Living Credit Card To Credit Card: How To Break The Cycle

By Maxime Rieman

Most of us have heard financial experts decry the dangers of “living paycheck to paycheck,” wherein a person’s income is so close to their expenses every month that they’re unable to put any money aside for emergencies or retirement. Of course, these gurus are right to be concerned: saving is an important habit to get into because it is an important safety net and it allows us to build wealth.

So yeah, living paycheck to paycheck isn’t ideal.

But really, I think the personal finance professionals are barking up the wrong tree. They’re right to be concerned that a lot of us are failing to save, but living paycheck to paycheck isn’t the worst monetary state you can be in. As most of us who have been in serious financial trouble know, there is a much direr financial situation you can fall into: living credit card to credit card.

Yep, credit-card-to-credit-card living is about as bad as it can get. If you’ve never experienced this type of financial lifestyle, it goes something like this: you charge up a credit card to the point that it’s just about maxed out. You probably keep your head just above water by paying the minimums on the card every month, just to be sure your credit score stays solid enough that you can get another card. Which you do. Then you charge that card up, without ever paying the balance on the first card. Again, you keep up with monthly minimums, but pretty soon you need another card. And not long after that, you can’t keep up with the minimums on the two other cards, so you use the third card to pay the other two. But now you have no more available credit, so you need another card. And so on. And so on.

Many college graduates fall into this trap. They graduate totally broke – student loan bills, rent, a car payment, and a bunch of other expenses eat up their nonexistent paychecks. But they also don’t adjust their spending accordingly, and quickly open more credit cards first to accommodate their splurges, and then to pay off the other cards. Keep in mind, in the past--even just as recently as 2007--banks were still doling out credit as generously as those free lollipops. So for many graduates, it is—well was--really easy to keep getting new cards to bail themselves out of payments that were too high on the other cards, and, of course, gain a little spending money, too.

This cycle lasts for about a year, and by then most realize that they are drowning. This is when the stress begins: stressed out about money all the time; constantly concerned about missing a payment or worse, not having enough to even pay the minimums; and sweat-inducing nightmares. For those, who are experiencing this during the Great Recession, I can only imagine your feelings of helplessness and the perpetual state of fright you must be in.

The good news is that, you can turn things around. You can go from a total money-wreck to financially savvy with some stubborn resolve, sacrifice and the knowledge that it can be done; knowing that there is an end in sight can really help on those hard days. If you’re looking to break the cycle of credit card to credit card living, try a few of the tips below:

• Stop using the cards – This is probably the most important step you can take towards stopping the credit card madness. It will be painful and unpleasant, but you have to stop using your credit cards entirely, at least for a while. Freeze them, cut them up, give them to a trusted friend, whatever – just keep those cards out of your wallet and out of your hands for the time being.
• Don’t open any new cards – No matter how bad the credit card withdrawal symptoms get, resist the urge to open a new card. Even if you promise yourself you’ll be responsible with this one, just say no. At some point you may be in a financial place where credit cards won’t pose a threat, but that’s not now.
• Put yourself on a budget – One of the reasons you probably got into debt is that you failed to create a plan for your money, which is what a budget does. Figure out how much money you make every month, then make a list of all your expenses, including non-fixed monthly costs like gas and groceries. Decide how much you want to spend in each category, making sure to allocate a hefty amount to debt repayment. Then, stick to your plan!
• Also, put yourself on a cash allowance – Since you’re not using credit cards, you’ll need a way to manage your spending money. I recommend cash. Go to the ATM every Friday; take out your spending money for the week ahead. Not only does this reacquaint you with the value of money (cash is concrete, credit cards are abstract), when it the money is gone, it’s gone. This will keep you out of trouble!
• Increase your income – Once you’ve quit credit cards and set a budget, it’s time to get serious about debt payoff by increasing your income. Get a second job, baby sit, walk your neighbor’s dog, or find some other income stream. But just be sure you use the extra cash to pay off your debts – no shopping sprees allowed!

