Kicking debt's ass, one minimum payment at a time

Nearly everyone I know in their mid to late twenties has an enormous amount of debt - credit card, student loan, medical or all the above. When you're in college, you kind of assume (mistakenly) that once you graduate, you'll magically find a full-time job doing something you like and be able to afford to pay off all the debt you've accrued getting an education. If you are in your early twenties and still think this way...you may hereby consider your bubble burst.

As you know, the Saturn return is all about changing behaviors and habits that aren't working for you. As much as I'd like to believe that money and emotions are mutually exclusive, they're not. Just like food or sex, how you handle money does reflect on your emotions and your psychology. If you're constantly spending money on crap you don't need,  it's probably not just recklessness. There's probably some root problem, and making more money or sheer willpower will not fix it. You have to change how you see and value money in order to change your behavior.

(By the way, can you tell I've been reading a lot of Suze Orman? I usually think Oprah's resident "experts" are pretty full of shit, but I like Suze's approach to money in relation to the rest of one's life. And I don't really buy everything she says, just the basic philosophy of respecting yourself by taking control of your money. So bear with me...)

One bad habit I have is using credit cards. I got my first credit card at age 22, right as I was thinking about leaving my boyfriend. I didn't have any place to go or any way to pay for things on my own (a stupid situation to get yourself into at any age, I might add) so I stayed unhappily put. I was still in school and working three part-time jobs, and didn't have any savings. Using my new credit card allowed me to find and furnish my own apartment and move out of my boyfriend's house without having to ask anyone (unless you count Visa) for help. I thought using the credit card to move out on my own proved that I was in control, when in fact it was a desperate act done because I was out of control. I had had let my life and my finances get out of hand. Instead of asking my parents for help, staying with a friend or saving like crazy, I decided it would be easier to let the ol' credit card take care of my problems.

Well, it seemed to work that first time and the rest is history. I'm pretty responsible and I'm actually quite cheap about most things, so it took a few years and a few too many interest rate increases (stupid recession) for my credit balances to skyrocket to a point where I was having a little bit of trouble making even the minimum payments - at least on time. Even working two or three jobs at a time and making decent money, it was hard.

A few months ago (actually right when my SR started now that I think about it!) I bit the bullet and added up all my credit card debt. I knew I was - for lack of a better word - fucked. Pre-Saturn return, I probably would have solved this problem by opening another credit card, taking on an extra job I didn't have time for, or transferring balances. But I decided it was time to be a grown-up in the weirdest way possible. I was going to - for the first time in my life - ask someone for help. Actually, I was going to ask a complete stranger.

I knew I had to get to the root of the problem, which was my attitude toward money. I like to pretend it doesn't matter. I don't pay attention to it until there's a problem. The calculations in my head of what I could afford and what I make obviously weren't accurate and weren't adding up to me being able to afford to live. Being an avid Suze reader, I went to a counseling center that offers debt counseling among many other programs. I researched and knew this was a not-for-profit organization. I knew to stay away from skeezy debt consolidation programs. After meeting with a very nice debt counselor who made me take an honest look at what I was spending and making every month (I was making exactly $8 more per paycheck than I absolutely had to spend on necessities and it would take me about 30 years to repay my debt at the rate I was paying it), I decided to go on a debt management plan.

I'll let you read up on DMPs, but basically I will be paying the not-for-profit (I used Family Means in Minneapolis) an amount every month that is about 65 percent of what I was paying for just the minimum credit card payments each month. That amount includes a payment for each card that Family Means has negotiated with the creditors (at a reduced interest rate I couldn't get on my own) and a nominal fee for the organization. Oh, and it will take me four years to repay my debt, not 30.

There are a few drawbacks: I can't use my credit cards while on the DMP (actually not such a bad idea!) so I have to be extra careful with my money during this time. Some creditors won't work with DMPs (ahem, Dell) so I still have to pay those separately. Being on a DMP will show up on my credit rating while I'm on the program, however once everything's paid off, it will disappear and just look like I paid off those accounts. And being on a DMP looks better than paying late every month.

It will be a financial adventure...but I am looking forward to being forced to manage my money better, paying off debt and actually saving some money!