Here’s an email we got recently :
Mr. Credit Card
I am so confused on what if anything that I can do about my situation. When I first turned 18 I applied for a credit card, and got approved. I did not know about this credit card until one day my mom came crying to me that she thought I called to tell them it was stolen… but really it was her that was using it. After giving me this long sob story I – stupidly – agreed to make her able to use the card. She promised to make the payments, turns out you can’t even trust your mother! Now I am in debt $8,000! I have no idea what if anything I can do. Please if you have any advice!!
Answer: Crystal, looks like Mom has broken your trust. I have to ask you a couple of questions first.
I would assume that you approved Mom to be an authorized user of your credit card and she is not a joint account holder. If this is indeed the case, then all you have to do is to remove your Mom as an authorized user and she will not be able to use the card in future. I would suggest having a word with her first and confront her. You will have to tell her that what she did was unacceptable and that you would have to remove her as an authorized user. Here is an action plan.
1. Set a Budget and a Payment Plan
I would assume that you are not able to pay off the $8,000 at once. You said you were 18 years old when you got the card, but I do not know how old are you now or whether you are in college now or are you working and earning some income. What you should now do is to set up a budget, look at your income and expenses and figure out a payment plan that will eliminate this $8,000 in credit card debt. You may have to cut back on some spending. But what you want to avoid is having to just pay the minimum.
You can use this calculator from CNN to help you figure out a realistic time frame to pay off the debt
to figure out how long it takes to repay your credit card debt.
You may have to make some sacrifices and work part-time if you are at school. Or work more if you are already working part-time.
2. Explore Balance Transfer Opportunities – You did not mention what rate you are paying on your card. I also do not know your credit scores. But definitely explore 0% balance transfer credit card deals. They will help you save on interest payments and your cash flow in your quest to eliminate this credit card debt.
3. Confront Your Mom
Once you figure out a plan, I would then confront your mom and at the end, ask her if she would bear some burden in your payment plan. Ask, but be realistic and do not expect anything.
I would be firm with your Mom and tell her how disappointed you are, but also be nice (in the sense that this should not turn into a shouting match). Bear in mind that what she did was wrong. She should never have been using your credit card (she should have got her own). She has broken her promise not to pay. You also have not told us about her situation : what does she do? how much does she make? Can she afford to pay?
4. Try to Get Refunds
There are other things you can do. For example, find out what has your mom been ing. Has she made any impulse purchases within the last month (like BowFlex on QVC). If you has bought some high ticket items within the last 30 days, you may be able to return and get a refund (especially for late night infomercial products).
5. Remove her as an authorized user
I’ll leave it to you whether to do this before you speak to her or after, but either way, this has to be done (IMO).
To summarize, here are your actions steps :
Sometimes life sucks and things happen. Stay focused. You need a plan to reduce this debt, stop the problem and move on. And also learn your lesson. If you are still in college, you may have to work part-time and if you are already, you may have to put in more hours. Remember, at the end of the day, it is your credit. Your credit score will affect whether you can rent, get an auto loan when you decided to a car and even affect your employment prospects. Pay off the debt ASAP and move on.
Oh – one more thing. You did not mention this in your mail (and I do not know your entire situation), but would speaking to your father about this help?
Anyway, hope this helps. Good Luck.