This is Part 9 of the series to serialize my book The Money Mentor: A Tale of Finding Financial Freedom. Click here to start reading from Part 1. Every other week will have another segment of the story of how a 23-year-old dancer struggles with and ultimately overcomes the burdens of her crushing financial debt. Look for posts on a variety of topics in the intervening weeks.
I was feeling pretty bad at this point, not just from the pain in my mouth but also from the realization that I was a fool who paid a lot more interest than I ever imagined—especially since I’d never given it a single thought, much less a second thought—and, worst of all, that I saw no way out of it. In fact, I wasn’t really sure what I owed. I knew roughly what my minimum payments on all of the cards totaled each month, but I had never thought to add up the principal. Or maybe I had thought of it but didn’t want to know.
“I’ll tell you something else about credit cards,” he went on, “People spend a lot more money using credit cards than using cash. It’s crazy, because after all, our money is worthless paper. If you take a Federal Reserve Note to be exchanged, they’ll give you another Federal Reserve Note—not gold and silver, the way they used to. So it’s our trust that gives the money value, our willingness to accept it. But we’re more reluctant to part with paper money than we are to run up a tab on a credit card. Maybe the fact you get the credit card back, but not the money, makes some difference. I don’t pretend to be a psychologist, but it’s another reason why using credit cards can be so risky. Not only are you going into debt, but you’re going into debt faster than if you didn’t use the credit cards. It makes me wonder what will happen when we’re all buying stuff on the Internet, using invisible digital money. I’ll bet people spend a lot more that way than they would if they had to hand over real money.”
I knew he was right, although I couldn’t explain why paying with paper money should seem more solemn and real than paying with a credit card. I was glad that the fifth credit card had something left to draw on its credit line, but suddenly I felt afraid about the future. Maybe I’d get a new credit card with a fresh line of credit, but somehow I didn’t think so. The last application I sent in had been turned down. Even if I could get another card, I was suddenly wondering where it would all end.
If you don’t want to wait two weeks for the next post in this series, you can purchase The Money Mentor on Amazon.