Updated on 06.03.09

Prolonging the Inevitable

Trent Hamm

Mitchell writes in:

Currently, we have around $100,000 in credit card debt and we’re having a very hard time making the interest payments. How can we consolidate that debt and get a lower rate? Should we go to our credit union?

Mitchell is falling into the same trap that I see a lot of people who email me falling into. To put it simply, they’re just prolonging the inevitable – putting off the necessary changes in their life because they don’t want to face it. They want to keep living their life as it is now.

I know all about this. For years, I did it myself. From 2003 to early 2006, I racked up tons of debt, and near the end of that period, I was concerned not with actually fixing the problem, but with thoughts about how I could move the pieces around to keep the game going. My thoughts weren’t directed towards the choices I was making to create that debt – I was instead thinking about how I could use “tricks” to not have to face those choices.

But no matter what kind of clever juggling I did – even once going so far as to do cash withdrawals from one card to pay the bill of another card – eventually, I found myself backed into a corner. I found myself with a pile of bills, no way to pay them, and a little child completely dependent on me to make good decisions.

When I finally faced facts and realized I had to make a change, I found out something painful. All of that shuffling of money to prolong my current standard of living had made my situation far, far worse than it could have been if I had just faced facts earlier on. The actions I had to take for recovery were more drastic and the lifestyle changes I made were much more stark. Even now, after years of working myself out of the situation, I can easily see how, if I hadn’t been so focused on just maintaining my lifestyle in 2005 and 2006, I would be in much better shape today.

The choices you make today will affect your future. You can either make the choice to keep spending with reckless abandon, or you can choose to take a real look at what you’re doing and see if you can make some changes.

Where can you start, especially if all you really want to do is just keep up your lifestyle? I suggest five things.

First, simply think about what makes you truly happy in your life. What do you do that actually brings you sustained joy? Most people immediately begin thinking about whatever action brought them a burst of excitement and joy recently – like a shopping experience – but that’s not what I’m talking about. Those bursts of joy fade quickly and don’t bring lasting happiness. Instead, look for the wells in your life that constantly provide joy, even days later when you think back on them. Family? A few very close friends? Good books? Going to church? Don’t worry about what others think – focus entirely on what makes you feel good. Whatever you find, that’s what you should be focusing your energies on – the other stuff can just fall by the wayside.

Second, think about the things that are broken in your life. Most of the time, I’ve found that when people overspend (myself included), they’re doing it to overcome some bad feelings about something. For me, it was a lack of self-esteem, which manifested itself in a desire to impress those around me. Other people might just spend money to cover up feelings from a hurt relationship. If you find those broken pieces, don’t flinch – instead, address them head on. End the painful relationship. Make an effort to patch up a relationship. Find new friends who lift you up instead of constantly dragging you down.

Third, set a one day goal. Can you get through today without spending frivolously? Instead of diving into opportunities to spend, look for inexpensive or free ways to enjoy the things in your life. Don’t worry about big things – just focus on the small. Then, when one day is a success, look to the next one. Then the next. Take it just one day at a time. And pair it with gravitating towards the positive things in your life and moving away from the negative things.

Fourth, discover things already around you. Look around your town for free things to do. Try new things. Glance at your community’s calendar (you can find it online easily enough). Visit the parks in your area, the museums, the community festivals. Dig into all of the opportunities out there instead of just doing the same old thing all the time. You can’t break bad habits and build good ones without dipping your toes into the pool.

Finally, focus on building relationships that aren’t built around spending. If all of your friends focus on shopping and going out all the time and criticize those who aren’t wearing expensive clothes, you might want to back slowly away from that circle. Instead, look for the people in your life who don’t focus on such things. The best friends are the ones who are perfectly happy to kick back on the couch and watch a movie together or simply have a great conversation over a bowl of ice cream. They add value to your life and don’t subtract from your bank account.

Yes, consolidating your debt at a lower interest rate is a good tactic for financial recovery. But if it’s not coupled with some other behavior changes, it’s just prolonging the inevitable – at some point, you’ll have to face facts or face destroyed credit and possible bankruptcy. Stop prolonging the inevitable – and instead start thinking about what really brings you happiness.

