Back to bad habits

By Kara McGuire, Star Tribune

Last update: September 8, 2007 - 8:35 PM

Malinda Erickson had been doing well. In spring, she paid off all her credit cards, thanks to tough payment plans for her $2,200 debt. And she had paid down $300 in personal loans off a $2,500 tab (not including the $13,000 she owes to a friend for her car). She's now contributing 5 percent to her 401(k) and $40 per month to a savings account, too.

But, with her kids going back to school, she relapsed. Erickson, 36, of Coon Rapids, spent $600 on new clothes for her two girls ("They're growing so much," she says), and had to put a "couple of things" on the new credit card she insisted she opened solely to rebuild her credit. She also charged a new computer.

While such impulse shopping was the source of her financial problems, Erickson does not seem concerned about her new debt despite vowing only weeks ago to never carry a balance again. "I pay [my credit card] in full every month -- with the exception of this time."

She insists she has her finances under control. "I do a lot less impulse shopping than I did a year ago," says Erickson, who does administrative work for a financial adviser. Yes, an insurance bill is late again, but at least debt collectors aren't calling her home, as they have in the past. And she just borrowed $1,500 from a friend to move to a larger duplex with lower rent.

Ruth Hayden, a financial counselor in St. Paul who teaches money classes for women, fears not much has changed. "It's really, really hard to get out of a habit and when you do, it's easy to slip [back] in," Hayden says. Upon learning that Erickson's new credit card has a $1,290 balance -- near the limit -- she sighs. Hayden had been hoping to talk to her about "how to build credit without building debt." But conflicting schedules and the time constraints of being a single mom have made it tough for the two to connect.

Her advice to Erickson is no different than it was in the first meeting: Live on cash, continue a weekly money meeting with herself to go over finances, and create a money mantra to repeat regularly. (A mantra is intended to break bad habits, and Erickson has had difficulty sticking with one. Her latest is: "Do I really need this?") If she were to add anything to Erickson's to-do list, it would be to admit that her current financial plan isn't really working. Only then can she really change.

That last one could be tricky for Erickson. No matter her online bank balance or her pile of bills, she's an unwavering optimist, committed to beating her debt and amassing wealth -- on her own terms. She still says she's planning to pay her debts and buy a house this coming spring, although the numbers don't match that timeline. "If you fail, and you will ... give yourself a little slack," she says. "I just get right back on the horse again."

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