Credit card debt – the trap, the hook and the freedom

Filed in: Blog

Under: Spend Less

Hello Leveraged Mamas! Today we're talking about credit card debt, the trap that lenders create for us and how they keep us hooked. It's not going to be an easy conversation  🙁

Becoming a Leveraged Mama is about using the time and income you have in the best possible way – so that you can achieve a beautiful balance with time, money, kids and happiness.

We're working together towards achieving this zen without major sacrifice and suffering.

But this isn't going to be without the occasional difficult conversation, or the occasional awkwardness where I raise topics that make you downright uncomfortable and want to turn away.

Depending on your circumstances and the choices you’ve made so far to manage your money, today could be one of those times.

I’m going to make every effort to tread gently, but there's still every chance that this topic may trigger you – and when I say trigger, I mean this: if what I raise today proposes a BIG change to the way you manage your money, what’s actually going to happen is that your amygdala – a part of your brain designed to alert you to danger – is going to fire up and get you ready to do one of two things:

Fight, or flight.

Practically speaking – it means you may feel anger, or want to hammer away at the keyboard to tell me exactly why you think I’m totally wrong and out of line (fight).

Or you may just want to stop reading and turn away, dismissing what you read as misinformed or just plain stupid (flight).

This is totally normal!

If it happens, just note that feeling and understand what it means. Your amygdala fires up when danger or discomfort looms. It’s preparing you to deal with or run away from the threat.

And the bigger the potential change, the more likely it is to be uncomfortable. So the amygdala is doing it’s job – it’s alerting you to potential discomfort.

Why do I know so much about this, I’m not a psychologist?!

No, I’m not a psychologist but in my professional role as an Agile coach I am often faced with bringing big change to people, and I see this response all the time.

I think it’s important that you’re at least aware of it, so that you can make an informed choice about whether you keep reading.

Because today I’m going to really challenge a societal ‘norm’ and it’s HIGHLY likely that some of the behaviours I’m going to challenge, are embedded in your life.

Just know this first before you read on – it’s not your fault.

And in due course I’ll explain in why.

The money bootcamp that exposed the truth about my credit card debt

Over the past year I’ve done an EXCRUCIATING money bootcamp, and it’s brought me to where I stand today – enlightened and shocked, yet relieved.

I need to set the scene that caused this ultimate showdown – it wasn’t as if I just woke up one day and thought “I’m going to totally upheave my family and cause us a heap of discomfort because why not.”

But we really had no choice.

Before I became pregnant we had a swathe of credit and store cards – none near their limit but all just chugging away with some level of debt.

I was actually proud of them – the unused portions that is. Look how much unused credit we have.

But when I was 6 months pregnant I was made redundant. I received a small redundancy payment but nowhere near what was required to replace the income I would lose.

Lucky we had all that unused credit!

The credit would and did become our back up. And when our savings ran out, the debt rose, and rose, and rose.

Then our landlord decided – in the hot housing market – to sell. So we had to move.

From a fully furnished house into a house with not a scrap of furniture…

Lucky we had those store cards!

But by the time we had moved to a new rental, our savings depleted and our credit almost at it’s limit, I knew we had to do something drastic.

By this time I was working again, but not full time so we had less total income coming in.

Our pre-baby lifestyles were coming back to bite us.

Our credit card debt was at an all time high and it was suffocating. Every time I had to turn to using credit I felt sick.

I felt trapped.

It felt so wrong.


I cut up all of our credit cards

Ok, that’s not entirely how it went down.

I actually spent months crafting a new budget to look at all the different ways we could manage without credit.

There weren’t many.

Firstly, I consolidated what I could.

Even though I think consolidated loans are stupid (they are a bandaid for bad behaviours), by consolidating our credit card debt it meant that we could close off three of our four credit cards, but more importantly:

“Consolidating” your credit cards into a loan, removes the ability for you to continue using them.

Related (on LendEDU): What Can a Personal Loan Be Used For?

So yes, that meant I could no longer use them as a source of revolving credit – you know, when you pay off an amount and use just as much if not more…

The remaining credit card – with a few thousand on it, and the store cards, went into a container in the freezer.

I froze them. Metaphorically and literally.

I’ll talk more about the wisdom of freezing your credit cards later but, on with my traumatic story for now…

So do you know what happened after I froze my cards?

Only the biggest financial showdown I had ever had in my life!

Once the cards were gone I had no choice but to save for everything my family needed.

