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A Geek’s Guide to Credit Card Debt

16th February 2022 Print

Whether it’s $2,000 or $25,000, credit card debt feels like a weight around your neck. It’s something that you can’t seem to shake, no matter how hard you try. But it’s possible that you’ve been trying the wrong things.

How Credit Card Debt Works

If you aren’t careful, credit card debt can sneak up on you pretty fast. It’s a silent warlord that stays out of sight until it’s too late. And at that point, all hell breaks loose (and you’re on the receiving end of the punishment). 

Very few people intentionally decide that they’re going to rack up a bunch of credit card debt. It’s usually a slow, compounding process that eventually spirals out of control and leaves you dazed, confused, and helpless. 

We’ve all been there before. You’re standing in the middle of GameStop and there are three new releases just out. You know you should only buy one, but the plastic in your wallet is begging to be used – so you buy Zelda Breath of the Wild 2, Hogwarts Legacy, and Halo Infinite without blinking. Suddenly, you’ve spent close to $200, when you were only planning on spending $60 or $70. 

Okay, it’s just one mistake. No harm, no foul.

But the very next weekend a friend approaches you and invites you on a trip to Comic-Con. You know you don’t have the cash to go, but you buy tickets, lodging, and airfare anyway. Not only does this cost you over $1,000, but you also have to miss two days of work (which means no income). 

Before you know it, your credit card statement is getting bigger and bigger. Suddenly, it’s no longer manageable. You’re officially drowning in debt. But just how severe are the consequences?

Here’s a quick rundown of what happens when you’re late with payments:

- 30 Days Late. Your credit score gets dinged, the credit card company nails you with some late fees, and you’ll be contacted with several reminders to make a payment.

- 60 Days Late. The phone calls pick up, your credit score takes an even bigger hit, and the late fees continue to mount.

- 90 Days Late. The phone calls come on a daily basis and the bank might even decide to sell your debt to a collection agency. Your credit score begins to tank.

- 90+ Days Late. The credit card company will most likely freeze your account (though the interest still accumulates). Collection agencies get aggressive and threaten to sue if you don’t pay.

Before you know it, what started as some debt on new video games or a trip to Comic-Con becomes an expensive debt with mounting interest charges and collectors calling your phone. To say that it’s stressful would be an understatement. It’s enough to induce massive amounts of anxiety and cripple your mental health. Thankfully, there are ways out.

Tips for Escaping Credit Card Debt

Not sure where to begin with your ballooning credit card debt? Here are several suggestions for escaping (and moving on with your life).

1. Get on a Budget

You can’t do anything until you get on a budget. As boring as it may sound, this is the first step. So download one of these budgeting apps – or open up a good old-fashioned Excel spreadsheet – and start planning. If you’ve never created a budget before, here are two good rules of thumb: 

- Make it a zero balance budget, which means every dollar is documented and accounted for.

- Start with your essential expenses. Once food, shelter, and basic needs are taken care of, everything else should go toward aggressively tackling your debt.

Contrary to popular belief, budgets aren’t constricting. If you think about it, they’re actually quite freeing. They show you exactly how much you can spend (and where), which squashes that nagging feeling of not knowing if you can actually afford something.

If video games are an important part of your identity, you can actually make room for them in your monthly budget. For example, you might budget for one new purchase per month, as well as one pre-owned purchase. And because it’s documented in your budget, you never have to worry about whether or not you’re spending money you don’t have.

2. Create a Repayment Plan

Once you’re on a budget and have set aside as much money as possible to pay down credit card debt each month, it’s time to develop a strategy for tackling the debt. And while there are several different strategies, we recommend starting by organizing and simplifying. 

“In some cases, if you have several credit cards on which you carry debt, you may be able to consolidate your debt and pay a single monthly fee,” attorney Devin Sawdayi explains. “Additionally, you can seek relief from credit card debt through a Chapter 7 or Chapter 13 bankruptcy.”

Start with consolidating to a single monthly payment with a lower interest rate. In most cases, this is enough to do the trick. (It might take six to 18 months, but you should eventually pay it off without accruing absurd amounts of interest.) If the debt still seems insurmountable, then speaking with a bankruptcy attorney about your options could be a wise move.

3. Shred the Plastic

The worst thing you can do is increase your balance when you’re trying to pay down debt. We recommend cutting up your credit cards to remove any and all temptation. Use cash for everything. 

Where Do You Go From Here?

If you have thousands of dollars in credit card debt and are to the point that creditors and collection agencies are ruining your life, it’s probably time to speak with a professional. Whether it’s a debt counselor, bankruptcy attorney, or personal finance coach – make a few phone calls and get some help. Relief is on the other side.