Tag: credit card refinance

Money Stories: Debt Anxiety Was Taking Me Down, But Cancer Changed Everything

Money Stories:? There were very few things Eleni couldn’t handle. Her mother’s untimely death, the loss of a business, her husband’s injuries, and a special needs son. But managing consumer debt anxiety almost took her down. Then cancer called and changed everything. Adapted from an interview with Eleni Ross.

My financial education was the school of hard knocks…

I don?t remember ever receiving any education in personal finance in high school. I majored in Anthropology in college and frankly, I never thought of taking economics classes because I felt that they were tedious and boring. Everything I?ve learned about personal finance was through the school of hard knocks, just by going through it and screwing up.

I first became aware of personal finances and having a bank account when I was a senior in high school. I had my first job at the dime store in the town where I lived. They paid you in checks, so I had to open a bank account to cash them. After a while, I started getting offers for credit cards in the mail. I think my first credit cards were a Macy’s and a Chevron card.?By the time I entered college, I had a Visa. But I didn?t use it very much. I might buy a pair of shoes, and then pay it off when the bill came.?

Related: Ten Quick Ways to Make Money While Helping the Planet

I was still in college when my mom passed away.

My mom was diagnosed with colon cancer when I was 16 years old. And although she had radiation, it came back and moved to her liver. So, by the time I was college age, mom was undergoing chemotherapy every week. I didn?t want go away to college because I wanted to be there with Mom to support her. So I lived at home and drove to UC Berkeley everyday in a car my mom owned. She paid the insurance and I paid my own gas. I never worried about money then.

Mom left me a small trust and a paid off house…

I was still in college when my mom passed away. I remember that she died in June, right after finals. When Mom died, she left me the house and a bit of money in a trust. There wasn?t a lot of money, but there was enough for me to finish college. And the house was paid for. My uncle was the executor and he would just dole out a bit of money if I needed it.? This is why I didn?t really worry about money then, either.

…but I had no education in personal finance.

After returning to college the next semester, I met my future husband. We fell in love and began living together. He was an auto-mechanic and wasn?t making very much money at that time. After a few months, we actually started to run out of money. ?That’s when I started using credit cards to fill in the gaps.

We started using our credit cards as a type of income.

We started using our credit cards as a type of income. We?d use them to get gas, we?d use them to get groceries, and eventually, by the time I graduated from college, we were carrying some pretty big credit card balances.

Eleni and Rob Ross

After we got married, we decided we needed to fix the house. The house was in significant disrepair. The roof was leaking and the bathrooms and kitchen needed to be redone. We figured we could take a loan out on the house, do some repairs and upgrades, and get a little extra to pay off our credit card balances at the same time.

Our house became an ATM

We live in a very affluent area. Everyone around us drove expensive cars and had expensive toys. To be honest, that lifestyle sort of rubbed off on us. I think it was when we decided to buy a really expensive car that things started to get out of control. The payments on that car were about $500 a month, and the insurance was ridiculously high. But we didn?t really see it for what it was because, by then, we had learned how to take a line of credit on the house. This was in 1999, and it was the beginning of a long spiral.

Related:? DIY Credit Card Debt:? A Guide to Permanent Debt Relief

We wanted to fit in with our environment. We wanted to be like everyone else…We were young and naive, and we just couldn’t see over the horizon. We couldn’t see what was coming.

Looking back, I can see how we began to use the house as an ATM. We?d rack up the credit card debt, and then we?d refinance again. We?d get a line of credit, pay off our car loan. We’d buy a new car and do it again. This became a pattern. But the reality is, we just didn?t need a fancy Mercedes Benz or a brand new BMW every few years.

Keeping up with the Joneses was a trap.

I believe now that we felt really pushed to keep up with the Joneses and be like everyone around us. But we just didn?t get that we didn?t have the money for that. Property values were skyrocketing at the time and it was super easy to get refinancing. Like many people during this time, we would use home appreciation value to justify these purchases. We were young and naive, and we just couldn’t see over the horizon. We couldn’t see what was coming.

Related:? Why We Love Rules of Thumb…Even Though They Suck

Having our son changed everything.

For a while, things were ok. The payments weren?t astronomical and we were both working decent full-time jobs. I was working for an auto body shop when I got pregnant with our son.

Our son was born slightly autistic, and I didn?t want my son to be raised by babysitters. I wanted to be there with him everyday. So I decided to quit my job and go freelance as an independent auto-appraiser so I could raise my son myself. The downside was that my pay was no longer consistent. That’s when things started to get out of control.

