ICFE eNEWS #19-31 November 2019
"I Really Do Not Have A Problem"
By Jim Garnett, a/k/a Ask Mr.G, a member of the ICFE's Board of Educational Advisors
Let me share a true story with you about a client who came to my
office to seek help. The man was 66 years old and had just
entered retirement. As he entered my office he immediately told
me that I should not think of him as one of my “average
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“I am not like the normal people you see. I am current on all my
bills, have a high credit score, and can secure a loan from any
bank in town. I really do not have a problem. I only need a
little advice on paying off my credit card debt.”
(Please remember that phrase, “I really do not have a problem.”)
Our clients are required to fill out a financial information
sheet listing their monthly living expenses, monthly income, and
the type and amount of debt they possess. This allows us to know
how much and what kind of debt the person has, and also his
ability to pay the debt.
I thought it a bit strange that he handed me two information
sheets instead of just one, but I found out later the reason.
This client was living on Social Security income amounting to
$1800 per month, and spent more than he made every month by
several hundred dollars. Now I saw the reason for the two
financial sheets instead of one – each sheet had room to list
only 27 credit cards, and he had 54 cards! Most of his cards
were active, but a few were closed with remaining balances.
His credit card debt came to a staggering $220,000! To service
this debt, he was currently making monthly minimum payments of
about $5800 per month, and at that rate would never pay off the
I told him that if we were to put him on one of our debt
repayment programs (DMP’s), it would require a monthly payment
of around $4500 and would take just under 7 years to pay the
debt in full.
“That sounds great!” he said. “Let’s do it!”
Then I had to tell him, “I’d love to have you on one of our
programs, but there is a problem, actually, a big, big problem.
According to your monthly income and expenses, you have no way
to make payments. You are out of money each month already by
several hundred dollars. You’d never be able to sustain the
With a shocked look on his face, he said, “But I have been
making the payments by myself. Remember, I told you I am current
on my bills, so I can surely make this work!”
“I understand,” I replied. “But you have been using your credit
cards to make your credit card payments. Had you not been
charging an additional $6000 on them each month, you would have
crashed and burned long ago.”
“That’s how your debt got so large so quickly. To keep afloat,
you have been adding over $70,000 a year to your credit debt.
You have been trying to use credit to pay off credit debt. It
just made the whole bigger!”
One thing I always appreciated about being a counselor is that
you learn valuable lessons from “the school of hard knocks”
without having to enroll in class.” In other words, you learn
from other people’s mistakes!
From this man I learned that when you get to using credit a lot,
it can CREATE
The illusion is that your finances appear to be better than they
actually are. Like this man, you can be paying your bills on
time, yet be on the verge of bankruptcy.
A recent AARP survey revealed that over 50% of Americans spend
more than they make every month. That is sad, but even more so
when you consider that nearly 100% of this 50% of over-spenders
do not know that they are over-spending. Normally, credit cards
make up the shortfall.
So, friends, be careful. Credit cards can be a real convenience,
but they have an uncanny ability to keep us from seeing our
finances as they actually are. The best thing to do is to sit
down and figure out what you spend each month and what you earn.
If your cash flow is negative, make more or spend less. Do not
use credit as your safety-net to stay afloat. It will make you
think you “really do not have a problem,” when you actually do!
© Jim Garnett, The Debt Doctor
AskMrG Consulting, LLC
2216 SW 35th Street
Ankeny, IA 50023