Debt: A dream killer? Part 2

   I sat running the numbers.  Part-time tuition at Texas A&M School of Law was approximately $25,000 per year.  I would complete the degree in four years for an estimated $100,000.  The GI Bill would cover 40%, leaving me with around $60,000 in addition to books and living expenses. What did that break down to in a monthly budget? 

  Suppose I started school in August 2015, graduating in May 2019.  Since all money had to be paid by graduation, I had 58 months starting June 2014.  That broke down to around $1050 per month.  I had whittled my monthly budget to around $5,500.  That, however, was only making the minimum payments on my pesky credit cards.  I certainly didn't want to maintain my current debt for five years.
   I contacted my bank, USAA Federal Savings.  I had started using USAA during my time in the Air Force. Founded by and designed for military people, I have found them accommodating.
   I inquired about a personal loan to consolidate my credit card balances.  The three credit cards I still had were through USAA.  I explained what I needed, fully expecting to be turned down. Instead I was approved: $30,000, 7.5% interest, seven year term. For the lowest APR, I needed to purchase payment insurance (dropped my interest rate from 8.25 to 7.5%).  My biweekly payment was $243 ($526.50 monthly average).  I had been paying about $720/month in pure interest.
   I turned to my student loans. 

   The Wells Fargo Loan had ballooned with interest(post graduation) from $10,000 to $11,200.  With steady payments, I stood at 10,800 with 11% interest.  

   The Discover student loan stood at $8,486.88 with 10% interest.  I ran the debt calculator to find the necessary payment to eliminate both in 74 months.  Wells Fargo required a payment of $205, while Discover needed $155.00. Eliminating debt in seven years was longer than the five years (or less) I had originally hoped for. My monthly debt payments stood at $886.50.  That number burned me.  So close to what I needed, but it was going to pay for my foolishness. Perhaps I could get a scholarship.
   To be competitive for a law school merit scholarship, good grades and an excellent LSAT score are necessary. My grade point averages, undergraduate and graduate, stood at 3.94 and 3.48, respectively. Back in 2001, I had taken the LSAT on a whim, with little prep, scoring a 158 (77th percentile).  To qualify for at least a partial scholarship from a fourth tier law school (Texas A&M is currently ranked as fourth tier), I would need an LSAT score in the 160's.  

   I began to prepare and decided I needed a bit of extra help.  I looked at my options. Kaplan's LSAT test prep with a one-on-one tutor started at $2600.  PowerScore and Testmasters offered private LSAT telephone tutoring for around $100/hr. I wanted to know expressly who I would be working with, what their qualifications were.  Plus, I honestly couldn't afford $100/hr must less $2600.  

   I found one site, LSAT-Tutoring.com. Peg Tittle, the tutor, had once written LSAT questions. She had taught extensively and authored a book,"Critical Thinking: An Appeal To Reason", that was used in college level courses both in the United States and Canada.  Tutoring rates started at $75/hr, or $60/hr if the student committed to 10+ hours. I decided she was worth a try.
   With Peg, I made significant progress, understanding the test better, gaining speed and accuracy.  As test day neared, I took several timed practice tests, scoring an average of 165 (92nd percentile)  Aside from the general test angst, my LSAT went well.
   With score release in early July, I totaled up what I would needed per month during the school year.  Even with a scholarship it would be difficult to make bills. Expenses had to come down significantly. The largest among them was my mortgage. Should I sell my home? I hated losing the equity that I had in it. What about leasing?
   If I leased my home now, I could put back the extra money for school.  I would then have a bit of a cushion. In the event I was awarded a scholarship, I would need to maintain a certain GPA (usually 3.0+) to keep it.  During the term, if I could hold monthly expenses to $3,000, I would only have to work about 80hrs per month. This option showed promise.  So how does one lease out a home? 

