Compulsive debtors turn for help
Man looks at mounting debts.
TEXT OF INTERVIEW
TESS VIGELAND: Much has been made in the jump of the savings rate in the year since the financial crisis hit. We're now setting aside about 5 percent, instead of the less than zero of a couple of years ago. We're also trying to shed debt. And different methods work for different people. Maybe you have a financial advisor helping sort things out or maybe you're an adherent of Dave Ramsey's "Total Money Makeover."
Well here at Marketplace Money, we figure whatever works for you, go for it. So today we're highlighting another method used by thousands of people across the country. Debtors Anonymous started in 1968 as an outgrowth of Alcoholics Anonymous. It today's show, we'll hear from three DA members here in Los Angeles. We're honoring their requests to use first names only.
Jo: I'm Jo. I've been a member of Debtors Anonymous for, it'll be 10 years Aug. 15.
Vigeland: I met up with Jo a few weeks ago at the Getty Museum in west Los Angeles. It was an anonymous location, where we could sip coffee as crowds milled around us.
Jo: I was $40,000 in debt on credit cards when I got to DA. And I still had $35,000 in credit left that was free that I could use.
Vigeland: So the credit card industry had given you $75,000 worth of credit.
Jo: I had 35 credit cards. I thought it was a wonderful thing. I mean my credit score was over 800. I had A-1 credit.
Vigeland: And how much were you making at the time?
Jo: I was making $33,000 a year. So, I owed more than my annual salary.
My first meeting date was July 13, 1999. I will never forget that, because I was terrified to go in. And the first six weeks I cried at every meeting I went to, because it was very painful. I didn't want to have to admit this was an issue I couldn't deal with, because I lived on credit cards for 25 years. It took me a long time to hit my bottom, so to speak.
Vigeland: And how did you know when you had hit bottom?
Jo: I could not get through the month without doing a cash advance on some credit card to just meet my needs. I was not overspending other than the way I've run up my credit cards. I charged a car. I actually put a $4,000 car on a credit line.
One of the problems with credit cards is when on you've got that revolving balance every month. You keep thinking, "I will pay it off." But you never do.
Vigeland: But slowly, she did. She paid off all $40,000 worth. Now she pays her bills in full, every month. She has what Debtors Anonymous members call a "prudent reserve." You'd call it a savings account or an emergency fund. But that's not all.
Jo: I have a retirement account, a mutual fund. I own my own condo. My car's paid off. These are things I did not have before I got into Debtors Anonymous. And I've learned so much. I write down -- this coffee we just bought? I have a receipt for it, it will go into my Excel spreadsheet. I track everything that I spent, so I can watch it.
Spending money is a lot like eating. There's a lot of habit forming that goes on. And I've created habits for me that keep me in line that I didn't have before. I take money out every month that goes into my savings and I've budgeted myself enough that I have a clothing allowance. What I used to do is I would deprive myself and say, "Oh my God, I've got to get these cards paid off. I'm not going to spend any money." And I go a couple of months and then I couldn't stand it anymore. So I go spend $400 at Macy's, because I felt I deserved this. So it was the imbalance of what I was doing that was also creating the problem that I had.
Vigeland: Do you own any credit cards? I mean is this a matter of just not ever taking them out of the wallet or are they completely cut up and gone?
Jo: They are completely cut up and gone. I have a debit card, but it takes the money out of my checking account, so I can't spend it if I don't have it. My credit went down when I first got into DA, because I had to stop doing what I was doing.
So a lot of my creditors, I had to call them and say, "I can only give you $10 a month." And some of them said OK and some of them didn't. I had to deal with collections agencies. I learned a lot in doing a lot of that. But what I did was -- most of them took my $10 a month. And it took me four to six years to pay off a credit card. It's not a quick fix. No one's going to pop into the program and next year be OK, unless they only owe a couple thousand. But to me it's like, "You know what? I have to own responsibility that I bought this thing and I did not pay for it."
Vigeland: I think that's not the way a lot of people think about their use of credit cards. That when they plunk that plastic down, they have not paid for the good or service that they have.
Jo: That's exactly right. I used to think that way. There was a disconnect in my brain about when I bought something with cash and when I bought something with a credit card. For some reason, in my mind, I had the thing or the service, whatever it was I paid for and it was done. But I hadn't paid for it.
Vigeland: Is there anything about Debtors Anonymous that you think sets it aside from other debt reduction programs. What is it about Debtors Anonymous that you think really worked for you, that maybe other things didn't?
Jo: It's a spiritual program, it built my self esteem. We have a saying in the program, "It's not about the money." That's one of the symptoms, but it's not about the money. So you can fix the money all you want, if you don't fix what's going on in side of you, it's going to happen again. And I went into debt three times. First time I went into debt, I owed about $5,000. Paid that off. Second time, $13,000. Paid that off. Thought I fixed this problem. Then I got up to $40,000.
So that's been the difference for me with DA, in that it's not just about the money, it's about what got me there. I'm a more peaceful person today. I'm a happier person today. I know how to live within my means, which is not a bad thing at all. In this country, that seems to be a terrible thing, to live within your means. And I don't think so; I still have fun.
Vigeland: And here's where I'll usually tell you to go to the Web site for photos and the like, but of course, we don't have any. We do, however, have a link to DA. You'll find it at Marketplace.org.
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Tess Vigeland: And now onto our second interview with a member of Debtors Anonymous. I met up with Ethan in another anonymous place: on a hiking trail, high on the Hollywood Hills.
Again, we're using first names only.
