It took until my 30th birthday to finally come to terms with my crappy credit score. I won’t say it but believe me… it’s embarrassing. It’s the result of bad decisions coming out of high school and even worse ones during my “party phase” in the mid-20s.
I had to do something — I decided to punch debt in the face.
Let the Simulations Begin
What got this journey started was getting real about understanding my credit score. I have tools like Credit Karma to thank for that which gave me a rundown of debts and scores.
The app has a debt/credit simulator.
I ran the sims using these criteria:
1. Paying off all my credit card debt
2. Making on-time payments for 1-year
3. Opening a new card for $200 (a secured card would do the trick)
4. Taking a small $500 loan (which my bank does specifically for credit boosting)
The sim was telling me I could bump my score back into the upper 600’s.
I suggest you do the same (running these sims) to help you plug in the info to a calculator and create a timeline for repayments.
Getting Things in Motion and Future Plans
The largest contributor toward paying debts was eliminating small expenses. I know, you’ve heard this before — it does work.
Being able to show control not only helps save money but it works with building better routines. This happens to lean toward doing better work and getting paid more – double win.
I basically eliminated all the following:
· Ordering takeout (or really anything that wasn’t cooking)
· Drinking (especially bar hopping)
· Multiple trips to the store (thus saving gas)
· Shopping at retail (Goodwill all the way for me now!)
This netted me an extra $300+ a month which as you can guess really helped pay down the debts. I could eliminate my Capital One balance ($1,600+) in about 5 months… nice!
But… there are much more to do.
I did my research and I think the next phase is to get creative with balance transfers. I took a look on CreditSoup and found a few offers that’ll let me do transfers with 0% APR. It would give me enough time using this $300+ a month to pay off other ones like old medical bills and some of the student loans.
The other two that will help are:
· A secured card that’ll tack on good marks to my credit report
· Using a credit builder loan that’ll also look good on my scores
I could, also, use this loan to do the “snowball effect” on my debts to get that nice boost in motivation and eliminate the extra dings caused by the monthly fees.
30 and Onward
You’re generally stuck with two options:
· Cut out spending
· Increase your take-home pay
I’ve already cut my expenses about as low as I could go without going insane. So, I need to bump up my income and the best way I’m finding is a mix of flipping stuff I’m finding at thrift stores and freelancing on the side.
There’s a lot of info out there about starting a side hustle – I encourage you to consider it because it’s not all that hard to turn your skills into money-makers.
Also…
I’ve taken to using high-interest accounts when I get “windfall income” (income you’re not expecting). I use Betterment to throw some money toward ETF’s which has been a decent return so far. It’s also letting me get an IRA in order – woo!
Punch? Nay, Uppercut Debt!
You’ve got decades of life to go – you’re not screwed even though you’re starting late. In fact, you’re probably sound minded when it comes to this stuff now. Take advantage of it and get back on track.
Believe me, if I can do it, then so can you.
Most interesting post I’ve seen here in a while. I liked the real world examples with tools available to anyone. And I would have liked each section of this post to go really in-depth. What made you decide you had to improve your credit score? What was the trigger event that drove you to run the simulations and formulate a plan? What landed you in debt in the first place? How much debt are we talking about? What percentage of your income are you putting towards debt? What kind of flips are you doing with your Goodwill shopping? How do you find items worth flipping? How do you flip them? Do you run into any nutso people while flipping? I see a lot of fun storytelling here but it was all glazed over. Will keep an eye out to see your future posts.