Debt – Dad's Taxi

Wipe our Debt (Photo credit: Images_of_Money)

So this is the spring of 2013. Yet when I go outside, it still feels like Winter of 2013. The temperature is still hovering in the mid 30’s and I’m cold.

To me this spring is always the start of something new. This year, it’s the end of a burden and the start of a fresh start for something that I’ve written about in many of my postings. This topic of course is the ugly head of debt.

For the first time in over 20 years, I can truly say that I have zero credit card debt. Unfortunately, I was able to achieve this success not due to my ability to save money and pay off debts but due to the passing of my elderly father and his ability to save money for his children, so they can have the fruits of his love. The art of being frugal and saving.

I tell you, to have this burden of debt lifted off my shoulders is like having this huge elephant (that has been following me around for so many years), disappear. Now the task that remains for me is to make sure that I NEVER EVER get into this situation.

Here are some of the things my dad taught me that I didn’t learn till after he left us:

Live below your means. This doesn’t mean you have to live like a miser, but if you have things that work, why discard them for the latest greatest thing? For so many years, he lived with a 25-year-old 19 inch tube TV which was not even cable ready. Not until, did the picture fade, did he allow me to get him a new television. Once I got him the new flat screen, he did realize what he was missing, but he still said, “I could have lived with the old TV”. This may sound crazy to most but it makes sense to me now: This is how he lived. He didn’t need the latest greatest gadgets. He lived in a very modest apartment and to him, he had everything he needed. A sofa, recliner and his TV. He was happy with this so he could watch his beloved Yankees. Till the day he passed on, he didn’t even own a cell phone!

Don’t incur debts you can’t pay off – My dad, lived debt free for all his life. He never, ever had a credit card debt. As a matter of fact, he didn’t even use an ATM. If he spent $1 on credit card, he immediately wrote a check for $1 to the credit card company. I remember when he got me my first credit card when I graduated from college. He said to me: “If you can’t pay off what you buy, don’t buy it”. Now I get it.

Live to save for tomorrow, for tomorrow you may not have anything to save: Savings and self-preservation were the two of the mantra’s my dad lived with every day of life. He felt he would lose everything and would not be able to live independent. He didn’t want to be a burden on his kids, so he saved, saved and saved every day. I was always on his case to live a little, but he would just shake his head and say “one day you will understand”.. Well Baba, I get it now.. Thank you.

Live Frugally: My dad, was so frugal that he didn’t need to buy new clothes. Ask yourself, how often do you buy new clothes, when your clothes in your closet will do just fine? Every aspect of his life defined frugality. He owned a car that was over 10 years old, everything in his home was things he had acquired from people who left stuff behind when they left the complex he lived in. He lived with the bare necessities and didn’t need much more.

Vacations – Are a luxury not a necessity. When we were growing up in NYC, my dad took us on vacations, yet he only took us to places that he could afford. It was not a democracy. He worked for the airlines and we traveled by air for free and stayed in budget motels. No 3 or 4 stars for us. To me, I love vacations, but vacations always added to my debt.. I was taking vacations that I could not afford! So basically my taking 2 vacations per year put me in a deeper and deeper hole..

Living in debt was part of my every day life and I was (am still) obsessive/compulsive about it. I wanted to defeat it.. on my own terms.. I failed miserably. To me debt was always a moving target that no matter what strategy I tried, I could not defeat.

Today, as I look forward, living debt free is not just my goal, it is my passion. The lessons I didn’t learn over the past 20+ years will be etched in my memories. I never ever want to go backwards into that hole of despair.

I guess that’s what spring time is for, as the seasons change, so must I and grow.

20 Ways to Become Debt Free (nationaldebtrelief.com)

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..

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
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
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.
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…