Debt: A dream killer? Part 1

 After one of my patients suffered a bad medication reaction, I was brought before my hospital's nursing peer review board.  I had struggled to manage two difficult ICU patients that night. My charting had been lacking, to put it mildly.   
  The nursing peer review process is simply that, review by your nursing peers.  I was required to appear and explain my actions. After hearing my testimony, the board would vote to decide if it was a minor issue or needed to be reported to the Texas Board of Nurse Examiners (BNE). If reported to the board, an official investigation would be completed.  If negligence or malpractice was apparent, the board may revoke, suspend or restrict the my license.  
  I had done the best I could for my patients that night, my documentation didn't reflect that. I was embarrassed. I was scared- scared of my bully of a nurse manager, scared of what might happen, scared of losing my nursing license.
  After the initial shock had worn off, I took council from my friends.  Some had been nurse managers, another was a nurse and attorney.  The concensus seemed to be that as there had been no harm (patient was discharged with no deficits), nothing serious was likely to happen to me or my license.  
  My nurse-attorney friend, Cecelia, had participated in many peer reviews.  
  "Write out a statement of what happened. Acknowledge what you feel you did wrong and explain what was going on.  State what you should have done differently and what you have learned. It might be a good idea if you took a course in documentation.  It will appear as though you are working to improve. Consider calling anyone who helped you that night as a witness. Also, when you appear before the board, your attitude and demeanor count for a lot.  Don't get defensive. Also, don't change your story." 
  I did just that, taking a twenty four credit hour documentation course. I completed a statement which Cecelia edited.  One the other nurses on duty that night, Byron, agreed to speak on my behalf. He was sympathetic.  
  "You got a sh---y assignment that night.  Nobody could really help you.  We were all drowning ourselves.  I honestly don't think you did anything wrong.  I've seen your work. You're good."    
  The day of the hearing, with it's overwhelming dread, came.  Perhaps the most terrifying was the feeling of being completely alone, without a friend or advocate, trying to defend my livelihood.  Byron was there, but he was seated outside until his testimony was required. 
  It all passed as a blur.  My nurse manager, B, appeared and was asked why she had submitted this incident for peer review.  She mentioned the issue in question and second incident where I had forgotten to complete a drug waste.  She kept repeating herself, seeming oddly defensive. 
 The unit manager, L, testified. Her clothing appeared wrinkled, her hair oily and unkempt. She starting talking about a completely different patient until the board chairman corrected her.  
The nurse I had given morning report to spoke.  M was basically neutral.  She had witnessed the reaction.  
 The chart was reviewed thoroughly.  The patient had not revealed to the admitting nurse all his home medications.  A progress note from his internist informed us he took a large dose of another medication on a regular basis.  A high tolerance of this type of drug may have contributed to the reaction. 
  Byron spoke.  He had cared for the patient in question before and after the incident.  His testimony helped to paint a picture of what I dealt with that night, why I had done what I had. It fit with my statements.  
  The witnesses and I were dismissed as the board prepared to deliberate. 
  I was told the results that afternoon. The board had decided this was a "minor incident", it would not be reported further.
  A few weeks later, I saw one of the members of the review board. We chatted about the event.  
"There was a lot of tension in that room. It's normally not like that." She said.  "You did very well.  You held yourself together and defended your practice.  Basically the only thing that it came down to was that you didn't chart like you should have."
  I knew it then. I wanted to be a lawyer.  That was 2008.  I had put that aside to do what was practical: something that could be worked around a future husband and children.  I loved being a nurse and I find work as a nurse practitioner challenging and rewarding.  However, the desire to pursue a legal education was still with me. 
  It was now 2014 and I was 35.  Was I going to spend my entire life waiting for Mr. Right to appear? Besides, if he every does show, wouldn't the right relationship encompass my dreams and goals? 
 My mother had always been opposed to me pursuing a medical or law degree. Neither fit her version of a proper wife and mother.  Was I going to live life for my mom? Or was this my life?
  I confided my desires to Noel.
  "Hey! I think you'd be awesome. It's your life. I'm glad you're finally making it about you!"
  "What about my debt?" 
  "There's always loans."   
  "I don't want anymore debt. Plus, I'll be almost 40 by the time I'm admitted to the Texas Bar. I have to consider retirement"
   "Well. What options do you have?
   I fell silent thinking.
   "My GI Bill will cover 40%, provided I go to a state school.  Texas A&M bought Texas Wesleyan School of Law.  I could apply to go part time. 
   "Ok, there's a big chunk"
   "That still leaves around $60,000."
   "Are you going to let that stop you? I think you're smart enough to find a way." He was right.  There had to be another way around the mountain. 

