Pay down debt, reclaim your life

Just before Christmas, the Associated Press reported that Americans are losing the battle with credit-card debt. We're falling behind on payments, and defaults and delinquencies are increasing rapidly.

The subprime mortgage mess is partly to blame, economists say. But they also cite "America's long-standing attitude that debt -- even high-interest credit card debt -- is not a big deal."

Howard Dvorkin, the founder of a Florida credit counseling service, put it this way: "The desire of consumers to want, want, want, spend, spend, spend -- it's the fabric of our nation."

Dvorkin's words irritated the heck out of me. Unfortunately, they happen to be true.

'Yuppie food stamps'
Sometimes, credit can be mighty useful. Major medical care for an uninsured in-law went on plastic because he didn't happen to have thousands of dollars lying around loose. Of course, he's now struggling to pay it off.

I paid for my divorce with a Visa. In fact, the attorney required an active credit card on file to top off the retainer as needed. This put me in debt for some time and my, didn't it feel swell to pay it off.

• Bing: How to file for divorce -- cheaply
  

These days, I buy everything with a credit card: utilities, gasoline, medicine, groceries. That's because I want the frequent-flier miles. But it's also because I can pay the card in full each month. I wouldn't charge something I couldn’t technically buy with cash.

If you're using credit "to inflate your lifestyle," as financial expert Robert Manning puts it, then you're heading for trouble. Or maybe you're already there. In an MSN article Manning, the author of "Credit Card Nation" voiced concerns over young people who seem to accept that "they will be in debt all their lives."

"Students now refer to their (credit) cards as 'yuppie food stamps'," Manning said.

Hmmm. At what point did Americans decide it was OK to become indentured servants to the likes of Capital One?

Good life, bad debt?
Sometimes I feel like a credit card Cassandra, screaming the same screams over and over: Tragedy! Financial ruin! Stop buying stuff you can't afford! But it's hard to get anyone to listen. Way too many people don't care about interest rates and how much they're actually paying for those Coach bags and wide-screen HDTVs. They want these things, and they want them now. They don't want to save up or, heaven forbid, buy something that matches their actual ability to pay.

The poorest Americans can still get new cars, televisions, computers, game systems and other big-ticket items. Of course, they're getting them on credit.

This is what the economists call "bad debt," i.e. purchases that immediately lose value (think "new car the instant you drive it off the lot") and have no chance to increase in value (think "laptop" vs. "mortgage").

And yeah, I do think that bad debt is a tragedy. It takes away our ability to direct our own lives. It reduces us to a bunch of wage slaves locked into stanchions. It keeps us working as hard as we can to make minimum payments on all the things we buy to take our minds off how hard we work.

In the film "Dead Again," the character played by an uncredited (as it were) Robin Williams mentions the "karma credit plan" -- "Buy now, pay forever."

Do you really want to pay forever for a handbag or a PDA or, good grief, for a pizza delivery?

If not, please resolve tonight to do something about it. Find a reputable credit counselor. Talk to your spouse or partner about money goals. Borrow personal finance books from the library. (Don't have a library card? Get one! They're free!) Browse the MSN Money message boards for advice, support and inspiration.

Just don't stay stuck. Don't pay forever.

Published Dec. 31, 2007