I started using credit cards as an income patch to cover our monthly expenses when my pay came up short. I’d refinance the house again to try and manage the credit card balances. But this time, I actually kept it a secret from my husband. I was afraid to talk about our financial problems because I wanted him to feel that everything was ok. I didn?t want my husband to worry and I wanted to be able to raise my son myself.

I was afraid to talk about our financial problems because I wanted him to feel that everything was ok.?

But the truth is, it just wasn?t sustainable and I knew this. My income was inconsistent and the credit card interest rates were climbing through the roof. I was ashamed that couldn’t make it work, but not telling my husband was the biggest mistake I made. Not talking about money made everything worse.?

Related:? Women and Money:? Why Aren’t We Talking About it?

We looked for ways settle our debt…

Eventually, our financial situation forced me to give in and get a full-time job at a high end auto body shop. While I was making an excellent salary, it was an incredibly stressful position, and I had already screwed us with the high interest debt. So not only were we still struggling financially, I had a lot of debt anxiety and was totally stressed out everyday.

I decided to hire one of those sketchy credit settlement companies because I just couldn?t refinance the house anymore.

I also decided to hire one of those sketchy credit card settlement companies to handle the credit card debt because I just couldn?t handle it anymore. The stress of the job, the debt anxiety, and the threatening phone calls from collectors – it was taking a toll on me. When the credit settlement company told me to stop making payments on my credit card bills and pay them instead, the phone calls finally stopped, but my credit score went into the toilet.

Related: Know the Wolf:? Credit Counseling vs Debt Settlement

… and we started a business.

Meanwhile, my husband decided to start his own auto repair business. We knew things would be tight at first, but we had a good business plan. There were some months in the beginning where he didn?t bring in any money at all, and our mortgage began to fall behind. I became scared that the bank was going to foreclose on our house.

This was in 2008, right when the subprime mortgage crisis was exploding, and, of course, I had a crappy subprime mortgage. On top of that, we discovered that our business partner was not only ignoring the bills, but was also actually stealing money from the business! We had to hire an attorney and kick him out. This definitely set us back.?

Finally, my husband’s hard work paid off and the business started to pick up.

For the next two years we were hurting badly. I remember my son even had holes in his shoes. I hated my job, but I was stuck there because we had nothing else. I began to experience constant anxiety. Everything was slowly falling behind but we hung in there. Finally, my husband?s hard work paid off and the business started to pick up. Things were going really well. At last I felt that everything was going to be ok.

A car came out of nowhere.

In 2010, just when our luck was turning, my husband was struck by a car making an illegal U-turn. The car hit his motorcycle and broke his foot. He couldn?t put any weight on his foot. He had to put his leg on a chair and try to finish the cars he had in the shop. He also had to hire someone to help him. As a result, he couldn?t take in any more new business.

Just when we thought we were starting to pull out of financial hell, my husband?s injury brought us right back down. We decided we would have to close the business after all, and when the business lease came up for renewal, we let it go.

Just when we thought we were starting to pull out of financial hell, my husband?s injury brought us right back down again.

Eventually, my husband?s foot recovered and he got a job at a shop as an auto mechanic. But the injury to my husband?s foot had weakened his strength due to inactivity. And shortly thereafter, he blew two discs in his back at work. He was in incredible pain and had to go on disability again. We were back in the struggle to try and cover our mortgage.

Close to the brink: the threat of losing our home.

This is when I tried to do loan modifications with my mortgage company. First I was told that we made too much money. Then they?d say I didn?t make enough money. I thought that my husband?s disability might make a difference, but the bank always came up with a different excuse as to why they couldn?t approve us. I think I tried to modify the loan about 6 times during this period.

Our subprime mortgage had originally been with Wachovia, but it changed hands about 3 times within in a year or so, eventually ending up at Wells Fargo. It seemed that I just couldn?t get anywhere with it. It was crazy. I was always asking, ?Who am I paying now?? By this time it was 2011. And we were finally warned of foreclose.

Related:? Divorce Your Bank in 8 Simple Steps – Who Are You Trusting with Your Money?

By now it was 2011. And we were finally warned of foreclose.

Still, I kept looking for ways out. Our son?s school district had a great program for special needs kids. He even had an aid that attended all of his classes with him to keep him on task. I didn?t want to disrupt his life. I needed to keep my son in that school district. So, even though there was equity in the house that could have dug us out if we sold, I refused to give up trying to save it.