How Did I Get Here?

  In "Facing the Numbers", I calculated up my debt, detailing where some of the money had been spent. Since that day in late 2012, I have asked myself these questions: What led me to spend like that? Why did I think it was ok? Was there something behind that?  I can't completely dismiss it as only foolish stupidity spurred by the impossible ease of plastic.  Why did I do that?
  By the time I applied to borrow for my graduate school, I already had significant credit card debt.  In 2010, at age 31 (with no debt but my car and mortgage), I had poured thousands of dollars into a national beauty pageant. Yeah, that's right, thousands.
  I had set my mind to win. To do so, I needed a gorgeous dress, interview suit, fashionwear and swimsuit.  I also hired a personal trainer, make-up artist and interview coach.
Had my competitive nature led me to spend? It was only a small part.  I wanted everything to appear perfect. I coveted an impeccable swimsuit body, flawless walk and interview charm. I couldn't get a second-hand dress-someone might notice! I needed to appear not only beautiful, but incredibly successful. Not to be seen as such would be, well... embarrassing.
  Of course I had reasons for thinking this was ok.  I had never just "had fun" with my money.  Everyone has to have a time to splurge on something, right? I was expecting a large payment from the Air Force for travel expenses/allowances from my recent deployment. I told myself I was spending that money.  Deeper still, I had structured my pageant platform around an enduring emotional pain that I still carried. If I could speak about this, I could make a difference and perhaps find healing for myself. Wasn't that worth the expenditure?
  I failed to achieve my ultimate goal for which I had mortgaged myself dearly.  I did not win, finishing below the top three.  I received the Director's Choice Award for the "spirit" I displayed, but I saw myself as a miserable failure. I felt stupid, ugly and rejected. Crestfallen, I returned home.  

  I was painfully reminded of my brief foray into modeling. At age 25, after losing over 25 pounds, I had been contracted by a local modeling agency.  The major drawback to my getting jobs (I thought) was my skin. I had suffered from severe acne as a teen and bore the scars.
  "Just work on it." I was told.  I went to various plastic surgeons, undergoing painful chemical and laser peels. I never achieved perfect skin. Wow! How realistic! I had entered modeling in pursuit of glamor and status. I left a little over a year later. I had been a model but I felt hideous.
  What I did not understand was that I was seeking irrefutable evidence of my own self worth: if I could prove I was beautiful, I had value as a human being.
  How had I come to be so emotionally bankrupt? So devoid of self-love and self-worth? Each of us must face our demons but mine were many. I traced them to a series of events beginning at age seven. Over a period of two years, I was molested on multiple occasions.