My money shadow was exposed

I had to do some SERIOUS rebudgeting to make sure we could cover all of our upcoming expenses without turning to credit or store cards as a back up.

No more instant gratification.

A number of very uncomfortable money conversations with my spouse.

It was really, really painful.

Why would I do this to myself?

Because I had a bone to pick with debt. Specifically…

“Dumb debt”

And not just credit card debt:

  • Credit cards.
  • Store cards.
  • Personal loans.
  • Consolidated loans to pay off credit cards.

It’s all dumb debt.

Why is it ‘dumb debt’?

It’s dumb for so many reasons – but this is what ‘dumb debt’ is technically:

Dumb debt: money borrowed to pay for something that reduces in value.

For example:

  • Clothing
  • Make up
  • Food and beverages
  • Cars
  • Coffee
  • Furniture
  • Holidays

Ok so pretty much everything except property – and even then there is no 100% guarantee that it will go up in value over time.

Smart debt: money borrowed for something that increases in value.

But my two cents (ha) about why it’s really dumb:

👉 Dumb debt steals from your future
For every dollar you spend today that you don’t have, it’s a dollar you have to pay back tomorrow – it’s a dollar you have to earn in the future to pay off the dollar you spent today.

👉 Dumb debt makes you work harder
For every dollar of interest you pay on dumb debt, it’s a dollar you have to earn, and it increases the original price of your purchase.

It’s a dollar you have to earn.

It’s a dollar you can’t use.

It’s a dollar gone to the marketing efforts that will get you to incur more dumb debt!

Interest on dumb debt is paid directly from the hours you work. How many hours a year do you work to pay interest on dumb debt?

👉 Dumb debt makes you think you’re wealthier than you are.
It lulls you into a false sense of wealth – you can have what you want, when you want it.

Even if you don’t have any real money to pay for it!

👉 Dumb debt prevents you from learning good spending habits.
Because there are less constraints, you’re rarely put in a position where you have to manage your money properly.

It just keeps coming.

And when you run out, they’ll lend you more.

And when you really run out, they’ll consolidate it for you.

So that you can later, get another credit card!

Dumb debt is not a Leveraged Mama’s friend

If you want to leverage your time and income, working today to pay off something you bought yesterday doesn’t make any sense at all.

Paying interest on items that lose value makes no sense at all.

Living outside of your means for any other reason than an absolute emergency, makes no sense, at all.

Actually, living outside your means makes no sense at all.

Do you have dumb debt?

Look if you have dumb debt, you’re not alone. In today’s society we’re led to believe that it’s ok.

Everyone has a credit card, right?

And once the credit runs out (or the interest free period from your balance transfer), you can use store cards!

No store cards? No worries – just Laybuy, or Afterpay, or or or…


If you're still reading AND you have a bit of dumb debt hanging around – I applaud you. I don't want you to feel bad about it so here's the truth: it’s not your fault.

It’s not your fault.

It’s not your fault.

And heres why.

Ok we’re about to go super deep here – super geeky, but it’s worth it I promise.

Much of what we instinctively do is driven by our ‘primitive brain’.

Functions of our brain that were formed to help keep us alive – back when we were hunter gatherers living in caves.

Before we had money…

Before we traded.

Before the housing crisis. Ha.

In this case, when we can’t wait until we have saved the money required to purchase something – we are seeking instant gratification.

Instant gratification = dopamine.

Getting instant gratification triggers the pleasure and reward centres in the brain, and we get a hit of dopamine.

Even thinking about receiving a reward of some sort triggers drip feeding of dopamine.

Try it – try thinking about doing/consuming/partaking in something that you REALLY enjoy doing.

Feel that? Yeah, that’s a dopamine hit.

Dopamine is nice… reeeeall niiiice. It makes us feel great!

Reward seeking behaviour was initially about survival: you craved the the things that kept you – and the species – alive: food and water, and sex for reproduction.

Get the reward, receive the dopamine treat. Bliss.

But the brain likes to automate… so it learns – through trial and error, what makes you happy, and once it sees a potential reward it goes into reward seeking mode and starts drip feeding you dopamine until you get the reward.

(If this sounds like addictions to you, you’d be right – it’s the same parts of the brain that are triggered with addictions and addictive behaviour).

But here’s the problem with dopamine and your future

When dopamine is released, it blocks the pre-frontal cortext – the logical, problem solving part of our brain – from weighing up your long term goals against the reward you seek.

This is so that you’ll do whatever it takes to get the reward you seek. You are driven to satiate the craving.