It was Christmas 2011 when I received the phone call that turned everything upside down. My routine annual physical and mammogram resulted in a phone call. I was told I needed to return for an ultrasound, then again for a biopsy. Two days after Christmas, the hospital called me at work, and all I heard was, ?Bla, bla, bla, you have cancer.?

I remember locking myself in the bathroom at work and completely falling apart. Everything stopped. In that moment, sobbing uncontrollably, I just didn?t care about money anymore. I couldn’t even think. I had to have my husband pick me up from work because I was too upset to drive home.?

Two days after Christmas, they called me at work, and all I heard was, ?Bla, bla, bla, you have cancer.?

How cancer saved my life.

Ironically, I still say that cancer saved my life. By the time I got that phone call, I had gained 70 pounds, was stressed out of mind, and my blood pressure was through the roof. If cancer didn’t stop me, something worse may have.?The constant pressure to chase the dollar, to move money around to cover this and that liability, the overwhelming debt anxiety, was slowly killing me. But when I got cancer, all of this just stopped. It was a wake up call. I just let the debt anxiety go.

Because my husband was also on disability for his back at the same time, he was able to stay home and support me through the cancer, which helped me tremendously. It turned out that although I had to have a mastectomy, I didn?t need radiation or chemo. I actually recovered from the cancer in 5 months, and I am still cancer free today.

When I got cancer, all of this just stopped. It was a wake up call. I just let the debt anxiety go.

Learning to let go.

After I had fully recovered, the thought of returning to that high-stress job overwhelmed with me anxiety. This time, I just wasn’t having it. I told my company I wasn?t ready to come back, and they insisted that I get a doctor to justify the extension.

When I talked to the doctor about my anxiety, the doctor told me to take antidepressants and get back to work. But I didn?t want to take antidepressants. So, I started seeing a psychologist instead. I told my psychologist, ?I just don?t want to do this anymore!? He responded, ?Then, don?t.? So, I went in and quit my job.

The doctor told me to take antidepressants and get back to work.?

Now, I knew this was a risk. But I had talked to my husband about it, and he was very supportive of my decision to quit that job. I had been living with debt anxiety and trying to save our house for years. But cancer made me realize, ?You know what? You only get one life!?

I hadn?t been spending enough time with my family and everything felt wrong. What’s more, I started noticing this in other people’s lives as well. I could see that there were a lot of people in our area who drove fancy cars and seemed to have tons of money – ?but who were absolutely miserable. Joneses or not, I knew I didn’t want any part of this anymore.

At this point, I was at constant risk of foreclosure, had no job, no income, no credit, a husband on disability, a special needs child…and only one boob! We finally surrendered and filed a Chapter 13 bankruptcy so we could at least save the house. We were able to make the Chapter 13 payments for awhile and were temporarily saved from foreclosure. But one month, we just didn?t have the money and we missed a payment. The Chapter 13 protection was dropped, and the foreclosure game began again.

I could see that there were a lot of people in our area who drove fancy cars and seemed to have tons of money – ?but who were absolutely miserable. Joneses or not, I knew I didn’t want any part of this anymore.

A silver lining through the struggle

A few months later, my husband?s back recovered and he was able to get back to work. At the same time, I also found a job with a much better work/life balance. I was making about 30% less in salary, but I had full benefits again and a company car, so it sort of made up for it.

While we were now finally both making a steady incomes again, I was still constantly filing for loan modifications to delay foreclosure. I think overall I must have made around 12 attempts over 3 years to modify the loan to save the house.?The truth is, the bank simply wouldn?t let us make payments. I told them I just wanted to reset the mortgage and start paying, but they just wouldn?t take our money. It was maddening. They wouldn?t let us put it on the back end. They demanded all the back payments in full. Something like $75,000. We just didn?t have it.

For the entire year of 2013, we lived like squatters in our own house. We never knew when the rug would be pulled out from underneath us, but it just never happened. There was nothing we could do, but wait and find out. And the waiting was brutal.?

They were going to auction the house in 90 days.

Then, in 2014, we came home one day, and there was the foreclosure notice posted right on our front door. Our biggest fear, realized. They were going to auction the house in 90 days. We had to make a move. We contacted a real estate agent we knew to help us sell the house before it was auctioned, because we didn?t know what else we could do.