Breaking the credit-card-to-credit-card lifestyle is tough, but it is doable. Even after a month you’ll start to feel better. Keep your chin up and know that you’re working towards a brighter financial future!

Maxime Rieman is a writer for NerdWallet, a financial literacy site where you can find brokerage reviews, such as this TD Ameritrade Review, when you’re ready to start investing.

Five Signs You’re Not Trying Hard Enough To Ruin Your Life With Credit Cards—College Edition

By Maxime Rieman

In these competitive times, many of us are pursuing lofty goals with a drive and determination that would make Aesop’s tortoise look woeful. After all, who doesn’t know someone who’s training for a marathon, writing a novel, or traveling the world? These days it seems like everyone is working on something big, and the bar for what constitutes “accomplished” keeps getting higher and higher.

While there are a lot of worthy aspirations out there, many Americans are working on a very specific endeavor, one that could potentially have long-lasting consequences—ruining their lives with credit cards.

Millions of people in the U.S. are destroying their credit and running up thousands of dollars in debt; they’re maxing out their cards, buying tons of junk they don’t want and can’t afford, while only paying minimums month after month. But the truth is, many of us who are trying to destroy our financial lives with credit cards simply aren’t doing enough to make sure that this goal is reached and we are not maximizing the example we’re setting for others who will soon be prey privy to the wonders of credit cards. Try as we might, we’re behaving far too responsibly with our cards and we need to put forth more of an effort to make sure that we’ll never get out from under the weight of consumer debt.

So how can you tell if you’re not trying hard enough to mess up your personal and financial life with credit cards? Here are five signs you could be doing more to reach your goal:

You’ve Never Gone Over Your Credit Limit
This is probably the most obvious symptom: if you’ve never had to pay a fee for going over the credit limit that your bank set for you, you really need to consider charging more. The interest and fees associated with going over your allotted credit could be all that’s standing between you and financial ruin, so if you’ve failed to purchase enough with your credit card to exceed that threshold, it’s time to hit the mall. A credit limit is really just a suggestion anyways.

You Don’t Obsessively Check Your Available Credit
If you feel comfortable enough to keep charging your day-to-day expenses to your card without worrying that you’ve run out of available credit, you’re definitely falling short of driving yourself into financial ruin. People who are really committed to letting their credit cards take them off a financial cliff are the ones you see in line at the grocery store obsessively checking the banking applications on their smart phones to be sure they can get out with their gluten-free pasta. Take a lesson from their desperation and make a bigger effort to eat up all of that available credit with mindless purchases. It might seem tough at first, but you’ll find that once you really make a commitment to buying useless crap, it gets easier over time.

You Can Sleep At Night
Every real credit card junkie knows that putting the goal of ruining their lives with their cards requires sacrifice, and one of those sacrifices is a good night’s sleep. If you never (or only rarely) lose sleep wondering how you’re going to pay your bills, you’re definitely not going to achieve the objective of total monetary devastation. Take it as a sign to start charging more if you’re getting a full eight hours every night, and remember that if you’re in a pinch you can always start putting your fraternity/sorority dues on your card. Do whatever it takes to get those balances up!

You’re Not Getting Random, Threatening Calls From Collections Agencies
One of the most persistent reminders that you’re really going the distance towards meeting your objective of ruining your life with credit cards is the unexpected and brash calls coming from collection agencies at all hours of the day. This is basically a commendation for not paying your bills, no matter how much the person on the other end might be encouraging you to cough up the cash. If you’ve never been awakened in the middle of the night—even though you were probably up anyways—by a bill collector threatening to tell all your future colleagues you’re a deadbeat, consider this a sign you’re being far too timely and responsible with your bill payments.

You’re Thinking About Buying A House
One of the hallmarks of financial responsibility is homeownership; so if you’re considering buying a house after college, kiss that goal of messing up your financial future goodbye. If you feel that in a few years you can take on a mortgage, you’re obviously been much too careful with your cash. Worse yet, if you actually qualify for a home loan, it’s really time to buckle down and start swiping that credit card.

