Are You Robbing Visa To Pay Mastercard?

I spent several years working as an insolvency advisor for people whose debt had become so unmanageable that they had to file for bankruptcy, and it would always surprise me at how long some of my clients ignored their growing debts before seeking help.

Often this was due to two reasons:

  • They were too embarrassed about their situation and refused to get help.
  • They were waiting in hope that their financial situation would improve by itself and in the meantime continued to borrow, in order to maintain repayments, as they viewed that as a short-term solution.

It’s often the case that some wait until the creditors are breathing down their necks and sending over bailiffs before truly realizing the gravity of the situation – and by then there’s little that can be done that doesn’t require drastic action.

William Penn said, “Time is what we want most, but what we use worst”, and when we’re talking about dealing with debt I couldn’t agree more. Part of managing your debt is coming to terms with your situation and being honest with yourself. It’s not an easy thing to do and it takes courage.

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Waiting not only delays the inevitable, but makes the prospect of quickly recovering your former credit status next to impossible. The implications of this can be felt for many years afterwards.

The infographic below from theWalletDoctor.com highlights the typical cycle that the majority of debtors go through. Over 63% of people in debt don’t seek help within adequate time and furthermore, many don’t realize that the help they needed was available to them for free the whole time.

The consumer debt infographic

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20 comments
Alicia says December 12

I really connected with the 40% stat about knowing something was wrong before getting help. The denial is tough,..”this pay cheque will be different”… and it rarely is.

Reply
    Laurie says December 17

    Denial is tough. I remember being at that point.

    Reply
John S @ Frugal Rules says December 12

Ouch! Being self-employed, I couldn’t imagine having more debt than those who’re not. It’s also sad to see that older individuals have more unsecured debt. It’s bad enough when you’ve not saved enough for retirement, having debt is something else altogether.

Reply
Travis @Debtchronicles says December 12

I lived this for thirteen years. I always thought the next salary increase would be the one that would allow us to pay down our debt. All it did was allow us to keep up with the growing minimum payments on our credit cards. The good news is that there IS help…in a variety of ways. People just don’t know what their options are – it’s much easier to deal with sooner than later. Because it was REALLY hard waiting until later.

Reply
    Laurie says December 17

    I did that for some time as well Travis. I thought that when I got my bonus, I would get out of debt. Nope, I would just spend it.

    Reply
DC @ Young Adult Money says December 12

The fact that unemployment redundancy and reduced income are the main drivers of debt should be telling. I think most people are living paycheck to paycheck and would have trouble getting by if they lost their job or had to take a significant paycut. Hopefully infographics like this motivate people to make more and spend less.

Reply
CNA Finance says December 12

Grayson, I’m loving this info graphic. Especially since it points out how much money payday loans really cost…uggg I hate those things! Thanks man!

Reply
    Laurie says December 17

    Payday loans are just nasty products, yet people still use them.

    Reply
Tanya says December 12

Denial is really hard. Most people don’t want to believe and except the fact that they need a lot of help. Then it gets to a point where its almost to late. sad.

Reply
Laurie @thefrugalfafmer says December 12

“The burden of debt doesn’t shift by itself – act now!” LOVE that quote. We started the year with a 65% DTI, and decided that it was time to get rid of that burden of debt, and what a relief it’s been! Not easy, by any stretch of the imagination, but the debt numbers are decreasing and the savings account is increasing, so we’re on the right path.

Reply
Melanie says December 13

I think people are too busy finding money than really thinking on the real problem on how to solve it.

Reply
    Laurie says December 17

    Great point Melanie. They need to focus on the problem and then find a solution.

    Reply
Leonard @ the Wallet Doctor says December 14

A big thank you to Grayson for posting the infographic I made.
I did find a lot of troubling statistics regarding under-25 year olds in debt, but there’s so much to cover that I will have to make it as a separate infograph

Reply
    Laurie says December 17

    Thanks for sharing it Leonard. I appreciate it.

    Reply
Mr Financial Debauchery says December 14

5000% APR? Are these people insane? I think I’d rather work all 168 hours per week instead of sign myself up for 5000% APR.

Reply
    Laurie says December 17

    I am with you there MFD. These people just don’t know of other options.

    Reply
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