When Spending Is Irresistible

Beware the plastic monster.

Consumer debt is rising to record levels, and credit cards account for most of that.

But especially with the holidays looming, cardholders don't always know when they've rung up too much debt.

Take Ted, for instance, who asked that his name not be used: He loaded $60,000 onto credit cards, in addition to his mortgage and student loans, before he knew he was in trouble.

Ted is a financial executive with an MBA and a CPA. He earns $80,000 a year at John Hancock Mutual Life Insurance.

His former wife gave up her $120,000-a-year job to return to medical school. And Ted racked up the $60,000 debt maintaining the family's lifestyle. "What I didn't do," he says, "is say no: 'No, we can't take that trip this year,' or 'I think we'd better make our coats last one more winter.' "

He says it really happened throughout the stages of his life. First it was a couple thousand dollars of debt as a young man. After that was paid off, $10,000, then $20,000. Three years ago Ted began adding lines of credit to cover old debt.

The wake-up call came when he was turned down for another $20,000 credit line. "I thought I was managing my income, but I realized I was just managing my debt," says the divorced father of two teenagers and a college student.

But unlike a record number of others in debt, Ted didn't declare bankruptcy. Instead he borrowed from his retirement account to repay most of his debts, and hired a lawyer to negotiate reduced payments on the rest - about $5,500.

He pays half his son's tuition to a prestigious college and has three more years before he'll pay back the last nickel.

Now Ted uses his financial knowledge and hard lessons to help others in the Debtors Anonymous program.

And while he received a clear signal of trouble - denial of a loan - many do not.

Unlike other debt counseling services such as Debt Counselors of America or the Consumer Credit Counseling Service, Debtors Anonymous stresses the emotional burden of overspending.

Many members, like Ted, admit that they were immature, avoiding the responsibility of living within their means, indulging their wants regardless of financial consequences.

And many see themselves as big shots, habitually picking up the tab and perpetuating an image to others.

These are the problems Debtors Anonymous tries to address.

The counseling services, on the other hand, are geared toward people who lack a financial education. They don't know how to set up a budget, minimize expenses, and keep track of money effectively.

Caution: trouble ahead if ...

* You pay only the minimum on monthly credit card bills.

* You borrow to pay regular living expenses or other loans.

* You're late on important payments: rent or mortgage.

* You've taken a debt consolidation loan.

* Your debts make your home life unhappy.

* Your debts cause you to think less of yourself.

* You make unrealistic promises to creditors.