How we finally saved our house

The real estate agent told me to try for one more loan modification to buy us more time to sell the house by pushing the foreclosure date. Of course, I wasn?t expecting anything, I was just going through the motions again. But when I got the phone call from the loan modification officer, he said,?Congratulations, you?ve been approved!? I was absolutely floored. Just when I’d finally accepted that I’d have to let go of the house, it was saved.

I got the phone call from the loan modification officer, he said,?Congratulations, you?ve been approved!?

Related:? Over 50 Broke and in Debt:? Starting From Ground Zero

What I?ve learned

Though we?ve managed to save the house, the payments are outrageous. But my son is almost out of high school. We will eventually downsize and move to a less expensive area. I’ve learned some valuable lessons throughout this journey.

I now realize that I’ve always looked at credit as available income. And it?s absolutely not.

The biggest lesson I?ve learned was to live without credit. If I can?t afford something today, I just don?t buy it. I now realize that somehow I?d always looked at credit as available income. And it?s absolutely not.

1. Things are not important.

I?ve also learned not to care what kind of car I drive, or whether I am able to buy the things that the people around me buy. Things are not important. Getting cancer and surviving wiped all of that nonsense away. All that is important is my health, my family, and that we are going to be ok no matter what because we are together.

Cancer survivor Eleni Ross and son

2. People need to talk about money problems.

Everybody has money problems. Even people with money have money problems. But people don?t talk about it. You could even say that people with more money have even more money problems.?

Related:? Why We Can’t Save

3. Some decisions are in your control. Some are not.

People don?t want to talk about money because they?re ashamed. But they shouldn?t be because, well, shit happens. You make some bad decisions. Things come up. Situations change. And some things you just can?t control.?

You can?t control getting cancer. You can?t control having an autistic child. You can?t control a Prius making a U-turn around a blind corner when you?re coming around on your motorcycle.? But you can control whether or not you buy an expensive car just to try to fit in. And this is the stuff we need to talk about.

4. Take control of your money before a crisis hits.

Unfortunately, for many of us, we are somewhat blind to our financial mistakes until a crisis hits.?

Unfortunately, for many of us, we are somewhat blind to our financial mistakes until a crisis hits. We go along, trying to keep up with the world, living overextended lives and trying to manage our debt anxiety. We need to get over this money shame because, seriously, I believe it has the power to ruin your life.

Related content: What I Wish My Clients Knew When They Were Younger

5. Gratitude is powerful. Realize how lucky you are.

Today, I am not ashamed to share my story, because I hope that others can learn from it. I didn’t know anything about personal finance before I began this journey. Now I do. But everything that has happened to me has made me realize how lucky I am – to have my health, to have my family, to have my life. Those are the important things. And they have nothing to do with what kind of car I drive.

– Eleni Ross

WellWallet Money Stories is ?a place where real people share their stories of financial struggle, loss, perseverance, and triumph. If you have a money story that needs to be told, please submit it to info@wellwallet.com. We will never publish your name without your permission. You can use a pen name or choose to remain anonymous. Or you can submit photos and go fully candid. It’s up to you. We all have money stories, and we need to talk about them. It is through sharing our stories that we heal, grow and learn from each other.


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Money Regrets are a Waste of Life: 3 Steps to Get Out

The Night My Friend?s Past Stole a Piece of Life

We were camping on the shore of a gorgeous prehistoric lake. The sun was still spread across the horizon as the moon slipped up over the pinnacles in the distance. We sat, my old college friend and I, sipping cocktails by the shore. It was breathtaking.

We hadn’t seen each other in years, we had a lot to catch up on. But all my friend could talk about is how much better it was in the old days, when he still had his house boat. It seemed as if he didn?t see the moon. Or rejoice at the pelicans diving majestically through the pink dusky sky to disrupt the mirrored surface of the lake. He kept mentioning how much better it was before. And as a result, it was stealing from him. Stealing a piece of his present life.

My friend?s problem was deeper than a house boat, however. Like many money regrets, it was part of a bigger story. My mate had sold and/or refinanced damn near anything of value?to fund his son?s pro-skiing career, which later came to an abrupt halt when the money ran out. I empathize with him. He took a calculated risk. It was his son. I would have done the same.

We Aren’t as Unique as We Think We Are

So many people are living under the constant stress of financial instability. Many have money regrets, but few have any idea how to move on from them. How to bite the bullet, take it all in, explore options, and begin to create a new money story.

