Unsecured credit and life beyond

I know I’m not the only one. I funded a high-risk venture that the banks wouldn’t touch w/credit card money. Ouch! Pricey money to say the least. I hit a personal high of $56K outstanding in October of '96; I’ve got that down to $26K in three years and I probably paid twice the difference to get here. My regrets are few, because my company is worth more than what remains for me to pay for generating it, but I still have to pay that out of unrealized dollars.

So the question is how do y’all handle credit debt?

Ahhh, memories. I was in the same boat once. My second job out of high school paid me $8.00 an hour. I thought I was rich. New car, jetski, drum kit, stereo, cd’s … Then the bills started rolling in. Needless to say, I was hurting bad. I would actually disguise my voice when answering the phone so that creditors wouldn’t know it was me. After about six months of that, I turned to Credit Counseling Centers. They’re a non-profit organization run by business people (banks, mostly) to help deadbeats like me climb out of the cellar. The creditors agree to a smaller monthly payment but eventually they get paid in full. It takes a while, but it sure beats bankruptcy and/or charge-offs.

Nowadays, I carry AmEx and pay it off every month. If I can’t afford it, I don’t buy it. Simple as that. And I don’t have to disguise my voice any longer. When I bought my boat, I made double-priciple payments and paid it in full in just a tad over half the term. The bank didn’t like it, but F 'em. They get a buck and a half every time I use my ATM card. Bastards!

In university in Canada, I received my first credit card, a Mastercard. At first I was conscientous about paying off the debt, but I was living in Montreal, far from home, on a student loan. I maxed it out and didn’t make payments for two years. When the bank tracked me down, I scraped together the debt, went to the bank, paid off the whole sum, and handed over the card to be encased in a block of titanium so that none would ever abuse it again.

The bad rating that resulted stays on my record for seven years (of which only five have passed). Being ineligible for credit, I’ve lived happily on cash since then, and have a much better sense of it now.

The twist is that I moved to Wisconsin a year ago for a job. I set up a new bank account, and applied for a credit card, thinking that I’d get the minimum limit and could just run a couple hundred dollars through it a month, paying it off religiously, and slowly building a good credit history. Because I have no history in the U.S., and the credit companies don’t check in Canada, they called my banker. Because I have the word “executive” in my job title (“Executive analyst”, meaning I’m not an executive in any sense), my banker told them to give me the big one. A couple weeks later, a platinum card showed up in the mail.

I’ve survived this card a lot better for three reasons: every time I think of using it, I say to myself ten times “credit isn’t money”; in the years I lived on cash alone, another mantra helped me get through - “never regret paying off a debt”; and finally, that platinum card feels like a loaded gun in my pocket. My hand still shakes every time I hand it over.

One thing to keep in mind is that if you live on cash, you will end up with NO credit rating. (Don’t believe this? My dad owned a credit bureau…lived on cash…and when he and Mom found their dream home…more than he could fork over cash-wise, he applied for a loan and had NO credit!!!)

If your bank doesn’t offer up a debit/credit card (so that you can generate a credit rating by using the card…which then automatically removes money from your appointed account), then maybe it would be best for you to make a ** notation ** in your check register each time you use your credit card, deducting the amount of your purchase…and find the money available in the same account to pay the credit card bill when it comes in.

As far as Amex, why would I want to PAY someone for the privilege of maintaining my own good credit rating? (Never DID figure that one out.)

“There will always be somebody who’s never read a book who’ll know twice what you know.” - D.Duchovny