My Financial Life

My financial life right now is boooring.

And that’s a good thing.

When I started this site I was $90,000 in debt, and considering bankruptcy.  I’d just started on the Dave Ramsey plan and was looking for every possible way to scrape up any extra money  I could.

Now, the debt is nearly gone.

US interest payments on debt by sector as a fr...

US interest payments on debt by sector as a fraction of GDP 1960-2008 (Photo credit: Wikipedia)

  • I’m looking at the last $8000 on my mortgage.  I have enough in savings to pay it off today, without draining my savings completely dry.
  • My IRA gets maxed out every year, and this year, my wife’s will be, too.
  • We save or invest about 30% of our income.
  • My credit score according to CreditKarma.com is 826.

Our credit card is almost paid off every month.  There’s occasionally some overlap between our auto-payment and our charges.  And sometimes the budgeted auto-payment doesn’t match the reality of our spending and I don’t notice for a week or two.  Except for the end of last year, but that’s a post for another day.

The short version is: We’re doing well, and we’re nearing the end of our financial problems.

Our scheduled mortgage over-payments will have it completely paid off in October.  Then we are debt-free and can hopefully manage to live the rest of our lives without paying interest on money that isn’t earning us more than we are paying.   For example, I’m willing to take out a mortgage to buy another rental property, but I’m going to wait to do that until our current mortgage is paid and we have a substantial down payment ready.

No debt.

I’m not kidding when I say it’s been a long 6 years of fighting our debt.  Counting a car loan we got and paid early, we’ve paid more than $110,000 of debt in six years.

I’ve run side businesses, aggressively negotiated raises, and left companies(voluntarily and otherwise) for better pay & benefits.

I’ve watched friends and family take vacations around the world.

I’ve turned my kids down for so many things that I would love to buy them, but couldn’t because being financially secure is a much higher priority than spoiling children.  Try explaining that to a 6 year old.

And now, the debt-ridden part of our financial journey is almost over.   Finally.

So what’s next?

I have no idea.  I’d like to travel more.  Linda and the girls want us to move to a hobby farm and get horses.  We want more rental properties.

Whatever “next” is, it will be done from a position of strength that won’t destroy our financial world or put out futures at risk.

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Credit Peril

When my mother-in-law died, we went through all of her accounts and paid off anything she owed.

The Discover card she’d carried since the 80s–a card that had my wife listed as an authorized user–had a balance of about $700.  We paid that off with the money in her savings account.  They cashed out the accumulated points as gift cards and closed the account.

A few months ago, we decided it was time to buy an SUV, to fit our family’s needs.   We financed it, to give us a chance to take advantage of a killer deal while waiting for the state to process the title transfer on an inherited car we have since sold.

Getting good terms was never a worry.  Both of us had scores bordering on 800.   Since our plan was to pay off the entire loan within a few months, we asked for whatever term came with the lowest interest rate.

Then the credit department came back and said that my wife’s credit was poor.  I chalked it up to a temporary blip caused by closing the oldest account on her credit report and financed without her.  No big deal.

Since we decided to rent our my mother-in-law’s house, we’ve discussed picking up more rental properties.   That’s a post for another time, but last week, we went to get pre-approved for a mortgage.    During the process, the mortgage officer asked me if my wife had any outstanding debt that could be ignored if we financed without her.

Weird.

A few days ago, we got the credit check letter from the bank.   Her credit score?  668.

What the heck?

I immediately pulled her free annual credit report from annualcreditreport.com, which is something I usually do 2-3 times per year, but had neglected for 2012.

There are currently two negatives on her report.

One is a 30 day late payment on a store card in 2007.   That’s not a 120 point hit.

The other is an $8 charge-off to Discover.  As an authorized user.  On an account that was paid.

Crap.

We called Discover to get them to correct the reporting and got told they don’t have it listed as a charge-off.   They did agree to send a letter to us saying that, but said they couldn’t fix anything with the credit bureaus.

Once we get that letter, it’s dispute time.

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Can Bad Credit Cost You Your Job?

Did you know that having a bad credit history could cost you your job? An increasing number of American employers have turned to running credit checks to screen job

NEW YORK, NY - MARCH 03:  Bill Harris of Brook...

Image by Getty Images via @daylife

applicants. Some companies even evaluate existing employees on a regular basis by checking their credit reports. If you have outstanding debts, you might consider getting one of those  credit cards for bad credit to clean up your report before you apply for your dream job.

Not all companies run your credit history when you apply for a position. However, if you’re applying for a job that entails working with money or valuables, it’s a safe bet that they’ll be checking your credit history. Financial institutions, brokerage companies and jewelry manufacturers all run credit checks, as do hotels, accounting firms, human resource departments and government agencies.