Ever find yourself impulse buying/doing? Yeah, that.

Dopamine is all about rewards – now, and survival is all about now.

  • Eat now or die.
  • Reproduce now or die.

But somewhere along the thousands of years of the evolution of our species, we have confused that.

  • Buy those new shoes now… or die…?
  • Buy that new furniture now… or die…?

No, when you think about it – it doesn’t make sense.

But dopamine is actively trying to stop you from thinking about that, when a reward is in sight.


It’s not your fault (entirely).

You just want your dopamine hit – and instant gratification allows you to get it.

Banks and retailers know about your dopamine habit

They know you want instant gratification.

So they make every effort to make it easy for you to get instant gratification.

And who are you to prevent this?

Herein lies the problem with dopamine seeking.

But ok, you might think – that’s fine I can handle a bit of credit card debt.

What’s the REAL problem with dumb debt?

The problem with dumb debt is that is doesn’t go away until you PAY for it.

You can’t sell what you bought and repay the debt – well, you may be able to sell some of it, but you won’t get the same value you paid for it originally. Because it loses value.

So you will always be paying off tomorrow, something you bought yesterday.

That’s money you can’t spend today.

That’s money that’s not earning interest (for you) today.

That’s payments you have to make even if you lose your job. Or get sick. Or some other unpredictable life event affects you.

That’s money you must earn today.

But, but, but… two credit card HOOKS that keep us dependent on credit

Even if I have done a stellar job of convincing you that dumb debt is bad and must go, there will still be those of you who believe that credit deserves a place in your lives.

Let’s talk about two ‘hooks' that keep us feeling confident about our credit card debt:

Hook #1: “I just use it for the rewards.”

Credit card hooks that keep us addicted - The Leveraged Mama

I’m biting my lip here.

I mean let’s just cut to the chase here – I can hear the lenders yelling “YOU WANT REWARDS? WE GOT ‘EM!”

No subtlety whatsoever.

Honestly that’s like someone walking up to you at a party and saying “Let’s have sex.”

No introduction, no prelude, no wooing just “LET’S CUT TO THE CHASE AND JUST DO IT OK.”

But sadly we all lap it up.

Reward seeking.

Credit companies offer these rewards so that you think you are getting something for free.

You should know that nothing is truly free…

Those rewards are offered to keep you hooked.

So that even if you manage to pay off your credit card every month, you still have access to money that isn’t yours.

And here is the problem with that (and this is what the credit providers know):

When the shit goes down, (job loss, illness, economic downturn, any kind of unpredictable event that affects your financial situation)…

Who/what do you turn to?

Who has your back?

Yeah, your credit cards.

Which brings me to hook number two that’s keeping you addicted to credit:

Hook #2: “But what if there’s an emergency?”

Credit card hooks that keep us addicted - The Leveraged Mama
Credit card hooks that keep us addicted – The Leveraged Mama

Yeah that’s a fair concern.

Emergencies – mostly unpredictable events that you couldn’t have planned for – we don’t want to get caught short and not be able to feed our families or keep a roof over our heads, if something drastic happens.

But it is possible to put aside money for emergencies without knowing what they might be, before they happen.

It just takes 3 ingredients – for ALL of us, no matter what your financial situation or income:

Money + Planning + Time

The less money you have, the more time you’ll need.

An emergency fund is (actual) cash you can use in case of an (actual) emergency.

The reason many people don’t have an emergency fund is because:

Their emergency fund is credit (of some sort).

(But really it boils down to a lack of planning, as we all have time and money.)

Alright sure Peti, you've convinced me – credit card debt is bad, but what do I do about it?

If I’ve done my job here today, you may be having an uncomfortable realisation that perhaps that credit card debt isn’t really your friend.

It might be something you already knew and are just looking for confirmation of that feeling.

It might be that you’ve been telling yourself the things you need to hear, to justify having credit card debt.

But I believe that credit card debt is inherently wrong, and it negatively affects so many layers of our society.

Credit encourages instant gratification and bad planning.

Credit card debt steals from your future to pay your past.

But how do you get away from this life long habit – this ‘perfectly acceptable’ way of living?

Well I've spent the last year doing just that, and that's what I'm going to pull apart in this series of posts.

How to plan it out, and exactly what you need to do to escape the credit trap.

As always I’m super keen to hear your thoughts – do you have “dumb” debt? Do you want to be rid of it? Or do you disagree? Drop a comment on the blog post.

See you next time!

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