  As a child, I did not understand a piece of my soul had been stolen. With the years came the realization, engulfing me with it's unspeakable pain and shame. Pain became anger, deepening into rage. I turned that rage onto the safest (and nearest) victim present-myself.
  I think as children, we do our best to make sense of an unpredictable world. If we know why something happened, it is far less frightening. When people I loved and trusted harmed me, I concluded it could only be my fault.
For the better part of 17 years, I tortured myself with bulimia and self mutilation. I mercilessly pushed myself to not just succeed, but be perfect. Receiving a "B" on a test or being criticized left me devastated, scourging myself for "being so f-ing stupid".  Sometimes, I truly hated myself.
   As an adult, I met an older man I came to trust as a father figure.  Unfortunately, I discovered too late that I had opened the door to another predator.
   Although I was successful in my career, I kept my distance from people, fearing to trust. I dated men occasionally but would quickly break it off: Men were too frightening! I was desperately lonely. My animals and food were my only companions.
   In a required class for graduate school in 2012, I met a classmate, Noel.  Cautiously, I allowed him to befriend me.
I now pursued a title in bikini competitions. I followed a rigorous diet and exercise regime. I was also spending again, dropping money on collagen and Botox injections. I won a local competition and shelled out almost $1500 to compete for a national title in Las Vegas. I finished last.
  Devastated and humiliated, I made my way through the shabby casino to my stale room. I lay there, my body aching. What was I doing? 

   The truth hit me like a bolt of lightening. I was seeking validation. I sat up in the darkness, watching the city lights flicker. I was 34 years old, awash in a sea of debt and completely miserable.  How foolish I felt, how pathetic. I texted Noel.
"This has all been a fool's errand. I came looking for self-worth."
"It's ok, Em."
"I've been so utterly stupid."
"Do you ever stop abusing yourself?"
  The tears began to fall. I was that frightened little girl again, sobbing in her pain and confusion. I just wanted to be held, to be loved by someone who gave a damn about me.  Yet I was alone, abandoned in a strange place.

   Who was I anyways? Underneath the carefully crafted exterior, what constituted the authentic Emily? I had always tried to "adjust my personality" to the situation I found myself in. I could be outgoing, reserved, funny or stoic at will. What did I honestly feel? I didn't know. I was floating through life in numbness and detachment.
  For a graduation present, Noel had paid my tuition to the Weekend, the first of the Core Trainings offered by Pathways, a non-profit organization in Irving, TX. The Pathways curriculum is designed to increase emotional intelligence, and its trainees are challenged to critically inventory their lives, habits and relationships.
    Skeptical and defensive, I was confounded by a simple question: what do you want?. Money, beauty, respect, right? No. These answers were all rejected. To know, I had to feel again. I needed to unlock my poor broken heart I had hidden for so long. I had to acknowledge what I pretended didn't exist: the pain, the shame, the rage. Only then could I truthfully answer. I wanted peace. I wanted to feel worthy. I wanted to love me.
    It has been a very long, hard road that still winds before me. I see now that my debt was only a symptom. I was trying to fill the hole in my heart.
In George Eliot's classic tale, Silas Marner is cruelly betrayed by a trusted friend. Embittered, he exiles himself to a distance village. Silas lives as a recluse, caring for nothing except a collection of gold coins hidden beneath the cottage floor. One day his money is stolen. In his feverish search, Silas instead finds an abandoned child. He raises her as his own, discovering with her innocent love the lasting peace of forgiveness.

Psalm 147:3 He heals the broken hearted and binds up their wound.

