step-by-Step Plan" spells it out in black and white.

Is it easy? Well, no. It takes some discipline and some planning, but that doesn't mean you can't do it. You can start as small or as big as you need to but the most important thing is to just decide to do it.

You can, you know.

 

How Can I Make a Lot of Money Quickly?

Here's a quote from an email I received: "We are in debt bad. Not like a poor person or anything like that but no kind of debt is good either. Please email me some good ideas of making big bucks in a short period of time for a long period of time. I will forever be thankful of your services if you would help us find something that will work." 

First of all, I'm not a proponent of making "big bucks" quickly. The internet and the mail are both full of scams that say they will do just that. They are only scams though, and will not bring you fast money (although you may lose money quickly to them), as good as they sound.

Then there are other ways of making a lot of money quickly, but they're not legal... so on to the real solution:

It's never how much money you make or how fast you make it, but it's how you use the money you make that makes the difference. If your family is in debt, no amount of money will help unless the basic attitude that got you in debt is changed. If that doesn't change, any greater amount of money will simply be eaten up with things and more things and can even put you in deeper debt.

The answer to your quandary is not making a lot of money quickly as much as it is controlling the money you already have. It's entirely possible to get out of "normal" debt and have money in savings on ANY income. Money problems are never resolved by how much we have, but how we handle what we have.

Save money or pay off bills?

Another question I get here at Frugal Living is "Should I save money, or pay off bills first?"

If you ask that question in a room with ten frugal living and personal finance experts, you'll get fifteen answers. I'll throw mine into the ring:

It's never a good idea to put all of your money into one pot. If you're in debt, you need to get out as soon as possible, but if you have no savings, you need to get some started immediately.

Why not get the best of both? After your basic bills are paid, divide whatever money you have and put part of it toward paying down bills (pay extra) and put the rest into a savings account. You will eventually be in a position to handle any money emergency without worry. 

The argument for starting a savings along with debt down payment goes like this: If you don't spend all your money paying down debt and something happens (your car needs repairs, you have unexpected medical expenses, etc), you can cover them with cash and not go deeper in debt.

All of this supposes that nothing is going to happen for awhile. If it does, be a little more frugal (or a lot more frugal if you need to) and pay as much in cash as you can.

Mike Killian

The somewhat elusive Mike Killian has an interesting web site called "Learning Credit and Debt Management. So who's Mike Killian? He's the former Credit/Debt Guide at About.com and he's still writing and still giving great advice. Mike and I traded traffic at About because our topics worked together so well. They still do, and I'm glad to see his material is still available.

For instance, Senior Debt: A Growing Problem tackles the sad circumstances many senior citizens face on a limited income.

Credit Card's Dirty Little Secrets is written in Mike's inimitable style and a must read if you have any dealings at all with credit cards.

In these times of economic uncertainty, it's critical to know how to handle credit and debt efficiently. Mike does know and he's willing to share.

Prepare for a tighter economy

It's hardly news that prices keep going up and up and up... Food prices have continued to rise over the last few months, and gasoline to fuel vehicles and natural gas to fuel home heating systems share in higher prices.

As the prices on other products rise along with them, we may find ourselves in a money crunch. The cost of just living is going up...

One thing feeds on another in a free economy. When it costs more to transport goods, that cost is passed on so the goods cost more. When they cost more, fewer sales are made. When fewer sales are made, there is less demand for production. When there is less demand, some workers will lose their jobs. They will have less money to buy products. And the wheel keeps turning.

It's such a huge wheel that individuals or even groups can't do much to slow it down. The best defense is to find ways to protect ourselves.

Just how to do that is the problem. Gardening and finding other ways to provide food for ourselves, insulating and developing methods of saving on heating, lighting and cooking fuels, being more selective in buying or making clothing and household linens all help.

I'm going to repeat myself: Get out of debt. Now. That's the number one thing you can do to prepare for the "future" economy - which is upon us at this moment.

More Life After About

Wow, I've got a great day going. First, I woke up refreshed after a good night's sleep! That's a miracle in itself... but what really made me happy was an email from Mike Killian. He used to be the Credit/Debt Guide at About, but he just up and disappeared on us awhile back.

He has a web site called Learning Credit and Debt Management and some of his best content is there. One, called "Credit Cards- They're Just Like Drugs" is worth a read even if you don't have a credit card.

I was happy to "meet up" with him again. More proof that there really is life after About.

Prestigious Debt?

Something struck me the other day. Credit cards are often whipped out like keys to a new Jaguar. People like to show off what they can go into debt for? Weird world we live in... anyway, instead of going through the whole rant again, here's a link to something I wrote about it: How Can Debt Be Prestigious?

