Credit Cards and the allure...
I have so much credit card debt, over many cards, 9 cards totally to about $9,000, to be exact. Every month or month and a half I succeed in paying off one of my lower cards, huzzah, good for me! It feels great! But then... I end up maxing it right back out. I seem to have little to no self control, I don't know what's wrong with me, I can't help it. I see something I want, I don't have the money, but hey this credit card I just paid off has a little room! And then the next day, oh well, I have a little more room! Next thing I know I'm right back where I started with all maxed out cards yet again, and I frantically pick up more and more hours to pay it back down to zero. I have no self control and I don't know how to fix it. Please, offer your stories and support? I can't just cut up the cards, because I have the numbers memorized, and shutting the credit account down will only hurt my credit score even more...
$9000 isn't that much. We had up to $30K at one point and found YNAB and lived our budget to pay everything off.
If you're using YNAB and budgeting for everything, that should speak for itself. Are you just blatantly ignoring the budget you've allotted yourself? Or is there not enough income and you're forced to go into debts for true needs? You say you "see something I want" in your post, so I am assuming you don't need that stuff.
Do you not have fun money built into your budget? Things clothes, movies, games, etc should all have a place in your budget.
If you "can't help it, have little self control", perhaps counseling is in order or Shopaholics Anonymous or something?
I know the credit card cycle well. It's something that I first fell into when I was fresh out of college and only making about $23k/year. I didn't have enough to *really* go around, so I made up for it by using credit cards and when one got too full, I would get another and the debt would just kind of shift around, while also growing and growing. It's vicious.
The first step to stopping the cycle is to figure out how your actual expenses line up with your spending habits. If you're using YNAB, then you at least have this readily available. What does your income vs. expenses report look like? If you're using credit cards like this, it's probably pretty uneven. Once you've looked at your income vs. expenses, though, you have to start really thinking about the income side of things. Say you make $1,500 in a regular month. You need to start spending less than that or if you can't cover your groceries and rent on $1,500 a month, you need more income. I think a lot of credit card angst feels rooted in the idea that you just can't control yourself, but the truth often is that you're not making enough income to cover your true expenses and are using the CCs to cover the gaps and/or to act out against your scarcity.
You can do a lot of things to stop your spending though. You said you've memorized your card numbers. Okay, get new cards issued to you. Scared you'll keep using them even with the new numbers? Call your card company and tell them to freeze new spending on your card. I’ve done this. You have to commit though and no amount of angst and hand-wringing will get you to that commitment until you’re ready. Until you’re able to say “being debt-free is more important to me than buying XYZ right this minute”, then you will still be using your credit cards and stuck in this cycle.
You also mention using your CC as a safety net for emergencies and I would suggest looking into YNAB's great resources on building rainy day funds and an income buffer. Your safety net needs to be cash, not credit. This is the stage I'm back in as well after several unforeseen events in my life over the past year. It seems impossible until you start and then the way forward becomes much clearer.
Best of luck!
I think JoyfulSong has a great idea. In fact, that idea is close to brilliant.
Nothing is wrong with you. But you do need to head off the credit spending with some gentle redirection. What are you purchasing? Is it important to you? Does it get you closer to your goals (short term or long term)?
I am an instant gratification person myself and while delaying purchases annoys the crap out of me, it's also very effective. I have wishlists *everywhere*.
Hi, For me, defining priorities well and tricking myself to be motivated at keeping them are key. If you want my distilled advice go to the numbered list at the end.
What are your priorities? Do you want random stuff more than paying off your credit cards? It is more likely you want both and struggling prioritizing so you can have both. Maybe you feel trapped that you cannot do both and why you might be going all in with spending the credit you have? For me, balancing priorities, only looking at my priorities, and having tricks to motivate me to keep them balanced are key to overcoming the buy random stuff now trap when I'm in it. Do you think that would work for you?
If so, here's my advice and experience related to defining priorities:
I always look at my priorities not my account balances in making my decisions; it is not a priority to max out my credit cards so why would I look at that as part of my decision process? In YNAB your budget lines and how they are funded basically is a manifestation of your priorities. So to make decisions that follow priorities I look to the budget lines and not account balances. That is a reason defining, knowing, and continuing to re-evaluate your priorities is important.
So, to define strong priorities it is import to have a budget line that reflect each priority and then decide what must be funded in what order and at what rate.
You probably know all that, but are you adding everything such as a category for your random spending? If not, do it and fund it each time you have some income even if it means paying down your debt slower! It'll help you feel like your spending is a choice and not a habit. Some people won't tell you this, but It is OK to not put every penny toward debt. It takes time to recover; the habits you build while recovering have to be sustainable long term and that includes how to spend it on random stuff.
