How Credit Card Debt Makes You Miserable

Credit card debt among Americans is widespread. According to this Experian State of Credit: 2017 article, the average household credit card balance is $6,354. However, that number includes people who pay off their credit card balance every month, so that number isn't accurate. I've read in other places that the actual number is closer to $20,000 for the households that do have revolving balances.

If you are not budgeting and spending money at will on credit cards, there is a high risk that you are spending more than you make per month. In other words, you are spending future income on your purchases. It can be shocking to look at how much you are giving away on interest. I looked at one of the credit cards we just paid off that had a large balance, and we paid over $1,400 this year alone in credit card interest!

By having revolving credit card debt we are lining the pockets of credit card companies. Basically, we are putting ourselves in the position of “catching up”, and we are wasting valuable time.

– Chris Roane

The debt we accumulated and paid off was not for things we needed. Some of it covered things like excess medical bills, car repairs, etc. If we had an emergency fund, we could have easily covered these things. Instead of always trying to pay off debt, it is much better to think about what we want out of life, and how we can use our money to help get us there. It is hard to get excited about your financial future when you are continually looking at negative balances.

For me, it started right after high school. I was able to get a credit card with a low balance and bought a computer. Eventually, I paid off that balance and as my income increased, my available credit increased. I became the credit card companies dream consumer, and the pattern was on repeat for most of the last 15 years. I knew debt was terrible but was able to convince myself I “needed” certain things. Or how spending money on the best was worth the cost. It was all bullshit.

Consequences of long-term credit card debt.

Being in credit card debt costs more than just interest.

  • Higher levels of stress.
  • Arguments with Andrea (spouse) around money.
  • Not being as generous as I wanted to be financially.
  • We sacrificed gains we could have made towards our retirement.
  • Not saving as much as we wanted towards our children's college education.
  • Feeling like we were always behind on our finances. Seeing large negative balances does not feel good.
  • Managing multiple credit cards with balances takes extra time and energy.
  • When you have made it a habit in going into credit card debt, it gets easier to swipe that card even more. Especially when you get raises!

On top of that, towards the end of 2017, Andrea was given the opportunity to start a salon, which required capital to get things going. Being in debt and not having much of an emergency fund meant we had to go into debt further. So we have spent this year focused on getting 100% credit card debt free, including paying off what we spent to get the salon going.

Your destiny does not have to be credit card hell.

When you are facing a huge wall of credit card debt, hope can seem like a distant relative. But don't let that get you down! It took time to get you there, and it will take time to get out. And you will learn things along the way. Just know this is a temporary phase in your life.

Create a budget and pay for your credit cards first.
It is amazing how creative we can be in saving money when we define a budget and do our best to stick to it. By paying for credit cards along with your bills as soon as possible, we limit the risk in overspending. But to do this, you have to commit to not to put anything on a credit card that you can't pay off in that month as part of your budget. And you need to make sure you are not cutting back on things that you can't live without.

Figure out which spending is giving you real value and cut as much as possible.
You will want to think about the things that matter most to you and set realistic expectations. If you have a partner, you need to make sure you are on the same page, or it will not work. A few ways to cut back: eating at home more, buying less processed foods, spending less on alcohol, etc… it is really up to you how much you want to spend. But the more you can cut back, even for a time, the faster you can get your balances paid off. Keep in mind small expenses can add up when spent every day or week.

Simplify your financial life.
If you have many credit cards, the more you can stop using or close, the better you will feel. Try to consolidate most of your spending to 1-2 cards to make it simple to track your progress. If you are going to close credit cards, you may want to space them out over time to have less impact on your credit score.

Why do I have this debt?
Credit card debt doesn't just happen randomly. And there can be psychological issues in why some of us are more prone to credit card debt than others. Are you overspending when you are stressed? Do you go out to eat more when you are tired? Or is just a matter of not having a reliable budget system you can use? Thinking about the core issues in the “why” will help prevent you from making the same mistakes in the future.

Increase income.
The more money you can make the faster you can get through this phase. This might mean working extra hours or pursuing “side hustles”. Know that even if you are facing a huge mountain of debt, this phase will pass. Just try not to ignore the pain. Remember how you feel so that you can avoid this as much as possible in the future.

You need an emergency fund.
Once you get debt free, you need to set yourself up from having to go into debt for unexpected things as much as possible. Most people would say you need 3-6 months of your necessary living expenses in cash, but really the amount will vary for everyone.

If you have kids, being a good financial example is essential.
I don't want my kids thinking we are perfect. So I'm open to them about our financial struggles, and we try to teach them good money habits. Being good examples has the double benefit of being mindful that your kids are watching your behavior. Because they are!

We are a few months away from having everything but our house paid off. We've been close to this stage in the past, but this time we have a clear picture of our goals and how debt was preventing us from getting there. We've been there and did not like the results. However, we are focused on making things right.

Do you struggle with credit card debt, or have in the past? How have you gotten through it?

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