Loading Disqus Comments ...
Loading Facebook Comments ...
  1. ChristianPF says:

    Trent you are right, I see the same thing quite a bit too. Getting to the root of the problem is the key, but yet it seems that it is the last thing that many people want to do.

  2. Joey says:

    Don’t start bailing out water until you’ve plugged the leak in the hull.

  3. Bill says:

    Um – what about talking to a qualified debt counsellor? They can help you with your exact situation and figure how you can lower your interest rates or perhaps even get some debt reduction.

  4. almost there says:

    If one has enough home equity take a loan out and pay off the credit cards. My credit union is hounding me to do this for a 4.99% rate for up to 20 years. I recently was turned down for a visa card for the first time. Reason, I had too much credit card debt based on my income due to taking advantage of teaser 0% rates that I will pay when due. Like Bill said above, go to a qualified debt counselor, preferably a free one from your city or county. Be wary of those firms that promise to settle your debts for a fee.

  5. Liko says:

    It’s funny how people look at consolidating as the answer to their debt problems. Even if the interest is zero it would still be hard to make payments on $100k!!! Somebody send them the TMM0 book by Dave Ramsey!

  6. Johanna says:

    @almost there: “If one has enough home equity take a loan out and pay off the credit cards.”

    Do *not* do this unless you are absolutely sure you have turned a financial corner and are capable of living within your means from here on out. I have read too many accounts of people who borrow against their homes to pay off their credit cards, and then they immediately go out and run up the credit cards again.

  7. John says:

    I think you’re way off the mark here. What the OP has asked for is advice on consolidating their debt at a lower rate – something that makes a TON of sense when carrying that kind of debt load. They don’t give any indication (although maybe some was included in the rest of their message, that you chose not to publish) whether they are looking to pay off that debt or continue their spending habits, but the quote you’ve chosen to publish asks a direct, valuable question, and you proceed to spend the next several hundred words posting pseudophilosophical financial advice without answering the core question. Great – go to the library, make new friends, blah blah blah – but what bank do they go to? How do they approach a financial advisor? I don’t think this answer was very helpful.

  8. kev says:

    It’s all well and good to eliminate debt, but it’s also important to repair your credit rating.

    Take the credit card (Not a store card) that you have had for the longest, that is still open, and make nice with them. Call them up, ask nicely for a lower interest rate, and no matter what you do with any other card, make sure you always pay them the minimum PLUS the monthly interest. And round that payment up to the nearest $5.

    That card, the oldest card you have, is going to be the underpinning for repairing your credit. Why? Because they have the longest record of your payments. You start sucking up to them now, in three-five years, when the only credit card you have is that card, you’ll be happy for their long memory when you check your credit score and realize that you’re off the bad-boy list.

    MY oldest card is so happy with me these days, they just cranked up my credit limit. I need to call them about that. Don’t let credit card companies do that to you.

    Now, since the last time I posted on this blog, I’ve heard that getting your actual numeric credit score in the US is more expensive and more complicated than it is here, but you can still get it free once a year, right? I used my numeric credit score for my little financial victories. Every time I went up 5 points, I counted that as a victory. The knack is learning to read your credit report so you can strategize what you need to do to score those points.

    In the process, debt will start to disappear. And scoring points makes it like a game. Except these points are real, and “they” are judging you by them!

  9. Kristin says:

    @almost there Why would you pay off unsecured debt (CC) with a secured loan(home equity)??? If you don’t pay your CC bill your credit will be shot. If you don’t pay your mortgage you don’t have anyplace to live.

  10. Kevin M says:

    I think Kristin is right. I’d be very leery to advise anyone with $100k in credit card debt to consolidate that with their home as collateral. Just a ton of risk involved there.

    Probably the best thing to do is call each card and see if they will negotiate a lower rate and then suck it up and start paying it off.

  11. Dale says:

    Home equity loans to consolidate consumer debt is just plain irresponsible. You would be swapping unsecured debt for secured debt.

    Miss a card payment and they get snotty and maybe sue you in two years. Miss your HEL payment and they’ll take your house.

    Get behind on your card payments and at some point they’ll settle for a lesser amount with you. Miss your HEL they take your house.

    Get behind on your card payments and you can restart them pretty much anytime you want. Get behind on your HEL you have to make all back payments all at once to get current or they take your house.

