Behind Blue Eyes: Credit Card Nation

I haven't written much lately about my "get out of debt" project, but I've continued to hack away at those goals and stick closely to a budget. I've read a lot of books about money management and getting out of debt over the years, but the plan Dave Ramsey promotes is the only one I've ever found that has given me the tools I need for living within my means. I don't know why this concept was so foreign to me before, but I've now been working this plan for 7 months, have attended his 13-week Financial Peace University program, and am much the better for it. My whole outlook and approach to handling my money is completely different now.

Surprisingly, the hardest part of this process was just getting started, but once I made the commitment to myself to never use debt again it's been surprisingly easy to incorporate these concepts and approaches into my life. Getting out of debt hasn't been easy, but I'm enjoying the process of budgeting (yes, I am a nerd), of watching the debts shrink and my savings accounts grow.

More than anything, living on a budget reminds me daily that I do, in fact, have everything I need. And what's more, I'm learning a lot more about what my priorities truly are by where I throw my money; having to wait to buy things until I save up for them creates a built-in self-check mechanism for making sure I really want something enough to spend my money on it.

On another positive note: in the last 7 months, I've paid off $7,186, with almost $1200 of that going to my Discover Card bill last month alone. That $1200 came directly from my tax refund (hooray for the Lifetime Learning Credit!) and it killed that debt completely. So, after verifying that the payment had cleared, I called up the Discover Card people and asked them to close my account. They did their usual bit where they asked why I was closing my account and could they do something to keep me as a customer, but eventually they closed it and very politely told me to "have a nice day!"

Yesterday, the phone rang and I made the mistake of not looking at the caller id before I picked up. It was a nice salesman from Discover Card who said he'd been looking over my account and "had just noticed" that I'd closed it. During FPU, we learned about the depth and breadth of the credit industry in this country and - make no mistake - the banks out there are serious about selling their credit "product":

Sales guy: So I noticed you closed your account last month, and I just wanted to call and be sure it wasn't something we did or didn't do to cause you to leave us.
Me: Oh, no. Not at all. You see, I paid off my bill so I don't need the card anymore.
Sales guy: Oh. Is there anything we could do - lower your interest rate? Give you free balance transfers? - to get you to come back to us?
Me: Well, no. I don't want to use credit anymore. So I closed the account.
Sales guy: You don't want to use credit? Don't you need a card, just in case you have an emergency? We can give you another year of zero interest if you sign up today!

[...I briefly wondered to myself how the bank was thinking it was going to make any money off me by lowering my interest rate to zero (again!) and giving me free balance transfers: they were hoping I'd be late on a payment, perhaps, and they could jack up my rate! ]

Me: If I have an emergency, I'll use the cash I have saved in my savings account. I don't want to use credit anymore. But thank you for the offer.

There was a pause here, where the sales guy seemed to be weighing his next approach or perhaps scratching his head while he tried to figure out what life would be like to be able to pay for an "emergency" with actual cash.

Sales guy: Oh. Well, if you would ever like to re-open your account we would be glad to have you back!

Yeah, I'll bet you would, buddy! I regularly get credit card offers in the mail, but I've never had a company call me up to offer me a lower interest rate or free balance transfers just to return! The exchange made me really stop and think about this approach and the way the majority of the people in this country live today: paycheck to paycheck, eating rice and beans, and beans and rice, because they've mortgaged and charged themselves up to their eyeballs. For a long time, I've been no better: using credit cards for things I simply wanted but couldn't be bothered to save for, taking out school loans for college classes (Lifetime Learning Credit indeed!), taking on loans without much regard to how I'd pay the minimum payment, etc... this is not adult behavior, people!

The sad truth is, I just didn't know any better. And rather than think about it, I chose to just float along in my own little universe and not worry about the consequences of my choices. I'm glad I've finally woken up and that I'm headed in the right direction: towards true financial peace.