The Highs and Lows of the Debt Diet

  I think most of us (certainly us ladies) are familiar with the joys of being on a diet.  The wonderous task of counting calories, pushing to exercise and sacrificing the delicious things we love, all for swimsuit season or to fit in those jeans again. 
  Seeking to eliminate debt is a lot like being on a diet, don't you think?  Strict budgeting, seeking to increase income while lowering expenses, giving up stuff we splurged on in, works to push us towards the goal of financial tranquility. Furthermore, just as it is in an extreme diet or fast, progress is significant but we are highly suseptible to "cheating".
In an interview by Kimberly Palmer for US News and World Report Money, JoAnne Nagler describes how she successfully paid off $80,000 of credit card debt in ten years. 
   "If you engage in self-deprivation, you can just do it for a few months.  Learn how to live well on the cash you earn, and fund the things that make for a healthy life.....I'm not saying it's going to be fast [repayment], what you want is slow-and-steady steps." 
    As you saw in "Robbing Peter to Pay Paul", I now had a bit of room in my budget.  I allowed for some miscellaneous spending.  I couldn't have a "junk food run" every day, but once-a-week at Chic-fil-a was ok.  It even tasted better now that it was a treat.  
    I had made my friends aware of my situation.  Yeah, it was humbling, but I was touched by their support and understanding. We still planned outings and get-togethers: "Ok, so you'll bring the meat? I'll pick up the wine and she'll bake cookies?" It was less expensive but I appreciated even more the simple joy of their companionship. 
   I planned purchases of the things I needed.  Invited to a friend's engagement party, I was going to need a "little black dress".  I had $120 for both the dress and an evening bag. 
  As a lover of Internet shopping, I began to check prices.  Boston Proper, Ann Taylor and White House Black Market were all beyond my budget.  Was I tempted to splurge? Of course. 
  I searched ebay (the world's biggest garage sale) for a 'little black dress, size 6, NWT (new with tags)'.  I narrowed the results for designer goods: Ann Taylor, Boston Proper, Calvin Klein.  Aha! That's pretty! An elegant dress by Calvin Klein, retailing in stores for $140. I clicked "Buy it Now" (I never bid).  It could be mine for $75 plus shipping! I had a new dress AND money for a purse! 
  I searched Amazon.com for "evening purse".  A simple black silk clutch for $20! Ok, this wasn't a name brand, but it was pretty.  As an Amazon Prime member, I enjoyed free shipping on both the
purse and a shimery silver wrap I chose (I'm always cold). My total stood at $114. 
  With a pair of black sequin stilletos and rhinestone earrings (recycled from my pageant days), I felt pretty and stylish. My friends noticed too.
    "Look how beautiful you are! I love you're dress. Where did you get it?"
    "Ebay!" I said with a laugh. 
  My budget also worked in emergencies.  An animal lover, I had three "critters", cats Eddie and Daisy and Pansy the Pug.  They were all due for their shots and Pansy needed more heartworm meds.
  Daisy had not been herself for lately. While she was still a gentle "lap cat", she had been vomiting and soiling frequently, slowly losing weight. I had adopted her at nine weeks old over ten years ago. She had always been healthy.  
My friend Carrie worked as a vet tech in Eastland, almost two hours west of my home in Mansfield, TX.  Prices were more affordable there.  I liked the vet I used locally, but the money I had set aside wouldn't be enough to cover the bill.  I packed up fur babies and headed west, all the while fearing what might be wrong with Daisy.
   Eddie was in top shape. Pansy needed to drop a few pounds but was otherwise healthy.  I waited anxiously for the results on Daisy.  Carrie had come with me.  She had recently euthanized her Australian Cattle-Dog, Louis. 
    "There's a pet crematorium not far from here.  It's really quite reasonable and they come pick the remains." She had showed me Louis' urn earlier that day. 
    The news was as I had feared, it was time for Daisy to go over the Rainbow Bridge.  The vet was kind and sympathetic.  He asked what I would like to do with the body.  
    "I can take it for you, but that basically means she goes in a bag in the trash," he said gently. I was sobbing by this time.
    "No! no! I want to keep her with me." He asked me if I wanted to be present. I could not bear to leave her.  My tears flowed freely as I petted her to sleep. I kissed her on last time, removing her purple collar. The bell jingled. I cried harder as Carrie hugged me. 
   My bill had come to almost $500. I had only set aside about $250, unaware that I would need to euthanize sweet Daisy. The cost of her vet workup, euthanasia and cremation made up the difference. Numbly, I realized my miscellaneous money was gone.  I hadn't needed to use my credit cards, though.  I had covered the bill. 
   Carrie drove me back to her house.  I could not stop crying. How would I go to work tomorrow? I called my boss. She was sympathetic but there was no one able to cover my shift. I had to go.  I honestly couldn't afford not to work, anyways. Sadly, I thanked Carrie and told her goodbye. I gathered Pansy and Eddie and began the long drive home. 
  The next day was mercifully slow as I cried for most of it. I had been invited to a friend's birthday party at Benihana's that evening.  I couldn't afford it. I texted my good friend Adam, also the birthday girl's boyfriend.
   " Do you think Chloe would mind if I just sat with you guys and maybe had a soda? I'm really short money with everything I spent on Daisy."
   "Would you let me treat you?"
  I wanted to say no. He was in school and I made more money. I also knew that he loved me and understood my grief. 
   "Thank you Adam. That really means alot." The tears came again. 
   I had a lovely time that night: enjoying the comfort and companionship of my friends, eating delicious hibachi, all generously paid for by Adam's father. The bitterness of my sorrow softened with their kind sympathy. 
  Later that night, I lay listening to Pansy's comforting snore. I had food in the pantry and my house had heat and light. In the garage, my reliable chariot, my 2008 Ford Focus, had just had all scheduled maintenance. I had not one, but two jobs. All my bills were paid and I was slowly climbing out of debt. I had friends who loved and supported me, accepting me just as I was.  Eddie nestled against me, purring.  From beyond the peaceful solitude of the house I heard the gentle coo of a mourning dove, calling it's mate.  I was a wealthy woman. 

