Mary Hunt is the author of 20 books about personal finance, most recently 7 Money Rules for Life. She came by her expertise the hard way, at the school of hard knocks. Here's her story, in her own words, of how she became debt-free.
"I grew up in a sheltered environment and never made decisions on my own. As a young child I dreamed of the life I'd have one day. I wanted to be rich. I used the Sears catalogue to plan my life.
Freedom Isn't Free
"When I went away to college I thought I'd died and gone to heaven. I could make my own decisions. I was hungry to get out and experience life. I opened a checking account at the bank and went shopping with my roommate, who was tall, thin, gorgeous, and rich. I wanted to be like her. I thought, Who would know if I wrote a check for more money than I had in the bank. It was a turning point in my life.
"Faced with a choice, I made the really wrong one. The check didn't bounce because I deposited my pay from working at the library before it came in. It planted a seed that it was okay to have things today and pay for them later.
"I fell into a fantasy world of total denial. The entire consumer credit industry is built on that feeling.
"Things escalated. I was always spending money I didn't have. I graduated college in 3 1/2 years, working three jobs to pay my tuition. I bounced checks all the time.
"Ironically, I married a banker. Never once did we talk about money before we married. He had no idea I had a problem. Then the turmoil began. I'd write checks and not record them. Bouncing checks put his job at risk. I still didn't stop. Now credit cards were available. We had two boys and I was bent on making sure they never felt poor. We got deep into credit card debt. In those days you received unsolicited cards in the mail. I figured they wouldn't give them to people who couldn't afford them.
"The next turning point came the first time I opted for the minimum monthly payment. Once you cross that threshold you're hooked. We had to refinance the house."
The Day The Earth Stood Still
"Then the house of cards fell down. The house was ready to go into foreclosure. We had no income, no savings, no unemployment, debts up the wazoo. We had no idea what we owed.
"I had a total meltdown — thought I'd die from the stress. I finally realized it's me. I was a horrible deceitful person. I called to God to forgive me.
"Offered a job managing an industrial park, I went back to work and learned how hard it is to earn a paycheck. I called creditors, reduced food costs, became frugal.
"Our marriage lasted. When I had my meltdown we owed $100,000 in credit card debt and loans from friends. In 10 years, we paid back $88,000. I was looking for something to do on the side to raise the last $12,000. I wrote a newsletter called Cheapskate Monthly. It was a silly idea and I'd never written anything before. That newsletter went to the moon. I was on Oprah the first year.
"It took 12 years to get that deep in debt, 13 to become debt-free. Here are the things I learned the hard way."
Hunt's Simple Rules
Cut up the plastic. You'll never get out of debt unless you put the credit and debit accounts away. You have to get the plastic out of your grip.
Change your attitude. For the short term, you'll use no credit. You'll get control of your money.
Face the music. Figure out what you owe, the interest rate and minimum payment. Pay that minimum every month on every card. Keep paying that amount even if the credit company says you can lower the payment.
Pay off each card. Pretty soon the smallest card will be paid off. Instead of blowing the money you were spending on it every month, add that amount to your second smallest credit card debt. That will pay off fast. When that happens, add that amount to card number three. When you pay off debt, there's a kind of euphoria. And a joy, a lasting joy.
For more information. Read more about Hunt's plan for getting out of debt.