Ethan didn't join DA because of massive credit card debt. He simply found it impossible to manage his money. He was trying to run a fashion business, but it was taking a toll on his bank account and his sanity.
Ethan: I've been in since 2001. I came in with $2,000 worth of debt. I had a company that I was a slave to, but I was barely able to stay live. And when I came in, I was looking for new skill sets, looking for why God put me in this situation or oh God, how do I get out of this situation, really. And that's what brought me to DA.
Vigeland: What was the moment when you decided that this was something that you needed?
Ethan: Well I didn't know how to pay my rent, but I was working and overworking just to keep the business alive. In Debtors Anonymous, there's the 12 steps. And the first step is recognizing that we are powerless over something. And I felt really powerless over being able to figure out how to deal with my life around money.
And so I knew when I first came in that there was help, that there was hope. When I got there, I could see people, people who had hundreds of thousands of dollars in debt and people who had all different levels of addiction that I didn't really fully share, but I wasn't a big shopper. If anything, i didn't spend any money on myself and that's something that I've gotten to learn about being in the program, which is really how to find some kind of equilibrium with myself and just be able to thrive.
Vigeland: So how did you manage your money or mismanage your money? Did you keep a running balance in your checkbook?
Ethan: I wasn't so on top of it. I think for me the path was, I was an underearner; I worked way too hard for the level of money I was receiving. And I had to kind of own up to that and it took the support of people in the program and different -- there's something called the "PRG" in DA, which is a pressure relief group. One man and one woman to be there to listen to you, to find out really where they can bring equilibrium to your world.
Vigeland: So what was your first PRG like?
Ethan: I remember that I went in and I wanted them to fix what kind of work I'm going to be doing right now, what's going to pay my bills, etc. And what really came back as feedback was, you need to slow down, where you are taking care of yourself. And it was not what I expected and not even what I necessarily even wanted. But what it did was give me the perspective of "Oh OK, I'm here for a long time."
Vigeland: Let me ask you a little bit about where we are. Why are we here in the Hollywood Hills?
Ethan: This is a walk I like to take. You get a full view of downtown, all the way down to the beach when it's a clear day. And it's something about finding some kind of peace and perspective. And it's nice to be this high up and get a view of the whole city that normally we're so run by.
Vigeland: Is this something you would've done prior to your experience with Debtors Anonymous?
Ethan: I wouldn't have given this to myself, no.
Vigeland: Well Ethan, thank you so much.
Ethan: Thank you and I'm just grateful that other people can have the opportunity to know about ways they can help themselves.
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Bill: I came in with about $50,000 in unsecured debt and another $70,000 in construction loans.
Tess Vigeland: What made you finally decide that you had to take this step to go to DA?
Bill: Well, the telephone calls from the creditors and not having been able to purchase anything else on credit, because my credit was so darn bad. But mostly the pain of not having money and savings and not being able to actually meet my obligations that caused me a lot of internal pain and made me feel like I was a nobody.
We lived in an age where people who had credit cards could, that was a status, a sign to them then. It's not much of a status now, but during that time it was. And I'd get them and max them out real quickly. Even when I said to myself that I couldn't, that I won't. So I knew I just've had a problem that was different from others.
Tess Vigeland: What was your first meeting like?
Bill: I was very shameful, because I have a degree in finance from a very good school. And I still couldn't handle my own. And so walking into that first meeting was pretty shameful, but because I had been in another 12-step program before DA, it wasn't probably as scary. You know, we've borrowed the 12 steps from Alcoholics ANonymous. I used debting the same way people drink, I just don't drink.
Tess Vigeland: Do you find at all that there is a change in how people feel about admitting that they have debt problems? Because it's so widespread right now.
Bill: I would say in the rooms, yes; outside of the rooms, no. Not as socially acceptable as Alcoholics Anonymous. Members of AA will talk about their time in AA. (A lot of ________________ about their time in DA).
I think debting is probably the course root of the problem. I heard people share about their sex issues and all of those things, before they'll talk about money. Think about the friends you talk about, very few of them will tell you what's really going on. If they're about to bounce a check today, they won't come out and say that. They rarely say that to you. But they'll tell you, "Oh my husband didn't come home last night" or "My wife didn't come home" or "My wife drank too much" or "I drank too much." Or they may say, "I went to the game last night and got smashed." They didn't tell you they blew all their money.
We as a fellowship should be the largest. And we are one of the smallest, why? We get members from every other 12-step program. What does that tell us? That we all address all these other issues first and debting is the last one we want to address, because it's shameful.
Tess Vigeland: What advice do you have for people who are in big trouble, money-wise, who are having trouble taking the next step and either going to a meeting or whatever else might work for them to deal with the debt?
Bill: I would say to them, don't be ashamed to say that you are a debt addict. When I identified myself, "Hi my name is so-and-so and I'm a debt addict," the recovery comes a lot faster.
Tess Vigeland: That single sentence?
Bill: Yeah, the single sentence means that you have surrendered. You no longer want to hide it, you know that's what the case is and you want to do something about it.
The primary thing I would ask someone to do: Listen to the _________________ in the room, listen to somebody who's already recovering, somebody that you hear and you like what they said, ask them how did they do it.
And then secondly, get yourself a little spiral notebook and write down every dollar, every penny that you spend out of your pocket. And that's going to be the biggest lifesaver for you. And it's not a process that happens overnight, but it is a process. And the process means that it takes time. And you will be able one day, to say, like I've done in this interview, that my life is so much better as a result of Debtors Anonymous.