Sunday, February 3, 2008

Maxed Out and Gay Monopoly

This video was pretty good. It's a documentary about Credit Card debt and the dangers it brings to society and the economy. I think I've embedded the entire movie here, if any watches it all let me know.
I pretty much only watch documentary and reality shows now, I just can't seem to find time to watch shows with plots.
This movie was especially close to my heart as I once had a massive credit card debt and still do to some extent. When I was about 21 or 22 I had 7 or 8 credit cards and about $17k worth of debt. The movie talks about how ridiculous it is to give someone who makes $35k a year $17k worth of debt at 29% interest. It highlights people losing their home and committing suicide to get out of the loop. I can understand, it can become overwhelming. I am lucky I never got to this point. Let's say I lost my job at that time, now I have no income and 8 collections agencies calling me 2 or 3 times a day for money, each. I'm stressed because I can't pay the rent, I can't get work and I can't escape the calls and the letters and the threats from the collectors. It all adds up so quickly.
The movie mentions how the United States now pays more for interest on their debt than they do for education. There needs to be an exit strategy.
Here's how I got out of it:
My life at about 23 was all about paying the bills. As I mentioned I had 7 or 8 cards, all maxed. I remember buying a gift certificate at the Bay with my Bay Card and using it to buy something cheap so I could get the rest as cash. It was impossible to get out from the cycle. I was making about $1000 a month after rent and I'd pay $80 to each of my 8 cards each month. I never missed a payment but I was paying about $450 in interest alone every month.
About 3 years ago, so at 26, I made a decision. I had an excellent credit rating because I had never missed a payment but I had never been anywhere and I had absolutely nothing to show for all the money I had spent. So I decided to go on vacation. I had always wanted to go to Atlanta so I booked the ticket. I financed it by not paying my credit cards. I was kind of juggling them, I knew that you had to be 3 months late before your card went to collections so I would go and pay the debt (minimum payment) when I got back.
When I returned I did make the payment but one of them was 2 days late, the account had already gone to collections. This was with Amex and when my one card went to collections, they automatically sent the other. Suddenly I owed $8000 to collection agencies and they wanted payment immediately.
These agencies are ruthless, they would call me twice a day each and tell me to borrow money from friends or family, they recommended I get credit from a lender they knew of with a 40% interest rate. They would call and call and harass and threaten. It wasn't an easy time.
I made an arrangement with one of the companies to pay them $400 a month. I had to really insist, they wouldn't take it at first and promised to still call daily for the balance even as they cashed my $400 checks.
I feel lucky to have never lost my wits during this period. I spoke to the other company and told them about my payment arrangement. This made them agree to one to, I told them I could either do a similar arrangement or they could get nothing, their choice. This lasted about 4 months until my cat died and I had to use their payments to cover the vet bills. Their checks bounced, my cat died, and the calls started again.
I worked out a deal with the one I owed the least to for a one time payment of $1,200. After I made the payment they said I sent it one day late, this voided the deal and now I owed the entire amount, plus interest. Back to the calls every day, and the other agency I still had done nothing with.
This is basically where I still am today, 3 years later. I haven't paid a cent to any of the three cards I still have outstanding and I've gone on 4 vacations. I have one credit card with a $3000 limit that I pay off so I can take another vacation, but is usually maxed out. So going forward my plan is:
- the first card, the one I made the big payment on, they wrote off the debt. I had many conversations with them and I never backed down. I told them I had already fulfilled my end of the agreement and they changed the terms. After 2 years they gave up. My credit report says the debt has been settled
- the second card for Amex I now owe $2800. They passed me to yet another collection agency a couple weeks ago and the calls and letters have started again. I will never deal with these people on the phone again, I find this is a great way to get the calls to stop. Get call display and never pick up the phone. It works. Monday I'm sending them a letter offering 7 equal months payments of $200 if they settle. We'll see what happens. I honestly thought they would have given up by now.
- the third card is a Visa, and I owe about $2500. They don't have my current address and I have no current plans for them, they can't bug me too much as they don't know where I live.
- the last card is my Mastercard which is the only card I still use, I will NEVER get another one. Unfortunately a year ago they doubled my limit from $1500 to $3000 but with all my accounts in collections they shouldn't raise the limit again. I hope when they finally do I have the will power to say no. I have my 2 big vacations planned this year and after that I will pay this off as part of my plan to buy a condo. I need to have a condo paid off by the time I'm 57. I was recently made permanent with my job and if I stay for 30 years, until I'm 57, I can retire with 80% of my salary and no deductions, more than I'm making now. With a condo in Toronto paid off I can use my salary to pay for a place in Florida during the winter.
So this is the sad story of my finances and how I decided to change my life and my future exit strategy, I hope it all works out.
Finally, here's some pictures of my friends and I on Gay Monopoly night.

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