Basic Finance - Part Two

My new husband taught me a lot of what I know about finance.

He showed me how to work on my credit score.

He taught me how to manage a household budget.

He taught me how to apply for a credit card.

He taught me why credit is important, and how to use it in a way that helps you get ahead instead of behind.

He helped me buy my first car.

We bought our first house together.

And now it is those lessons that I am using to get myself back to where I was before our divorce.

The most important thing he taught me though, was the importance of attitude. If you wake up everyday telling yourself that you are in a temporary slump, instead of permanently poor, you will not be permanently poor.

Poor is a state of mind.

Breaking the cycle of being poor begins with how you see yourself.

The day I filed my bankruptcy (unavoidable due to our nasty divorce) I applied for my first credit card. I searched credit boards (www.creditboards.com) for one that would approve me and that was not prepaid so it would actually report to the credit bureaus and start helping me build a credit score again. I was approved. The card charged a fee of $100 a year and gave no benefits other than a high interest rate. It had a $500 limit.

I used that card for some of my bills each month, to establish a routine of running up a balance and paying it off.

My credit score prior to the bankruptcy was around a 300.

After bankruptcy it came up a little bit. But for two years that card was the only one I could get.

I monitored my credit score monthly using Credit Karma. Credit Karma (www.creditkarma.com) is free, and it will give you a baseline score so you can actually see the impact of your actions.

I paid every bill on time, and I was super careful to keep my balance on that card paid off in full every month.

I got another card after two years, and then another. I finally closed the first account to get rid of the pesky annual fee. The third card I was approved for was the Best Buy card. For a year I ran every bill I could through that card. I would pay the bills with it, and pay it off with the money for those bills. That way I could show responsibility, and a constantly revolving balance. I got Best Buy rewards, and I purchased my iPhone there with those rewards later. I am still a platinum Best Buy member, lol, so I get free shipping and first access to Best Buy sales. Card benefits that really are not that helpful, but better than just paying my bills and getting nothing back. Same bills, no interest if you pay it off every month. And $5 or $10 back every month if you keep doing it.

After that, I didn't apply for any cards for a long time. I moved to Arizona, I re-married, and I put all that stuff on the back burner. I divorced. This one wasn't nasty. And this time I had safeguarded my credit by not intermingling our finances.

I re-entered the workforce, my son was with his dad in California for half the year, so it only made sense. My son was sent out to live with me full time two months later, and I have had full custody ever since. I kept my job as my son was now old enough that he could handle being by himself in the afternoon for an hour or two a day.

I had credit card debt leftover from my marriage,  and I was working very hard to pay that off. I had a ten year old Hyundai that was fast approaching the point where the repair bills would be far more than the value of the car. I heard an ad on the radio to "pay off your holiday debt" where the car company would give you $3000 cash for purchasing a new car. I read the reviews online, and they sucked, the dealership offering the deal had the worst kind of rating. I looked up dealerships with good reviews and called some asking for a price match. I got one. In one day I paid off all of my credit cards and got a reliable vehicle with two years of free oil changes and 6 years of warranty. 

 I was now debt free, except for my car loan.

I got my tax return, and it was quite substantial because of the child tax credit. For once in my life, I was finally ahead of the game. That didn't last long though, lol... I got laid off due to a bad merge between my company and another one. I was unemployed for three months, and completely stressed out, but I had enough money to get me through.

I found the Indeed App. I highly recommend the Indeed App. You can set up an account on Indeed.com, and through their app on your phone apply for lots of jobs (not all, but lots) in ten seconds or less. My job search became far easier. I found a new job, and I was once again on solid financial ground. Things were going great.

It was right at this time that my dad got sick. I had to get to Alabama with my son for my dad's emergency brain surgery. I didn't have the money to do so after being unemployed. I called my credit card companies to see if I could get a credit limit increase. I magically got a $3000 increase from Capital One that morning because I had been responsible and paid off the card in full when I bought the car. I hadn't used that card since because it didn't offer any benefits like the Best Buy card, and something is always better than nothing. They really came through for me and saved me. My dad was able to have us there for his surgery and he didn't have the stress of trying to figure out how to cover my plane tickets or anything. He was proud of me for being able to figure it out on my own. In retrospect I feel like it was a gift for both of us. Every time I call Capitol One I thank them. They probably think I am insane, but honestly, not all debt is bad. Some gets you where you need to be when you need to be there.

The debt from my dad's surgery trip got paid off with my tax return the following year. I applied for a few cards in the two month period after I had everything paid off from the tax return, and I finally got the coveted airline miles card I had wanted all this time, but could not qualify for. I got 50,000 bonus miles for signing up. Those 50,000 miles ended up paying for the tickets for my son and I to go back home for my dad's funeral. This was another last minute trip, but the total cost of that trip was far less than the emergency one the year before because of that card benefit. I still ran up my cards, but this time it was to buy gifts and dinners for my family, to help comfort them in this time of sadness and need, instead of spending it on just the plane tickets. I took my mom out to their favorite restaurant for dinner, I bought Pandora charms for everyone in memory of my dad, I was able to do things that ordinarily I wouldn't have been able to afford.

 Imagine always having a stash of airline miles laying around for anytime you want to take a trip. I now use my airline miles cards (I got a couple more after the first one, credit card companies compete, and once you get one the rest follow) to pay every bill every month. I roll my bills through those cards so I never really have to carry a balance and I get the airline miles and I get the credit boost that comes from using the cards.

This summer, in honor of my dad, I decided that my big goal would be to take my son scuba diving to Belize. I signed us up for scuba diving classes. I got us certified. I did my research and figured out that the tickets would cost around 100,000 miles and a few hundred dollars, and I planned out how to get enough of both. The plan was to go next summer. I started following The Points Guy on Facebook, and he mentioned low rates to Costa Rica one day. I decided to look at Belize and see if by any miracle they had sale tickets as well. I was able to get round trip tickets to Belize on Delta using 70,000 miles and $135. We are going a lot earlier than my plan, and it was all by complete accident. 

Fast forward six months. I was feeling like perhaps a home loan would be somewhere in my future. I applied thinking that I had a lot of time, and I would be able to look at what is out there and figure out where I stand and what I need to do to finally own my own home. I was approved by several banks at once and my phone was ringing non-stop with mortgage companies ready to help me. No one was as shocked as me. We move in a week from today.

If I can do this, anyone can do this. Ther is nothing special or remarkable about me, there is nothing different from anyone else, with the possible exception of attitude, and anyone can have a great attitude.

The first step if to look at your credit score, and create a plan to improve it. Mine was a 300 when I started. A 300... almost anyone has a better one than that!!