I Was Not a Compulsive Shopper. I Was a Day Trader. – John

“Dear Steve,

I’m currently having two debt settlements going on between two cards totalling $14,000. Actually, I had three credit cards when I started the settlement, with a total debt of $19,000. One was settled so far with a balance of $5,500 being settled for $1,700. Still waiting on the other two, but while I’m waiting my credit score is dropping, and my credit limits on my remaing cards have been dropped by as much as 90%.

Not that it matters, but I didn’t get this far in debt by compulsive shopping, about 70% of the debt came from credit I was using to meet minimum margin requirements for day trading, the minimum being $25,000.

I was in when the big crash in September hit, and it was even worse for me because the money I lost was the credit cards money. Needless to say I will never day trade again!

But now I’m worried about 1099 forms next year, where will I get the money? I go to H & R Block, do they give loans to pay off the 1099 taxes say if it was about $6,000? I read your article about govermet bail outs for indivduals being a lie, but is there any program out there like grants to help individuals pay off credit card debt? I believe debt settlements are better then going bankrupt, bought the amount I may owe on 1099s worries me.


Dear John,

Wow, great question with a number of interesting components.

I’d like to tackle this issue about compulsive shopping and day trading. Both are more similar than you would think. In my experience, a big segment of compulsive spenders shop for the excitement and the rush or good feeling it gives them. Day trading can stimulate some of the same excitement needs in our brains and lead us to rationalize behavior that can lead us just as deep, in debt.

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Your debt is not the root of your problem, it is the symptom. The root problem was that you got involved in a highly speculative endeavor. It is very similar to the gambling position that you should never gamble with borrowed money, or money that you are not prepared to lose. And yes, gambling leads to similar brain chemistry, involving dopamine, and activity outside of conscious awareness that leads us down the debt path to destructive financial actions.

I can hear you now, brain chemistry, right! Consider this, day trading, the unexpected sale, or the slot machine unexpectedly paying out, can all trigger the rush of dopamine in our brains that some find addictive and are strongly drawn to. We are subconsciously drawn towards the activity that makes us feel good, even though it is not logical.

In your case, the use of borrowed money from credit cards to pledge as collateral for a speculative stock trading endeavor was more than likely going to fail from the beginning, risky, and not a logical course of action. But I bet it was stimulating and fun when it was going well.

I’m afraid that your bargaining logic is still leading you down an illogical path. H&R Block gives refund anticipation loans based on the money you will get back from the IRS. You are expecting a bill to pay instead. They are not going to loan you money to pay a bill you already can’t afford with money you are not getting back.

Again, I think your decision to not look at bankruptcy is fueled by your emotional brain, rather than your logical brain. To discount bankruptcy as a legal tool to deal with your debt is illogical. Debt settlement can lead to big tax bills on the forgiven debt, bankruptcy does not. So, I’m at a loss, in your situation, to understand how settling your debts to face a tax bill you can’t afford is a better outcome.

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I don’t think you need for me to tell you more about bankruptcy. I think you owe it to yourself to get the facts by going and meeting with a local bankruptcy attorney. Most offer a free bankruptcy consultation appointment so you can get all your questions answered. Go do that and then come back and share what you learned and let’s then take this to the next step.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

Steve Rhode

3 thoughts on “I Was Not a Compulsive Shopper. I Was a Day Trader. – John”

  1. Debt settlement vs. bankruptcy. Here is my main point in choosing debt settlement over bankruptcy. If I have bankruptcy, it lasts seven years and I lose all my credit making it very difficult for me to get by on the tight budget I’m already on. My one negative about debt settlement is the high taxes at the end of the year after filing a 1099, but this still outweighs the reprucussions of a bankruptcy for me.

    • John,

      Your debt settlement will be negatively reported for nearly as long as well. Bankruptcy does not mean you won’t be able to get credit again in the future. You can begin to rebuild a good credit history immediately. I humbly suggest that that before you make assumptions about what bankruptcy means for you that you meet with a local bankruptcy attorney. Then, and only then will you be best informed to make a decision about what path is best for you.



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