If you had a bucket with a hole in it — maybe one with water leaking out of it — would you try to fix the leak by cutting out the hole?
Of course not. That would only make things worse.
But that’s exactly what many people who are in debt try to do. They try to cut out debt by borrowing their way out of debt.
I know, because I used to be one of them.
All that interest!
It seems like a good idea at the time. You look at your credit card bill, and see that the vast majority of your monthly payment is going to interest, and you get frustrated. You feel like you’ll never get ahead. “If only they didn’t charge so much interest,” you think.
From there it’s only a small step to thinking about paying LESS interest. What if I could get this money switched over to a no interest card? I could pay it off so much faster…
So you apply for a balance transfer, and bam, now you have yet another credit card that you owe money to. But this time it’s one that will hit you with an even higher interest rate if you don’t follow the instructions exactly right.
Getting in deeper
After that it’s only a matter of time before “something comes up” and you “need” to use the original credit card. (Because you can’t use the zero-interest card for new charges without getting switched to a hefty interest rate on the new charges.)
Pretty soon you have two credit cards that are near their limits. The cycle just continues, and you get more and more frustrated.
Next you think, “I could pay off my debt so much faster if only I could get rid of these credit cards altogether.” So you look into consolidation loans — because you’re trained to look at debt as a solution — and the cycle continues.
The real problem
We never stop to think that the problem isn’t the evil credit card company, the fee-crazy bank, the auto dealer who wore us down, or the mortgage broker that didn’t explain things clearly.
The problem is us.
And the real solution
You have to change your habits. The only way to fix the hole in the bucket is to PLUG IT.
Even if your credit card charges you 33% interest, if you’ve stopped USING it, eventually you WILL get it paid off.
So think about things differently.
Ask yourself, “If the only thing in my situation I could change was MYSELF, what would I do differently?” Listen to the answers to that question, and you’ll find your way out of debt. For good.