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Ask Susan Responses
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Budgeting: Spending Addiction |
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More Ask Susan |
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Before I got married I lived on very little and enjoyed being debt free. Just before I got married I bought a computer with the money I received from student loans. Since then, I have spiraled into heavy debt. Now I owe $26,000 in debt and am scared to death to graduate. In addition, I have spent over $15,000 of my wife’s retirement fund. I do not consciously say to myself, "I think I will commit financial suicide" or "Gee, today I think I’ll spend $300 on things I think I need." It just happens. I am seeking counseling because I want to stop. It is like a drug. Please help me. - Norman |
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Dear Norman,
Overspending is easy to do. It is one addiction seems almost acceptable in our society. You have made tremendous progress in your “recovery” by admitting you need help. You might try to seek help from Debtors Anonymous (DA). DA is a non-profit organization that offers help for people with a spending addiction. For the location of DA offices, please call their national office, in Needham, MA at 781-453-2743. Their web site is http://www.debtorsanonymous.org.
To get help with your student loans, go to the university’s financial aid office. Ask for information on all student loan consolidation programs now available. They should have brochures outlining qualifications. You can also call 800-557-7394 for a complete listing of loans eligible for consolidation and repayment options. You can also check out your consolidation options on the governments website at: www.ed.gov/DirectLoan/consolid.html.
Best Wishes,
The Advice Team
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I am looking for a support group for my daughter and her credit card abuse. She has decided to make a change and will need help. Do you know of any such group? -Mindy
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Mindy,
Overspending can be an addiction may require psychiatric help. To learn more about compulsive spending, visit www.debtorsanonymous.org.
On the other hand, if your daughter’s credit card abuse comes from a lack of knowledge or planning, I recommend she visit with a credit counselor to discuss her options. They may be able to help her with a repayment plan and can steer her towards some educational materials to invoke a lasting change.
Best of luck to you and your daughter,
The Advice Team |
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I finished a debt program recently, and did very well while on the program. After completing the program I have gone into the same routine. I have a real problem with credit, I am impulsive or I justify how I will pay it back. I am not in large financial difficulty, but I don't want to continue on this path do you have any suggestions? -Nicole |
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Nicole,
It’s time to prioritize. Take some time to discover what is important to you and put it in writing. Remember your goals when you’re tempted to spend. For example, if saving for retirement is important to you, know that every time you spend a dollar, you are farther away from that goal. Spending with your head and not your heart is the key to your success. Don’t underestimate the wonderful feeling that comes from being financially free.
The Advice Team
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I have $90,000 worth of credit card debt. Income is $75,000. We have good credit. It is getting very hard to keep up. Do I borrow $75,000 for 15 years with 12.95 percent interest which is a tax write off which would come to about $888 per month they also include closing fees for approximately $4,000. My mortgage is $2,300 not including other expenses. Totally desperate I need to know as soon as possible. Please advise if other way. -Anthony |
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Anthony,
Your overall solution is to get a better grip on the way you look, act and feel about money and credit cards. With $90,000 in credit card debt, you may be 'addicted' to credit cards. The first thing you need to do is break this addiction to credit cards.
Before you do anything further try this experiment. Put your credit cards in a drawer and not use them for the next 30 days. What you are trying to do is break this addiction to credit cards. Within 30 days you can see that life goes on without the need for credit cards. Hopefully you can then see the benefits of not relying on credit cards all the time and get on to a program that promotes sound money management and the wise use of credit.
You then need to contact MMI to speak to a professional counselor. During your counseling session, your counselor will review your overall financial situation, discuss possible solutions and make recommendations for you to consider.
After you have talked to a counselor, you can explore all your options and determine your best course of action. If you feel a $75,000 loan for 15 years at 12.95 percent interest is best for you, then pursue this plan.
Good luck,
Susan
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I have a daughter with credit addition. She is currently going through counseling. She wants to tells credit card agencies to stop approving for
lines of credit. Is there a letter or form that she could send out to credit agencies? -Matt
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Dear Matt,
Since there are literally thousands of credit grantors, writing them individually may not be an effective way to stop the solicitations.
There is another way she can stop at least some of solicitations. To remove her name from direct mail or telemarketing lists of members of the Direct Marketing Association, she can send a written request with her name, address, and Social security number to the address below. Her name and address will remain in their consumer exclusion files for two years.
Mail Preference Service Assoc.
c/o Direct Marketing Association
P.O. Box 9008
Farmingdale, NY 11735-9008
Telephone Preference Assoc.
c/o Direct Marketing Association
P.O. Box 9014
Farmingdale, NY 11735-9014
National consumer credit reporting agencies (credit bureaus) may also sell or share her name and certain other information to various outside companies for marketing purposes. If she wishes to direct these agencies not to sell or share this information about her for these marketing purposes, she can call their toll-free telephone number at 888-567-8688 to communicate her request.
Best of luck to your daughter,
The Advice Team
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I was recently in debt and I just freed myself from it. I am curious what advice you might have for college students who are bombarded with credit offers as soon as they walk into school. Knowing so much about the pain debt can cause people, do you have any advice on avoiding debt? Thank you. -Kristin |
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Dear Kristin,
Too often students learn from the school of hard knocks. College students are the largest identifiable segment of first-time customers for credit card issuers.
When used properly, credit can be a tremendous asset. Students should take advantage of these opportunities to establish a credit history and to practice strong money management techniques. However, when handled improperly, the resulting debt can become a terrible liability for a student.
For example, if a student racks up a $1,000 credit card bill his freshman year, and pays the low minimum payment each month, he will finish his bachelor’s degree, complete his master’s program, finally begin earning a living and still have three and one-half years to go to pay off that spending spree! In addition, if a student ruins their credit in college, it can ruin their chances of obtaining future credit for the next seven years.
The key to success is knowledge. Here are some tips for student spenders:
· Before seeking any credit, prepare a spending plan.
· Invest time when shopping for credit and know your options. Look for cards with low interest rates, little or no annual fee, and a reasonable “grace period” to allow “free time” before finance charges begin.
· Since different types of credit have different interest rates and terms, use the same amount of time and research shopping for credit as you would a new car or other major purchase.
Consider the risks involved. What would happen if you defaulted on a loan?
Students everywhere thank you for your question,
The Advice Team
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