    Consolidating your loans means you’ll be in debt longer and you risk running up the stupid cards with more debt and substantially increase the risk that you’ll lose the house.

    Debt CONsolidation is just that… a CON.

  12. Roscoe Casita says:

    If you can’t pay down your debt, the proper thing to do is to declare bankruptcy.

  13. Joan says:

    OK, Trent, I like your post, but what is your answer to Mitchell’s question?

    We are in the same position – approx. 80K in CC debt – that came from a series of health and college-funding issues in the mid-90s.

    Here’s the thing. We’ve done TMM. We don’t use our cards. We’ve successfully gotten at least some of the rates lowered. We got rid of one car. We spend less than we earn and use only cash. We have a house we can afford (though a new roof set us back painfully.) We even pay more than the minimum on most of the cards.

    But the fact is, we don’t have great credit because of how high those balances are, and they are NOT interested in giving us good rates on these cards. One card alone carries over 40K in debt – they’re not interested in dropping that baby, let me tell you! The BEST we have gotten it to is 21 percent.

    We have considered bankruptcy, but we really don’t want to do that. We are looking to potentially settle with that largest cardholder using proceeds from a refinance on our home, but ironically, because we AREN’T late on our payments and haven’t missed any, they’re not very willing.

    So what do we do? Like Mitchell, I want to know if we should try to consolidate, and if so, if a credit union is the way to go. I am NOT interested in doing HELOC; I agree with the earlier commenter, why trade unsecured debt for secured debt??

  14. Sandy E. says:

    I agree with the advice to not take out a HELOC to avoid risking losing their home. Also, that 4.99% interest rate, I guarantee you, is not fixed and probably is capped at 18%. Check the details – I’ve been offered the same 4.99 variable rate too, but it can go to 18%. Someone with that amount of credit card debt has some serious problems, and they need to figure out what exactly is lacking in their lives that is making it so unfulfilling that is causing them to treat themselves frequently with expensive items?

  15. almost there says:

    Sandy E. and other posters that think it unwise to take a HE loan. First, I am not the sharpest knife in the drawer by far. But I have been successful in life averaging 10K per year in income over a 20 year navy career. I just answered the question of how to refinance 100K in CC debt. I for one never was in CC debt that much. I made the assumption that they were paying a minimum of 1% ($1000/mo) or more on their CCs. The only way I could see short of selling body parts or illegal work (prostitution/drug sales) was to get a HE loan. I successfully took out a HE loan to buy my second retirement. What wouldn’t go on the HE loan went to teaser CC debt. I agree that unsecured debt is easy to walk away from if one wants to be a dirtbag. I also assumed that that the people wanted to put all the payments in one and have breathing room. If they took a HE and didn’t mend their ways and continued to spend then they should loose their house. The stupid shall be punished. Furthermore, I belong the the first largest and second largest credit unions in the world. The third largest has the 4.99% fixed rate HE loan. So yes, there are deals to be had for every U.S. citizen at that credit union. Anyone can join, just have to jump through a little hoop. BK is not the proper thing as a poster stated. But we are increasingly a country of people that live large and let someone pay for their debts. BTW, my HE loan and CCs are paid off for anyone that wants to continue sniping at me about debt consolidation.

  16. almost there says:

    correction: “largest and THIRD largest…” Google it if you too want a good deal.

  17. Kirk Kinder says:

    I think Trent’s advice is profound. The key is to be honest with yourself and accept that you are headed down the wrong path. That is very hard to do and takes true courage. We never want to admit that we screwed up, but once you find the guts to do so you become liberated.

    We can discuss the best way to lower debt, but Trent is right that this person needs to realize that they need to change their state of mind. One hundred thousand in debt is serious.

  18. Steve says:

    Trent wasn’t answering the OP’s question, because in his view the OP was asking the wrong question. That’s totally reasonable.

    I was pretty sure after the first few paragraphs that this was going to be about bankruptcy. I was wrong, but on the other hand I’m not sure going to the library is going to erase 100k of debt.

  19. AC says:

    Wall street executives get actual bonuses based on profits on paper. Let’s say that they bought a stick that increased a lot. But they didn’t sell it. But they still got bonuses (actual money) based on profits on paper. Now, if the stock falls then the profits gets wiped out but the executive still has the money.

