From last month’s dreaded six letter word, to next up the &*#! four letter word…. D-E-B-T.   Let’s get real about the impact this four letter word has on your life.     First off, I want you to imagine all the things you could do if it was gone forever from your life?     Imagine the relief you would feel, the freedom and the possibilities.     What could you do without this four-letter word in your life?

Over 25 years ago, I imagined how my life would play out without this four-letter word.    I was single, in a good paying job and received a nice bonus at the end of each year.    I would use this bonus every year to pay off my most pressing debts: multiple credit cards.  Then come January, I would start charging them back up again.    You know how it is – dinner out, car repairs, a new outfit (or four), a vacation, gasoline, birthday gifts and on and on.  Come December, I would receive the bonus and pay them all off again.    

This circle continued for several years until one day I looked at the year-end bonus check and imagined how my life could look if I did not have to pay off the credit cards with the check.  I imagined taking a nice vacation, using it towards a new car, building up my savings or helping to fund a retirement account while simultaneously treating myself to something extra special.  I also imagined what would happen if I did not get this customary year-end check the following year.   Something finally clicked in this imagining time, and I decided that year was going to be the last year I would use my year-end bonus to pay off credit cards.   

A new plan was born and starting the year fresh, I made a commitment to myself to pay off the credit cards every month.   I imagined what it would be like to hold that year-end bonus check in my hand without having a single credit card balance come December.   I was determined to succeed.    I wish I could say it was easy, or that I considered not using credit cards at all, but it was not that simple.   I continued to use the cards and struggled to pay the monthly bills in full every month, often juggling and trying to time the purchases based on the due dates and my cash flow.  Some months I barely scrimped by, having only a few dollars in my pocket to make it through the week.   As the months went on, I was more cautious on what I charged and tried to buy less and pay cash more often.  I told myself anything under $20.00 had to be paid by cash (something I still try to do today).   Some months I found myself dipping into emergency savings to help pay off the monthly credit card bills.   It took a while, but I found my stride and eventually even consolidated down to using only one credit card for everything.   I said “no” to a lot of purchases but was able to find satisfaction in keeping my promise to pay off my credit cards each month throughout that first year.   You cannot even imagine the sweet feeling it was holding a bonus check that first December, knowing I owed zero on the credit cards!  It was an incredible feeling and gave me the incentive to continue with the same plan of paying off my credit card every month in full for the next 25 years.    

Debt comes in all shapes and sizes, and for most people is more widespread than credit cards.  Yet I shared this story as a pivot point in my relationship with debt.    I began by getting my credit card spending under control and moved on to other debt.     

Over the next four weeks, I plan to continue to post about the value of losing this four-letter word completely.  For now, gather up all your debt statements and list out all your debts, monthly payment due, full outstanding balance and the interest rate charged.  If you have followed along the organizing binder project this year, go back to your net worth statement as a starting point to see your list of debts and use this list of outstanding bills to pull your statements.    Up next week “Why should I live without the four-letter word?”