The other day, while researching an article about whether to pay off student loans or credit card debt first, Carrie asked our Facebook group what we thought.
Most people gave really great responses, and she included those responses in the article.
I gave my knee jerk response, which was that credit card debt is for losers, and student loan debt is normal and for everyone.
There was a bit of back and forth, especially since it looked like I was name calling, so here’s my controversial stance.
Credit Card Debt is for Losers
For years, I had a huge pile of credit card debt, and I felt like a loser because of it. My credit limit was $25,000 and I was so close to maxing it out that I had stress dreams about lacking money.
It was bad, you guys. I had no job and a $600 minimum payment on my credit card. Plus rent. You can see how I was starting to lose my hair. Even writing about it now, years later, I can feel the tightness in my chest.
An actual sign in Portland
I finally broke my silence and told my mom what was going on. Instantly, (bless her heart) she signed up for a credit card in her name: A Discover card with 0% interest for the first 24 months. All I’d have to do is pay the balance transfer fee (which I believe was somewhere near $750, which is small potatoes since I’d been paying more than 20% interest on the credit card each and every month) and of course make payments. She was lending me her sparkling credit, knowing that I wouldn’t get a deal like this with my own. I could already see the light. My only regret was not telling my parents sooner how close to the edge I’d gotten.
The Stigma of Credit Card Debt
If you read enough personal finance blogs, they will let you know that it is not cool to have credit card debt. I’d read so many different versions of the same thing: there is only one kind of person who allows themselves to get into credit card debt, and you don’t want to be that kind.
I didn’t even think I had anything to give to the personal finance world until the end of credit card debt was in sight. In retrospect, I wish I’d started earlier simply to read my thoughts from that era. Because even though I was one of the “losers” in credit card debt, I had valuable insights to contribute. But I couldn’t shake the stigma. I felt like it followed me around. Like my credit card debt was sitting on my shoulders, weighing me down. I am a loser, I would think.
So, when my mom came swooping in to help, I knew that math didn’t matter. Zero percent schmero percent. Who cared? That credit card debt was going to be paid in full well before sunset on the 24th month.
Paying Off Debt Helps Build Self Esteem
After some futzing with my spreadsheets, I had a plan. I couldn’t be stopped. Okay, so I went to a concert or three when I really should have put that $$ toward this monstrosity, but I wanted to keep my sanity (and my friends).
I took on extra jobs, some of which were highly unusual. I stopped using the credit card as a way to pay my bills. I might have missed out on some opportunities for rewards, but I saw it like a bucket of water. If I’m going to the effort to take a cup of water out of the bucket each month, I’m surely not going to add anything back, even a tablespoon. So, debit cards kept me goal-oriented during this marathon.
I couldn’t think about my car loan or my student loan. When you’re in deep water, you just have to start swimming. I paid off the last of the credit card less than 18 months after my mom opened it for me. I was so excited to tell her to close the account! Since I paid it off before my 0% interest expired, I am sure that mathematically I missed out. But psychologically, I was a winner, not a loser anymore.
I don’t think you’re a loser.
Even if you are in credit card debt, I’m certain that you’re a good person. Trust me. You’re probably an even better person than you let yourself think!
Is it stupid to pay a giant bank any amount of interest on your consumption? You bet your britches it is. Financing shoes is not a good plan. But your story is probably different from mine.
Maybe you’ve never carried a balance on your credit card, and you’re thinking about using one of those 0% offers to finance an addition in your house. Who am I to say you shouldn’t do that?
Or, let’s say you’re a young whippersnapper, and your student loan interest rate is ridiculous. Higher, even, than the interest on your credit card. Then, yes, for sure, you do what feels right to you!
But if you start to feel bad. If you are floundering and desperate and can conjure up tears with any amount of thinking of your financial situation, please, join me, and get rid of the one thing that is causing you the most pain.
Even if the math doesn’t make sense.
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