Robbing Peter to pay Paul (and getting some breathing room)

As I wrote in "Tiny Steps," I had started making slow but steady progress. I watched my
budget carefully and worked hard, applying everything extra to my credit card with the
lowest balance (Visa, starting balance of $9,900). With credit counseling and loan
consolidation eliminated as options, I looked to my dwelling.
Recovery of home prices in north Texas after the 2008 housing bust had been fairly
rapid. My one-story brick ranch, purchased for $165,000 in 2005, was now worth
$182,000. Thanks to a 15-year mortgage at 5% APR, I only owed $129,000. Prime
mortgage rates had dropped to just under 4% in the summer of 2013.
I didn't have stellar credit anymore, but I managed to qualify for a loan for 4%
APR. Not bad. I was allowed to borrow 80% of my home's value ($145,600) in
September 2013. After fees and closing costs, I received $14,000. I used this to pay
down my car ($5,800) and to shrink my credit card debt to
just under $30,000.
Doing so gave me the biggest bang for my buck, freeing up over $350 dollars in my
monthly budget. Additionally, my mortgage payment dropped from $2,050 to $1606. In
under a year I had reduced my unsecured debt by 25.4%. I could now make ends meet
and slowly discharge the debt without working overtime.
While I was still willing to work hard, I was starting to buckle under the strain, falling
ill frequently. Early in 2014, I was diagnosed with a chronic illness.
Rolling debt into a mortgage is not "getting out of debt.” It is simply a reallocation
(Robbing Peter to pay Paul because Peter charges lower interest).
Huettner Capital president Todd Huettner manages a mortgage brokerage firm that
specializes in debt consolidation. Huettner suggests homeowners answer three questions
before combining debt with a home mortgage:
1. Why do you have this debt? As I mentioned in "Stopping the Bleeding,"
consolidation must accompany a change in spending habits (living on a sound
budget). Failure to do so only results in a bigger mess.
2. What are the costs of consolidating the debt? As I noted above, I needed to pay
nearly $2600 in fees and closing costs. I'm now paying that back (with interest of
course). Because I was able to finance to a lower interest rate, I will save money in the
long run (five years-plus).
3. Is there a more effective way to eliminate your debt? If you have less debt, or when
cash-out costs are high, stick with paying the old-fashioned way. While failing to pay on
credit cards may bring a lower credit score and some nasty phone calls, your house can't
be taken. Defaulting on a mortgage or home equity loan is a different matter.
All things considered, this was the best option for me. I needed some breathing room. I
needed to work fewer hours. I needed to take care of me.
Personal finance experts and their proscribed debt fixes are many: Jean Chatzy's “Debt
Diet,” Dave Ramsey's “Financial Peace University,” Suze Orman's “9 Steps to Financial
Freedom.” etc. Rolling debt into a mortgage is not high on the list of recommendations of
any of them. Overall, however, their principles are the same: Reduce your debt and
increase wealth through budget discipline and living within your means. I have taken tips
from each, with Dave Ramsey being one of my favorites. It is my life and my money.
Ultimately I have to do what works for me.

