True story. For as many years as I can recall, I had no idea what was happening inside my bank account. I remember the days of holding my breath, envisioning a magic number (“If I have at least $____, it’ll all be okay!”), crossing my fingers, and hoping for the best as I peeked at my balance through my fingers. Oh boy, those were the days, and we’ve all had ’em.
After Adam and I got married and combined bank accounts, I started getting very serious about our money. Having “more” to budget with, and having the flexibility to create a system was exciting for me and motivated me to start saving, paying off our debts, and creating a budget for our daily lives. Even without two incomes, these techniques are still valuable.
Balancing My Checkbook
The single most pivotal change I made in my approach toward gaining control of our finances was balancing our check book. About two and a half years ago I came into work, sat down at my desk, and balanced out our accounts in a transaction register. Just outta the blue. Since that day, the first thing I do every morning (after I pour my coffee) is check our bank account. There were no more magic numbers, no more guessing games, and now, before we make a purchase we know whether we can afford it or not. Not only do
we* I know how much money we have in our bank account, but now we’re aware of it’s destination. If you don’t know how much you’re spending and where it’s going, it will keep disappearing and you’ll have no accountability for your spending.
*I am the appointed Jones Family Accountant. Sup.
Budget Cuts – Finding Ways To Save
Eventually, after tracking our spending for several months, I was ready to hand over my attention to where we could save. With a tangible record, it was easier to spot unreasonable spending habits or monthly bills. If you have financial goals, like buying a new car, building a savings account, or purchasing a home, for most of us… these goals call for an evaluation of our budgets. Without a specific goal in mind, I got to work. The first thing we did was cut cable. Now we only use internet, which is complimented by our Netflix subscription. (Tbh, I use my sister’s Prime Video access, too…) I also have a tendency to overspend at the grocery store trying out new products, but I’ve managed to keep that under wraps; meal planning ahead of time helps me from buying things that aren’t on my grocery list. We changed our cell phone bill to automatic EFT and started saving $5/month, and since my husband is a firefighter, we also receive a discount from Sprint, so make sure to check in to incentive programs like this from your regular utility providers. Sometimes your employer might offer discounts through specific phone providers. Round out your spending. Figure out what you really need (or want), and cut the baggage. (Obviously, I still have a Starbucks stipend. Because, priorities.)
Repairing My Credit Score
After I created more space in my budget, I was focused on increasing my credit score. Brace yourselves, this one’s going to be long; but perhaps the most informative section since I detail the exact steps I took to improve my score and what difference they made. **Disclaimer: I am not a financial professional. I am not telling you what to do to repair your credit score. The following testament is my real, personal experience.
I’d been walking around with a score teetering between 380-450 since I was 20 years old. FYI: that is BAD in terms of credit! I had never opened a credit card in my life. The only activity I had to comprise my credit scores were collection accounts and my overdue student loans from the one year I decided to “go to college.” Woof.
Some (very) basic information about credit & how it works: your scores range between 300-850. The higher the score, the better. There are three main credit reporting agencies that your lenders might report to every month: TransUnion, Equifax, and Experian. When you apply for a line of credit (think: credit card, car loan, mortgage) the creditor will submit a hard inquiry to obtain your credit score to either approve, or deny you the loan. If you’re approved, they use the score to calculate specifics, like the amount and the interest rate. Keep in mind, though they have a low impact, hard inquiries can count against your score, so if you apply for a line of credit and don’t qualify, you might work on repairing your score before you try to apply again.
After checking my credit scores on Credit Karma and ordering my annual free score from one of the aforementioned reporting agencies to validate currentness, I went to work. I took a deeeeep breath; I was starting from the bottom. As of July 2017, my credit score was ~560. The first conscious step I took toward repairing my score was opening a Capital One secured credit card. Basically, I paid a “deposit” which became my available line of credit for that card. The card I qualified for required a $99 deposit, but I added $150, and after one month, my max available line of credit was $200.
After my new credit card was reported a month later, my score went up to ~585. That’s 25 points! I was thrilled, but, this is still a low credit score carrying little chance of credit approval. So I sat by, twiddled my thumbs, and watched my credit score creep up by a measly one point every month for six months, until January 2018 rolled around. After six months of consistent, on-time payments, my Capital One balance was increased to $500 automatically. This advantage was advertised at the time I opened the card. The additional credit increased my score to ~606. About 20 more points. At this point, my one credit card had increased my score by ~50 points. I was so psyched that it worked, that I looked for more “quick-fix” opportunities to increase my score, longing to experience that exhilaration of watching my score go up. So, what other moves could I make?