My friend still had some equity in his refinanced house. But he admitted that he was flat out ignoring a personal loan from several years prior. And although he refused to actually look at what he needed to do to get out of this mess, he couldn?t stop mentioning it. It was the undying topic of conversation of the weekend. And it made me very sad. I was worried about him, and heartbroken that this issue was wasting the short time we had together.

?Listen,” I finally interjected. “I get it! I really do.”

But he didn?t want to hear that. He insisted that no one could possibly understand what he was going through. Sadly, he’s wrong. Truth is most people have money regrets and financial stress. And a fare amount of them refuse to look at the extent of the damage, which is precisely what they need to do, to get over money regrets once and for all.

Ignored debt is like a speeding train, downhill, without brakes.

I wanted to tell him how I’d been trapped in consumer debt working a shit job for a corrupt company for which I had to commute 4 hours a day. It was hell. I was stretched from paycheck to paycheck. I couldn?t afford to make a move. I couldn?t afford to quit. And if anything came up, an illness, an emergency, an unexpected expense, it had to go on the card – just digging me in deeper.

I wanted to tell him that when I finally pulled my head out of my ass and faced the fact that I was over 50, broke and in debt,?it was truly horrifying. But then came the acceptance. And then, and only then, came ideas. Once I knew exactly where I stood, I could determine which options were available to help me. And I could begin the long crawl out.

How to Transform Hopelessness Into Hope

If he knew how hopeless I had felt. How I struggled with paralysis for years until I finally got the courage to bite the bullet. How it all had driven me to a place so dark that I could no longer feel the peace of the rising moon above a body of water.?

And even though my friend wouldn’t have believed me, (because he was comparing his now to his past,) he is in a much better financial situation than I am. He has equity in a house. He owns several vehicles. He actually has more options than most. But his past was blinding him from moving forward. He’s just not ready to take that scary first step in getting over money regrets and moving on: ?

Step 1) Discovery

If you don?t know what the disease is, you cannot treat it. Period.

I?m not going to bullshit you, it?s not easy to pull up all of your accounts and write down how much you owe and the interest rate you?re paying. It?s harsh to compare the debt you are in to the balance in your bank account, the equity left in your house, or the balance of your retirement fund – ?to do the math.?

This is the part my friend can?t fathom. He doesn?t want to know how bad it is. And I understand this feeling. But everyday he looks aside, the compound interest on the errant loan is eating away all of his advantages. Ignored debt is like a speeding train, downhill, without brakes.

Know your strengths (assets). Know your weaknesses (liabilities).

I wanted so much to tell my friend to swallow his pride, look at his situation square in the face, and take a deep breathe. I wanted him to get that you can?t begin to move on from money regrets until you can actually quantify your current financial strengths and weaknesses. Knowledge is power when it comes to repairing your finances.

Step 2) Research Your Options

Once you know where you stand, it?s easier to see where you can go. Financial terminology may seem difficult at first, but it can be learned. All you need to do is get interested. Seriously, if you are reading this, you can Google anything you need to learn. You can find your options, and decide what plan of attack is gonna get you in better financial health.

Some of us have used our retirement for our children?s college tuition to try and save them from the disability of student loan debt. Others have made investments that didn?t pan out. Some have been leaching off of the equity in their house for years. Or we?ve been using credit cards as an income source to maintain a certain living standard.

Different Solutions for Different Problems

Everyone?s situation is going to be different. But what may be the same for a lot of us is that we can?t keep living like we have been and expect to get away with it in the long game. If you aren?t finding any options that can help you with your current situation, then you may need to take a deep look inside yourself and ask whether you need a lifestyle and/or a mindset change to create options.

In my case (dog paddling through the depths of minimum payment hell after spending all of my money on my kid’s education), I looked at the options available to me and ran different scenarios out in my mind.

I asked myself questions such as:

Step 3) Action?

After researching options available to me like balance transfer cards, consolidation loans, or picking up a part-time job, I finally settled on refinancing all of my consumer debt at a lower interest rate than any of my cards with a personal loan. One payment a month for 5 years. Fine. Done. No more stress.

I also eventually moved, changed my career, and completely changed my lifestyle to be able to live within the range of my budget. This flowed somewhat naturally, because once you get really interested in experimenting with how little you can get by on, you tend to equate saving with freedom. Your mind opens to creative ways to get out from underneath the constant pressure of debt.

After researching, make a plan and take action. It could be by refinancing something. It could be by liquidating assets. It could involve completely changing your lifestyle, where you live, where and how you work, or what you drive.

