credit cardIn 1975 I was issued my very first credit card. It was from Sears and I charged a sewing machine as a gift for someone. I remember specifically how happy I was at the time. You see I was less than a year out of high school and while most of my friends were working for minimum wage, I had a job that paid me significantly more. I had credit now. At age 18 I felt like I had arrived. For the next 30+ years I would carry a balance on my Sears credit card.

As crazy as that sounds, it is a true story. It was a stupid decision in hindsight and stupid decisions in personal finance always come with tuition and I paid a lot of tuition as you will see.

For most of my life I lived with the philosophy that said, if I can make the payments, I am good. And for most of those years, that’s exactly what I did, make payments. I made payments, not only to Sears, but to other department stores, jewelry stores, bank cards and Visa cards, mortgage companies, banks for car loans, and just about any other financing medium you can think of.

If you think about it, it is what our culture teaches us as young adults. You don’t have to live within your means, as long as you can open up credit lines. Advertisers spend inordinate amounts of money to tell you that your life will be better with this new car or whatever product they are trying to sell. You deserve it. In fact, most advertising is focused around the principle of telling consumers that their lives are just not complete without their products.

And for the most part, we buy the lie.

What advertisers don’t tell you, is that eventually someone has to be paid. Creditors will demand payment. Many will relentlessly pursue you for what they are owed, and rightly so in most cases.

In my case, I learned the power of borrowing more money only to prolong the eventuality of having to pay what I owed in full. I worked the system. I can’t be sure of how many times I refinanced the mortgage and rolled my debt and on top of my mortgage balance. For some people, very few, that works to relieve yourself of debt. For the majority all it does is provide an opportunity to accumulate more debt.

That’s the American way right? What I did not take into account was what I would do when the system broke.

In today’s economy, debt settlement companies, debt consolidation loans, and debt counseling companies are thriving. Typically they advertise a program that will quickly get you out of debt and back on your feet financially. Remember what I said about advertisers?

Don’t buy the lie!

Debt is like being in bondage. You are a slave to the lender.

There are no lenders that I know of who are interested in you becoming debt-free.

Essentially they want to create more “slaves” and keep the ones they have. Everywhere you go people are crying for banks to loan more money. The entire world revolves around credit. For those of us who have used and abused credit, we know how the story ends.

Remember I said that eventually everyone has to be paid. In early 2008 I refinanced my home. The housing bubble was filled to capacity, but had not burst yet. I was in debt. I was in significant debt. At that time I owed $108,000 on the home. Additionally, I had a $40,000 second mortgage that was taken out a few years earlier to relieve more debt.

The mortgage company I was working with sent out the appraiser and I was overwhelmed with the figure on the appraisal. The home was worth, according to the market, $350,000. The lender called and told me that I now qualified for much more money than I had been asking. He dangled a figure of $210,000 like it was a piece of candy. I ate the piece of candy. I paid off most of my debt, but not all.

My mortgage payment was now $600 more than it was, but at least I didn’t have all those credit card payments right?

This story does not have a happy ending. As most of you know the housing bubble did burst. I lost my dream home in foreclosure. Bankruptcy followed after that. That is not a plan I would suggest you follow.

Just the other day I was walking around a local wholesale warehouse. It was a Costco. I wandered past a Nikon camera display. They were advertising an entire photography package for around $800 . I stopped and looked. I thought to myself, there was a time in my life where I would’ve purchased this camera. Actually I would’ve charged it on my charge card.

I then thought, those days are behind me. Move forward and don’t reach back into your past to borrow what you don’t need.

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