This and That and That, Too

Besides the "work" (thanks, Timothy) at the DS Community, I've been doing some writing on the side (mostly just so I can sound off) for Associated Content. Lately, debt and credit cards have been on my mind, maybe because I know so many folks finding themselves deep in debt and not knowing how to get out.

The overall unsettled economy makes me want to keep warning people to get out of debt now - but I do write about other things, too. Some of it doesn't even have anything to do with frugal living, believe it or not.

Anyway, here's my "Content Producers" page, in case you'd like to see. Content Producer: Pat Veretto.

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Many of you have been to The Dollar Stretcher Community by now. What did you think of it, candidly? We're still in Beta and there are things that do go wrong now and then (sometimes more often than that), but what is your overall impression of it?

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And thirdly (were you counting?) my yardwork is coming along nicely, although the rain/snow stopped it for a couple of days. A jonquil is blooming alongside a few lilies of the valley and the grape hyacinths peeked from under a layer of snow yesterday morning.

The grass is green, the leaves are coming out and I'm dreaming of real tomatoes already. It's springtime in Colorado, where the tornadoes roam...

Another Rant About Debt

I've been hung up on the news lately... or certain types of news, anyway. This morning I came across a story of a couple in India who were deeply in debt, and harassed by lenders, hanged themselves.

Another, a report on a book called "Maxed Out," by James Scurlock, tells of others who have committed suicide, and mentions those who are "victims of easy credit."

Yet another states "Credit cards are forcing families to the brink of financial calamity."

I don't often get emotional about such things, except to rant a little now and then, but this breaks my heart. I found myself on the verge of tears.

We tend to look at credit card companies and other lending entities as faceless, nameless businesses that operate by a set of rules and don't really know how it affects the people it manipulates for a profit.

That attitude makes it easier to deal with them and to roll with the punches, but those businesses are set up by people. Their rules are made up by people, their profit is raked in by people. So why do we think people don't know what is happening? Is the love of money so compelling that these people will do anything to get it?

It seems so.

Sure, people who go into debt have a responsibility. I wouldn't call anyone a victim who went into debt willingly, but lenders who deliberately set out to trap people into going deeper and deeper into debt, and those who make a living harassing the same people into deep anxiety about paying that debt, are selfish and cruel.

It makes me angry to see how people are taken advantage of and how little human concern is shown. Other times, it makes me want to cry. Lost love, guilt over something one has done, despair over relational situations... while those are not acceptable for suicide or deep depression, one can make allowances. But indebtedness?

There will be those who put the blame solidly on the shoulders of the borrowers, but you just can't clear the lenders of guilt. No one who gives an inexperienced teenager a credit card or offers financing for a house to a couple who can't pay for it or writes come-ons to entice anyone and everyone to buy on credit, can be innocent.

Secrets of Your Credit Card

Frontline and the New York Times present Secrets of Your Credit Card

This is not new, but if you haven't seen it, you can watch the entire thing online whether you have a fast or slow connection.

If you have a credit card, have ever had one, or intend to have one in the future, watch it.

Threats of Recession: Get Out of Debt Now

Something in the air disturbs me. It's all well and good to keep mops going for years and to grow celery on the windowsill. Believe it or not, those things do make a difference...

But there seems to be a new caution in the air. People are talking about recession, either now or in the future. Today, the stock market is falling, and it's no news that a couple of mainstays of American economy - housing and automobiles - are down.

My one word of advice: If you're in debt, get out of it. Do what you have to do to pay off anything you owe. If you have something of value that you can sell, sell it and use the funds to pay off debt. If you have to take on a second job, do it. t may be the most important thing you can do to make it through the days ahead.

Debt can eat you alive in the here and now; what's it going to do if we go into a serious recession? How do you pay them without a job? What do you do when your savings quit earning interest? When you can't withdraw your savings for days, weeks or months?

I don't like fear mongers and that's not where I'm going with this. I just want you to know that if you're in debt you may be headed for trouble like you've never seen.

And if we don't go into recession? You'll be in better financial shape than ever!

Google Found a Good One

I subscribe to a Google service called Google Alerts that sends an email each day on search terms you choose. One of the terms I put in and was contemplating removing, hit gold today, so I'll be keeping it.

The site (a blog) is called We're in Debt. My first reaction was "What a a negative name for a blog!"

Then I went and read a few posts, then I picked some random samples from the archive and I changed my mind. These people are serious about getting out of debt and their blog is a down to earth story of how to do it.

They've used many of the same tactics I've advocated, like tracking expenses, setting up an emergency fund, and keeping an eye on the details of all transactions.

Anyway, I could talk about it all day, but go see for yourself. I think you'll be as impressed as I was.