Playing with snowballs in July

One of the key reasons I decided to start blogging again, particularly about dealing with my finances, is that I regularly find myself having a crisis of confidence. Am I'm making the right choices on my quest to get out of debt?

I've been listening, when I can, to the Dave Ramsey radio show. That helps keep me focused. It also is a good reminder that I am not alone in dealing with problems of too much debt. It also helps me realize that I don't have it so bad. I'm not on the verge of losing my house. I rent. I don't think there will be any need to file for bankruptcy. I don't have creditors or debt collectors hounding me. I don't have a car payment.

Fortunately, I have been able to pay my bills. But some months that is harder than others. I have finally realized that I cannot use credit cards at all, to pay for anything. But I confess that I have not destroyed the cards, except for one -- a Chase credit card that is charging obscene interest. I think I could get a better rate from a loan shark. The only way my rate could be any worse if is I was regularly late, or not paying at all, and even that would only raise my interest rate by 2 percent.

They obviously expect me to default on that account. I am awfully tempted to prove them correct out of spite and pay the creditors that look at my good payment history. Chase obviously doesn't care about that and seems determined to help me default.

As I said, I've been listening to Ramsey. In his system, what he advises it to take on the smallest debt first, rather than the account with the highest interest. He calls it working on the debt snowball, starting on the small debt, and building on that success. I can see the reasoning behind Ramsey's advice in that it would feel good to just get some of those monthly bills eliminated. I would take any positive reinforcement I could get right now.

But there are days, like today, when it feels like the snowball is working me. It's several days until pay day, the checking account is almost empty, the vehicle's fuel tank is almost empty, and some household supplies are empty, or on the verge of empty. In the not-too-distant past, I would have just used a gas station credit card and filled up the truck without thinking twice about it. I've done that recently enough ago that one of the gas cards I have still has a balance of almost $300 due to some work-related and personal trips I took in late spring and early summer. I just eliminated the debt on another gas card. This would be the second step in my debt snowball.

But it seems like if I keep doing the debt snowball approach, I will be at this forever. So I may revert to the approach I was using a couple of month ago, which was to tackle my two highest interest rate accounts by paying an amount that, if I could maintain it, would eliminate those two debts in about 3 years. I have another account that was converted to a loan, which will be paid off in about four and a half years. Those three accounts make up nearly half of my debt. Along with continuing minimum payments on the other accounts, that would mean I would have eliminated more than half of debt in about 4 years or so.

Even that seems like a long time. I have to remind myself that it took me 20 years to get this deep in debt. So, maybe that's not so bad.

But it sure doesn't feel good. At least not today.

Uncle Sam isn't doing my financial reform many favors

Congress passed a financial reform package today, and President Obama is expected to sign it, perhaps as early as next week.

I'm nervous about what this will mean. That's not because I'm some big-wig investor or mega-bankers. I'm just a schmuck swimming in credit card debt. And the reason I'm scared is because the last time Congress clamped down on banks for their abusive practices on their account holders, the banks retaliated by becoming more abusive, raising interest rates even more and lowering limits.

And people wonder why consumers haven't started spending again to buy the country out of this recession. The answer is simple. We can't afford it.

There was only one beneficial piece in the last consumer protection bill as far as I can see, and that's the provision that requires the credit card companies to print some very useful and important information on the credit card statements. That key information tells us some very important things about what our credit cards are really costing us. In that information we can find out how long it will take to pay off our balances -- and how much we will eventually pay -- if we don't charge any more and only make the minimum payments. We can also see how much we would have to pay if we quit charging on the card to pay it off in three years.

That's important information to know. Of course the other actions the bank took have made it harder for me to dream of paying off the cards I have in three years or less. Credit card issuers have raised interest rates, and lowered limits which increases the proportion of debt you have, which lowers your credit rating, which then puts you at risk of getting rates raised again, and limits lowered again, and further erode the credit rating. It's feeling like a vicious, and expensive, cycle.

For me, though, there has been something of a silver lining. It has helped me to realize that I need to get out of debt as soon as possible and never get back into it again. I am tired of paying in blood to these legal loan sharks.

It is that conviction that brought me back to Digital Fishwrap again, after an absence of more than a year and a half. I feel like I've turned a corner in my financial life. After rounding that bend, I can see clearly the long, steep climb I face to summit this mountain of debt. I think the Fishwrap site can help me on this journey, because sometimes I need a place to confess my fear and frustration. I need a venue to vent my anger at myself and the assholes that helped me create this huge mess.

Learning to live without using credit cards has been tougher than I imagined. It's not that I lead an extravagant lifestyle. My couch and recliner are the two pieces of furniture I bought after getting my first job after college, bought on credit of course, because I didn't have the cash to buy them outright. And that's been the pattern of my life, buying items, large and small, on credit when there just wasn't the cash available. Gas for the car, gifts for others, travel to visit family when I lived far away, dinners for family and friends, all paid for on plastic.

I wasn't making much money in that first job, and had a series of low-paying jobs, but I make what should be a decent wage now, and I am still always broke, because nearly two-thirds of my monthly income goes to pay on credit cards. About one-third goes to all the core household expenses, like rent and utilities. Which leaves very little for everything else, like food, clothing, fuel and insurance for the car, etc.

I don't pretend to be a financial expert. If you saw my monthly bills and the checking account balance you would see that for yourself. I'm just a guy on a journey to get my life back. I've come to face the reality that another big raise or promotion is not just around the corner in this economy. There is no lottery jackpot coming my way to rescue me from myself and the banking bogeymen. It's going to take time, determination and tons of patience. I'm not sure I have that much patience, but maybe if I take the time to write about what I'm finding and learning it will keep me from running one and spending money on a lark just to avoid staring at the four walls or eating yet another home-prepped bargain-basement meal. And maybe you, dear readers, can help keep me on track.

Blasted by the past

I had the strangest emotional reaction today. I followed a link on Twitter that led be to a website where I saw a name I recognized. The name was the husband of woman I dated in college. So I decided to read what he wrote.

It was a poem. In it, he made a reference to sex. Of course I assumed the reference was to his wife. And what I felt shocked me. I felt a pang of jealousy.

How could that be? Of course this woman was very important to me back in college. She was, I now know, my first love. She was my first really serious relationship. But that was 20 years ago.

Why would I feel jealousy now, after all these years? I haven't even scene her in probably a dozen years. It didn't make sense.

But then, feelings don't subscribe to logic.