I was recently in debt and I just freed myself from it. I am curious what advice you might have for college students who are bombarded with credit offers as soon as they walk into school. Knowing so much about the pain debt can cause people, do you have any advice on avoiding debt? Thank you. Kristin
Dear Kristin:
Solicitations, by credit card companies to college students to apply for a credit card, has gotten to be of epidemic proportions. Currently, there is nothing that can be done to stop these creditors from their mass mailings and mass promotions.
The only action a college student can do to defend themselves, is to discipline themselves, by not returning and not responding to any of these solicitations. If they do receive a credit card, the student then must discipline themselves to not charge any more than they can afford to repay when the statement comes in every month. If the student starts charging where all they can afford to repay each month is the minimum payment, then the student has a problem.
Discipline is the key. The student must discipline themselves to act and charge responsibly. Unfortunately, we humans are weak when it comes to discipline. That is why there are so many bankruptcies. In many cases, people didn't discipline themselves with their use of credit. The next thing they knew, they were overextended in credit and couldn't afford to repay their debts. They then looked at bankruptcy as a solution when in actuality, disciplining themselves on the wise and proper use of credit was the solution.
My advice to any student would be this; Discipline yourself to use credit responsibly. With credit cards, charge no more than what you can afford to repay when the monthly statement comes in.
Dear Susan & Co.,
I finished a debt program recently, and did real well while on the program. After completing the program I have gone into the same routine. I have a real problem with credit, I am impulsive or I justify how I will pay it back. I am not in large financial difficulty, but I don't want to continue on this path do you have any suggestions? Nicole
Dear Nicole:
The secret to the success of anything we do in life can be spelled out in one word; 'discipline'. Unless you can discipline yourself to not charge items on credit, you will always have a problem. To help you discipline yourself, write this word on a piece of paper and tape this paper to your credit card. Every time you pull out your card, you will see this word. Hopefully this will motivate you to discipline yourself to not charge impulsively. Good luck.
Dear Susan & Co.,
I read your article online and I've come to realize that I am a compulsive spender/debtor. Before I didn't think there was a category for what I was suffering from, but I found it on-line.
You suggest a support group, and that's a great idea, except I don't have access to an in-person support group like the one you suggested. I'm an American, living in a small town in Japan, the only foreigner in town; besides the fact that I would like to be in an English speaking support group, Japanese culture treats problems like these with cover-ups and denial, even by people close to the sufferer (I'm sure you've heard about "maintaining face" in Japanese culture). For instance, this is a country where drug users are put in jail or mental institutions and don't get the help they need.
Can you suggest an online group for me?
Signed, Pocket Full of Lint
Dear Pocket Full of Lint:
I'm not aware of any on-line group that you can call on for help. My suggestion is you write to Debtors Anonymous, P.O. Box 400, Grand Central Station, New York, NY 10163-0400. Ask them if they can offer you some assistance. Good luck.
Dear Susan & Co.,
I have $90,000 worth of credit card debt. Income is $75,000. We have good credit. It is getting very hard to keep up. Do I borrow $75,000 for 15 years with 12.95% interest which is a tax write off which would come to about $888.00 per month they also include closing fees for approx. $4,000 My mtg. is $2300 not including other expenses. Totally desperate I need to know as soon as possible. Please advise if other way. Thx. Antynay
Dear Antynay:
Your overall solution is to get a better grip on the way you look, act and feel about money and credit cards. With $90,000 in credit card debt, you apparently are 'addicted' to credit cards. The first thing you need to do is break this addiction to credit cards.
Before you do anything further try this experiment. Put your credit cards in a drawer and not use them for the next 30 days. What you are trying to do is break this addiction to credit cards. It generally takes less than 30 days to break someone from any type of addiction such as drugs, alcohol, etc. Credit cards can be included in this group. Within 30 days you can see that life goes on without the need for credit cards. Hopefully you can then see the benefits of not relying on credit cards all the time and get on to a program that promotes sound money management and the wise use of credit.
You then need to contact your nearest CCCS office and schedule an appointment to speak to a professional counselor. During your counseling session, your counselor will review your overall financial situation, discuss possible solutions and make recommendations for you to consider. If your debts are truly unmanageable, your counselor will explore the possibility of a Debt Management Program (DMP) which allows you to make reduced payments to creditors. The DMP serves the dual role of helping you repay your debts and helping creditors collect money owed them. You agree to deposit funds with CCCS each month which CCCS will then distribute to your creditors until you become debt free.
To locate the closest CCCS office, call 1-800-388-2227. If it is inconvenient for you to visit a CCCS office, call our affiliate Money Management International (MMI) at 1-800-762-2271. MMI offers the same service as CCCS except MMI counseling is done over the phone, by mail, fax and the Internet. Counselors are available 24 hours a day, 7 days a week.
After you have talked to a counselor, you can explore all your options and determine your best course of action. If you feel a $75,000 loan for 15 years at 12.95% interest is best for you, then pursue this plan. Good luck.
Dear Susan & Co.,
Before I got married I lived on very little and enjoyed being debt free. Just before I got married I bought a computer with the money I received from student loans. Since then, I have spiraled into heavy debt. Now I owe $26,000 in debt and am scared to death to graduate. In addition, I have spent over $15,000 of my wife’s retirement fund. I do not consciously say to myself, "I think I will commit financial suicide" or "Gee, today I think I’ll spend $300 on things I think I need." It just happens. I am seeking counsel because I want to stop. It is like a drug. Please help me. Norman
Dear Norman:
Compulsive spending is devastating. I’m glad you’re seeking help.
For referral information, I called Michael Yeager, at the Whole Person Recovery Center here in Houston. He suggested Debtors Anonymous, a nationwide organization that addresses compulsive spending problems. The Houston number is (713) 797-8441.
He also suggested reading "How to Get Out of Debt, Stay Out, and Live Prosperously" by Jerald Mundis. But don’t substitute reading for calling DA, thinking "I can do this by myself." You need the help of others as do we all. None of us is self-made.
To get help with your student loans, go to the university’s financial aid office. Ask for information on all student loan consolidation programs now available. They should have brochures outlining qualifications. You might qualify for a ten-year payout with manageable monthly payments. Fight fear with information.
Don’t despair, Norman. You’re not alone. Help is literally at your fingertips. I’m glad you wrote.