CC debt, the good, the bad, the ugly and finally getting out

[Guildedagain]

So it's 2020, the year of the pandemic, and it's not long before my bank account is low, but I have this lovely card, $23k limit, I've used it regularly for years to cover things, and for years - after paying it off once 20 years ago - paid it off within the cycle, why they would want me as a customer, I don't know, it's like a free service if you play it right.

But then I got bored, started buying guitars and other stuff as a way to cope, figured maybe it's all over anyway, racked up $10k in no time at all.

This is a really good card with low interest, but still several hundred a year.

I started paying it down, $300-400 a month, got it down to $7k, didn't feel like it was going anywhere or never really would.

Thing is, I maybe easily doubled my money on some things I bought, but even if I was swimming in it, I have having a great time, wanted to keep playing rather than paying it back, so I was just buying more guitars as I flipped guitars.

Finally the feeling of crushing debt was too much for me, and my bank account ridiculously swollen from a couple recent sales, I paid the card off yesterday, balance zero, and I'm just now starting to bask in the feeling, even though the transfer doesn't hit til Monday the 18th.

The deal I had made myself was that I would sell my old guitars to pay for new ones - and pay the card back - and so I'm minus a lot of guitars I'd had a long time, and I have roomful of new ones I don't like enough to keep.

But I'm debt free.

 

[twocorgis]

Man, nothing is worse than CC debt. My ex (and one of the main reasons she's my ex) had me over $60K in the hole on two cards while she was in charge of the finances, and I wasn't paying attention, but should have been.

I converted it to a Home Equity Line of Credit, so not only did the interest rate go down, but the interest was (or used to be) tax deductible. It took four and a half years, but I managed to pay off that, and the over $50K that she had run up on the HELOC. I might not have a lot of money now, but at least I don't have any debt, and I plan to keep it that way.

 

[adorshki]

So it's 2020, the year of the pandemic, and it's not long before my bank account is low, but I have this lovely card, $23k limit, I've used it regularly for years to cover things, and for years - after paying it off - paid it off within the cycle, why they would want me as a customer, I don't know, it's like a free service if you play it right.

Because they make their money off merchant fees. It's why they'll offer (the right) new customers short-term 0% interest AND a lump sum cash award for making X dollars worth of purchases with the card within a short (typically 6 months) time frame.

I've picked up about $1,000 that way over the years. The trick is to never buy more than you could actually pay off, and I'll use the card exclusively until the threshold's met, then put it in the box with the rest of 'm. Within 60 days the cash is available and was always allowed to be used to pay down card balance, so I would. So $300 cash back on a 1500 spend is like making 20% in 6 months.

Never carry around a credit card. THAT'S where the trouble starts.

But I'm debt free.

Me too. Even working the system gets old after a while.

 

[twocorgis]

Because they make their money off merchant fees. It's why they'll offer (the right) new customers short-term 0% interest AND a lump sum cash award for making X dollars worth of purchases with the card within a short (typically 6 months) time frame.

I've picked up about $1,000 that way over the years. The trick is to never buy more than you could actually pay off, and I'll use the card exclusively until the threshold's met, then put it in the box with the rest of 'm. Within 60 days the cash is available and was always allowed to be used to pay down card balance, so I would. So $300 cash back on a 1500 spend is like making 20% in 6 months.

Never carry around a credit card. THAT'S where the trouble starts.

I do the same thing Al. I've picked up $1000 with all those $200 bonuses, and it was like free money, because it was. And after my ex plunged our FICO sore into the low 600s, mine has stayed over 800 since I rebuilt it, so the offers keep coming (and I'll take them).

As for not carrying the cards, I do the opposite. I put everything on them. I have one card that gives you 2% on everything, and another that gives you 4% on fuel, and 3% on restaurants. As long as you pay off the balance every month (and I do), that's like free money, too.

 

[walrus]

+1. I have an amazon VISA card - about $30 - $40 each month in rewards to spend on anything on amazon. Ha! Making amazon pay me - nice! It's crazy not get some type of rewards card. Of course, the key is to pay the balance every month. Luckily, I've always been pretty fiscally conservative, so it has not been a problem.

walrus

 

[chazmo]

Congratulations for getting out of credit card debt. Borrowing money with a credit card balance is probably the worst way to do so. But, I'm sure you've learned your lesson, guildedagain. Congrats again.

