I did a podcast with His and Her Money and one of the questions that they asked was “When did you get into debt?”. It made me think about how my debt story all started and the top three experiences that sum of up the reason why today I am scared to death of credit cards.
Like many people currently riddled with debt, it all began when we first started college. Very few graduate high school and find themselves drowning in debt, college is when the debt starts to pile up.
My first days of college began with a little money saved from working construction in the summer and a new student loan to pay for my college tuition.
My parents had moved away to another state and for the first time, I was truly on my own, in a physical and a financial sense.
I was responsible for every cent of my college experience and any mistakes or learning experiences I went through was 100% Even Steven Money, maybe I was just Even Stevie Money back then, as Mr. 1500 Days likes to joke.
I don’t even remember the day I applied for a credit card. When I was in college, credit cards were given away with frisbees and t-shirts. Thank goodness the Credit Card Act of 2009, which prevents this from happening at college campuses. If you are looking to dive more into the specifics of the Credit Card Act check out section 301 for the nerds out there.
I remember getting my credit card in the mail with a $500 credit limit. Of course, I only saw this as $500 extra in my pocket, not surprisingly this card was maxed out within a few short months.
When the credit card bill came, I had the option to pay $25 per month towards my bill, I mean are you kidding me that sounded like a great deal. My thought process was that I didn’t even have to pay all of the money back right away.
I saw the credit card had a pretty high-interest rate or at least what I know as a high rate. The interest rate was in the 21% range, but it didn’t matter those were just numbers on a piece of paper they sent me once a month.
All I had to do was pay $25 per month and I was golden. Did I mention because I was doing so great with my credit card they even raised my limits, yeah $500 went to $1500 and I was on my way to even more credit card debt.
Can you see how easy it is to get in credit card debt, especially at a young and vulnerable age? Here are a few things that led me down the path to credit card debt.
During my sophomore year of college, a large group of us decided we were going to spring break. It was all set up, we had 8 college guys ready to make memories and do everything we had seen on MTV, basically have a big party.
The big party cost somewhere in the $800 range, all I had to do was put it on my credit card. Of course not before having a late charge for not paying the entire balance to the Spring Break travel provider, which made it an even $1,000. That’s all it took when I was in college to put expenses like travel, clothes, or going out to the bar on my college credit card because remember it only took $25 per month to take the Spring Break trip of a lifetime.
As you can see I failed with my first credit card. Here are just a few general areas I failed:
I wish that was the last story of why I am scared to death of credit cards. Not surprisingly I graduated college with plenty of credit card debt and at this point, I was even able to have more than one credit card, because what’s better than being in credit card debt with 1 card, but 2 cards!
Immediately after college, I did not have a clear direction of where I was heading. Life is certainly full of obstacles and mine fit the same road map.
During college, I played a good amount of poker both online and in the brick and mortar casinos. Everyone wants to imagine they win at poker and while my thoughts back then were the same, today I realize if I had been a winning poker player I doubt I would have graduated with student loan and credit card debt.
Over time I did get better at poker, I switched to a more controlled limit poker rather than the no-limit poker you will find on TV where you can go all-in with your money. Limit poker is a game that involves fewer swings in money because of the betting structure.
It was during this time with little money and not much direction in life, I started to play poker full-time. These are the decisions I made at 23, can’t imagine how I struggled with my finances.
Surprisingly, I did pretty well playing poker full time, I was making money and paying off credit card debt. I didn’t account for a few things that you run into every day at a casino.
I’m going to focus on that last bullet point because that’s exactly what happened. Money was not important to me, getting that money back was.
If I went to the casino with $200 for poker and lost sometimes I didn’t stop there. I would hit up the ATM machine until I won all of the money back. Sometimes this happened and sometimes it didn’t, it’s scary to look back and realize I had no real filter on my money or gambling decisions.
The next step which I am almost horrified to admit was getting a cash advance from my credit card. According to Nerd Wallet, a cash advance ranges from 2%-5% on the amount of the advance, plus the additional interest rate charge associated with your credit card.
I remember going to the cashier/customer service to have them run my card for more money, it’s ultimately admitting you lost big and will do anything, even pay the extra money and a high-interest rate to win back the money you lost. It’s probably a good time to say if you have a gambling problem please consult the National Council on Problem Gambling or call 1-800-522-4700.
Honestly, I don’t know if I had a gambling problem, but I very well might have. I know for certain I had a credit card debt problem and playing poker 6 days a week for 8-10 hours a day was not helping.
