Post of the Day
February 4, 1998

From our Credit Cards Board

Subject: Celebrate with me! How I did it.
Author: KentuckyLiz

A hearty cheers and raise your glasses, Foolish friends, as of this week, I have NADA, ZIP, ZERO on my credit cards!

"Hi, I'm Liz, and I'm a recovering credit card addict. I've been sober as of today's mail. I'm feeling good now, and I know there will be tempting times, but as long as I avoid the near occasion of sin (i.e. the shopping mall), I know I'll be okay. Thanks for your support."

How did I do it? Here's some strategies that helped me. Different things work for different people.

1. I overcame the NUMB UNCONSCIOUSNESS of it all. I took out my credit card statement file and totalled up how much I'd been paying in interest each year. Zounds, mon! I wasn't even aware of how the interest rate had gone up. I looked at the statements, at the things I'd charged, and thought of their present condition and level of satisfaction to me, and realized the payments lasted longer than the items. I became aware of why I shopped: boredom, desire to impress, self-indulgence, not good reasons!

2. Serious change of habits. I had a windfall a few years back and paid off my credit cards then and was very satisfied with myself. But, windfalls don't cure addictions. The behavior was no different, and BOOM I was back at square one--worse, in fact.

3. Lock 'em up. Don't carry them--except for travel, in case of emergency. Emergency meaning car breakdown, not a great sale at the Liz Claiborne outlet. I tried freezing them in ice, but it only takes seconds to release them when held under a hot water faucet. I locked mine in the home safe. If I had a safe deposit box, that would be even better--would have to plan ahead to liberate them for use.

4. Visual aids. I got these ideas from "Your Money or Your Life," whose investment ideas I disagree with, but they have great ideas for charting progress. I bought graph paper and made a big wall chart showing monthly progress in asset growth (black and other "cool" colors) and liability shrinkage (red and other "warm" colors). How encouraging the "up" lines were, as the market buoyed my retirement plan and IRA, and payroll deduction savings grew steadily (new to me--emergency funds). How exciting to see the "down" lines sink even further!

5. Make your own coupon book. I used an ordinary little scratch pad, and made a page per month, and recorded my monthly commitment to make a $500 debt reduction payment. Also, large occasional bills like taxes and auto insurance went on the coupon, so I'd know what's coming up and plan ahead to have the cash. Best of all, along the bottom edge, I'd write little encouraging and sometimes humorous ditties: "Debt free, the way to be!" "You go girl!" "Only nine months left 'til debt free: pregnant with possibilities!" "Kiss my assets!" "Debt-onate!" (with cartoon picture of bomb) "MC, go master your own possibilities and leave me out of it!" "Plastic slavemasters, die!" "Debt free = LIBERTY!" and also, my intermediate term goals: "2000: tenure, house, car, Rome!" (Vacation in Rome, not buying it. Yet.)

6. I kept my 2 credit cards in a little plastic wallet, and kept receipts, balance notes tucked in with each card. I knew exactly what my balance was, what I charged, at every moment--staying conscious.

7. Net worth consciousness. I set up a chart in the back of my calendar planner with a row for each month and a column for each asset, total assets, each liability, total liabilities, and net worth. I checked balances monthly and wrote it into the mini-spreadsheet. I had the 800 numbers jotted down right there for easy use. Double zounds! I was increasing my worth far more than the actual amount paid into retirement, savings, debt reduction, because of the great market. What an inspiration.

8. Promotional interest rates: milk 'em for what they're worth. I switched cards every 6 months after being reassured by a credit specialist that it wouldn't damage my credit rating. Loyalty does not pay. I would call my current bank and let them have the chance to keep me by continuing the promotional rate, and if they said no, sayonara ba-beeee! Of course, this works best if you have an excellent credit rating--mine is, from carrying large balances and never missing a payment. Also, I will definitely chill and settle into one card now, in preparation for a house purchase in about 3 years' time.

9. Throw every windfall at the problem. Tax refund? Birthday bonus from Dad? Christmas lolly? Send in an extra payment. Instead of rewarding myself with new self-indulgent gifties, I rewarded myself by paying for everything that I already own and had purchased as a self-indulgent giftie.

Rejoicing and glad tidings! What a great day! Thanks for reading this long post and celebrating with me. Best of luck to all still struggling with this process. Keep at it, it's worth it. I got the job done a year ahead of schedule and that makes the victory even sweeter.

Foolishly yours, KentuckyLiz

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