“Don’t buy things that you can’t afford.”
A few years back when Steve Martin hosted Saturday Night Live, there was a hilarious infomercial sketch for a debt-management book called “Don’t buy things that you can’t afford.” No matter how many times the spokesman explained to the couple the title, theory, and financial plan—all of which were the same—they still couldn’t get it through their thick heads.
“So wait, you mean… if you don’t have the money, use your credit card, right?”
For some reason, no matter how many times I told myself in college NOT to use my credit cards, I did it anyway. I always had an excuse. I needed to buy a birthday present for my Mom. I needed new shoes. Sometimes, I really did need to use it—like when I found out my tires were going bald and needed to replace all four of them. But whatever the reason, I accumulated a credit card debt of almost $18,000!!
Credit card companies target campuses with an arsenal of free gifts and low introductory rates… they want young college kids with no worries and a put-it-off-till-later attitude. If you’re like me and got suckered in, you’re now wallowing in student loans AND credit card debt. An overwhelming and depressing combination.
But there are solutions, and I’ll share the one that worked for me.
There are non-profit organizations that exist for the sole purpose of consolidating your credit card debt. I chose a company called Money Management International (MMI). This is not a plug, and I’m not being compensated for this article in any way. And there are probably many other companies out there like MMI, which all work to negotiate with the credit card companies on your behalf, and for a small fee, take care of all your payments. You need only send a single monthly payment to them. Your credit cards are then considered gone, and you aren’t allowed to obtain a new one without being booted from the program. It took five long years of paying a large monthly payment, but eventually, the credit card debt was gone! For me, just having a plan and a pay-off date was crucial and put my mind at ease. It wasn’t always easy making the payments, but because I couldn’t get any more credit cards, I really had to get my spending under control. The whole experience gave me a greater appreciation for the things I have and choosing wisely before making purchases.
If you decide to consider a debt consolidation program, make sure you crunch the numbers. Be certain that most of your money is going towards your debt, and not to the consolidation agency. Of course, know your pay-off date, monthly payments, and be prepared to make kicking your debt’s ass a top priority! And of course, do NOT take on any other credit cards or loans in the interim.
Besides consolidation, there are few options for credit card debt. Unlike student loans, there are no forbearance or deferment options. And missing payment on credit cards has serious repercussions—like enormous fines and sky-rocketing APRs. Consolidation truly is the way to go, unless you can afford to pay more than your monthly minimum.