Lessons from my worst money blunders: credit card debt

Never put a balance on a credit card that you can't already afford to pay at the end of the month.

Along my financial journey in life, I made a great number of mistakes. In this ten part series which runs from July 19 to July 30, I’m going to focus on ten of my worst mistakes and the difficulties and successes I’ve had in overcoming those mistakes.

I spent more than I earned and made up for the difference with credit cards.

It started in college. The bookstore offered a discount on textbooks if you signed up for a card. I signed up. Later, I used that card to buy video games, starting with The Ocarina of Time.

When I graduated from college, I had a small amount of credit card debt – nothing unmanageable.

Next came our honeymoon, a year later. I financed most of our honeymoon to London, Edinburgh, and Inverness on a credit card, nearly reaching the credit limit on that card.

When we returned, we furnished our new apartment with a new card. I bought some golf clubs and a bunch of electronics. I began to settle into a routine of buying books every week.

I remember buying a $500 crib for my son on credit in late 2005, going home, and attempting to pay bills. There was less than $500 in my checking account then and I really didn’t think anything of it until later on. I just kept rolling on.

The end result? By April 2006, I had accumulated around $20,000 in credit card debt. The monthly payments on that debt were actually higher than our rent. When you add car payments and student loan payments on top of that (as well as all the regular bills), we simply did not have enough money to continue to make ends meet.

The tricky part about this mistake is that it was actually just a series of small mistakes that I didn’t bother to fix. Every time I used credit to pay for something I couldn’t afford, I could have just said no. Every time I went through with buying something unnecessary, I could have been more frugal in other areas of my life and just paid for that indiscretion.

I didn’t do either one. Instead, I kept buying things that I couldn’t really afford. As the debt built up, I found that I could actually afford less and less because of the growing monthly bills, but it didn’t keep me from racking up more debt.

Why did I buy? There was a mix of things going on. Poor impulse control. Career-related anxieties. Lots of stress. All of these things were solvable on their own and buying things I couldn’t afford was merely a short-term salve for them. It was easy to forget that pain if I could go home and read a new book or play a new game for a while.

What can you do to avoid this trap?

The solution is simple: never, ever put a balance on a credit card that you can’t already afford to pay at the end of the month. The moment you do that is the moment you’re financing a lifestyle that’s beyond your means.

If you’re already in a situation where you’ve built up a large deal of consumer debt, start getting rid of it now. Yes, this means you’ll have to live quite a bit below your means for a while. The first place to start is by selling off all of the stuff in your closets and on your shelves that you never look at or use. If you have a CD or a DVD or a video game or another item that you’ve not looked at in more than a year, sell it. Use that money to hammer the debt. When you’ve done that, focus on minimizing your monthly spending – here are 100 such tactics – and roll the money you’re saving into a debt repayment plan.

Finally, deal with the other problems of your life head-on. Start wiping away the stress and the concerns. Focus on fixing broken relationships and moving on from ones that can’t be repaired. Deal directly with the things that are bothering you. Seek professional help if you cannot. Eliminate the stress and clear your mind to make better decisions with the resources you have.

Just remember that you can do this – and don’t beat yourself up over every mistake. Success isn’t perfect and it doesn’t come in an afternoon.

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