Before my big move from Lebanon to Little Rock, Arkansas in 2009, I had many questions about the US financial system. I remember going to a histology technician in the laboratory of the American University of Beirut Medical Center to ask him about credit cards.

 

“How do credit cards work?”

“How and when do you pay off the credit card balance?”

“What’s the difference between a credit card and a debit card?”

 

After he patiently answered each question, I came out with a positive opinion of those thin, rectangular plastic cards: If used correctly, credit cards provide consumers lots of benefits.

 

There is, however, one major pitfall with credit cards: You can get into debt relatively quickly depending on how you use them, and your overall behavior around money.

In 2022, the US credit card debt, which decreased during the COVID pandemic, appears to be on the rise once again (9.2% increase compared to 2021).

 

Like a lot of people, I just can’t stand being in debt. Any type of debt! It would weigh on me and I wouldn’t be able to sleep at night. I have to thank my mother for my aversion to debt. Growing up, she used to repeatedly mention how tricky it is to take on debt. It’s something that stuck with me, and as a result, I’ve avoided being indebted throughout my life.

 

In fact, it’s one of my money rules: If I can’t afford something, I am not buying it. No matter how much I want it.

 

Every month, as long as I got rid of my credit card balance before the payment due date, I wouldn’t be charged any fees or interest.

I even take my loathing of credit card debt one step further: I pay my card in full before the statement closing date, so that I wouldn’t owe the credit card company any money. Zilch! Nada!

 

For credit card companies, I’m reduced (or elevated depending on how you look at it) to “deadbeat” status! I intend to keep that title as long as possible.

 

 

I must admit that becoming a deadbeat requires not only being disciplined with your money, but also some luck. I consider myself fortunate for receiving financial help during various stages of my life. My parents paid for my college education and helped me during and after my move to the US. With a resident physician’s low salary, I knew I could rely on them if I ever needed financial support.

 

That’s not the case with a lot of people in the US.

 

We come from different backgrounds (including different cultures) and experience unique childhoods. Some grow up in a household in which being indebted is normal. Others are raised by parents who never talk about money. And then there are few who experience upbringings in which they get almost anything they ask for.

As a result, we view money (and credit cards) in a completely unique way. Each one of us embarks on our separate financial journeys.

 

Some of these views and journeys lead to financial success and others to financial woes including credit card debt. Both paths have one things in common: Mistakes.

 

Most of us have made mistakes with money. Small ones and big ones.

Here some examples:

 

• We listen to the media, our parents, our neighbors or our closest friends and think this is the right time to buy a (insert a car or a house, or cryptocurrency, the latest smartphone or a Peloton). We make big purchases based on peer/societal pressure. That leaves little wiggle room for unexpected expenses or emergencies (insert sick parent/child, car accident, illness and related medical bills, home repairs).

 

• We make impulse buys using our credit cards, just because it feels good for the short term. Do we really need to buy so many “stuff” off Amazon or Target?

 

• We fall into the trap of making purchase decisions based on the monthly payment (instead of considering the entire cost). A car that costs $30,000, but the monthly payment is “only” $388 for 8 years. Wow, that’s pretty reasonable, right? Well, not quite. If you ran the numbers correctly (factoring in interest rates), you end up paying more than $37,000. If we add the monthly payments of other items like furniture for the house or that laptop, it is easy to see why debt is rampant in the US.

 

• We say yes to things or activities that we don’t want to miss out on, but don’t really make us happy. Do you really enjoy going to the symphony/opera? Do you seriously want to own and take care of a pet? Does going out to bars and staying up late bring you happiness? Some people go with the flow without giving a serious thought about what intrinsically makes them happy. They often say yes to events/purchases out of feeling pressure and accruing debt along the way.

 

• We make the biggest purchases of our lives (houses, cars, trucks), without running the numbers and making sure we can actually afford them.

 

I could tell you about credit cards and their ridiculously high Annual Percentage Rates (APRs).

I could tell you about credit scores and credit reports, and how they could save you tens of thousands of dollars on your biggest purchases.

I could tell you that keeping a budget might help (they don’t).

I could tell you that you need to cut down on your spending and paying more than the minimum on your credit cards.

I could tell you about the need to establish an emergency fund for unexpected expenses.

I could tell you that you might need to find ways to increase your income.

I could tell you about so many solutions to get rid of debt.

 

However, there is one thing that really does the trick: Working (every day) on our money psychology.

 

That includes our behavior with money and our feelings around money.

 

The financial psychologist Dr. Brad Klontz came up with the term “invisible money scripts” to explain why we spend or save money the way we do. Ramit Sethi, the author of “I Will Teach You to be Rich”, expands on this concept in his teachings.

 

When we grow up, we tend to absorb the things our parents and society tell us. They eventually become embedded in us, so much so that we don’t realize that these scripts guide our behavior every day. They are invisible, yet so powerful. They can steer our personal, professional and financial journeys.

 

Some of these scripts can be positive (“Don’t do to others what you don’t want to be done to you” or “Exercise is good for you” or “Don’t spend more than what you can afford”). Others can potentially harm you (“You’re throwing money away on rent”, or “Couples who are truly compatible never have bad fights”).

 

The two money scripts that were engrained in me are: “Save your white money for your darkest days.” That led to me saving money growing up, rather than over-spending it. The second was, “The stock market is like gambling.” That cost me dearly because I feared investing until I reached 35 years old.

 

When it comes to debt, each one of us has their perspective on it. Depending on your childhood and life events, you can see debt as harmful or as something normal. Maybe your parents had plenty of debt. What about the media and the real estate and financial industries? Have they normalized debt?

 

In fact, some people are in so much debt that they don’t even know how much they owe. For them, facing that number would be so painful, so they’d rather ignore it. Eventually, it becomes part of their identity. It’s “normal” to be in debt.

Some people take on another hopeless script. They’re deep in debt, so what’s another $300 pair of shoes going to do their “already bad” financial situation? Nothing, right?

 

What if you could reframe these harmful money mindsets by saying, “My credit card debt is pretty high at the moment. I don’t want to continue the trend of buying things I know I can’t afford, especially with the high interest rates on my credit cards. It’s going to take time to become debt-free, but it’s better to start making more than the minimum payment now, by cutting down on unnecessary expenses.”?

 

Yes, it takes time and regular effort to change our money scripts that are holding us back. However, establishing a plan with consistent payments will unshackle us from them, and lead to a much happier, healthier life.

 

What if you reached debt-free status and you had enough savings to take your family on an unforgettable trip to the beach?

Enough money to spend on memorable weekend getaways with your closest friends?

On music lessons to learn how to play a new instrument?

On private sessions with your personal trainer to reach your fitness goals?

 

 

Instead of stressing about spending on the things that bring us joy, we can finally spend and smile, knowing that there is a system in place that works for us.

By changing how we approach our finances and our feelings around money, all of us, regardless of income level, can reach “deadbeat” status.