    This is not fair at all. Either he should return the money or he should get bonus only on actual and real hard cash profits (that is, they need to sell the stocks at a profit). If this was done from the beginning then we wouldn’t have seen the financial crisis like this because no one would have bought sub-prime so much (packaged in exotic investment vehicles). To get bonuses, they would have had to show real profits from sub-prime and then they wouldn’t have bought so much sub-prime.

  20. Sheila says:

    I found what Trent wrote to be pretty insightful. And as far as debt goes, the only way I can see to pay off debt is to spend less and/or earn more. One way to find out if you’re really spending as little as you think you are is to go to a non-profit financial counselor. If your spending is really as low as it can go, then what about getting a second job, selling stuff on e-bay, picking up aluminum cans and selling them, etc.?

  21. AnnJo says:

    Trent’s answer to Mitchell is absolutely right – while Mitchell’s interest rates may be awful and debt consolidation may lower them, the problem isn’t the rates, it’s the refusal to admit reality: the lifestyle needs to change. $100,000 in credit card debt is evidence of a reality-phobic person, and debt consolidation is only a brief postponement of the final reckoning. I admire Trent’s willingness to tackle the problem head-on.

  22. Charley says:

    I don’t pretend to walk in someone else’s shoes. What’s missing from the OP is the reason why they were in debt. While it could be a really, really bad case of financial irresponsibility, it could also have been medical bills, or trying to bolster a failing business. In any event, I agree, consolidation wouldn’t do a whole lot of good. As others have stated, you’d need to attack the underlying reason and then, just like eating an elephant (why anyone would want to eat an elephant, I will never fathom), pay it down one dollar at a time.

  23. Kellygirl says:

    Almost there, glad the HELOC worked for you, but it’s really and truly not a smart option based on the situation, and could be downright dangerous if their financial situation declines, and I think you are being very judgmental.

    Like it or not, if someone cannot pay their unsecured debt, it falls off your credit report after 7 years. It is downright foolish to use equity from your home to pay off the credit cards. You will be liable for this debt no matter what. Someone does this, then loses their job in this economic climate, they might find themselves and their dependents homeless. It is probably going to be challenging in this environment to convince credit card companies to lower interest rates when they are skittish about consumers’ ability to repay and raising them to ridiculous highs. You may be able to find a reputable credit card counseling service who might be able to help you with repayment plans, but be wary of those who ask for a lot of funds upfront–these are scam artists who take the money and run. In the short term, the best approach is to pay as much money as you can afford to each month on the card with the highest interest rate, and pay the minimum on the others. When you pay off the first one, throw the extra money at the card with the next highest rate. I highly recommend Suze Orman to learn more about managing finances smartly. Also, really take a hard look at where you spend each dollar, and separate the wants from the needs. You may find more funds to throw at your debt if you do this. Good luck.

  24. Sarah says:

    $100K could also be evidence of a very serious illness. Without more evidence (Trent gives nothing but the debt amount), why does everyone assume these folks are insane spendthrifts? For, say, a cancer patient who had to leave work and lost his health insurance, it would be not at all difficult to run up that much debt.

  25. Joan says:

    @Sarah – that was my point. I have almost that much in debt, but it was due to who I WAS, not who I am now. Some of it was a serious illness during a pregnancy when I was without health insurance, and some of it was just plain bad decisions on the part of myself and my husband – 15+ years ago. We have not added any NEW debt to it in many years. But just knowing the number does not tell you that the person is a spendthrift currently, or has ever been one, for that matter.

  26. Sylvia says:

    Wish our country could take this advice. If we took a hard look at reality and figured out that by lowering a bit of our obscene “standard of living” and actually living within the means of our dwindling economic and natural resources we could pay our dues and still have the important stuff that really matters, we’d be wise. But I’m not gonna bet the flat screen tvs and iphones on that happening.

