Holiday credit-card debt challenges many

Oakland Tribune, Feb 12, 2004 by Hank Ezell - ASSOCIATED PRESS

AMANDA CHAMBERS took her first steps into self-sufficiency at the age of 19. She got her own apartment, took on as many as three jobs at one time -- and acquired a dozen credit cards.Before long, she was many thousands of dollars in debt. That included spending for groceries, furniture, airline tickets and a seasonal favorite: Christmas gifts.

The turning point came shortly after she got her last credit card. "It had a $1,500 limit," recalled the Acworth resident, 24. "It was only about 20 days till I had it maxed out. The interest rate was 21 percent. That was a reality check."

Lots of Americans are getting reality checks as the credit card bills for holiday splurges pile up.

"Our busy season starts on the Tuesday after the Martin Luther King Jr. weekend," said Suzanne Boas, president of the Consumer Credit Counseling Service of Greater Atlanta. "Folks have gotten all their Christmas bills. Generally they don't have any money left to travel. It's a long weekend, and they don't have anything to do but sit and think about it."

Plenty of people are in trouble with their holiday debts. Consumer debt -- credit cards and car loans -- hit $1.98 trillion in October. That comes to about $18,700 per household, and the numbers have doubled in 10 years.

An all-time high of 4.09 percent of debtors were late on their credit card payments in the last three months of 2003, according to the American Bankers Association. The ABA suggested that lost jobs have made a bad situation worse.

Boas believes that a big part of the problem is drive-by spending. In December, the holiday frenzy too often results in carefree shopping and careless buying. "For most Americans, pulling out a credit card is a habit."

Getting back out of the hole is tougher but manageable, said Boas. She suggested these steps:

Stop using credit cards. "There are people who think they can borrow their way out of debt," Boas said. "That's what bill consolidation is all about. And it's quite often a disaster."

Find out how bad your problem really is. Make sure you've got all the bills, and total them up. "For many people, the problem is relatively short-term," Boas explained. "They just need to set up a plan for the next three or four months, so they can get back in control."

Some will have the self-discipline to cut their spending, use the savings to pay bills and work it out for themselves. Others will need professional help and prodding. If that's you, check out CCCS at www.cccsatl.org or call 1 (800) 251-2227.

Evaluate your spending. Some people go through their checkbooks; others keep a notebook and record every dime they spend for several weeks. The idea is to find places to cut back on nonproductive spending.

Avoid easy answers. So-called credit doctors often charge high fees or don't achieve very much.

Pay the most expensive debts first. Don't skip payments on relatively low-interest credit cards, but concentrate on eliminating debts that carry the highest interest.

Boost your payments.

Celebrate your victories. "If we start on a physical fitness regimen or lose weight, we get positive feedback," Boas said. "If we take our debt down from $10,000 to $3,000, which takes enormous discipline, nobody knows.

"You might take a vacation day, or do something your family has always wanted to do, even if it costs some money. It's important to celebrate, because you've come down a lonely road."