When Credit Cards Attack
There are a few signs that you will want to look for when you are in a dangerous situation and it is time to get out or get help to get away. Fighting back a credit card that is foaming at the mouth and starving for your attention and your money is not a good place to be in. In most situations you already know you are in danger because you feel it in your gut or you have trouble sleeping. If you are unsure about your 6th sense, here’s what to look out for:
- You are only able to make the minimum payment ‘“ This is a bad thing, if you make only the minimum on a 1,000 dollar credit limit it will take you almost 4 years to pay it off.
- If your balance is going up while your income is decreasing ‘“ Unemployment is a tough life and credit cards can be a saving grace. BUT, should only be a last resort. Belt tightening and sell off whatever isn’t nailed down is where I would start.
- Charge more than the payment you make ‘“ this goes along with the two above, it is going to take longer to pay off.
- You receive collection notices ‘“ This is an obvious one and action must be taken immediately. Every month that goes by, your credit score tanks even more and this causes trouble with buying large items (cars/house) that you may need in the future.
- You are routinely hiding your purchases from your spouse ‘“ This is not only dangerous financially but does not bode well for a healthy relationship.
- You are dipping into IRA or 401K to pay off your debt ‘“ When you hand someone a credit card to pay with, you are saying that I will have the money in the future to give you. If you dig into your retirement savings, you are saying to yourself that this item is more important that having money when I am 70.
These are just a few of the signs, there are many more but you get the idea. Credit cards don’t care about your financial station in life or your health; they want to be fed NOW! If you haven’t already sat down and figured out where you can save money to pay off these animals, do it now. If you can cancel a $15 a month subscription, do it ‘“ that will help pay off a $1000 debt in just over 2 years, instead of 4 years.
If you feel you are still too deep and need some help, check around with credit counseling services that may be offered.
A few resources:
CreditinforCenter.com
Credit repair and the scams
Consumer Credit Counseling Service
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Dawn C. is site owner of Frugalforlife.com where this is a repost from: When Credit Cards Attack. Dawn is residing in Colorado with her spouse, Teri, of 11 years.
Photo credit: stock.xchng.
We experienced 1 and 6, and shut down our credit access before the rest of these items came into play. We did the credit rolldown, and started aggressively hacking at the 5 cards we have. We borrowed against a 401K, paying off a card with 16% interest. The 401K loan is only 6% interest, so we felt good about that choice. When we pay off a card, we apply the amount of that card’s payment to another card, so each one gets paid more aggressively than the ones before. I don’t recommend consumer credit counseling unless you’re on the brink of bankruptcy. I did it when I was just out of college, and it screwed my FICO for years. Luckily that’s dropped off now.
Dawn, these are all really good points, especially #6.