Lesson Learned The Hard Way #2: Credit Cards
Posted on: April 29, 2009 by Matt
Shortly after exhausting my inheritance from my mother’s estate I discovered credit cards. However – I had no clue how they worked or how they could effect my financial future. The only comparable reference to how I felt that I can think of came from an episode of the TV show Undeclared (the only episode I remember seeing even). In the scene one of the students is running back to his friends, huffing and puffing while yelling something like “Guys!! They’re giving money! Money they’re giving it away!“ If you have any interest in checking it out just watch the first 50 seconds or so over here at YouTube.
I think that pretty much sums up my impression of how credit worked. I knew that the credit card folks expected to get their money back plus interest but I did not really take credit cards seriously. So I somehow managed to secure two credit cards and maxed them both out within the span of my junior year. I somehow managed to make a minimum payments for a while but eventually stopped making any payments at all.
Eventually I was sent off to collections for the two credit cards that I could obviously no longer use. I stopped answering my phone and stopped checking my mail. I was terrified that I was going to jail or they were going to track me down and send the police for me. I really had no idea what would or could happen so I just avoided all of the uncomfortable situations. I got to the point where I checked my mail about once a month – usually after the mail room called and left me a message that the box was overflowing.
After about a year or so the calls stopped and the mail became less frequent so I thought I was in the clear. After a couple of years in the work force I began dealing with all of my bad and defaulted debts. Most of the debt was student loan related but there were still the lingering balances for the two old credit cards. I made arrangements with both companies and paid them off in full but the damage had already been done. Luckily – the bad credit card debts have since fallen off of my credit report so the negative information is no longer listed.
I lived in complete fear of credit cards and taking on any new debt for a couple of years after my experience with credit cards in college. The whole series of events could have probably been avoided if I had taken the time to educate myself and understand what I was getting into. My father tried to explain but simply told me that I should not have a credit card and got frustrated when I asked the obvious “Why not?”. He was unable to explain how credit works or how bad debts can carry on through the rest of your life. His flustered answer was along the lines of “because it will effect your credit”. I know he had the best intentions but the explanation seemed obvious to me at the time – I mean that was the point of credit cards right?
I believe the lessons learned here include that credit cards are not to be used lightly, not repaying debt can have serious long term ramifications on your future plans, do not spend money you do not have and communicate with your creditors. I still work on practicing some of these items (hence my current credit card having a balance – which is going down quickly) but have worked really hard to ensure that I do not get back into yet another cycle of harassing collection calls.
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TagsCollections, Credit Cards, Debt, Debt Reduction, Personal Finance, Spending Filed Under: Collections, Credit Cards, Debt, Debt Reduction, Lessons Learned The Hard Way
Hi, interesting post. I have been pondering this topic,so thanks for writing. I’ll certainly be subscribing to your site.
Yikers; that’s a harsh way to learn about credit cards. I’m glad I didn’t go through anything like that. But I had my own big money mistake in my own way. All these could be very good reasons for giving kids allowances and getting them started on the ins and outs of spending and saving from an early age.
This is probably a very common story. I had a roommate in college who went through a pretty similar spell after his brother died. It was fun every week to see the new gadget (TV, stereo, VCR) or pile of CDs that would appear, but at the same time I knew that my friend was getting in over his head. Thankfully, he too has turned things around. College and credit are just a bad mix.
I just found your blog and really enjoyed the posts I’ve read so far, and look forward to continuing to read.
Thanks Money Beagle!
I agree – college and credit cards are a really bad mix. The major difference was that I was spending mostly on food and drinking. I did not manage to accumulate much fun new stuff.
I look forward to checking your site out! Thanks for stopping by!
Great that you are trying to get out of debt and writing about and sharing the experience. All the best.
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