Companies run credit checks because they want to hire employees who won’t be tempted to embezzle company funds to pay off large debts. Some companies fear that employees who carry large debt loads are susceptible to blackmail or bribery. The federal government carries this concern even further, indicating that citizens who owe large debts are considered national security risks.

Many companies feel that your credit report gives them a sneak peak at your true character. Having a good credit history indicates that you are a responsible person with excellent character. Having a bad credit history means that you are an unreliable person of poor character. True or not and fairly or not, this is the current belief running throughout company hiring departments.

Unfortunately, you can’t relax about your credit report even after you’ve been hired for a position. Once you’ve given a company written permission to check your credit report, they can recheck it at a later date. Government and financial organizations often run periodic credit checks on all of their employees. Some companies only recheck your credit history if you are up for a promotion. It’s a good idea, therefore, to keep your credit history squeaky clean.

Keep in mind that having a couple of late payments probably won’t kill your chances of employment or promotion. Most employers look for the really big issues, such as high credit card balances, defaulted student loans, repossessions and foreclosures. Some companies also look for charge-offs and consistent late payments as well.

Steps You Can Take

Financial experts suggest checking your credit report before you start your job search. Read your credit report carefully and make sure that all of the information is accurate. If your report contains incorrect details or any unauthorized charges, dispute these errors immediately and have them corrected to raise your credit score.

If you have a host of unpaid bills, find a way to settle those debts to improve your credit history before applying for jobs. Many people turn to credit cards for bad credit consumers. These cards allow you to consolidate all of your debts into a single debt. Just don’t forget to make the payments on this card.

Be upfront with potential employers about any negative marks on your credit history. Just tell them that you have had past issues with your credit and are now working to clear up all of your debt. There’s no need to go into explicit detail.

Once you have a job, be sure that you check your credit report at least every six months to ensure it contains only correct information. Pay all of your creditors on time. Never take out any new lines of credit unless you are absolutely positive that you can pay it back in a timely manner.

 Post by Moneysupermarket

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How to Deal with Debt While You’re Out of a Job

This is a guest post from Marc Chase of My Credit Group.

Dealing with a lot of unpaid debt can be a hassle on its own.  Having to pay those debts when you don’t even have a job to provide you with the money to do so can be a nightmare.  While you’re hunting for a job to help make ends meet, your debts continue to pile up, leaving you scrambling to find a way to take care of them before they cause you to slip further into the poor house, and leave your finances needing credit repair services.

Since you’re likely more concerned about finding a job than anything else, we put together this handy checklist of what you should do to avoid your unpaid bills and debts getting the best of you while you search for a new job.

•     Apply for unemployment benefits. This should be your first order of business after you’ve lost your job, especially if you’re one of the many Americans currently living paycheck to paycheck.  Unemployment benefits go a long way towards helping consumers stay on top of their bills and credit accounts.  Don’t make the mistake of thinking another job is just around the corner – there’s a good chance you can’t afford to wait.

•    Keep paying the minimum balance. If you’re on the verge of drowning completely in unpaid debt, you may be tempted to stop paying your bills completely, at least until you get some additional funds in your account.  Do this, and you’ll find yourself in need of credit score repair before you even get that call back for a follow-up interview.

Instead, do everything you can to at least pay the minimum balance on all of your credit accounts and bills.  This will ensure that your credit history doesn’t take too much of a beating, and saves you from paying even more in interest fees down the line.

•     Stop spending money like you have it. Because the sad truth is, while you’re still unemployed, you likely don’t have a lot of money to spare.  If you’re still living your life as though you can afford to pay for everything – eating lunch and/or dinner out more than twice a week, generally buying things you don’t NEED – now’s the time to stop.

Stop charging every purchase you make to your credit card – break them out only in an emergency.  This will help keep you from sinking further into debt while you’re out looking for a way to pay for your purchases.

•     Eliminate and prioritize your bills. Now’s a great time to take a long look at some of the bills you’re paying, and deciding if they’re even worth the service.  That doesn’t mean you should stop paying bills you consider “less important” than others; it means looking at some of the things that might have once been necessities (a land phone line if you primarily use a cell phone, a full package TV cable bill, etc.) and re-evaluating your stance on how important they are now that you can’t afford them all.  In many cases, you can get in contact with your service provider(s) and talk about ways to reduce your bill (say, cancel cable but keep internet).

This is a guest post from Marc Chase, President of Product Development for My Credit Group, a website dedicated to helping consumers with managing their credit.

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