After careful consideration, I decided that I would sleep easier at night by consolidating my credit card debt with a personal loan. If I hadn’t taken that step, my $9,000 credit card limit would eat at me until it would ultimately put me into a pine box sooner than I should there.
My first Visa application with a major bank (in Australia) was $1,000. When I asked for an increase, they raised my limit to $3,000.00. Wow, I was having a field day! It didn’t take long to get to the upper end of my limit. My biggest downfall was when I asked for more and they looked at my overall financial position, then allowed me a limit of $9,000.00. In one sense, I am grateful that they approved that because I happened to need a lot of it for bills and the children’s expenses for school, etc, but on the other hand, it gave me a false sense of security and I started to spend like there was no tomorrow.
Each month, the interest would accrue, and each month I would keep on increasing my visa balance. My own funds were not increasing by any means, apart from one pay rise in that time. Eventually, I had to admit that I was in over my head and that I am not good with money. What makes this even more shameful for me is that I have an accounting background and I’m terrible with budgeting, I let my emotions dictate how I use my money. If I feel bad, I’ll buy something to cheer myself up. I eat out a lot instead of making my own lunch for work. If the kids want something that we hadn’t planned for and it’s a nice day, sure, let’s go to the shopping mall. Inside, though, I was dying. The fear of our home being sold started to eat at me and kept me up at night.
One night recently, I needed to know how much my Visa account would be debited so I could leave sufficient funds in the account – my visa card is linked with my bank account, all under the same bank. I allowed for up to $200 to cover interest, although it came to about $130. It showed me how little I knew about my true financial position. When I called the bank to ask how much the interest would be, I came across a very understanding and compassionate officer and we talked about how I can make my life easier. She recommended that I consolidate my debt and reduce my card limit. At first I was overwhelmed by what would be involved but they made it sound so easy. Over the telephone I was able to organise a personal loan and a reduction of my limit. They told me that they would send the papers to the local branch of my bank and I would get things done as soon as I signed the papers. Believe it or not, the whole process only took a day.
By the morning after I spoke with the bank, I had sorted out a mess that took about two years to create – I accept responsibility for this, of course. My point is that I needed to accept that I have difficulty with financial matters, and by admitting this to the officer on the telephone I had made progress towards solving my problem. She made some suggestions and I have started following them already. They set me up to have some cash aside, so I won’t need to go back into debt straight away with my new lower limit, and encouraged me to put money aside whenever possible so I can use that instead of credit. I now have a month before my next payment goes through towards the personal loan, and it is an affordable amount, with a lower interest rate than the credit card rate. By the time my account is debited with the first payment, my own money would have accrued from my salary together with other income and I’ll be starting again with my credit card on a clean slate. While my overall debt may be slightly higher, the plan to decrease my debt has already been put into place. Without doing this, I wouldn’t have had a hope of being able to reduce my debt position.
In order to change something for the better, the first step in my experience is to admit there is a problem. Sometimes you’re lucky enough to find people in the finance area who can help you to find solutions rather than making you feel worse than you already do. This woman on the other side of the phone could have added to my financial problem if she wanted to, I was at her mercy as a customer of the bank. Luckily for me, she was a decent human being who had been in a tight credit squeeze herself and wanted to help me overcome the situation I was in. This was not just another sale for the bank. There were no guilt trips, no blame, just a discussion to find solutions. Now I can sleep at night and my panic attacks have gone.