I spent the 1990s addicted to credit cards. I was mired in debt.

Recently while cleaning the garage, I unearthed a box full of old receipts and bank statements. I spent a couple hours sifting through them, aghast at my former spending habits. It was like peering into the life of a stranger.

Addicted to debt
The oldest documents I have are from April 1994, less than three years after I graduated from college. Already I had $9,550.13 in credit card debt. (I also owed more than $5,000 on my 1992 Geo Storm.) Fifteen months later, in July of 1995, my credit card debt topped out at $19,965.74.

During this time, on a take-home pay of about $1,400/month (after taxes), I was deficit spending by nearly $700/month! I spent 50% more than I earned. I bought books and comic books and VHS tapes and videogames. I did not invest. I did not save.

[I spent a lot of money on books an comics]

How much of that stuff do I still have today? On a quick stroll the house, I found a handful of science fiction books I bought in those years. That’s it. Basically, I spent $25/day on nothing. I was an idiot.

From 1995 to 1998, my spending fluctuated. I’d dig myself a couple thousand dollars out of debt, and then fall back into the hole. It was as if I was compelled to use all of the available credit on my accounts. I can remember calling the banks’ toll-free numbers to find out which card had enough room for me to buy new comics. As I said, I was an idiot.

[$11.32 in credit available]

I also used every possible penny in my checking account. (I didn’t have a savings account.) A lot of times, I used more than every penny:

[I bounced checks all the time]

Running to stand still
During the time I was addicted to credit, I knew that I had a problem. I’m a smart guy. I understood the math. But my deficit spending wasn’t a math issue — it was a product of subtle emotional and psychological problems that I had to work through before I could get my spending under control.

One day, out of desperation, I cut up my credit cards. A local bank was promoting home equity loans, so I took one out and used the proceeds to pay off all my credit card balances. From the middle of 1998 to the middle of 2007, I did not use a personal credit card.

But getting rid of credit cards only provided temporary stabilization. I still lived paycheck-to-paycheck, spending every penny I earned. And I still had $20,000 in debt — only now it was in the form of a home loan. Eventually I discovered other ways to take on consumer debt. I financed a new car. I took out a loan for a computer. I borrowed from family. By 2004, my debts totaled over $35,000. Then, at last, I began to turn things around.

Addicted to saving
It took more than three years of focused intensity to become debt-free, but eventually I did take control of my finances. Since then, the financial inertia has helped me to save more.

During my quest to eliminate debt, I developed a positive cash flow of over $1,000/month. That continues to this day, which means I’ve managed to save $5,000 in my emergency fund, $1,000 in my Mini Cooper account, and an extra $500 designated for a future vacation. Plus, I’ve begun to save for retirement.

All of this feels great, of course, but sometimes I worry that I’m in danger of developing a different sort of unhealthy relationship with money. I’m addicted to saving. I feel like I’m perilously close to becoming a miser. It might be time to actually budget for fun.

Taking the first steps
How can you dig out of debt and begin to build wealth? First, recognize that it will take time. You won’t change your habits overnight. At first you’ll need to take baby steps, and even then you’ll fall on your face at times. Get back up and keep trying. Eventually you’ll move beyond baby steps; you’ll find that you can confidently make huge financial strides. Here’s some advice based on my own experience:

  • Set goals. The road to wealth is paved with goals. I spent like a fool when I was younger because I didn’t know what I was doing with my life. Find a purpose.
  • Stop using credit. You may not be able to do this immediately, but make it a priority. The longer you continue to add debt, the longer it will take to get rid of it.
  • Establish an emergency fund. Set aside some cash in savings as cheap insurance against life’s nasty surprises.
  • Practice frugality. Look for ways to curb your spending. Shop smart. Focus on quality and value.
  • Reduce recurring monthly expenses. Monthly subscriptions — to magazines, to web sites, to cable television — are like a cancer. Cut as much as you can.
  • Get out of debt. Find an approach that works for you, and begin to chip away at the deficit. Use the debt snowflake principle to make gradual progress.
  • Increase your income. Ask for a raise, or make money from your hobbies. Consider selling things you no longer want or need.
  • Try not to get frustrated. Don’t let your situation get you down. Don’t focus on the big picture. Do keep your eyes on your goal, but concentrate on taking small steps. Do the best you can at this moment. If you know you have problems in certain areas, work to improve them. Don’t expect to become perfect overnight.

The key is to get started. Looking back, I wish I had found the courage to begin digging out of debt in 1994. Instead, it took me ten years and tens of thousands of dollars to find the guts.

[I was paying interest rates as high as 18%]

This article is part of the MBN Group Writing Project for May. Here are stories from other participants:

What about you? How do your finances compare with a decade ago? Has your situation improved? What was your turning point? What was the most valuable strategy you found along the way?

This article is about Debt, Real-Life