I played poker full-time for a little over 3 months, I can say for a fact that my credit card balance went down during this time. It’s not something I am proud of but it’s true. My late night binges on poker actually made me a few dollars, but the wild swings of money and control are nothing to mess with.
I rarely if ever go to a casino today, I have other ways to make money in an entrepreneurial sense and it satisfies any gamble that lives within me.
I can also say for a fact that a credit card advance is one of the most dangerous ways to use a credit card. The upfront fees and higher interest rates are just another way credit card companies make money from the consumer.
Sometimes funny things happen in life. I was not far along out of college and working my first real job, I had even been promoted to a supervisor position.
What life-changing moment was next… well, it was a beautiful young lady who I had been dating long distance for almost a year. Everything felt right so I had to find out if she was the one for me.
I saved up a month or two of my wages and headed to meet the future Mrs. Even Steven Money? But wait not before I bought one of my worst financial mistakes, the Mercedes Benz or the Benzo de Lorenzo as I used to call it. Nothing can go wrong with this situation, even though I’m sure every one of you can see the train coming right at me.
I drove down to Florida, putting everything on my credit card. I even made a few stops to see friends I had not seen in years, because why not I’m rolling in money! I arrived in Florida without a care in the world and as I continued my job search in Florida I didn’t have any prospects.
This was during the heart of the US Financial Crisis with layoffs happening every day and I was running out of money quickly, so quickly in fact that I had to use my Emergency Fund or what most people call a credit card.
I struggled for a little over a year trying to make ends meet with side hustles, part-time jobs, online poker, and applying to every job I could. That didn’t stop me from racking up hundreds and even thousands in credit card debt.
In my mind I had no choice, I put myself in a position to fail and that’s just what I did. At around the year mark, I was faced with very few options. I was at the point where I could literally drown in credit card debt and stop making payments or I could move back to the Chicago area where I had a guaranteed work from my days caddying for Michael Jordan.
I had to go where the work was and that was Chicago. I would like to tell you that everything worked out in the end, so I will. I married the future Mrs. Even Steven Money not long after this financial fiasco. It cost me thousands of dollars in interest and credit card payments and to this day it makes me downright terrified of owning a credit card.
Sometimes you don’t see a train coming right at you.
Reading each story again I can see the train wreck coming right at me, but back then I had no idea how to stop it from hitting me head on. I have learned so many lessons along the way from my credit card experiences, it’s very hard to think that I would do well with a credit card in my hand today.
I associate being in credit card debt and getting out to being an alcoholic who has not had a drink in years. You wouldn’t tell an alcoholic to go in a bar because they have a drink special or that everyone at the bar is responsible and is consuming only one or two drinks.
No, you would advise the person to stay away from the bar and stick with what got you to this point, for me that’s staying away from credit cards. I worked my way out of debt over the years using my debit card and cash, which is what works best for me.
Will I ever get a credit card again? I don’t know that answer for sure, but I know that I will be scared to death the entire time.
This post originally was published on October 4, 2015. Those were the days of being in debt and when I had a Dave Ramsey like approach to all things credit cards. He mentions a story and explains why he is mad at American Express, I instead was deathly afraid of them.
Since the time this post was written, I did obtain a credit card. I made the choice to get an Alaska Airlines credit card because of their 2 for 1 companion pass that allowed me and my wife to visit friends in Montana for $400 less than we would have paid normally.
I still don’t really like credit cards. As a money coach, it’s one of the first things I look at in regards to which debt to pay off first because of the high-interest rate. A credit card can also be a big red flag on those who don’t know where their money is going even when they are paying off the balance in full every month.
Here are a few of my updated thoughts on credit cards:
Today I have 2 credit cards, which will be down to 1 this upcoming year. My wife and I have the same Costco credit card which offers cash back, this is used for our primary spending.
Alaska Airlines credit card is the other, which I plan to cancel in 2019. Now that we live on the East Coast, the credit card and the benefits it offers does not fit our location as Alaska Airlines is predominately a West Coast airline and the $75 annual fee would be a waste of money.
I also have over 100,000 miles that we will need to use in the coming year, a good problem to have I suppose. When I cancel the card I’ll make sure to check on the Alaska Airline policy if miles expire or when they expire.
I’m still deciding on obtaining a business credit card but I really like having cash in my account to cover expenses rather than credit. We shall see later in the year.
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