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.

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.

Lacey’s Credit Card Debt Story

Guest Post by Lacey Cook

Hello all. My name is Lacey Cook, and this is my personal credit card debt story. I was always taught to spend my money wisely. From the age of eight, I started to save for my first car. By the time I turned 18, I had saved enough to buy a six year old car at about $8,000. I paid in full with a check, and I’d never felt so great.

After that, I went off to college, where I had some trouble keeping my finances afloat, but I made it through with the help of my parents. After graduation, I got married and started a new chapter of my life. That’s where everything started to go south. I had no student loans or credit card debt, and we’d just got a few thousand dollars for our wedding, but that wasn’t enough. He was about $40,000 in debt from student loans and credit cards, and we had no way of paying our bills. We struggled to find jobs, and we ended up having to use my credit cards to make ends meet for the first few months of our marriage.

Finally, we found jobs and started to slowly dig our way out of the hole. Everything was great, but we still wanted something more, so we decided to get a dog. We went to the pound to adopt one, and found the most adorable little puppy I’d ever seen. She was fun, yet still wanted to cuddle, and I knew she would be the perfect addition to our new little family. We spent our weekly budget for groceries on her and decided to eat bologna and mac and cheese to tide us over.

The second day after we got her, she started to look lethargic, and I wanted to make sure she wasn’t sick so I took her to the vet. Turns out, she had a very draining virus that could have killed her if we hadn’t caught it in time, and even with the treatment, she still only had about a 50% chance of survival. I handed over my credit card. Two days and nearly $2,000 later, we finally got to take her back home to nurse her back to health.

We knew, at that point, that we had to make some drastic changes in our spending to get us back out of debt. We sat down, made a list of all of our monthly expenses, and created a budget to suit our life. I started clipping coupons and stopped buying name brand items to cut down our grocery bill. We discontinued our cable bill as well and used digital rabbit ears instead. We cut down our budget so much that we were able to start paying way more than the minimum payment on our debts each month, which I know is important when you are trying to save your credit score.

We’re not out of the woods yet, but we’re getting there as fast as we can. In fact, we’ve been so successful, that we’re also able to put away a little money each month to start a retirement fund. I know you may be thinking that we shouldn’t have to worry about such things yet because we’re young and have plenty of time, but I have realized that I definitely don’t want to have to work until I’m too old to stand. The sooner a person starts to save for retirement, the sooner they can actually retire. I am determined and motivated to get out of this debt and live my life to the fullest.

Author Bio:
Lacey Cook is an author who writes guest posts on the topics of business, marketing, credit cards, and personal finance. Additionally, she works for a website that focuses on educating readers about getting their first credit card.

Living Without Credit Cards

If you read this post (Eliminate Credit Card Debt, The Beginning) you'll recall that my wife and I decided to get our credit card debt under control in November of 1997. This necessitated that our family would have to stop the use of our credit cards.

When you are used to having credit available the sudden withdrawal can be traumatic. Not having a credit card isn't too hard but it does require a little more planning. We picked a tough time to stop with the Christmas Holidays coming up.

It's amazing the time of year that we used the credit cards the most wasn't as hard to get through as I would have anticipated. We just had to set priorities, our kids were 1, 4 & 8 years old at the time so they were still easy to take care of at this time of year. We deferred any major gifts for ourselves and concentrated on the important things "Tradition and our children".

The real test happened in early January 1998. We sent our third grader off to school (did I mention we lived along the central Maine coast at the time) on a nice morning. Ten minutes later he was back and said there was no crossing guard. Well the street he has to cross is not busy at all so we sent him back. You see he was running late an we figured the guard left early. This time he was back again and he said he met another mom and her kid walking back from school. He stated that school was closed due to the coming ice storm.

This was the beginning of 12 days of stress. It started with freezing rain at around noon. We lost power around 4pm. When I heard pine trees starting to snap I moved the car out of the garage and onto the street. This turned out to be a good thing because branches off of the pine tree overhanging our driveway and electrical hookup snapped and not only blocked the garage but ensured we wouldn't be getting electricity any time soon.

We were without power for 11 days. The next day I went into town and there were wires down arcing and sparking everywhere. Just north in Canada they had high tension wire towers collapse like dominoes. This was the worst ice storm in Canadian history.

I immediately felt a little lost without the ability use a credit card. How would we manage this event? We stayed in the house two nights then decided we had to find a warmer place for the kids.

We spent the weekend at her sisters in Connecticut. We called our house and the answering machine didn't pick up so we knew we were still without power. We then called a neighbor and their machine picked up. They weren't home but we knew they had power. When we left my wife's sister asked where are you going to stay, we replied at our neighbors. They didn't know it yet but they had power and that is why you get to know your neighbors.

We then spent a night at our neighbors place. The next day with a little help our heater blower was wired into a neighbor's electrical box, this allowed the oil heat to warm the place up. Now we ran an extension cord 200 feet to an outlet on the back of a house behind us. This allowed us to run the living room almost like normal. A couple of light a computer and the TV. If we wanted to run the electric wok we had to turn off a couple items.

After 11 days the TV nightly news declared all the power was restored. We were surprised because ours was still out. By midnight they were at our house to hook things back up. So after 11 days we finally had our power restored.

What was the point of this meandering?

Even faced with a major disaster I didn't need to use a credit card. We used a little imagination and a little assistance from our neighbors and managed to come through this with good memories and some great stories. To top it off we came through it without adding any more debt to our credit cards.