Getting into a financial bind may seem hard at first, but with a dash of college-freshmen-ignorance, a pinch of giving-into-peer-pressure-and-keeping-up-with-the-Jones-Kardashians-everyone-else and a pound of prolonged-bill-opening-avoidance, you’ll achieve it in no time. Take these signs into consideration to gauge your progress periodically and remember: never let a trip to the Apple Store pass you by!

Maxime Rieman wishes being an adult weren’t so hard. Luckily, she works for NerdWallet, where she found cheap auto insurance, learned the ins and outs of credit cards and generally, how to be more financially savvy.

My College Credit Card Debt Mistake

Guest Post by Christine Kane

I have not had a credit card in over 10 years. I have chosen this path because I learned an important lesson at a young age. I was a freshman in College learning the ins and outs like how to sleep with your eyes open during lecture. When I wasn’t mastering this art form I was enjoying living the fine life with weekend road trips, new clothes, fine dining, parties and concerts.

Like most Colleges that first week of school when doe eyed freshman arrive, there are lot of on campus things to attend. Most colleges have a meeting where students can find new clubs, organizations and programs to become a part of. Roaming these halls are bankers and credit card givers.

I was approached by a charming fellow just a few years older than me. He offered me a credit card and I declined because I had heard from my family that is what I needed to do. After I said no, he persisted with his sales pitch of the credit card. Except, I didn’t realize it was sales pitch. These words that flowed from his mouth were music to my ears. Promises of low interest rate (what’s that? I had no idea), easy to use, use it for beer, books and gas. SOLD. I signed up and signed my credit score life away.

This little piece of plastic became my study, party and shopping buddy. I didn’t really know the limit or what would happen if the limit was exceeded. I didn’t know understand that paying the minimum wasn’t good. I had no idea, because no one told me.

6 months past and before I knew it I had accumulated almost 4,000 dollars of debt. Oops. What now? I panicked and when the card stopped working and the calls started coming, I did what any 18 year old girl does, I cried. I knew had to make that dreaded phone call home to explain that their scholarly daughter had in fact made a very uneducated financial move.

After a few lectures and a few ‘pull you out of school’ threats, we all calmed down. Thank goodness I was lucky to have parents that could afford to help me out of my mistake. They took the card and paid it off. I got job and to pay them back, plus interest, of course.

My advice to parents or young college students. Educate yourself on credit cards. Parents sit down with your child and explain the basics behind it. Students avoid the smooth talking men and pretty woman with shiny cards. Don’t ruin your credit like I did. And if you are in debt, don’t be afraid to ask for help from anyone whether they are your financial adviser or parent.


Author Bio:
Christine Kane from internet service providers, she is a graduate of Communication and Journalism. She enjoys writing about a wide-variety of subjects for different blogs. She can be reached via email at: Christi.Kane00 @ gmail.com.

Ban Uncontrollable Spending for Good

Guest Post by Lauren Bailey

6 Steps to Shopping Addiction Recovery

It is an unfortunate reality that many Americans and citizens across the world have found themselves in debt and living beyond their means. As common as this is, though, suffering from an actual shopping addiction is quite a separate issue, and it can leave hugely detrimental marks on your finances. If you have found yourself compulsively spending and you need to break the cycle, here are some easy steps to help start the process.

1.  Admit you have a problem and seek the help of a counselor.
As anyone who has struggled with an addiction issue knows, the hardest part about the process is completely admitting to yourself that you have a problem that is out of your control. The next step is admitting you need help. Remember, if you could help yourself, you would have done it already! Make an appointment with a counselor or psychologist to talk about the issue and get some guidance about ways to move forward.

2.  Cut up Your Credit Card
The first step to financial freedom after putting yourself in damaging debt is to give up your credit card, once and for all. Pay for purchases with cash, check or debit only.

3.  Find Shopping Alternatives
The compulsion to shop is not going to simply go away because you realized you are addicted. In fact, your need to shop will probably grow the more you try to fight it. Make a list of activities that you can do in place of shopping, so you have plenty of options handy.