Once you get really interested in experimenting with how little you can get by on, you tend to equate savings with freedom.

The struggle of trying to ?keep something? going when you don?t have the money to do it is horribly stressful. I can?t tell you the relief it will give you to finally address your biggest stressors in the face, brainstorm the real options open to you, and then take action.

And you will start to notice a spillover into other areas of your life. There is something about accepting where we really are that is comforting and stable. The energy previously wasted on consistent financial stress and worry is now freed up and available for cool life stuff. Like chilling with an old mate by an old lake.

The Bottom Line

No matter how bad you think it is now, it could be worse. And if you do nothing, it will get worse. And you know what?s worse? You already know this…

If you are sitting around and complaining, it just means that it?s stressing you out. It?s stealing your life. Just like it stole that one beautiful night at the prehistoric lake from my friend, and inevitably, from the people around him, too.?

Find out where you are. Know your liabilities and assets (if you are lucky enough to have any.)?The pre-emptive strike for financial disaster is to stop the bleeding, start the healing, and be patient with yourself.

Discover, research, and take action. And remember to live and find joy in what is in front of you.

Related:? DIY Credit Card Debt:? A Guide to Permanent Debt Relief



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DIY Credit Card Debt: A Guide To Permanent Debt Relief

There’s a new hero in town ready to tackle your credit card debt. (hint: it’s you.)

Credit Card Debt Sucks

Literally. Credit card debt sucks freedom from our daily and future opportunities. If you have credit card debt, you already know this. You also probably know that:

  • Most Americans have credit card debt.
  • Credit card debt affects your credit score.
  • Making only minimum payments will cost you tons of money over the long term.

Credit card debt is such a common issue that if you google ?get out of debt,? you’ll get daily editions of new articles from well-meaning personal finance sites with steps to take action. Don?t get me wrong, there’s usually nothing wrong with the advice given. But many of us can?t use it for 2 reasons:

  1. We believe we can?t come up with the extra cash necessary to take action.
  2. We believe that refinancing our debt is impossible, dangerous or will damage our credit score.
Download PDF: Well Wallet DIY Cedit Card Debt: A Guide to Permanent Debt Relief

And Sometimes We Get Stuck

If we believe there are no actionable steps we can take, we freeze. We may think that the minimum payment is all our budgets can handle, or that paying off credit card debt with a personal loan is risky. So we do nothing. We feel trapped. This is where most of us give up.

Our biggest problem is that we are convinced that we can?t do anything about our credit card debt.

That’s When Financial Predators come out to “help”

In many cases, we just continue making minimum payments, hoping for some day in the future when a windfall might come along and get us out of the situation. Or, we throw up our hands and pay for credit card counseling or debt repair services. Be careful here. There is a huge difference between honest credit card counseling and sketchy debt repair services that could impact your credit score for years.?

Even if you erased your debt with a credit card ?repair? service or a bankruptcy, your FICO credit report sticks with you your entire life. A few mistakes and you’re stuck with that crap for years until it drops off your report.?Today, our credit scores also impact us in ways that have nothing to do with banking. Even potential employers are pulling credit scores.

Why Fixing Things Yourself is the Best Approach

You?re always better off sticking with a Do It Yourself (DIY) method to manage your credit debt. Not only is it cheaper, but through the process you will learn how to avoid debt in the future, so you can avoid falling back into the same trap.? And while that might seem overwhelming, you need to believe that you have the power to change things, because you do.

Don?t give up before really giving DIY a chance

We really have to bite the bullet by overcoming our own fears of facing exactly what we owe and what it?s costing us over time. This can be hard. We don?t want to see it. It?s depressing and makes us feel like giving up. The more we look at it, the worse we feel. I know. But if you bear with me for a moment, I want to explain why you shouldn?t feel like a loser if you are in a credit card debt spiral.

How Banks Take Advantage

The banking system is not broken. It?s actually designed to work exactly as it does: not in your best interest. So stop feeling like a loser. You aren?t at all and you need to wrap your mind around that.

If you are stuck in minimum payment Groundhog Day, you are exactly the kind of customer a bank wants.

If we talk a bit about what banking and debt really are, you’ll realize that, far from being worse off than everybody else, you’re actually very much like most people. You will realize that this is all one big game, and you simply need to learn how to play it. It may take some effort and creativity on your part, but it?s so worth it. We have to change the way we think about banking. Check it out…

1. Banks Like to Double Dip

Banks don?t create their rules to benefit us, they create their rules to benefit them.

