I read and article this morning referencing 10 sings that you're headed for a debt disaster .
1. Your bank account is consistently overdrawn.
2. Your credit card balances are rising.
3. You're only making minimum payments on your credit cards.
4. You and your partner are arguing about money.
5. Your savings account is busted.
6. You're juggling your monthly bill payments.
7. You don't know how much you owe.
8. You're keeping secrets.
9. You've got a credit card collection.
10. You're near the limit on your credit cards.
I meet eight of the ten signs, or met eight of the ten before starting our debt payoff process. Our credit card balances were rising (not anymore), we are making the minimum payments on all but two of our credit cards, we argue about money, our saving accounts are busted, we're juggling monthly bill payments (although not to the extent in the article, we now know how much we owe, we've got a credit card collection, and we're near the limits on most of our credit cards.
Reading that article led me to an article about Debt Relief Firms and how they put debtors in a deeper financial hole. I don't use debt relief programs, and in most instances, I don't like debt relief programs. After reading the article in the New York Times, I like them even less.
In the interest of full disclosure, I have to tell you that I briefly (two weeks) worked at Consumer Credit Counseling Service. CCCS is different than the debt relief programs that this article talks about in that they negotiate lower interest rates and payments on your debts, collect your payment from you, and distribute it to your creditors according to your established payoff plan. There is no saving until you have enough to negotiate with your creditors before payments are made. Consumer Credit Counseling Service is a non-profit credit counseling agency. They have counselors in their office and you come in and meet with them in person. They have low fees ($25 set up and $25 per month) but do have a process to waive these fees if you're in a financial hardship situation.
A quick search for their website shows me that they're now known as Apprisen Financial Advocates. Again, I used to work for this company, but I have no personal interest in their success or failure at this point, as I have not worked there in over ten years and have no affiliation with them.
I have not personally considered working with this company. Why? While I feel that they can be beneficial for individuals who have a hard time juggling their monthly debt payments and budgeting their monthly expenses, I believe that if you are motivated, dedicated, and educated, you can pay your debts off yourself without costing $25 a month in account service fees. The problem is that many people with massive debt, such as myself, are in that position because they couldn't stop themselves from using credit in the first place. If you can't change the root cause of your financial problems, you are doomed to repeat them.
Just this past week or two, my husband and I were discussing taking a vacation to Florida. My mom, sister, and niece are going next month. We went last year and took them with us, and we both wanted to go again this year. Even with our credit cards maxed out and working to pay the balances off, I have been trying for weeks to come up with a way to afford this vacation. To me, it didn't matter that we're sitting on $20,000 in credit card debt, or that we're trying to pay those balances off, or we're a flat tire away from being broke; all I wanted was to go on vacation, however I could make it happen. I was even considering applying for another credit card just so we could go. Logic finally kicked in this morning and I realized that this need for instant gratification is what got us in this position in the first place.
My husband, while apologizing for us not being able to go on vacation this year, said that maybe starting now, we put $50 a paycheck into a savings account for a vacation fund for next year, that way we can afford a real vacation without scrimping and saving. I guess he's right, although I would never tell him that, however the beach we want to stay at is on the Gulf coast and I'm afraid that this time next year, it'll be saturated with oil.
We were talking this weekend and I told him, "Do you realize, if we pay off these credit cards, we'll save $825 per month in minimum payments? $825!" He replied with, "Yeah, that sounds great and all, but we use these credit cards for everything. We'll never pay them off if we don't stop using them." To which I answered, "We haven't used them since I told you we're broke. We can live without them, we just have to learn how to."
It's amazing what you don't need when you put your mind to it.
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