Thread: Irresponsible, please help me

I am in serious need of advice.



I have two credit cards, a Mastercard ($5600 limit) and a Discover Card ($4000 limit). Until recently, I have been consistently using both of them to the maximum, and both have been maxed out at various times in the past. I have the Mastercard down to a balance of $2500, but the Discover still has a $3500 balance. This brings my total credit utilization to about 60%, which is the best it's been in years. (Pretty awful, I know).



What I have realized in the last six months is that I do not have the ability to use credit responsibly. Even in the rare occasions where my credit card balances have been low (no balance up to 10% utilization) I've felt an irrestible urge to spend and drive up the balance. When my cards are paid off and I have no debt, I feel full of anxiety, as though I need to make a large purchase in order to feel comfortable again. (Last time my card was paid off, I impulsively charged a $1500 round trip flight to Israel. I have spent the last two years paying off this trip).



The idea of living a credit-free life is really liberating to me. I can't continue to live this way anymore. Not only is it humiliating to carry such large balances, and not only is it frustrating to pay such high interests rates ($1500 a year) but it is demoralizing to do such extensive business with, and be at the mercy of, bankers that I really don't believe in. I can't continue being a slave the rest of my life. I know that there are consequences to getting out of the credit game, but I can't play the game responsibly to begin with. I'd rather suffer the consequences and cut off my credit and buy only what I can afford.


Can someone please weigh in on my situation? I am in distress.

About 10 years ago I was roughly $35,000 in debt -- all of it credit cards. This was 2-3 years after having moved to a new city for a higher-paying job. I experienced the "wealth effect," and there were lots of new places to spend money in the new city.

While I was a grossly irresponsible spendthrift, I was remarkably astute at managing my debt. This was during the heyday of 0% balance transfer offers, some with no fees at all, etc. I took full advantage of everything on offer. I don't think there was ever a time when I didn't know what the balances were on each of my cards and what interest rates I was paying. I was obsessed.

Then one day it hit me that I would ALWAYS be in debt. I would never be able to pay off the $35k. And I thought, "Oh well, cest la vie."

A few weeks/months went by and I had another realization: I couldn't spend the rest of my life in debt. I knew I would never have financial security lugging my massive debt from one lender to another.

It never occurred to me to default, file bankruptcy, seek credit counseling or anything else other than to chop my spending and plow every penny into paying off the cards. And that's what I did.

I sucked it up and paid every one of those damn things off in full. It took several years. I have never missed a payment/paid late for anything in my life and I have excellent credit because of that. (I'm a bit smug about this, sorry.)

Since then I've run up smaller balances and paid them off. For instance, just yesterday I paid off an interest-free debt on a merchant card, early btw.

Now instead of obsessing about debt, I am neurotic about getting as much CC cashback as I can and saving as much in my retirement account as possible. In a good year when I really stretch I can put away one-third of my gross income.

Right now I owe about $2,200 on several cards, which will all be paid off when the cards auto debit my checking for whatever is owed at the end of the month. I've got more than $160,000 of open credit on a fist-full of cards.

The point is if I can do it, anyone can. Above I wrote that at one time I had despaired of every paying off the debt and gave up for a while. This is an important point. I think it was necessary for me to "give up" before I could commit to attacking the problem. This sounds a bit religious (and I'm not) but I believe in letting go in order to get something you want. I had an almost identical experience when I quit smoking (3.5 years ago). At first I was trying too hard.

The other point is after you commit to grabbing hold of your finances, run your life like a business. If you don't know about how businesses work, find a small business person you respect who can talk to you about cash flow, managing payments, etc. If you learn a few principles of sound money management and put them to use, you will be amazed at the rewards. Then you'll only be encouraged to do more and it will keep getting better.

Good luck. Sorry so verbose.