When you deposit your paycheck in a basic checking account, the bank gets to use your money however it wants to, and you get paid nothing for providing this service to the bank. Conversely, if you want to use some of the bank?s money, the bank charges you interest. A bank makes money from the difference in what it earns in interest by providing loans, and what it pays in interest to depositors. With the minuscule rates banks pay in interest on savings deposits, if you are paying interest on a credit card, you are getting shafted. And if you are paying monthly banking fees, well, you can see where this is going.

The bank is making money off of the money you ?loan? it and off of the money it ?loans?? you. Think about it that for a minute.

2. Your Deposits are a Loan to the Bank

?But wait,? you say. ?I don?t have any savings in the bank, I just use it to pay my bills.? Doesn?t matter. When we deposit our paychecks in a bank, that money sits in our bank for around 2-3 weeks or so until our bills start coming out of it. What is happening to your money while it?s sitting there waiting for your bills? The bank loans your money out to someone else and collects interest on your money. So, even if you only deposit your paycheck until your bills clear, the bank gets to use your money for around 50-75% of your life for free. But if you want to borrow the bank?s money, even for a short while, you have to pay the bank interest. The banks are double-dipping.

3. Banks Even Lend out Money they Don’t Have

And if that pisses you off, as it should. Did you know that banks can loan money they don?t have? Banks only have to keep in reserve 10% of your deposits, and they can loan the rest out without your permission. What this means is that for every $1,000 you deposit in the bank, the bank can loan out $900 of your money and make money off of your money. This is called Fractional Reserve Lending and it?s completely legal and normal in our country. So you could say that, in effect, we do not have money system at all. What we have is a complicated system of IOUs. ?

Banks can create money by extending credit and loans to customers from money that it doesn?t technically own.

So, when you think about your debts, try not to look at yourself as some sort of failure. You aren?t. You are simply caught up in a game designed by the banks for the benefit of the banks. And it?s not your fault because we weren?t taught this. As depositors and borrowers, we are in a losing game until we learn the rules, learn how to play to our advantage, and flip the script on the banks.

How can we flip the script on the banks?

First, understand that you are no more in debt than the US government, the banks themselves or anyone else. Our entire economy is leveraged. It?s how the game works. You are just in a more vulnerable position because credit card consumer debt is usually for goods and services which are ?consumed.? For example, compare credit card debt to a business loan used to start a business, or a mortgage to buy property. These types of debt, though still debt and still incurring interest, are doing something for you. This is why credit card debt is the worst debt to have. It does nothing for you but does wonders for the banks. They love it. This should make you angry enough to want to do something about it.

Forgive yourself and start small

If we want to get ahead in this game, we have to get interested in it. We have to get involved. The problem is, ?money? is emotional. It?s hard to deal with. But you have to get out of your own way and stop taking it personally. So, stop with the debt-shame. It?s pointless, and it?s the primary reason that people remain stuck. If you get anything from this post, understand that changing your mindset and even taking one small action can begin to destroy your feelings of powerlessness and shame, and set you on a path to change your thinking and behavior so that you can change your relationship with money and the banking system.

If you don?t like the way you feel when you think about your credit card debt, you can change it!

While there is no quick fix for the credit card debt itself, you will be surprised at how taking action, no matter how small, can begin to empower you and temper feelings of shame and angst. Once you start, you will build momentum over time. The most important thing is to start.

Where do I start?

A guide to eliminating your credit card debt for good.

A guide to eliminating your credit card debt for good.

Ignore your feelings of overwhelm and let’s walk through some simple steps. First, you are going to want to grab your most recent credit card statements so that you can see all of your balances and the interest you are being charged for each account. Armed with this knowledge, you can get a picture of the options available to you.

Here is a resource to help get you started:
Download: Well Wallet – DIY Cedit Card Debt



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Should You Refinance Your Credit Card Debt?

Personal Loans vs Balance Transfer Cards

Ready to get serious about paying down your consumer debt? Refinancing options may help you get organized and save you money in interest. There are a couple of different tools you can use to refinance your credit card debt.?A personal loan with a lower interest rate than your credit cards?can help you save money. You can use it to pay off all or part of your balances and consolidate multiple payments into a single payment which you can then ?set and forget.?

Another helpful tool you can use to save money on credit card interest is a low/zero interest balance transfer card. A balance transfer is when you move all or some of your credit card balance from one card to another. This can save you money if you are able to make a significant dent in your balance during the low interest period. The best kind of balance transfer card is the 0% interest transfer card with no transfer fee.

