You won't often see me write about money on this blog. Especially my money. We are a one income family, originally by choice/necessity due to daycare costs, and we have to be careful with what we spend our money on. We are also a large family, which means that our expenses are on the high side. We don't eat out much, we buy in bulk to save in the long run and we ask our families to help with the big expenses for the kids like hockey (thank you grandparents!!!). We are working hard to pay down debt; I am still paying on law school loans and will be for some time. Having to pay mortgages on two homes for 2 years did not help our financial situation and set us back. But we're trying to get out from under our debt.
I can't say that we were always financially savvy. We are quite guilty of using the equity in our home to consolidate debt, thinking that we were doing the right thing by paying off higher rate credit cards (hence why we had to sell our house for such a loss this year; owed more to the bank than the home was worth). We've consolidated several credit cards into a single credit card at a lower rate, which was supposed to stop the flow of money out of our bank account. We try to pay more to our higher rate card each month, but that isn't always possible. Our kids need clothes, food and shelter and those things cost money.
So imagine my horror yesterday when I got a letter from one of our credit card companies (Citibank) yesterday telling us that our nice, low interest rate was going up to 29.99% effective November 30th. TWENTY NINE POINT NINE NINE PERCENT! Of course this is our card with the highest balance, by far. Now of course under the new federal regulations Citibank is required to allow us to opt-out of this rate change. What their letter doesn't tell us, but what I know from doing my research, is that 1) if you opt-out, you have to pay your balance in full within 5 years, 2)when you opt-out and your card is canceled, it can effect your credit score (go here if you want to read the article).
I'm pissed. I'm pissed because we made stupid money mistakes. I'm pissed because as we're trying to get things right financially, the credit card companies are making it HARDER for us. I've done my calculations and I know what it will take to pay off our card in five years. It's more than we're currently paying for our minimum payment, which then puts us further in the hole instead of gaining any ground. Someone needs to explain to me how we can get out of the recession if people can't get out of debt because the credit card companies are putting the screws to us.
I am well aware that if we we were a two income family, I might not be writing this post. At the time I decide to retire from the practice of law five years ago, the cost of putting two kids into daycare was almost as much as my weekly salary. Add in my work costs (gas, clothes, travel, etc) and I wasn't going to have much of a paycheck left. We've talked about me trying to go back to work (NOT in the practice of law thank you very much), and quite frankly, it isn't a scenario that works for us right now with so many small children at home and this economy.
I know we've made our bed (financially speaking) and have to lie in it. But I also know that we are trying hard to rectify our past money mistakes and that having the credit card companies raise our rates isn't helping. We're trying to take steps forward and they are pulling us back. Is that the new American way? Quite frankly, it sucks.