The Slippery Slope

My Brave Family #1, 2008


[read in a slow, thoughtful way, like how Billy Crudup would say it]

2 train tickets to New York City - $429
1 digital camera that will be obsolete in less than a year - $1595
4 years of compound interest - $2900
Getting out of debt - priceless

In today's mail I received a letter titled Five Convincing Reasons To Stay With Us.

Dear John M. Photos,

We want to be your number one credit card. We noticed that you recently made a large payment to your Chase Visa® account and want to make sure we're not losing your business. That's why we want to remind you again of these low-rate reasons to stay–it's our way of showing you that your business is important to us.

It goes on to offer me some blank checks at 0% APR f0r 12 months as a money-saving thank you (their words).

Allow me to explain. The large payment they referred to is actually many large payments that we made beginning in December 2007. Sticking with our outrageous goal, we managed to send $1000/month to the beautiful people at Chase, including our entire Economic Stimulus check. (Sorry economy, but I totally did my part in the past).

My business is the staggering amount of money that we spent, some of it as long as 4 years ago, as well as the interest that they have been earning ever since.

The five convincing reasons... there were five checks.
...

A little background:

I spent the first part of my adulthood avoiding credit.* I thought borrowing cash to buy clothes and movies and returning them for pot money was for suckers. And I was right. If anyone sat down and did a little math, they would see that a 9.9% introductory rate for the first 6 months is a lot of money. It's the opposite of purchasing a sale item. It's like paying a second sales tax. It's like going shopping with some rich asshole who offers to buy you whatever you want, you can just pay him back, only instead of the retail price you'll just owe him like 10 or 15% more, whatevs. And so, throughout my schooling I lived my life avowedly without credit.

Enter the Internet.

The confluence of events is nothing short of miraculous. I do not believe that people are fated to do certain things in our journeys toward our respective deaths, or that our paths are preordained by some intelligent designer. I believe that people control their own destinies by their ability to choose, and if need be, to die for those choices, like Joan of Arc, or Cubs fans. Yet, there are moments few and far between in which the effect is the only rational outcome of the causes.

By 2002, I was out of school and earning a living for the first time. I lived with my wife out of wedlock, and we split all the sinful expenses 50/50. We even had a joint checking account.** This being the case, there were certain times, such as Christmas and 2 in the morning, when I wanted to be able to spend my allowances more discreetly. Around this time, everything started going online. It was the birth of e-commerce. Suddenly I could type in the name of a book, Amazon would locate it for half price at a shoppe in Des Moines, and it would show up a few days later. Remember that? Pretty neat. The only drawback was that to participate I needed a credit card.

The breaking point was when I needed to buy a plane ticket. I am an adult I thought. I won't be stupid with it I thought. I will make darn sure that I never spend more than I can afford for that month I thought. Oho, I will be different than all those poor suckers who get into trouble I thought. I am too smart for that I thought.

Paying online via a mouse click is diabolical. Purchasing something with a credit card is already too easy. By removing actual money from the equation, you never experience the heft of the cash as it leaves your pocket, the finality of the cost as it is slammed into a metal drawer by an underwhelming person. Shopping online, you don't even have to own pants. It literally requires nothing of you, save the ability to read and good enough aim to hit a gin-soaked checkout button.

I kept my promise at first. I entered my purchases into a separate column in my ledger to be subtracted from the balance like any other debit. It was just one more bill that I budgeted for. What I didn't understand at the time is that I was being conditioned. If I may say so, I am fairly skilled at math.*** If my checking account was running low, and I knew my next paycheck would arrive in time for my next credit card payment as long as I left work that Friday 15 minutes early and ran my ass off to qualify for the Saturday morning deposits, it was a no-brainer! I became pretty skillful at juggling my money streams. As long as I stayed one paycheck ahead all the time, what did it matter which account had purchased back issues of the Sports Illustrated Swimsuit Issue, technically speaking? Thus I had mastered the most important lesson of the debtor–how to spend money that wasn't there.

Nobody means to go into debt. Nobody wants to save up and pay extra fees for something they already bought. I believe that. If people really knew what was at stake, if they could be shown the difference between what they think they are spending and what they will end up spending, no one would go in for it. But this is how the companies make their money. They have figured out how to fool us. And fool us they have, mightily. They do it by sleight of hand. It is called hiding the interest.

The first and most important way they do this is by not charging it at all. When you sign up for a credit card, you are awarded an introductory rate, oftentimes of 0%. It is lower than everyone else's because you are special, and they can see that. In this period, you will have plenty of time to learn the ins and outs of credit. The most fun-loving of you may even "max out" your credit limit and carry your balance. But that's ok! Don't be ashamed. You're not in trouble. Heh heh. In fact, since you aren't even paying interest yet, we can just up your limit. What do you say to that? Great! I'm happy too!

The next way they diffuse the cost is at the time of the purchase. Instead of accounting for the interest up front so that you can see what you are spending, the charges are held in purgatory by a delightful invention which the companies call a billing cycle. A billing cycle starts and ends on a random day of each month. It corresponds only to the day of the month on which you initially opened your account, and ends anywhere from 25 to 33 days later, which ever you will have the most difficulty remembering. It is at this point that you will be billed not only for your purchases in the previous cycle, but also for the interest, which took effect without your notice a few months ago. But even that isn't really a big deal. I mean, yeah, you can't afford to pay your balance this month, but there's next month. Besides, it's only costing you about $50 a month to buy a little time. What's a little more on the pile gonna matter? Why should you go broke trying to pay this all off at once? You're young, and fun. Let's talk about this in the morning.

The final way they trick you, and this only works on very advanced cases who are already beyond saving and it's just fun to kick your corpse, is to offer you a balance transfer. This is an invitation, via a third party, to throw over your current company even after they've been so good to you and come on board with our new company. Why would you do that? Because if you do, we will purchase your debt from those other jerks and, get this, lower your interest rates to 0%. Remember the good old days, when you didn't pay interest? Well, they're back. AND we're going to up your credit limit, just because we have a good feeling about you... and so on.

These things, these tricks masquerading as solutions, they actually happened to me. I am not going to lie and say encouraging things. This was an emotionally straining ordeal, and caused more than a few fights between my wife and I. It is the reason that I never get to see my relatives anymore. It is the reason we don't go to the emergency room when I cut the bejeezus out of my thumb. It is the reason we picked up and moved across the country last year. I now live in New Mexico, widely regarded as the 50th state, because we were going broke in Chicago. We literally had to restructure both our spending and our earning habits if we ever wanted to have any money again.

We got full time jobs with decent wages and health insurance. We worked hard and lived simply. We paid our bills first, subtracted out the largest possible payment we could make for our debt, and set a daily budget for the whole family. Sometimes it was as little as $20 per day for two whole weeks. Maybe I'm spoiled, but try living on $20 a day for a while, even if you're single. What if you need gas, or toilet paper, or your cat is making some fucked up noises? It can get pretty tough not to pull out the old plastic.

Well, I am very pleased to tell you that, as of July 15, I paid off some pretty serious credit card debt. Without going into dollar amounts, let's just say that I could have bought about 7,500 items from the Wendy's Value Menu. I feel like we accomplished a miracle. I feel like we won the game, and we will never play again. At the very least, I feel that I have earned the right to be left alone. And here, only two weeks into my newfound freedom, I receive a letter of desperation. My company wants me back. It'll be good again. Promises promises.


* Ironically, this was also the time in which I was accruing over $50,000 in student loans.

** This is absolutely the best measure of your significant other. If you can share a checking account, and you are still in love, congratulations.

*** I can't do calculus, but I know enough so that I can beat the shit out of you at Scrabble.