John Leland of the New York Times has written another article about debt (he’s the one who interviewed me in February). This time, he visited the Moellerings from Ypsilani, Michigan.
Christine (40) and her husband Mark (39) currently have over $22,000 in credit card debt, a mortgage of $93,000 and a HELOC of $68,574. Together they make around $66,000/year and their debt is too much for them.
“For the Moellerings, juggling balances and interest rates has enabled them to pay for things they could not otherwise afford, like their 2004 wedding and house renovation, or to eat out occasionally, when â€œweâ€™ve both had a bad day at work,â€ Mr. Moellering said.”
Right there is the big problem, and the one I attribute much of our debt to. We used our credit cards to get things we wouldn’t have been able to otherwise. Instead of saving up the money, we used the credit we had available.
The hard part is trying to turn the situation around and right what you did wrong. The Moellerings are paying over $380 with their credit card finance charges alone, and I can sympathize with how tough it can be to get credit card debt more manageable. For us, it took some work, but reducing our credit card finance charges from $400/month to around $100/month was a huge step.
There one thing that Ms. Moellering said that concerns me:
â€œItâ€™s been almost two weeks since weâ€™ve had time to sit down and go over the bills,â€ Ms. Moellering said. â€œYou canâ€™t do it every day because we both work full time. Iâ€™ve got two kids; they want all our attention; they havenâ€™t seen us all day. Weâ€™re trying to cook dinner. We have to do the dishes, fold the laundry. Weâ€™re exhausted. And on the weekends the kids want our attention, and we want to spend time with them; we donâ€™t want to spend time going through the bills.”
I completely understand how she feels with wanting to spend time with their kids and not wanting to spend time going through the bills. I usually do our finances on the weekends or late at night after my son is sleeping. Making sure I take the time to be more “in tune” to our finances has helped to avoid lates fees and overdraft charges. Even one late fee of $35 would mean that we would have $35 less to pay towards our debt.
Taming the debt beast is tough, but taking the time to get a good handle of your finances is a great step.