  27. Wendy says:


    I took your advice a couple of months ago. My husband and I have $40K in credit card debt over 5 credit cards. I was so overwhelmed with the bills each month. We were only making minimum payments on each. I would try to pay a little more on one, but wasn’t consistent with which one. We were not living within our means. I was depressed and overwhelmed by our debt. I read one of your articles about an option to take out a home equity loan or a personal loan to pay down credit cards. We went to our bank to discuss our options. We qualified for a personal loan, but not a home equity. We took out the loan and the bank payed off and closed out all 5 charges for us. Thank God. I don’t know that we would have closed the cards and would have reverted back to the same bad habit. We were paying between 7.99%-13.99% in interest between the 5 and now we have a 9.99% fixed.
    I feel like we have a better understanding of our monthly bills, I am not so overwhelmed and we can’t turn to charge cards anymore for the little things. If we don’t have the cash, we don’t get it. We just cancelled a camping trip we planned with friends because we don’t have the cash to go. Before we would have just charged the whole weekend and said we’ll pay it back with our next paychecks, which never ever happened.
    It is so hard. It has been a huge break in our bad cycle. But harsh reality hit us in the face that we will never get ahead until we pay down the debt. We are now living within our means. It takes sacrifice and retrainig our thought process, but I am so glad we did it.

  28. Paul says:

    Hi Trent,
    I was really moved after reading this post because I have been there also.

    I want to suggest one more thing for the list: Enjoy the items you already have! I can’t tell you how many times I look around my home now and see things I haven’t used in a long time that I use and get a whole new experience using. The upside of that is no new expense.

  29. Robbie says:

    I have been following your blog for several months and really enjoy it. I think this is one of my favorite posts yet, not only because of it’s application to finances but to life in general. Instead of offering this individual a fish, you have given him advice that will make him a fisherman. Our finances being a wreck is a symptom of a greater illness, telling someone where to get a good rate and to go forward with consolidating is the equivalent of giving someone a band-aid who needs a tourniquet. Keep up the great work!

  30. Marc says:

    Good article. The point I think some are missing is that whatever you do to manage your debt, to be successful your expenses HAVE TO be lower than your income. If you don’t SPEND LESS THAN YOU EARN whatever you do is just delaying the inevitable.

    Example: Broad advice like never pay off your cards with a HEL is usually accurate but there’s some situations where it could make sense. The reason it’s so bad is because most people don’t adjust their spending behaviour (see article and point above) and so end up where they were before, plus the HEL.

    If however the debt is the result of one-time or old expenses, you’re confidently and consistently living below your means but maybe unable to shuffle things effectively (Joan-post 13) then it could be an effective solution. I’m not suggesting it’s absolutely something she should do, but it may be worth looking into.

    The expression “never say never” didn’t come out of nowhere. Generalized advice like never use an HEL (or credit cards) potentially deprives people who may benefit from these. Granted they are potentially dangerous tools (and you can’t count on a bank to tell you that), but you cannot assume you know what’s best for others and what they can/can’t handle.

  31. jana says:

    Fantastic Article Trent! It’s difficult for a lot of people hear but it needs to be said. We all have a sense of entitlement in some area of our lives. I was at Costco today and I heard a lady say “I deserve this” as she reached for a food item in the cooler case. Do any of us really deserve anything?

  32. Rachel says:

    “For me, it was a lack of self-esteem, which manifested itself in a desire to impress those around me.”

    I’m intrigued.
    So did you work to stop the connection between the self-esteeem problem and the spending, or on improving self-esteem?
    How did you go about that?
    It’s a simple little sentence, but a sure candidate for “easier said than done” – my self-esteem problem and low confidence is closing doors for me in life, and I’m finding it hard to ignore the negative subtexts in my thought patterns or to improve them.

  33. tightwadfan says:

    It’s hard to advise Mitchell without knowing more about his situation than what Trent quoted. Trent’s answer assumes that Mitchell hasn’t changed his spending habits, did Trent get that from the rest of the letter? We would need to know mitchell’s income. If he makes too little, he may want to seriously start considering bankruptcy. If not then a lower interest rate would help, and I too wonder why Trent didn’t answer the question how to get that lower rate.

    I don’t think we should judge Mitchell without more information. $100,000 in credit card debt, in addition to being from medical bills, could also be from a business that went bust. It’s not necessarily irresponsible spending.

    Almost there, I’m glad you were able to use the HELOC to get out of debt, it can work for some people. The reason most of us are against it is that it would only work if the person was totally committed to paying off their debt. The majority of people who put debt on their HELOC aren’t, and end up even worse off.

