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YOUR MONEY: Debtors Anonymous offers support for spending addicts

"Hi. I'm Tom and I'm a compulsive spender." So begins a recent gathering of Debtors Anonymous, a support group for those addicted to overspending. Every week, in the fellowship room of a Sacramento, Calif., church, Kevin and about 25 other self-d...

"Hi. I'm Tom and I'm a compulsive spender."

So begins a recent gathering of Debtors Anonymous, a support group for those addicted to overspending.

Every week, in the fellowship room of a Sacramento, Calif., church, Kevin and about 25 other self-described "overspenders" and compulsive debtors seek help from others battling the same addictions.

They acknowledge their struggles. Celebrate their victories. Like Louise, who told the group on a recent Tuesday evening how she'd gone to see a financial planner that week -- for the first time ever.

Patterned after Alcoholics Anonymous, DA, as it's known to its faithful, is a 12-step program for recovery from chronic debt. And like AA, none of its participants use their last names. (To protect their anonymity in this story, their real first names are not used.)

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Headquartered in the Boston area, DA has been around for more than 20 years in the Sacramento region. With no fees or dues, DA offers "pressure relief" sessions, dial-in meetings, phone mentoring and live online groups.

And while DA doesn't work for everyone, its adherents call it a salvation.

The voluntary organization of 513 U.S. and overseas groups does no advertising. And despite a recession that's clobbered many consumers, neither local DA members nor the Boston office report any significant increase in members. Michael, a retired data processing manager with a state agency in Sacramento, said he started attending weekly DA sessions in 1995 after hitting a financial wall. With $26,000 in debt, he'd maxed out six to eight credit cards, reached the limit on his bank's credit lines, refinanced his house multiple times and tapped out his parents and in-laws for loans. Yet from outward appearances, he had it all: married with two sons, a house and a steady state paycheck.

But like many chronic debtors, Michael says he never had a clear idea of how much he was spending. "I wasn't a compulsive shopper or an underearner. But I used credit cards to live on. Everything was an emergency: taking a vacation, car registration, repairs on the house, kids' clothes. They were all crises. It didn't matter how much I made, it was never enough."

That's a common trait. In DA, the first step to recovery is basic: tracking every nickel of spending for 90 days.

At the end of three months, a new DA member is paired with two veterans who help devise a spending plan. In a so-called "pressure relief group," the new member learns how to set aside funds for predictable expenses -- like car insurance or mortgage payments -- and bigger goals like vacations or college.

DA also helps keep compulsive spending in check. Janice, a 19-year member in Sacramento, says she once had 21 credit cards and would cure herself of "a bad day" at work by dropping $200 at department store jewelry counters.

Today, she lives credit-card free, but when the urge to spend arises, Janice calls her designated DA mentors.

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"It's not about the money; it's about getting support, thinking things through and establishing your needs and wants," she said.

Learning to live without relying on unsecured debt, such as credit cards, is a tenet of DA.

For Michael, that required fire. Soon after joining DA, he piled all his credit cards on a piece of aluminum foil, set it on his barbecue grill and lit the flame.

"They all melted into a little plastic blob," the 58-year-old recalls. "I was absolutely terrified. That was my lifeline and it was gone."

Slowly, he started paying off his cards, starting with the smallest amount first. It took years.

Today, Michael lives without credit cards. "I haven't opened a credit card account in 12 years. With just a debit card, I can do anything: book airline flights, rent a car, buy stuff online. For gas, groceries and everyday living, I pay cash."

DA can be a lifesaver, if done right, say consumer finance experts.

"It definitely has a place for some folks," said Brent Neiser, a program director with the Denver-based National Endowment for Financial Education. Neiser said groups like DA can help compulsive spenders who get caught up in the emotional rush of spending, without any long-term financial planning.

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"Too much of (their) monthly income is pushed to feed the spending problem. ... It's sucking the life out of (their) financial management."

Others say DA works best in tandem with professional credit counseling.

"I don't hesitate to refer people to DA who are looking for some place to feel they're not alone," said Bruce McClary, spokesman for ClearPoint Credit Counseling Solutions, which has 11 California offices.

But some need the professional guidance of nonprofit credit counseling agencies. "If you do both, it's the total package," McClary said.

DA also has separate groups for business owners struggling with chronic debt.

Karen, a former bookkeeper who works part time in Rancho Murieta, joined an online Business Debtors Anonymous group. (It's a Yahoo users group: prosperity-- in--our--businessBDA.)

Every day, she checks in with her group, whose members are scattered from London to California.

"It's affirmation and reinforcement that I'm on track," she says. "Like today, someone online was talking about preparing earlier for end-of-year taxes. I realized my quarterly taxes are due in December -- and all my stuff is completely ready."

Through DA, Karen said, she learned how to set up a spending plan for both personal and business expenses.

The 39-year-old mom uses her iPhone to tally her daily spending, typing in a recent $30.12 gas fill-up, for instance, on a budget tool she downloaded. It also lets her track business spending by category, such as quarterly tax payments.

But like an alcoholic coming to grips with drinking, dealing with chronic debt is hard work. Many drop out of DA, say longtimers. "It's harder than alcohol," says Janice, "because you can't live without money."

While it's difficult to quantify DA's effectiveness, those who've stuck with it say it works.

Michael, the retired state manager, said DA changed his life. "Even with this economy, I don't lie awake at nights like I used to. ... It's the best-kept secret in financial life. And it's free."

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