Shopping can turn into an addiction. The term “shopaholic” may sound cute, but the debt problems it creates definitely are not. And it’s a serious issue that can ruin your finances, as well as your relationships.
When one partner in a marriage is a spender while the other is trying to save, it can lead to money fights that can end a marriage. If you’re in a situation like this and you’re the one overspending, you need to take action. Fixing your financial habits and solving the problems with debt, could also help you save your relationship.
This is the situation that Diane faced with her husband. After a lifetime of overspending left her with bad habits that were hard to break. But before her credit card debt cost her the love of her life, Diane called Consolidated Credit. Here’s her story.
Diane welcomed every credit card offer that came to her door…
Like everyone in America, Diane’s mailbox in Houston was constantly flooded with new credit card offers. Credit card companies hunt for new customers. They pre-screen consumer credit reports and send offers to anyone that they identify will qualify for their cards. Unlike lenders that ensure people can afford a debt before they get approved, credit card companies send offers even when people are living on a financial edge.
“Each time an offer came in the mail, I would sign up for the card. My husband was furious with me. But I didn’t care, I guess. The cards were just too easy to get, and I enjoyed shopping for myself and my kids.”
Diane’s overspending led to constant money fights in their home…
Money fights are a leading cause of divorce in the U.S. In fact, roughly four out of ten of marriages end over conflicts about the household finances. This is especially common when one person is the spender in the relationship while the other is trying to live responsibly and save. If couples can’t get on the same page, it can cause serious friction.
“My husband and I would yell at each other over this debt. He even separated our expenses. He opened his own bank account because he didn’t want to be associated with my out-of-control spending.
Diane tried to solve her credit card problem with more credit cards…
As Diane continued to run up her balances, she got new credit card offers in the mail. This time, it was for balance transfer credit cards. These cards offer a way to consolidate existing debt at a lower rate. In many cases, they offer 0% interest for a period after you first open the card. But there’s a catch, if you don’t pay off the debt before that interest-free period ends, the rate will shoot up.
That’s the trap that Diane fell into. The solution she’d promised her husband would solve her debt problem ended up making it much worse.
“It was like my life was placed on hold. The interest rates on the cards were up to 26 percent. I made the minimum payments, but that didn’t help. I was paralyzed.”
This minimum payment trap is not a unique problem for just Diane. It’s a trap that many credit users fall into. They think making minimum payments will get them out of trouble. But minimum payments are not designed to get you out of debt. In fact, they’re designed to keep you there as long as possible. And with rates as high as 26%, Diane was destined to fail.
Let’s look at an example. If you have a $5,000 credit card balance at 26% APR, the minimum payments would typically be around $150. You’d think eventually that would make a dent in the balance. However, of that $150 monthly payment, $108.33 of that payment goes to cover accrued monthly interest charges. Only $41.67 goes to pay down the $5,000 balance.
So, nearly three-quarters of every minimum payment that Diane made was getting used to cover interest. As a result, her balances just weren’t going down.
Diane commercials for Consolidated Credit, but loved ones worried it was another trap…
Diane realized that she was going to need help if she was ever going to get out of debt. She started paying attention to commercials that promised to help her solve her debt problems. One of those commercials was from Consolidated Credit.
“I was determined to save my marriage and get out of debt. I told my friends and some family members that I was going to use Consolidated Credit, but they were skeptical. They thought Consolidated would rip me off.”
Her friends and family were wrong about Consolidated Credit but right to worry. Not every company that promises to get you debt relief has your best interest at heart. Some are scams that take your money and run. Others represent themselves as one program, but in actually end up hurting your credit and causing collections.
But Consolidated Credit and other nonprofit credit counseling organizations are different. As 501(c)3 nonprofit organizations, our team is here to be your advocate. We work with creditors to help customers like Diane pay off their debt in a way that everyone can be happy with. Creditors agree to reduce or eliminate interest and stop penalties, so people can focus on paying off the debt they owe.
Diane did her research and made the call…
Not wanting to fall into another trap, Diane took the words of caution to heart and made sure to do her research this time. After seeing that Consolidated Credit had an A+ rating with the Better Business Bureau and was well-reviewed online, she decided to make the call.
“I put all my trust in Consolidated that day I called five years ago. I had nowhere else to turn. I messed up, and I wanted to pay off the debt—and Consolidated didn’t let me down. They inspired me each time I called to talk.”
Diane’s credit counselor helped her set a realistic budget and found a monthly payment that would work for her budget. She enrolled all 23 of her credit cards into the program. The accounts were frozen, meaning Diane wouldn’t be able to use them anymore. Once each account was paid off, the card was closed.
For the first time in her life, Diane learned how to live without credit cards. She broke her overspending and shopping habits, learning how to stick to a budget and save up to purchase things she wanted. She says instead of limiting her like she initially thought it would, it was actually freeing.
Diane was also happy that the program didn’t affect her husband. Since he had started separating their finances and wasn’t on her accounts, Diane was able to enroll on her own. Her husband was free to keep using his cards and managing his finances without interruption.
“He doubted me when I told him I was going to pay off my debt, but he stuck with me. Mostly everyone doubted me, but I wasn’t going to give up. I believed in my heart that I would get it done.”
After five years, Diane paid off her debt in full and was ready to retire…
Diane was hoping to retire from her customer service job but couldn’t until she paid off all her debt. It was tough, but that day finally came after a steady battle.
“I worked at my job for 29 years. And when I knew my debt was paid, I stood up at my desk and said “?I paid my debt. I can retire!’ It was one of the happiest days of my life.”
With just 60 payments, Diane had turned her life around. She retired at 55 to settle down and enjoy her kids and grandbabies. She also saved her 28-year marriage.
Is your marriage suffering because of credit card debt?
If money fights over credit card debt are ruining your relationship, we can help. Get a free evaluation and work with a certified credit counselor to develop a realistic budget and explore options for debt relief. If a debt management program is the best option for you, you can find a monthly payment that works for your budget. The program will consolidate your debt into one affordable monthly payment. You can get out of debt without damaging your credit.
Get a free debt and budget evaluation from a certified credit counselor.