 

[Canard]

Once when I was a 18-year-old, long-haired hippy-type, pretending to be a university student, I was hitch-hiking up to the university campus. An elderly gentleman, very elegant with grey hair (immaculately groomed), and wearing obviously bespoke tailored clothes, pulled his 50s Bentley over to the curb and asked where I was going. I told him. He told me to get in. I did. He was a charming, pleasant conversationalist. Towards the end of the ride, he said, "Although I am old, I have only two pieces of useful advice for you. 1. Work hard and save up a cushion of at least six month's salary and try to keep it at that level - that way you don't ever have to kiss ass in a job. 2. With possible exception of property, which is likely to increase in value, don't buy stuff you can't immediately afford. This isn't to say don't use a credit card or borrow money. Just don't put anything on a credit card or borrow money for something that you couldn't pay off at any time if you had to or wanted to."

I did not have the resources (or good sense) to follow the first half of his advice for quite some time. Hey I was young.

The second half was easier, because I was fairly frugal anyway. And in way this was how I started buying Guilds. Nobody seemed to want used ones, which was confusing, because they were obviously well-made and they sounded and played great, often way better than guitars from the competition. I could easily afford them, much more easily than the fashionable Fenders and Gibsons. They were great. I wish I had held on to all of them. Unfortunately I didn't, and unfortunately, the world has long since caught up in the appreciation of Guilds..

 

[Guildedagain]

This card is with BOA - pretty decent actually - had my mortgage through them, and a refi, which was great, but then I started being a bachelor again, racked up $8k in guitars - some in person at guitar stores - and misc on the card, that was the 1st time around, blaming a broken heart, lol ;]

So then I discovered the Home Equity line of credit, it was like 3% and I borrowed enough on it to wipe out my student loan debt AND my CC, barely raised my mortgage by $50 a month, then I sold the house, probably the smartest thing I ever did, erased all the debt and walked away with a tiny bit of money, the house had been losing equity at the rate of $10k a years for several years running.

I never borrowed any $$$ on the card, just used it for online purchases.

I found the the faster you buy a guitar, from start to finish, the better.

Don't stop and think about through checkout - because you know it's really madness - just buy it ;]

 

[Guildedagain]

Ran into this just today, some decent advice and getting out of debt.

‘I’m Out of Student Debt, But I Still Feel Like a Failure’

Your next steps may seem daunting, but you should be proud of yourself.

www.thecut.com

 

[adorshki]

I do the same thing Al. I've picked up $1000 with all those $200 bonuses, and it was like free money, because it was. And after my ex plunged our FICO sore into the low 600s, mine has stayed over 800 since I rebuilt it, so the offers keep coming (and I'll take them).

As for not carrying the cards, I do the opposite. I put everything on them. I have one card that gives you 2% on everything, and another that gives you 4% on fuel, and 3% on restaurants. As long as you pay off the balance every month (and I do), that's like free money, too.

Yeah, it's just that my expenses are already so low it was hard to spend the $1500 sometimes (after rent), don't eat out much since about '16, buy gas at cash discount price....it was easier just to manage my debit card checking, and was socking away everything I could in the 401k (since '97, actually)

Also got a little nervous when my company was acquired by a competitor in June '18 but it actually turned out to be one of the best things that ever happened for me. In spite of the eventual COVID lay-off last year, they did nothing but right by me, even carried me on furlough for 6 months (meant I continued on company health insurance, for example), anticipating a quick return to "normal" which just didn't happen in time...

I mean, our warehouse was shut down except for essential staff in April...the biggest part of their business, retail, was knocked flat out. Unemployment was a slamdunk and went off like clockwork for me, sending in my continued claim forms by mail. It was like a year long paid vacation with no worries about debt or even having to look for work... requirement was dropped due to Covid...

Went into the Big Lockdown debt-free, cost-of living overhead only. My dear departed grandpappy's influence bore fruit in the end, I think.

 

[silverfox103]

You need to cut up that card up and stop fooling yourself..........sorry.

Tom

 

[silverfox103]

On a related note, We have Thanksgiving at my oldest daughter in Philadelphia every year. The youngest daughter (31) who is an engineer and lives in OR was coming. The flight was $1600 for 2, she said that's too much. I offered to pay $1000 of it, she said no, it's too much. Although we'll miss her, I get it, that she get's it.

Tom

 

[Brad Little]

When I managed a record store, we had a customer who came in every Friday and spent at least a couple hundred dollars, mostly on opera records. When it was time to pay, he would pull out one CC alter another before picking one. I asked him one time why he did this. With a grin on his face he said I have good credit, so I get tons of offers, every month I pay the minimum on each. I'm a bachelor with no family, so when I die, screw 'em all! Moved to Ohio, probably still at it (unless he's already screwed 'em all!)

