Six years ago, I decided to cut credit out of my life.
But not before they got me in a heap of trouble.
I grew up believing that a credit card was something you needed to be a responsible adult in this world, so I was thrilled when my parents opened up my first credit card for me in college. I felt like I had arrived.
Working as an entry-level assistant in the television industry, trying to make ends meet in New York City, I quickly realized that my $29,500 salary alone wasn’t going to cut it. To make up the difference, I opened up three more credit card accounts over the next three and a half years.
Credit was my security blanket. Instead of opting out in the name of financial responsibility, I could spring for the next round of drinks with my friends. Or take a trip to Costa Rica and charge it, even though my stomach churned when I saw the prices. Or avoid asking for the raise I know I deserved, because I was fine—I didn’t need more money. Credit was my crutch.
I told myself it was better to use cards. I was building a credit history. And think of the rewards! With credit, I didn’t have to think about what came in and what went out. I was impulsive with my decisions. If I wanted something, I just bought it, and I carried all my cards with me all the time “just in case I needed something.” Something always came up.
This was before the financial crash of ’08. Credit flowed freely and it seemed everyone was living on borrowed money. I figured, “If the banks are letting me borrow this much, I’m sure it’s fine.” (It wasn’t.) And I rationalized that I was investing in my future by using credit to make up for my lack of cash.
My Own Personal Financial Crash
In 2007, I was two months late on one of my payments. I had never really had a system to pay—or keep track of—my bills, and this one escaped my notice for too long. As a result, my interest rate jumped and my minimum payments quadrupled overnight. Before that moment, I’d never looked at the fine print—in fact, I’d never really considered that credit was a contractual obligation.
Suddenly, I didn’t feel so free.
I plopped down on the floor with a calculator and all of my bills to total everything I owed, and the numbers shocked me into reality: I was almost $30,000 in the hole, which, at the time, was 95% of my after-tax annual income.
Quite frankly, I was pissed. How had I let it get this bad? I realized that if I was going to get out of debt, I’d have to end my addiction to plastic. This wasn’t a minor realization; it was a turning point in my financial life.
Suddenly, I was determined, resolute … and scared as hell. I was terrified that some catastrophe would strike and I’d regret that I didn’t have my cards to save me. Even so, that night, I cut up all of my cards—except for the one my parents opened for me in college.
I took that card, placed it in a Tupperware container of water and stuck it in the freezer so I couldn’t use it.