4.  Bring a Shopping List Every Time
If you want to control what you buy, then you need to figure out exactly what you need, and only purchase those items. Make a list of items you need to purchase every time you shop, whether it is for clothing or groceries, and stick to it.

5.  Change Your Lifestyle
Keeping up the same routine as you had before you started dealing with your addiction will not help your recovery process. Instead, think of this as a time to change up the way you live. Drive a different way to work, eat out at different restaurants, and add activities that you never did before to your weekly schedule.

6.  Bring a Friend
When in doubt, bring a friend. Find someone you can trust to support your through your recovery process and call them when you feel the urge to shop, or when you have to go shopping and feel afraid you will overspend.


Author Bio:
Lauren Bailey regularly writes for online colleges. She welcomes your comments at her email Id: blauren99 @gmail.com.

Credit Card Debt vs. Student Loan Debt: Which Should take Precedence?

Guest Post by Mariana Ashley

With Labor Day now done and long over with, all colleges have officially commenced. That said, there are many students who will be completing their final semester/year of college. While many are looking forward to earning their diploma, many are dreading what happens shortly after graduation—repaying student loans. But the situation may seem a lot worse for graduates who have to face a double whammy: student loan and credit card debt. If you find yourself in this situation, which debt should you try to take care of first and why? To find out, continue reading below.

What Kind of Debt Gets Higher Priority?

To state it rather directly, you should always aim to clear your credit card debt before your student loan debt. This is because since your credit card is considered revolving debt as opposed to installment debt, it will impact your credit score more ferociously and more quickly than a student loan debt. That's not to say that your student loans should be disregarded. But if you have some sort of student loan grace period—which is typically around 6 months or so after graduation—you should put all of your energy to wiping out your credit card debt first before making payments to your loan. It's understandable why you may want to pay off your student loan first during the grace period, after all you typically do not acquire any interest during this time. But ultimately credit card debt will do more damage. If you find an extremely high-paying salary job and can afford to pay off both credit card and student loans simultaneously then by all means do it. But if your resources are limited, go with the credit card debt first. If your student loan grace period expires and you still have a hefty credit card balance, talk with a student loan officer immediately to figure out a way to make the smallest monthly payments possible. Sometimes doing something as simple as consolidating all of your loans can result in a small monthly payment, some as low as $50. Whatever you do, you never want your loan to get defaulted though.

Debt Collection Rights

If for some reason you cannot make timely payments on either your credit card debt or student loan debt, you can be reported to a credit card debt collection agency or the Department of Education debt collection agency respectively. By law, debt collectors (of either department) can't threaten to repossess your home, car, or anything else valuable over the phone to compensate for your debt. But they can drag you to court and sue you. Here, if a judge finds you at fault then the judge can mandate that certain items be repossessed, garnish your wages, or collect your tax refund checks to pay off your debt if you don't the money to pay it off for example. Note that credit card and student loan debt collections work a little differently however. With credit card debt, each state has a statue of limitations—which simply means there is only an allotted time for which a debt collector can hit you with a law suit. For example, in Texas it's 4 years. A debt collector can still take you to court even after the statue of limitations is up—it's up to you to show proof that the allotted time has expired if you are taken to court. While you may get out of making the court forcing you to pay up, know that your credit report will be ruined for a good chunk of your life. Good credit is needed to make most big purchases that you will make as an adult, including a home and car. A student loan debt collector does not have any restrictions however and can sue you at any time.

Author Bio:
Mariana Ashley is a freelance writer who particularly enjoys writing about online colleges. She loves receiving reader feedback, which can be directed to mariana.ashley031 @gmail.com.

Finding Options to Help Fight Off Debt

Guest Post by Stella Walker

Getting into debt is scary. There is no denying that. You start to get this anxious feeling of being trapped; you have too many bills not paid off to think clearly. You know you have to do something, but you feel like you don't have a lot of options.

