Debt, Debt, Debt Everywhere

As many of my readers know, Dad is always behind the eight ball when it comes to Credit Card Debt. Many families break apart due to debt and for me, I’ve finally reached this breaking point.

I realize that unless my family goes into a total “lock down” mode with our credit card situation, we will drown (literally and figuratively) with our credit card debt.

I consider myself to be a pretty astute financial person, but  I’m resigned to the fact that I am not wining  the battle with the bad debt of plastic (Not to be mistaken with the battle of the bulge which is a topic for another day). Regardless of which strategy I employ, every time I zero out my credit cards, within a few months, my credit card balances balloon to unmanageable proportions.

The funny thing is that as a family we don’t live beyond our means. We don’t go out and buy diamond rings, new cars, new toys, new clothes.. Nor do we go out for eat out on a regular basis.. We just lead a middle class existance.. With this existence we are constantly fighting the demon of plastic debt.

I make a decent living for a large Telecom company and my wife works for a local bank (part-time).  Yet living on one income in NJ is almost an impossible task.. Unless of course you live in a cave and don’t own a home,  have children or don’t leave your house EVER.

Yes, New Jersey’s standard of living is high with it’s outrageous property taxes and taxes in general.

I’ve tried all of the techniques that I’ve read about on Oprah, Wisebread, Lifehacker, Get Rich Slowly and other excellent sites for managing and beating the credit card monster.

Here are some of my mistakes:

• Transferring Balances to zero % (and paying the 3% (Now 4%) balance transfer fees) and low interest cards. Doing this will impact your credit worthiness when you have way too much credit available.
• Using my Home Equity Line of Credit (HELOC) to pay credit card bills. Now you are substituting good debt for bad debt, but if your HELOC is a variable rate, your monthly payments will quickly balloon.
• Paying non-discretionary expenses by Credit card (Gas, Groceries).  My mistake here is that I didn’t pay off the balances and they continue to mushroom even as I try to pay off the balances.
• Selling stocks to try to reduce or address growing balances.  Only thing this does is to have a slight dent in the debt. As soon as you pay off the debt, another card’s balances are growing.
• Paying off Highest interest rate cards first, making minimum payments on all others. FYI this is the strategy that EVERYONE recommends!

There are only few answers to beat credit card debt and I finally realized this just a few days ago..

1. STOP USING PLASTIC – Refer back to my “Lock Down” remark. Until you pay off the debt, the revolving cycle of credit card will not cease, nor will you be able to pay off your debts
2. When you use Credit Card, Pay off purchases the same day of the purchase. For every $1 that you leave outstanding, this debt will mushroom to $100 very quickly
3. Use Debit Card (with caution to avoid overdraft) to pay.  Unless you have overdraft protection (another form of credit),  I would not recommend this strategy. Fortunately, I’m like a hawk when it comes to my bank balances.
4. Use Cash – This I think is the most right of all the solutions.  When all else fails, stow away all your credit cards except one emergency card and pay everything with Cash.

One of my tasks over the next few weeks is to do a line item balance sheet of income/expense analysis to determine where my income to debt ration is out of  proportion. Obviously, I’m doing something wrong..

I’m sure that the desperation in my writing will be apparent to many of my readers.  Let’s see how how I get out of this one..

Stay tuned as I try different strategies to dig out from this mess.. Hopefully, my readers will find the next few postings useful if they have struggles like I do with the “plastic demon”.

On an optimistic note.. I’m determined to find a lasting solution which will get me out of this plastic purgatory.. I hope.

Feel free to send me your suggestions.. Of course if I will not any posts which are SPAM from credit monitoring agencies of  “get out of debt” shysters…