Editorial Policy

High Earners Not Immune to Credit Card Debt

Erica Sandberg

October 9, 2012

QDear Erica,

Nobody knows what I am going through right now. Everyone thinks I have my life together. I’m a single mother with a great job and a big home in a safe neighborhood. Yes, Erica, I wear nice clothes and I love jewelry. I vacation, too, and just got back from Jamaica. My life sounds perfect, right? Wrong. I’m up to my ears in debt. I owe so much money on my credit cards that I don’t think I’ll ever be able to pay it back.

I owe almost $60,000, not including my car and house. You might ask how I did that. I don’t have a good answer except that I have ignored reality, I guess. My base salary is 100,000 not including commission, so you would think I could afford the payments. Yet I am falling behind on everything and don’t know what to do now. The fact that everyone thinks I’m some great success is making all this worse. Even my family doesn’t know that I’m a fake. Please tell me what to do, as I have no where left to turn. — Kristen

ADear Kristen,

I’m so glad you wrote because I can assure you that you absolutely do have a place to turn. The first avenue for you to drive down is Debtors Anonymous (DA). From your description, it sounds like you may have an addiction to deal with. DA is a 12-step program that helps people with their compulsive spending and charging. The atmosphere is extremely supportive, and the meetings should help you figure out why you feel the need to shop to the point of disaster.Ask Erica

To know if DA would be beneficial, check out the 15 questions on the organization’s website. If you answer yes to at least eight of them, a meeting ought to be in your future. They are:

  1. Are your debts making your home life unhappy?
  2. Does the pressure of your debts distract you from your daily work?
  3. Are your debts affecting your reputation?
  4. Do your debts cause you to think less of yourself?
  5. Have you ever given false information in order to obtain credit?
  6. Have you ever made unrealistic promises to your creditors?
  7. Does the pressure of your debts make you careless of the welfare of your family?
  8. Do you ever fear that your employer, family or friends will learn the extent of your total indebtedness?
  9. When faced with a difficult financial situation, does the prospect of borrowing give you an inordinate feeling of relief?
  10. Does the pressure of your debts cause you to have difficulty  sleeping?
  11. Has the pressure of your debts ever caused you to consider getting drunk?
  12. Have you ever borrowed money without giving adequate consideration to the rate of interest you are required to pay?
  13. Do you usually expect a negative response when you are subject to a credit investigation?
  14. Have you ever developed a strict regimen for paying off your debts, only to break it under pressure?
  15.  Do you justify your debts by telling yourself that you are superior to the “other” people, and when you get your “break” you’ll be out of debt overnight?

I have a feeling that you’ll be nodding to the majority of these, and if so, contact DA to locate a meeting near you. If there’s no meeting nearby, you can also participate via telephone — so you have no excuses.

Another place to turn for help is a credit counseling organization. Don’t let the word “counseling” fool you — these organizations aren’t there to listen to all your psychological issues, but rather to help you manage your money and get out of debt.

The (very) good news is that you have an income. You’re making money! Now you have to use it in the right way. With a credit counseling agency’s help, you can develop a budget that you can live with and pay your creditors, too. Refute the idea that you can’t pay them back. I bet you can. These agencies also have debt management plans that allow you to pay your unsecured debts through them for between three and five years. The deal: You stop charging and start paying. If you were to send regular payments of about $2,700, you’d be debt-tree in 60 months — and that’s assuming a 20 percent annual percentage rate, which a credit counseling agency may be able to reduce.

Now, you’ll most likely have to change your lifestyle to get back on track. Possibly even dramatically. However, it’s better than what’s going on right now. The stress and depression you’re feeling is clear. More, if you don’t make radical changes they will be made for you. The bank may repossess your car and may send unpaid accounts to collections or even sue you.

Finally, Kristen, open up to trusted friends and loved ones. You’ve got a mighty big secret there, and if they love you, they’ll understand. You need allies, people who will help you stay on the frugal side of the road.

Got a question for Erica? Send her an email.