In actuality, there are a lot of options out there, and I'm not just talking about bankruptcy (although this is still viable in extreme cases). Half the battle is getting yourself out of this emotional and psychological slump and convincing yourself that you can be proactive about your debt and finances.

Cut off luxuries

If you can't pay your own bills, it's time to start making your own coffee and lunch and bringing it to work. You should also at least attempt to repair household items yourself. If there's no cancellation fee, cancel your gym membership and instead opt for good-old-fashioned jogging. While you're at it, cancel any other services that you don't need; if the service doesn't facilitate you getting out of debt, you don't need it.

Start a small business

While it is true that it generally does take some money to startup a small business, some business start-ups are actually extremely low cost. One extremely cheap startup is a snow cone stand. Have any secret hobbies or skills? Now is the time to put yourself out there and at least give it a shot. You'd also be surprised how cheap it is to start up an online business. You could even write a blog telling the story of your struggles with debt (like this one).

Balance Liquidation Plans

If you have a whole slew of credit cards with outstanding balances and frighteningly high interest rates, you should perhaps consider requesting balance liquidations plans from your creditors. While this doesn't allow you to charge to cards that you've liquidated, it does lower the interest rates to extreme degrees. Just be sure that you have ways to make necessary expenses without your cards.

Pay Cash

If you do wind up liquidating your cards, this is a great way to try budgeting with cash. The beauty of a cash budget is that it forces you not to overspend because you literally can't. You take out the amount of money you want to budget each week (or month) in cash, and if you find yourself getting low on cash, you just have to start scraping pennies and looking for food in the freezer until the set time that you allow yourself to take out more cash.

Use Envelopes

If you decide to limit your budget with cash withdrawal restraints, another great strategy is to organize separate budgets into different envelopes. For example, you'll have envelops for bills, clothes, groceries, etc. with a designated amount for each envelope. The idea here is that you limit a budget for each area of your life, and if one envelope empties to quickly, you have identified a possible spending problem in your household.

Author Bio:
Stella Walker is a freelance writer of free credit score where she writes about topics including credit, debt, investment, bankruptcy.

Eliminate Credit Card Debt, The Beginning

Let me set the scene and see if this is familiar to anyone out there.

November 1997, I was set to retire from the US Navy in Sept of 1998.

I had about $26,000 of unsecured debt (credit card debt). Every time I was transferred from one base to the next over the years our debt would increase by about $2-3,000.

We were making all of our payments on time, but it was like treading water we never gained on our debts and the biggest expense we had were our three lovely kids, ages 1, 4, and 8.

Did any of the previous sound familiar?

At this point we decided that we had to see what help was available to try and work our way out from under debt load. The most common group specializing in this type of assistance at the time was the Consumer Credit Counseling Service, a non-profit group that had offices across the USA. This is still one of the best groups out there.

The Consumer Credit Counseling Service in 1997 required one-on-one counseling and a budget set up with a counselor. I was arrogant enough to think that I didn't need any face time with a counselor. I wanted a group that was easy to use but I didn't want them to get personal with me. I knew I was going to have to stop the use of my credit cards and start taking a bite out of the debt crunch.

I used the internet to research alternatives and came up with Debt Counselors of America now called Myvesta. This was a non-profit group that would negotiate a lower interest rate with the various credit card companies on our behalf (this group doesn't seem to do this any more but does have great info on the topic). The only catch was everything had to be paid through them.

My credit card interest rates went from 21%-0%, 18%-10%, 18%-6%, 18-4% and 16%-16%. My largest debt on a single card was the Discover card which went for 21%-0%.

The only credit card I didn't place under the program was the one from my credit union. I have a good history with them, a reasonable rate and I didn't know how using the program would effect my credit rating. I wanted one avenue that was free of any possible problems. The card was at its limit and wouldn't be going down too fast since the other cards are the priority. But this card was listed as off limits by my wife and I.

Well this was the beginning. Later I'll explain what difficulties we ran into and how this effected our life.