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Personal Finance

My Personal Finance Journey from 500 Credit Score to 800

personal finance journey credit score

Personal Finance is a topic that stresses a lot of people out.  I used to be one of those people.  If you have ever seen “Confessions of a Shopaholic,” there is a scene where Isla Fisher’s character is avoiding all the collection letters and calls that she is getting.  This was me.  I have decided to share my journey with personal finance so that if you are stressing and/or avoiding dealing with that life category, then you can know that you can get out of it.

When I was growing up, my parents didn’t have much money.  In August, we would each get $100 a piece to shop for clothes and shoes to last us the entire school year.  The family would always plan one family trip in the United States and save for the entire year.  My mom had this huge piggy bank that we would fill up with coins for the trip.  We would then do the painstaking task of putting them in the coin wrappers so my mom would take them to the bank.  In my forties, I am glad that we didn’t have much money because it taught me to cherish what I have and to prefer experiences over actual items.

At 15, I got a part-time job.  For two years, I saved $2000 to buy myself a beat-up car to drive around.  I remember how jealous I was of my friends who had parents buying them new cars. Even though I wish I had a new car, I loved my 1986 red Honda Accord that had the window that I couldn’t roll down because it made the craziest sound (think Jim Carry in “Dumb and Dumber”). However, I had a great time in the car with my friends and I going to DC and other parts of Northern Virginia. 

When I went to college, I remember there was always a line of financial companies lined up trying to get college students to sign up.  I thought it made me adult so I signed up for two.  This is something that I will make sure my kids know not to do. It started my bad habits with money.  In my teens, I had no idea what an APR was, that I eventually had to pay for what I was putting on the card and that I was digging myself in a hole.  Overdraft fees in my checking account was another problem that I had.  Additionally, the amount I owed on my cellphone, utilities, and the list keeps going.

I do think that with the Internet, it’s much easier to track your accounts, pay your debt, and get alerts.  Back then, we did not have this so I was always in the negative numbers.  There was one point that I owed more on overdraft fees than I had in my bank.  

I quickly caught the eye of collection agencies, and I started getting constant phone calls and letters.  Avoidance was the way I handled this, and that is never good.  When my kids’ father and I decided to buy a house, my credit score was in the low 500s.  Therefore, he bought the house on his own.  The relationship didn’t last, and I had no place to go but to my parents’ house.  I couldn’t even qualify for an apartment.

This was a huge wake-up call. It was embarrassing not being able to get a place for my children so I decided it was time to start learning about how personal finance.

I went to the library and got a bunch of books on personal finance.  I also started searching the Internet to see if I could find anything on the subject. This was all I read for about a year. 

Stopped Avoiding Collection Agencies

It was time to stop dodging the collection agencies.  I called one by one.  I read a few books and articles on negotiating with them so that is exactly what I did.  All of them accepted a lower amount and a payment plan.  In about a year, I had no more collection agencies after me.

Started Checking My Credit Reports Regularly

It’s much easier now to check your credit reports with the new law of the three credit reporting companies having to provide you a free one.  Back then, you had to pay for the credit report and that is what I did.  I learned that you can dispute what financial companies are reporting.  Many financial companies are busy and won’t even counter the dispute.  Maybe about 70% of the time, I got the line item removed from my credit report. This improved my credit score tremendously.

Got a Prepaid Credit Card

People say credit cards are bad, but you need them to improve your credit score.  I got a prepaid credit card and started using it.  After six months, they gave me a $500 credit limit. I made sure to use it but always pay it back every month.

Reviewed My Accounts Daily

Every morning, I made sure to check my accounts. When the financial institutions started offering alerts if you go below a certain limit or if you are in danger of going below $0, I made sure to get all those alerts sent via email and the phone apps.

Limited How Many Credit Cards I Had

I only have two credit cards.  This is coming from someone who used to have 5-6.  I could go down to one, but for me, I like having the two credit cards that I have because they have different benefits that work for my lifestyle.  I barely use them but for bigger purchases so I can get the points.  When I do use them, I make sure to pay them off promptly. Another advancement that helped was the use of debit cards. 

Learned How to Save

It is great to save, but you shouldn’t save 100% of your income (Is that even possible?).  Therefore, you have to save for items that you want or need to get before you have to pay a huge lump sum.

Continue Learning

I continue to learn about personal finance.  In any subject, there are new topics or skills that you do not know about.  Laws and policies change, and you should be aware of them. This is especially important for your taxes. Keep learning.

If you are having issues with your finances, I hope that this story makes you realize that you can get out of the financial rut that you have gotten into.  It felt great when I was getting a new car (son has learned how to drive) and the dealership manager said, “Wow, you have an 810 credit score.” It felt damn good because I went from the low 500s to 800s.  If I could do it, you can.

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