Last week, I described my debt situation as leaving the casino busted, ready to face the consequences of my gambling. But what if, as you stepped outside, you found a loose scratch ticket on the ground, and it came up a winner?
Two weeks after my months of living largely on credit ended (as a result of the banks denying me any more fantasy funds) the payoff I had been gambling on finally came through. Amazon offered my comedy group a contract and an order for six sitcom-episode scripts. Not a lot of money, but enough to cover my debt after taxes. I had just pulled off the financial equivalent of jumping a bicycle over the Grand Canyon.
To ground what seems like a dramatic, fantastical moment, this Amazon deal was the result of my previous 10 years working in comedy. Each stepping stone can be traced back, eventually to the first time I stepped on stage at the downtown Comedy Works on May 14, 2003. So lest this seem like an improbable rags to, well, less ragged, tale, it's spread over a long timeline.
Was it wise? Not at all. Living on beans and rice and adhering to a strict budget while pursuing one's dreams is wise. Wading blithely into the swamps of credit-card debt is not. When I was approached for this column, I had my reservations about accepting it, mainly because I did not want to address my own stupid behavior.
All told, as the wild roller coaster ride pulls back into the station, I am at least left with some valuable lessons, which I can share with you after my firsthand experience making these mistakes.
Don't open a credit card. I have plenty of friends who bemoan the fact that they've never been offered a credit card. Good for them. A credit card is not a status symbol (despite the imagery used to sell them to you). A credit card is a big bank's debit card. That's the best way to view them. If you already have a credit card?
Destroy your physical cards. Having a credit card in your wallet (just for emergencies, you tell yourself) is nothing but bait. You may not normally use it, but if you came across the right item at the right price...
Likewise for keeping it in your home. If you just don't feel right cutting the card up, put it in a jar of water in the freezer. At least it will take you some time to access it if you feel compelled to use it.
Never use credit cards as an online payment option. If you use a credit card number for online shopping, you just made it that much easier to spend money that isn't yours. Online shopping is the impulse buyer's best friend, so the worst thing you could pair that with is a (seemingly) bottomless source of funds.
Take the time to do the math. If you're like me and despise math, steel yourself and actually figure out how long it will take you to pay off your debt using only the minimum monthly payment. In your head you may think "forever," but having the actual amount of time is both sobering and inspiring. You can't work toward "forever," but you can work toward reducing a real number. It will also motivate you to pay more than the monthly minimum.
It's never too late to put on the brakes. When you're sinking quickly into debt, it's easy to lose perspective. "Well, I'm already $12,000 in, what's another $1,000?" The answer is, of course, $1,000 plus the accumulated interest by the time you eventually get around to paying it, which could result in a much larger amount. It's a lot easier to extricate yourself when you're ankle-deep in quicksand than neck-deep.
After my free fall of living on credit, it feels good to live on a budget. It feels like I have both hands on the wheel of my life, and the money I spend comes out of my bank account. If I don't have the money in there, there's nothing to spend. And that's the way it should be.