Friday, June 15, 2007


Do you use credit cards? Are you a recent college graduate? Are you between the ages of 18 to 35? If so, chances are you've got a healthy amount of debt. Don't feel bad; The national average is around $8,000 per person, although truth is most people probably have a lot more, in fact I don't think I know one person with less than ten grand to pay off, not friends, family, no one. Except myself that is; It took me five years of living like a pauper but I finally paid it all off and now I get to live free. Read on if you want to live free too.

First step is Get rid of your credit cards: Cancel them, cut them in half, never use them again. Credit cards are the number one reason why so many people are in such ridiculous debt. Thing is they're designed to get you to max them out so you end up spending way more than you could ever actually pay off. They present them in such a way that people think they're getting free money, when in fact what is going on is when you use them you're spending your money that you have not earned yet in the present. Thus, the more you use them, the greater your debt becomes, the less of your money you get to spend in the future. They do this on purpose. They lure people in with low interest rates under some false illusion that it'll always be that way, then after a certain amount of time the rate shoots up to to 29% or whatever ridiculous level it's at now. Add to this all the other bullshit charges they throw on there when you're not looking, late fees, annual fees, your-momma-says-you-ugly-fees, etc. American Express actually tried to charge me $20 "Processing Fee" during a month when I didn't spend anything on the card, almost like a "Privilege of owning the card" fee. Then you notice that the minimum monthly payment is actually less than the interest rate - so in fact you end up owing them for the rest of your life, and if you follow their rules you'll never ever pay it off.

As far as I'm concerned it's all part of a highly sophisticated confidence scam. They prey on college kids and young adults who don't have much experience with this sort of thing, get them to spend away their future, then own them their entire lives so for years and years they end up paying thousands of dollars in interest on shit they don't even remember anymore. I got my first Credit card when I was 19 while in college, because the guy that was running the table was giving away free Slinkys to anyone who signs up. I didn't even want the card, I wanted the free toy (because Slinkys are cool.) Nowadays they even give them to children as young as 16 who don't even have jobs, as long as they have a bank account. Nice way of making financial slaves out of America's young people.

Well fuck that! Don't use them! I know it's hard to do, it's almost like we as a population have been conditioned into thinking paying 29% a year on a bag of potato chips is an acceptable thing. It's one thing to buy a new computer or some other expensive, big ticket item that you otherwise could not afford and then pay it off religiously, but most people don't use credit cards that way. Some people have gotten into such a hole that they depend on their credit cards to buy essentials: Gasoline, groceries, medicine, etc, and it may not be so easy for them to stop.

Well, how bad do you want to get rid of your debt? Do you want half your paycheck to go to paying stupid credit card bills for the rest of your damn life, or do you want to take control and do what you want with your money? If you're carrying a large amount of debt the only way you'll ever pay it off is to go without for the time being. Sorry, but that's how it is. There's no easy way to get out of it, it's going to take a lot of work, a lot of sacrifice, and a long, long time, but in the end it will be worth it.

First off you're never going to get rid of that debt if it keeps growing by 29% every month. So cancel all of the cards, ALL of them, so that way you stop incurring interest. Some companies however don't allow this and will keep charging you interest anyway (some of them like Sumitomo, American Express, or God Forbid, Cross Country Bank are real assholes about it) in that case then transfer the balance to a different card with a lower interest rate. You can also call the companies and politely ask for a lower interest rate, especially if it's a card you're had for a long time and don't have any late payments on. Pull the "Dissatisfied Customer" routine, and start quoting rates from other companies, they'll cave in (It's also a good idea to call and dispute any weird fee you see on there, half the time you can get them to take those off also.) The goal is to keep your interest rate to a low level so you're able to pay off the card faster than the interest incurs. Once this is accomplished sit down and figure out budget, a real budget that allows for emergencies and such, and find out exactly how much you can pay every month.

Now this is the hard part: Actually pay them off. Stick to it, choose the card with the smallest balance and pay it off completely, then work your way up the line until you've only got the card with the largest balance left. Thing is as you pay off each card then that much more of your monthly income is freed up, whereupon you can either save this extra cash or throw it in with your payments to get it down that much quicker. Also as the cards get paid off you may find that suddenly your credit score will increase by leaps and bounds, and you start getting credit card offers in the mail nearly daily. These companies are like wolves, they can smell your extra disposable income. Do not give it to them. Resist the temptation and throw those offers away.

Now let's fast forward a few years and assume you've managed to get it down to the one or two cards with the largest balance. Go to your bank and take out a personal loan, then pay off the largest cards in one fell swoop. If you've been sticking to your plan your credit should be good enough now to do this. This way you'll be paying a livable 5% to the bank instead of 29% to the stupid thieving credit card company. And you'll notice that a bank loan actually goes down every month when you pay it and is actually something that you can pay off within the foreseeable future.

That is essentially what I did to get out of debt. In my own case I was nearly $10,000 in the hole, I paid it down to the last card with a $3,000 balance, took out a loan for that, and had the loan paid off within two years. Yes it took five years of my life being totally broke and not having any fun with my money, but today I actually get to spend my paycheck in the way I see fit. Yeah, I'm not rich, in fact I'm at the lower end of a middle class income, but I'm not living like a pauper. Since I'm not shelling out half my paycheck to these thieves suddenly I've found myself with all kinds of purchasing power that I just didn't have before. I've bought a new car, kept a decent computer going with new stuff now and then, bought a nice 40 inch plasma flat screen TV, and I'm able to keep a month's pay with expenses in the bank. Last year I applied for an apartment and got accepted ahead of four other people because since I paid off all the cards my credit is fantastic. All of this without credit cards.

You can do it too, all it takes is some determination. Take control of your life, throw out the credit cards. Do you want them to own you forever?

1 comment:

  1. Awesome post – I think way too many people are falling into this trap and can’t get out of debt. The credit card companies make it ridiculously easy to get behind and then they keep throwing on hidden fees and changing rates until its unbearable. I work with a group that is trying to help inform people about hidden charges like interchange fees which hit not only average consumers but small business also, I hope this system keeps getting more attention so that something finally gets done but for now with any luck people will read articles like yours and can start taking some action on their own.