In the fast moving life of 2010 it is hard to imagine tackling the consumer market without a credit card, or even better still, a wallet full of credit cards and various store cards. As we entered 2004 that is just what I had in my wallet and most of them were maxed out. There were 8 different credit cards and 3 store cards and the total debt on the cards was over $90,000 at an average interest rate of 19.5%. But I didn't have a problem - we had a great Christmas 2003 and then a few weeks holiday and when the bills came in towards the end of January 2004 I didn't have the money to pay them. Now I had a problem.
The secret to getting out of a difficult situation like this is to immediately admit there is a problem. Certainly I had the problem for a long time before I would admit that I was in trouble with my mounting debts but by the third week of January 2004 I had admitted that I had a problem, not only to myself, but I went and spoke personally to each of the credit providers involved and told them I had a problem and discussed the ways that I could address the situation so that it could be resolved.
Everyone was spoken to before I defaulted on a payment and I asked for a two week exclusion from payment while I considered my options and arranged my finances again. This was agreeable to everybody and I spent two days researching on the internet to find the best way for us to progress from here. After discussions with my wife we both agreed that the credit cards must go because they were making it far to easy for us to spend money on things that we really didn't need. By the end of that week I had consolidated all the card debts into one loan for 5 years at 9.5% interest and all card accounts had been cancelled and cards destroyed.
Credit card debts are one of the biggest problems facing American families today and using American Express, Mastercard or Visa has become the norm - I even see people buying their groceries on the fantastic plastic. I can remember not so far back when cash was the preferred method of payment but now in my business where we turnover $5,000 every day there is generally less than $50 cash. Cards are just too convenient and we produce them and purchase things without feeling the pain of parting with your hard earned cash money.
With my own debts they quickly got out of control because I would charge anything and everything without the slightest thought of how could I pay for it and the question of did I really need it - well everybody needs the latest giant screen home theatre system don't they?. There is a happy ending to this story because with some real dedication and following a budget, without giving in to temptation, we were able to eliminate the debts completely in just under 4 years. We do now have just one American Express credit card that is strictly for emergency use only and must be repaid as soon as possible. We make this concession because it is difficult to book an air ticket online or book a rental car without a credit card and because of our new status of financial freedom we do take a few air flights now.
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