The Amazing Credit Offer

Dear Emily Becher,
 Its easy to save on interest with Balance Transfer checks that come with your Chase Amazon.com account.  
   - Save on balance transfers-Use this offer to tranfer higher-rate blances from other cards to your account.  
   - Save on purchases- use these checks to pay for big expenses or emergencies
   - Of if cash is most convenient- Just write a check to yourself to deposit in your checking account.

Awesome! That sounds great, right? Not so fast. 
I examined the offer closely.  Two blank checks payable through JP Morgan Chase Bank, NA had been supplied. 

   "Promotional 0% APR through billing cycle that ends 08/2015. 

 WTH is APR? I honestly didn't know until I  did a Google search, wading through articles until I found one I could substanitively understand. APR = annual percentage rate of interest, also the cost of borrowing.  That's just another fancy term for interest, right? 
  Well, that's why I thought.  Credit card interest or APR has a number of nuances. Generally, different types of credit applications- Balance transfer, Purchases and Cash  Advance-  have different APRs.  

  "After that, your standard Balance Transfer APR will apply, currently 17.24%."  Currently? So this is a variable rate?    This particular offer sported a generous 0% introductory APR after which an APR of 13.99 % + Prime would apply. What?!!! Prime? Prime Rib? Primetime? 

Prime Rate or Prime Lending Rate - Prime rate is the interest rate charged by bankers to the most credit-worthy borrowers and refers to the Wall Street Journal Prime Rate which is published monthly. This, in turn,corresponds to the Federal Funds rate which is set by the Federal Reserve (Prime Rate is generally about 3% higher). This is why it's SUCH a big deal with Federal Reserve Chairman, Ben Bernacke opts to change interest rates. 
   Let's assume for I used those checks to transfer a balance of $5,000.  I make no payments on the balance until I'm required to do so in August 2015.  Let's further assume that the APR of 17.24% applies and hasn't' fluctuated much over the past 15 months.  What is my current balance and minimum payment? To calculate this we first need to understand the principle of revolving interest. 

 Credit card debt is like a Merry-Go-Round that never stops, with no happy music or Dramamine.  One of the reasons plastic is such a boon for lenders is revolving interest.  Most people are familiar with installment loans (car note, mortgage ect): you borrow a set amount, have a certain interest rate, monthly payment, repayment schedule..blah blah blah.  The payment is calculated by the balance owed, the length of loan term and interest rate. Each payment contributes to the balance, though early in the term a significant portion goes to interest.  
 Revolving interest is slightly different.  The term is unspecified.  The Borrower is allowed use of credited funds up to a certain limit.  A monthly payment (of pure interest) is calculated  by multiplying the balance by the correct (fluctuating) APR and dividing by 12. 
  Er- I think I just made that more confusing! Suffice it to understand that, per theory, you 
could be paying "to infinity and beyond" and never discharge the debt. 
 So, back to my calculations.  With my balance of $5,000, lets find the monthly interest.
  I will multiple by 0.1724.  $5,000 x 0.1724 = $862.  I will now divide by twelve (we're only calculating for one month from an annual percentage rate). $862/12 = $71.83.  Let's then add that to the original balance ($5,000 + $71.83 = 5,071.81) and we arrive at balance of $5,071.83, with $71.83 as our minimum payment, right? Wrong!  
  Looking further down on the credit offer, I noticed a stipulation in much smaller print at the end of the page. 
  "We will begin charging interest on these transactions on the transaction date." Oops! That changes things a bit, huh? Our paltry sum of $5,000 has been collecting interest for 12 months.  So, provided Mr. Bernacke hasn't changed interest rates much, where are we now? Twelve  months of interest on $5,000 at 17.42% APR is $862.  Our current balance is $5,862.  $5,862 x 0.1724/12 = 84.23. 
 Awesome way to save, don't you think? The only way to win at this game is to actually pay it off in full during the introductory period.  Statistically 75% of people fail to do so. 
   I was one of the foolish ones.  I moved my balances among different cards.  I was always planning to pay it off, but without a change in habits, that didn't happen. 
  Getting out of debt is not all about income, expenses, payments and budgeting. I am also working to forgive myself for my foolishness. It's hard to not have regrets. Even though I failed to read that brochure mailed with the credit card (you know, the one with the really teensy print written by the credit company's lawyers and filled with the mumbo jumbo I've tried to translate here), I can't say I didn't have a basic understanding of debt.  I still marvel at how easily I spent money I still don't have for things I never truly needed. 