Refinance Your Credit Card Debt With a Personal Loan

If you have a decent FICO credit score, you may be able to take out a personal loan, pay off your credit card balances, and then make one payment a month to pay off your personal loan in installments rather than making several payments to your credit card companies. Personal loans are usually offered with a 1-5 year monthly payment plan.

Related content: ?How to Get The Best Personal Loan


  • May be able to refinance at a lower interest rate and save money over time.
  • Can increase your credit utilization score which is 30% of your FICO credit score.
  • May increase your credit mix score which is 10% of your FICO credit score.
  • May make it easier to stay on task with a single payment per month instead of several.


  • Freeing up credit cards with a personal loan can get you into serious trouble if you are not diligent about leaving the cards alone. Only take this route if you are completely committed to using the loan as a tool to get out of consumer debt.
  • Your monthly installment payment on your personal loan may be higher than the minimum payment amount on your current credit cards. Make sure that you’ll be able to cover it each month. (Keep in mind, however, that in order to pay off your consumer debt you will have to throw more at that debt than minimum payments anyway.)

Related content:? Five Ways To Free Up Cash Without A Side Gig

Key points

A personal loan will only save you money if you are able to get a lower interest rate than you already have on your credit cards. For example, if the APR on your credit card is 17% and you are offered a personal loan at 19%, it does not make sense to refinance your card. You will end up paying in more in interest.

The lower your FICO credit score is, the higher the interest rate you will be charged for a personal loan. Before you start shopping for a personal loan, make sure that your FICO credit score is high enough to qualify for an interest rate that will help you.

Related content: ?Know Your FICO: A Guide to Understanding Your Credit Score

Refinance Your Credit Card Debt With a Balance Transfer Card

Credit card companies use balance transfer cards with zero or low interest rates as a marketing incentive to try and get new customers. But watch out. Credit card companies are hoping you don’t pay off your debt during that zero/low interest introductory time period. Why? They want you to pay that high interest rate when the introductory time period runs out. The introductory rate can run from 6 to 21 months depending on the card. If you use these, make sure you are really aggressive with your payments to take advantage of the zero/low interest rate window.


  • Can save a lot on interest if you pay them down quickly.
  • Can increase your credit utilization score which is 30% of your FICO credit score.


  • If you cannot pay down the card before the higher interest rate kicks in, you will be on the hook for that higher interest rate.
  • As with personal loans, freeing up credit cards with more credit cards can get you into serious trouble if you are not diligent about leaving the cards alone. Only take this route if you are completely committed to using the card as a tool to get out of consumer debt.
  • Some balance transfer cards charge a 3-5% fee to transfer the balance. For example, if you transfer $5,000 to a card that charges a 3% fee, an additional ?$150 would be added to your balance.

Key points

  • A balance transfer card will only save you money if you can take advantage of the low interest period.
  • Applying for multiple cards in a short period of time while card shopping can temporarily ding your credit, as the card companies do a hard credit inquiry upon your application.
  • A 0% interest card with no transfer fee can be a great tool, but keep in mind that you may not be able to refinance all of your cards.
  • Be sure to create a repayment plan that targets your highest interest card first.

Related content:? Credit Card Payoff Strategies:? What the Card Companies Don’t Want You to Know

Which Option Should You Choose?

Before deciding whether you should refinance your credit card debt with either a loan or a card, consider your personal circumstances. You will want to look at your FICO score, how many card balances you have, and your total amount of debt. Your FICO score may not be high enough to get a personal loan with a lower interest rate than you are paying on your cards. Or you may not qualify for the better balance transfer cards. You may not be able to transfer all of your debt to balance transfer cards, or you may not be able to get a personal loan high enough to refinance all of your cards.

The Bottom Line

It’s a good idea to sit down with your statements to get the big picture of your situation before you consider refinancing. Note the interest you are currently paying on each card, the balance of each card, and the total balance of your debt. Then come up with a repayment plan that has a long term goal of being debt free forever and commit to stick to that plan! The biggest and most common mistake you can make when you refinance your credit card debt is to use a personal loan or balance transfer card for a bit a relief, and then rack up debt on your cards again. It happens more often than you think and can get you in serious trouble. Get ahead of the? curve and take control of your consumer debt.

Related content:? Know the Wolf – Credit Counseling vs Debt Settlement


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