  34. jm says:

    I’m still trying to wrap my head around $100K in cc debt. $100K!! You can buy a house for that in some areas! What is the interest on that? Like $18K a year?

    Just declare bankruptcy and walk away, otherwise paying back this debt is going to become your life’s work, and that is not something I would want to have written on my tombstone.

  35. jm says:

    You gotta know when to hold ’em, when to fold ’em, when to walk away, and when to run. This situation falls into one of those times, probably the last one.

  36. Kevin says:

    Trent’s advice was spot-on, in the general sense. However, in the more specific case of Mitchell, I believe it was inadequate. Yes, of course Mitchell should do all of the things Trent advises. But even if he did, it would take years for Mitchell to work himself free of a debt of that magnitude.

    The truth is, Mitchell’s situation is exactly the reason bankruptcy laws exists. Mitchell should bite the bullet, get his ducks in a row, then file bankruptcy and be free of this albatross. There’s no reason to sacrifice the next decade of his life living like a pauper. It’s UNSECURED debt. The risk is built into the interest rate. The banks expect to lose their money in some cases, and let’s face it, Mitchell’s is a textbook candidate.

    Mitchell will never be this young and healthy again. No way would I waste 10 years passing up traveling, enjoying dinners with friends, and everything else out of some bogus sense of “obligation” to a money-hungry corporate conglomerate bank that only cares about profits.

    Bottom line: Assuming there are no cosigners on this debt, Michell should get his housing situation in order (that is, rent a place he is certain he can afford and that he’ll be comfortable staying in for 7 years), get himself a reliable vehicle that’ll last him for 7 years, build up a small cash emergency fund ($1000), taking it from the credit cards if he has to, then he should file bankruptcy.

  37. Kevin says:

    @jana (#31):

    “I heard a lady say ‘I deserve this’ as she reached for a food item in the cooler case. Do any of us really deserve anything?”

    Well that’s kind of depressing, isn’t it? I actually think we DO deserve things. If we’ve worked hard for something, is it wrong to feel entitled to a little reward or indulgence?

    I mean think about it. What’s the alternative? To go through life constantly believing we don’t deserve ANYTHING? That everything we have, we don’t really deserve? What kind of horrible, self-loathing attitude is that to carry through life?

  38. mellen says:

    not everyone who is in debt is there because they needed to pay medical bills or some other “valid” reason. I put “valid” because if you want to look, there is always a good reason for being irresponsible with money; I know, I was. Sure I started out using my CC to pay for text books and other school related expenses but then I started paying for lunch with it, and clothes, and then a night out, etc. Soon, it wasn’t just my school expenses that were causing the problems. Why does everyone mention the people who have cancer when talking about CC debt? It’s a nice way to absolve ourselves of responsibility, isn’t it? “My kids NEEDED $70 sneakers”, “I HAVE to have a new suit for work”, “I’ll pay off this trip next year with my taxes” or, in my case, “as soon as I graduate and get a good job, I’ll pay off all these charges”… Then when life happens, as it almost always does, we blame the CC companies. I include myself in that. I didn’t start to get my act together until I stopped blaming someone else and started taking responsibility for my actions. Your kids don’t NEED $70 sneakers, you CAN get by with the suit you have, you shouldn’t take a trip if you don’t have the money and (for all those college students) you might not get a great job after college that will let you pay off all that debt. Live within your means, actually, live below your means and stop expecting others to pay for your mistakes – I’m tired of paying for the mistakes of others, I make plenty of my own and I pay for them.

  39. Evita says:

    Trent’s advice is excellent but I wish there was a second part to this article reviewing financial steps that Mitchell could take. THAT would be really useful!

  40. infinityplusone says:

    Excellent response Trent!!

    Very good points in the comments, mellen.

  41. One of the best posts I have read in a long time, thank you. You hit they nail on the head. Consolidating your debt is not the end answer to your debt problems, it is your live style. If you cannot increase your income, you must lower your expenses and best way to do that is to change your lifestyle, even your friends as you pointed out.

    Great blog as well. Thank you. Will follow you from now.

Leave a Reply

Your email address will not be published. Required fields are marked *