When I deprive myself of a priority I fall in a trap where I will spend more money I don't have to meet that need. This mean I sacrifice another priority and that is the *choice* I am making even though it feels like I'm not in control. Once I decided to always fund every priority a little I didn't feel deprived and that I was making the choice in advance. I didn't feel out of control in the moment and I stopped the binge on neglected prioritizes. I have the same problem with food. I suspect that is human nature but it probably only makes sense to people that struggle with such issues. Does it make sense to you?
So, what about motivating yourself to follow the budget and balance your priorities, especially long term priorities over immediate gratification?
Well, what motivates you? Only you can answer that, but when you do you can figure out what mind games and tricks would motivate you best. The following is what works for me.
I learn a new mantra when I try to motivate myself or change a habit. Mantra's are powerful because they let us make quick decisions in familiar situations. It sounds like your mantra today is " Do I have available credit so I can buy this random item, yes I can!" Try a new mantra such as "I budget for random! Let me check if I have enough in the budget or need to re-prioritize?" You can tie the mantra into a contract with yourself. Such as, if you don't have the money but want to do it anyway you choose to take money from another high priority budget line and never by creating *new* debt. For me that would be my weekly taco budget. It takes practice for the saying and action of looking at the budget each time to become a habit. It is worth the effort. I changed my internal mantra about money and I do not fall in the buy stuff now trap very often. Yepee for making a habit in alignment with true priorities!
Let me distill my advice:
1. Don't neglect your need to by random stuff spur of the moment, work with it and budget it. Work toward meeting both goals of paying down debt and spending frivolously. Add a mad money category. Make sure you fund it some each time you have income even if it means not paying off the CC faster.
2. Stop looking at the credit availability when making purchasing decisions. Only look at your budget lines and what is available. You already know they represent your priorities and means to accomplish them without creating new debt. By looking only towards credit availability you are ignoring all of your other priorities.
3. Use Rule #3 (roll with the punches) if you want something frivolous and it is not funded in your mad money budget. Options for when you don't have enough money without creating new debt are: A. Choose something else random that fits in the budget to fit that need. or B. WAM (whack a mole) by moving money from a different budget line (something you are deciding is a lower priority) to the mad money account.
4. Find a new mantra, something you always say in these spending situations, to make it a habit to re-evaluate your priority for random stuff over other prioritizes. For example replace "Do I have credit for this random item, yes let's get it!" to "I budget for random stuff! Let me check if I have enough money or need to re-prioritize?"
If you made it through all that, congrats! ;) I hope something was useful to your situation.
Thank you very much, guys. I'm feeling a little more energized after reading this, and I hope I can keep going. The problem is definitely that it would take a couple months to fund a "mad money" budget to be in the hundreds, which is what I usually do. I see an expensive new baby swing, gotta have it. Or a new electronic, gotta have it. I just have to try better... Thanks for the support. I'll come back and read it every time I start to slip.
Gold Pegasus (385fd2874783) said:
and shutting the credit account down will only hurt my credit score even more...
Yes, it will. But only temporarily. You really don't want to keep borrowing against future income. Doing so will keep you short of cash, impoverished, or living paycheque to paycheque and repeatedly reliant on credit for years/decades.
Once you have gained control of your finances, established a pattern of paying all your bills in full and on time, pay your cc in full every month, your credit score will climb again. And by then, as an experienced YNABer you'll have moved on to a preference of paying for everything with money in your accounts and saved in your categories. I can attest to the fact that the peace of mind and quality of life that provides is so much better than juggling credit card payments.
And here's the best part. After that score rebuilds -- and it will rebuild -- you may not even need that great credit score. Mine is beyond phenomenal, due entirely to being responsible and paying on time. Companies are repeatedly chasing after me offering me all the credit I used to dream of having and now no longer want/need.
I strongly recommend you make the decision to use cash and/or debit card from now on and get rid of all our credit cards. Also, I encourage you to listen to the Dave Ramsey show every week, that will keep you motivated, believe me. I'm not saying you should follow his specific methods, but just listening to his show will make a change on you.
After a couple of years living like that, you are going to start understanding the value of money, instead of focusing on the "deal" or the "quality" of the stuff you are getting so that you can make a more cold mind trade off. A lot of the problems with Credit Card shoppers is that they focus on the deal that can't miss out or the "priceless" quality of the item they are getting. They feel that it is "worth" pushing the limits of the budget to get the stuff. The only way to train your mind to not think that way is by feeling the limits of the available money, which means, pay with cash or debit card and live with its consequences, for one or two years. Maybe after you "get it" deep in your heart, you can go back to have credit cards just to pay it in full at the end of the month to get the perks like cash back or miles.
You need to learn a new behavior, and that will take making hard decisions and time, it won't happen over night, or just because you "know a better way". You will have to "practice" it for probably 2 years.