Posted on Mon, Jul. 6, 2009
Christine Vanderberg knows what it's like to be loaded down with credit card debt - also what it takes to climb out of it.
Five years ago the 56-year-old Amityville, N.Y, resident gave up one of her bookkeeping clients. The cut represented $25,000 in annual income, but she also faced a "grueling schedule" after her mother was diagnosed with lung cancer. Vanderberg and her family incurred $12,000 in credit card debt - from charging the basics such as food, gas, clothing - she said.
"During that two years or so I felt like I had something tight on all the time," she said.
Plenty of others are feeling that pinch, as more people struggle with credit card obligations. The amount of Americans' credit card balances that card issuers wrote off in May as uncollectible rose to 10.6 percent of the total $900 billion in outstanding balances, according to Moody's Credit Card Index, released Wednesday.
That's up from 6.4 percent in May of 2008 and is the first time in the index's more than 20-year history that the charge-off rate rose above 10 percent.
Also, Moody's expects that rate to rise further, likely peaking "at around 12 percent in the second quarter of 2010," vice president William Black said in a statement.
For some consumers, excessive credit card debt can result from life event setbacks. For others it's a gradual slide.
But "it's not like it's an incurable disease. It's debt. It's money. You can make a plan. You can dig yourself out," said Carolyn McCormack, director of education at SafeGuard Credit Counseling Services Inc. in Hauppauge, N.Y. Don't "close your eyes and hope," she added.
Vanderberg and her family reversed the slide by developing an austerity plan and using a zero-percent balance transfer to pay off their balances.
The plan meant no vacations, no dining out, no movies, forgoing online book purchases in favor of library checkouts. And as her mother recovered, Vanderberg said she was able to take on more clients.
"We bit the bullet - we were bare bones," paying $1,000 a month to whittle down the combined balance in a year's time, she said. "Now I pay the balances in full every month and carry no credit card debt."
(c) 2009, Newsday.
Distributed by McClatchy-Tribune Information Services.
PHILLY.COM INDICES WATCH
Philly.com Promotions