I Timothy 6:6 "But godliness with contentment is great gain."

Tiny Steps

Fortunately, my calculations fell at an opportune time: tax season. Having deductions for a mortgage and tuition yielded an IRS return of $5,000. It was enough to furnish a $1000, "mini" savings account, pay off the smallest student loan ($2,300).  The rest went towards the smallest credit card balance. It seemed such a small amount against the total, which grew at a seemingly voracious rate, fed mostly by revolving interest. I wanted to pay back every red cent yesterday, perhaps there was a better way: Credit counseling or debt consolidation?
It's hard to watch more than 30 minutes of television in this country without seeing an ad for loan consolidation or credit counseling.  Americans are, sadly, up to their ears in debt:
Average credit card debt: 15,263 (14.95% APR)
Average outstanding student loan balance: $31,646
Average auto loan debt: 30,738
Only 59% of Americans have more than $500 in ready cash savings. On the surface loan consolidation or it's cousin credit counseling may seem like a good idea. With debt consolidation, several smaller debts (generally with higher APR) are combined in one large loan, usually at a much lower interest rate. This allows for one payment to one creditor. Loans are ideally simple interest loans with a set payment and term (like a mortgage or car loan). The "minimum payment" in this case goes towards interest and principal, systematically discharging the debt. 
There are two obstacles to this approach: good credit and a change in financial habits. Without a shift in spending habits, debt consolidation simply frees more income to "blow" (i.e. float more debt with) perpetuating the downward spiral. I would like to think my habits have changed permanently (at least I have the best of intentions in that regard), however the culminant beating my credit had taken precluded approval for the amount ($60,000) needed to consolidate. Looking at my credit report, I could clearly identify the problem: more than one credit card maxed out, percentage of credit utilization to credit extended was too high (65%). 
 So what about credit counseling?  I began to research the idea, speaking with a representative. He asked me about my income and debts, cash savings and other assets. 
"At this point, you are able to make your minimum payments. We generally recommend our services to those who are in default and/or facing bankruptcy or foreclosure. With credit counseling, we work with your creditors to reduce the amount you owe. For someone with reasonable credit like yourself, it would hurt you more than it would help."
"So I'm better off doing what I'm doing, just slowly paying it down?"
"Exactly." I appreciated his honesty. Debt-freedom guru and founder of Financial Peace University Dave Ramsey has spoken candidly on the issue of credit counseling, stating that " you will get out of debt, but only with your credit trashed". Debt management is thriving in the land of "having it all" (also known as the United States). What many consumers don't realize is that if, after using one of these companies, they apply for an FHA, VA or conventional mortgage, they will be viewed as if they filed for Chapter 13 bankruptcy. In her article "5 Ways to Get Out of Debt" for MSN Money, Gerri Detweiler advocates the "DIY Debt Reduction" first. One variation of this is the "snowball method": making the minimum payments on all but the smallest debt (to which is applied any and all extra money). While certainly not glamorous, I had found the correct path: hard work, doing without and small but consistent progress. There was no "quick fix", would depend on discipline and perseverance.