The next thing I did, which might not be realistic for everyone, is have my husband add me as an authorized user to his credit card. You can also check into having your parents add you to their credit cards. A card will be issued to you in your name, but they don’t have to give it to you if they don’t want to. (I kept mine. Duh.) I wasn’t sure what kind of affect, if any, this would have on my score, because in articles I’d read some people experienced that the card didn’t report on their score as a secondary user. To my delight, February 2018 brought me a new score of ~640. Oh my gosh. Almost 35 points! By now, my score had increased around 80 points in 8 months as a reflection of my efforts.
OKAY. Almost done, I swear, but this next action had the most impact on my score of all. Amidst harassing my husband to call PNC to add me to his credit card, I’d been eyeballing my credit karma account to anatomize what else could be done. I noticed one of the detrimental “credit factor” sections on my overview indcated Missed Payments. I identified the missed payments from my 8+ year old student loan account. In the past, I’d constantly defer my loans for “financial hardship” reasons, not knowing any better that I’d accrued interest doing this over the years (barf), but it appears, for a few months back in 2012 they weren’t in deferral. I’d been billed, and didn’t pay them before I noticed and deferred them again. By that time, about 6 months of missed payments had been stacked up against me. Back in July 2017, I’d decided that I refuse to pay for nothing (aka, accruing interest), and budgeted $50/month to set up EFT payments for both mine & Adam’s student loan accounts. Little did I know, this really helped me in the long run, because fast-forward to January 2018, the automatic payments that I barely noticed anymore (because I budgeted for them) were used as leverage when I sent a request to my lender for a “good-will credit” and clearing my missed payments. I googled a form-letter template and replaced the body of the letter with my own sob story. “I was a single mother, I had no sense of financial control, but I’m better now! And I’m married! And I want to send my son to a great school! And I really want a house! But I can’t do that without you! So please, please help me! Look, these payments come out automatically! That means I will never miss one again!” Seriously, you will feel cheesy AF, but it worked for me. And voila. They agreed to clear my missed payments. By March 2018, my score sky-rocketed to… wait for it… 694. Over 50 points! And folks, the increase came from clearing late payments from over SIX YEARS AGO. However, I will point out, I sent a similar letter to my husband’s education loan lender, and they denied the request.
How My Life Has Improved Since I’ve Taken Responsibility for My Finances
Gaining control of my finances and my credibility has empowered me with financial freedom to make my own decisions. For a long time I’ve been wanting to invest in a new computer to write from home with, and a couple of weeks ago, I applied for a line of credit to finance one since I didn’t have the extra money laying around to buy one outright. I was approved for double the amount than I needed to buy the laptop of my choosing, and received it in the mail a week later. 24 months interest free financing will barely cause a ripple in our budget. It felt rewarding to be given the trust that I deserve. The convenience of an insanely affordable credit program for my computer is a product of my efforts, and as the appointed bookkeeper for Casa de Jones, I’ve worked my ass off to form a budget, create a savings account, and work toward paying off our debts while still having financial comfort to indulge in a nice evening out, or a family trip to the movies every once in a while. Normally, we can afford a family vacation during the year as well. Don’t get it twisted, while most of the time our financial necessities aren’t thought about twice, some months are electively much tighter than others. Even now, things have come up since February that are super out of the ordinary for us, so our budget hasn’t had much flex the past couple of months and those financial commitments will affect us for a couple more months. That’s how it goes, though. Ebbs and flows. And, if worse comes to worse – we have a small savings to fall back on. Meanwhile, I’ll be waiting on the edge of my seat to check my score in May following my new credit card… (Hellurrrr, hoping to hit the 700’s)
After teaching myself about these basic strategies, I feel confident in looking forward into our financial future. I hope that my experience struggling with finances and repairing my credit score helps you become motivated to improve your own financials. I’m assuming if you’ve read this far, then you have or are struggling to get there, and my strongest word of advice would regard to patience. It takes time to repair a credit score, but the work will pay off. Different people might have to use different strategies. Items dragging my credit score down might not be the same as someone else’s. Also, if you ever wonder – just stop. There are many people who are dealing with a low credit score limiting their financial freedom. Take control of your money and start making your own decisions!