Getting the Monkey off My Back

This is in response to Jeanne, who asked how I got out of debt.

Keep in mind that this is what worked in my particular situation; your experience may be different. BUT! Don't let those debts get you down; you CAN get rid of them!

First, I got rid of all my credit cards. I didn't keep even one, because I knew I couldn't be trusted (also, I'd reached the limits, so I couldn't use them anyway).

Second, I called a credit counseling agency. I went with AmeriDebt; they were bought by another company but I forget what it's called now.

You need to gather all your most recent statements together, including any from collection agencies, before you call. You'll tell your counselor all your bills, and then they contact the companies and negotiate for you. Often this negotiation will get you a lower interest rate as well as a waiver on late fees and over-the-limit fees. (Interest rates and late fees, by the time I called, were accruing quickly, and they increased my debt probably by about 50%. No, really).

This is very important: if you contact a company that charges you for this service, THEY ARE FRAUDS. You do NOT have to pay them. Check out your counseling service at the Better Business Bureau (?) to make sure they are above board.

The credit counselor will give you a monthly amount that will be divided amongst all your credit debts. For example, mine was about $200, and they split it four ways.

Now, SOME COMPANIES refuse to work through these agencies. LIKE SEARS, who was charging me a buttload of interest. I did some math one time and figured out that if I paid $50 a month, ELEVEN DOLLARS was going toward my actual debt, and the rest was interest. They said they did not work with CC services, and that I would have to go through their in-house people, who did not exist, I guess, because I never ever talked to one of them. I did, however, stay on hold for about sixteen hours total. I hate Sears. And I called one time to say, "Hey, I really want to pay this; could you lower my interest rate?" and this guy, who was clearly someone they'd outsourced to in India said, over and over again, "NO. NO NO NO NO NO NO." So that was pretty disappointing and it set me back a little. Also, I don't shop at Sears anymore, so they can bite me.

Now, getting out of credit card debt is going to call for some sacrifices.

Can you afford that magazine subscription? (I went to the bookstore or the library to read them).
Do you need all the premium channels on your cable bill? (I am not suggesting you give up ALL the channels; that would make me a hypocrite of the highest order).
Can't you just make your Starbucks coffee at home? (Seriously, a coffeemaker is like, twenty dollars).
Can you wait until a movie comes out on dvd?
Can you color your hair at home?
Can you drive your car another four years?
Are you really using that gym membership?

I became the bargain-est bargain shopper that ever there was. I very rarely bought anything that was not on clearance. (This is a habit that is hard to break now; last summer I had a big internal discussion about whether or not I should pay $30 dollars for some Dockers. I did, but I will be wearing them for several years, just to get my money's worth). I shopped on eBay a LOT, and even sold some stuff in order to make extra money.

For a while I worked a part-time job in addition to my full-time job (before I started teaching again). The majority of that money would go to credit card debt. Once I did start teaching, I'd take every extra duty I could get: Saturday school, summer school, after-school tutoring. All of that money would go toward paying off my debt.

If I came into some money, like if I got a bonus or something, I'd send it off to a credit card company directly. Say, for example, that I had one card that I only owed $300 on. I'd pay that $300 to the company, call AmeriDebt and tell them the card was paid off, and they'd redistribute my monthly check.

The CC service will automatically withdraw the money every month, and you get to pick the day; for example, I always had them take the money out the day after payday.

My family was very supportive during this time. When I moved back to Randomville, my parents let me stay with them rent-free so I could put more money toward my debt. When that deer blew up my car, they were there to lend me the money I needed to start my lease agreement on the Kia.

And finally, my dad and I struck a deal where he would loan me the money to pay the balance on my credit cards; I would still be in debt, but I owed HIM, and that came interest-free. He kept meticulous records about how much I paid him; I would write him a check every payday, and the amount would fluctuate based on what I was paid (the second paycheck of the month was often used for car insurance and health insurance, so I would pay a smaller amount then). I think it probably came to $400-500/month.

---I want to clarify that this was only in the last few months of my Credit Debt Enslavement. Just when I had started to see the light at the end of the tunnel, that freaking deer strolled out onto the highway and ruined everything. I found myself adding a car note (which I hadn't had previously) to my monthly budget, and my insurance doubled as well, and this forced me to cut back on my payments to the credit card companies. Until that point, I had done everything else ON MY OWN.---

And that's how I declared my independence from credit card debt. It was a long hard road, and it was HORRIBLE, and I hated it, and now, it's OVER.

For others' advice on getting out of debt, I'd recommend Dave Ramsey and Suze Orman. I think they have the most sound ideas.