"This message is for Amanda McCormick. Please call me back today about an important business matter. According to the law, I have to tell you that this is a bill collector."
Everyday, I receive anywhere between 10 to 25 phone calls (depending on the day of the week and time of month) from credit card companies wanting my long-overdue payment. My original debt equaled about $3,000 accrued across five credit cards but is now approaching $10,000. This total does not include my Stafford student loan debt.
I am a junior in college and since I maxed out all five cards during the latter half of my freshman year, the interest charges caused my debt to more than triple. When I first left for school I found that, like most college towns, Tallahassee, Fla., (home of the Florida State University Seminoles) consistently comes up short when it comes to employment for students. Forget about a well paying position, one is lucky to find a job for minimum wage. So I was unemployed my freshman year due to the lack of available jobs.
After I maxed out my first card (an American Express student card complete with Seminoles décor), I applied for my second card to again compensate for lack of income. Thus, I fell deeper into debt. Card after card, the situation worsened. I found myself in well over my head as I applied for my fifth card, a Discover card with a $500 limit, at the conclusion of my freshman year.
At this point I felt as if I were out of options. I had no place to live for the summer since my current dorm at the time wasn’t available to students during that period. So I activated my fifth and final card in order to put a down payment on a summer abode.
The Free Pizza Trap
Speaking from experience, a credit card offers seemingly acceptable relief for financial strain especially considering it is so readily available to students on college campuses. Consider this scenario: Johnny, a naive college freshman, reads a flyer advertising a local pizzeria giving away free pizzas. Of course Johnny is interested.
When Johnny arrives at the shop he learns that all he has to do to receive this free pizza is apply for a Visa credit card. Johnny thinks nothing of this requirement so he signs up for one. A couple weeks pass by and Visa sends him a new credit card that is ready for activation. Johnny is so pleased that he was approved for the card that he immediately invites all his friends out for dinner!
I know many people would not act so drastically about a credit card approval but the point of this example isn’t about the card at all, it’s about the pizza. That deliciously cheesy meal was a catalyst for Johnny’s first real bad financial decision.
For starters, he did not know the interest rate of the card he applied for. In fact, Johnny did not even think about Visa again once he signed the application form. That is, until the day he received and activated his card.
A financial decision such as acquiring a credit card should be something that is well thought out. The choice to obtain credit should not be made under pressured circumstances or be induced by the chance to win a prize. Nor should the credit cards be used as a last resort of temporary relief for financial hardship.
Pre-Approved For Problems
Having good credit is essential for any consumer. Bad credit creates a horrible mess that inevitably has to be cleaned up. Needless to say, I know well how fiscal distress feels. All I can say at this point is in caution: bad credit often leads to more bad credit and eventually it becomes too tiresome to answer the collection calls.
As of this date, my debt has not been eliminated. I do not claim to have the secret method to financial success and the annoyance of collection calls has not dissipated. Money management is still difficult, but at least I have enough money to pay my bills.
Although I am still stressed about every financial transaction that I make, I now know to spend my own money that I don’t have to pay back instead of borrowing from creditors. I have started making payments on the credit card debts and although the process to eliminate my debt has been slow, it is no longer stagnant.
I have found that the single most important rule for good money management is to make a budget. You need to be conscious of where you stand financially. You also need to know how much you MUST spend every month for bills and essentials. By knowing and having a firm grasp on these expenses, you can make any budget work for you.
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