 

[Guildedagain]

You need to cut up that card up and stop fooling yourself..........sorry.

Tom

Cutting up the card sounds symbolic, but it doesn't expire for a few years yet ;] That card has saved my bacon over and over during the years, just to cover short term purchases, or preferring to use a CC instead of Debit just in case of transaction issues.

It's a double edged sword, like anything else, a capability to do good or bad things.

Also, it was prob 20 years ago when I aksed for a credit increase and they bumped me up to $23k, but nowadays with my pitiful income and lack of actual employment history, I'd be lucky to get a card with a $1500 limit. My credit union wouldn't give me a card, lots of questions, followed by an offer of a "starter card", why bother when I have this one.

I did want to kick BOA to the curb for good, but in the end could not. My very 1st bank account was a Seafirst I opened at a Safeway store, Seafirst was bought out by BOA, eventually realized I was not very happy with BOA on account of something to do with my mortgage so I took my everyday banking to a Teacher's Credit Union, and they have been quite fantastic from the start with actual local phone support.

 

[Brad Little]

I'm with 2corgis, virtually everything I buy is on a CC with rewards, pay off every month, regularly enjoy the benefits with gift cards, usually for Amazon or Petsmart.

 

[richardp69]

I have no issue using a credit card and if fact, do so often. But, and it's a big but, it has to be a zero interest/financing charge deal. I'd much rather use other peoples money than my own.

 

[fronobulax]

I spent a lot of time with my grandparents when I was young and I absorbed the usual lessons about savings and debt that are taught by people who lived through the Great Depression. So I'm a 7 or 8 year old with an visceral sense that debt is bad. We had a mortgage. We had a a savings account. My long suffering mother had to explain to me how we would lose money of we took cash out of a savings account that was paying 5% and paid off a mortgage that was charging 2%. The attitude stuck and the only times I have paid interest on a credit card have been when the bill or the check were not delivered, by the Post Office, on time. I don't even have a debit card because when they first came out the consumer protections were much weaker than those of a credit card. Part of being a curmudgeon is not changing even if the protections are similar now.

 

[silverfox103]

I spent a lot of time with my grandparents when I was young and I absorbed the usual lessons about savings and debt that are taught by people who lived through the Great Depression. So I'm a 7 or 8 year old with an visceral sense that debt is bad. We had a mortgage. We had a a savings account. My long suffering mother had to explain to me how we would lose money of we took cash out of a savings account that was paying 5% and paid off a mortgage that was charging 2%. The attitude stuck and the only times I have paid interest on a credit card have been when the bill or the check were not delivered, by the Post Office, on time. I don't even have a debit card because when they first came out the consumer protections were much weaker than those of a credit card. Part of being a curmudgeon is not changing even if the protections are similar now.

Now there's a guy that gets it!!

 

[silverfox103]

Cutting up the card sounds symbolic, but it doesn't expire for a few years yet ;] That card has saved my bacon over and over during the years, just to cover short term purchases, or preferring to use a CC instead of Debit just in case of transaction issues.

It's a double edged sword, like anything else, a capability to do good or bad things.

Also, it was prob 20 years ago when I aksed for a credit increase and they bumped me up to $23k, but nowadays with my pitiful income and lack of actual employment history, I'd be lucky to get a card with a $1500 limit. My credit union wouldn't give me a card, lots of questions, followed by an offer of a "starter card", why bother when I have this one.

I did want to kick BOA to the curb for good, but in the end could not. My very 1st bank account was a Seafirst I opened at a Safeway store, Seafirst was bought out by BOA, eventually realized I was not very happy with BOA on account of something to do with my mortgage so I took my everyday banking to a Teacher's Credit Union, and they have been quite fantastic from the start with actual local phone support.

Don't mean to pile on, but you have to stop making excuses.

Tom

 

[Guildedagain]

Yeah, the depression/dustbowl folks were special. Read the "The Worst Hard Times", such an incredibly great book, no one now has the backbone to go through what those people did.

I worked for/with an old timer, when we would have lunch, he'd bring out all these leftovers, some of them spoiled... and drank hot water instead of anything that would cost money. Didn't believe in using trash cans, said "if if can't be burned than bury it".

He was actually a big time musician around here going back to 1920's barn dance in N Idaho. His wife had "run off with the hired man". Had a Martin D28 and played more revivals and tent meetings and old time fiddlers gigs in one month that I played with anybody in a year.

They don't make them like that anymore.