(How I established my credit, saved money, and rebuilt my life)
Warning:- This is a long read.
This post is for the desperate soul who says time & time again “I am no good at saving money” or “I have no money to save.”Neither of which is usually true, but rather just a habitual phrase used as an excuse for not doing so. I say that directly and without apology but with the following disclaimer only:
If you do not have a job, a place to live, or transportation- this post is not for you. Take care of those things first in whatever way you can. I am not able to offer advice or help for those issues. If , however you have those things and are reading this , I hope the following is of some value.
First: A short background for the usual “nay sayers”: I have been both a single mother of two with no job skills and a person without a partner to help with finances( many times). I come from a very poor back ground ,and by that I mean a childhood in which we often went without heat, hot water, and/or electric for various time frames and/or lived with others because we were without means. Food was scarce and usually acquired from our own garden, hunters in the family, and government assistance ( my mother was also often single). There was NO family help available for education ,a graduation trip or even a class ring, much less a first car . I was emancipated at the age of 15 and worked my butt off to become the person I am today. I have had NO help from the usual sources or any generous hand-outs. I am in no way “privileged” unless you can write me a check right now making it so. Just saying.
Ok, moving on.
I started learning about money at an early age. I made stupid mistakes (as we all do) but unfortunately for me, those mistakes lead to serious life issues. I have worked at tax paying jobs since the age of 12, and in the naivety of my youth( up until my late 20’s)- I spent that money on fashionable clothes, purchasing specialty foods on a whim, taking days off work for no real reason –often resulting in getting behind on real bills and having my utilities shut off, being unable to buy groceries, and many times stressing over how to afford even diapers & baby food. It took a few years of suffering and then having to file bankruptcy in the early 90’s ( after my 2ndchild was born) to realize the endless folly of my ways.
After filing , I knew my credit was shot for 10 years, but I began my recovery immediately. I was able to raise my score, buy a car and home , and acquire a reasonable credit card before the decade was up. Here’s how:
- I started an cash envelope system. I did this because using a bankcard , bouncing checks and paying fees for overdrafts , etc. was part of my problem. I closed ALL my accounts( for a while) and converted every pay check to cash weekly.. I had an envelope for and put cash in each for every bill / payment and used money orders to pay for anything I couldn’t just use cash for outright. Stuff like rent was divided into weekly amounts to be paid on time by the due date. This alone helped me to avoid ATM fees, the temptation to withdraw too much, or write checks and “hope” I could cover them.
- I attacked my credit score with a vengeance and used guerilla tactics to raise it. I was weekly at the credit bureau clearing up mistakes, making sure anything I paid off was removed promptly and making deals to pay debts off for half of what I owed immediately in exchange for the debtors written promise to remove it from my credit report.
- During this time I learned to do extreme couponing. I didn’t have a newspaper or magazine subscription, I simply stopped at a local laundromat and went through their community free boxes. I asked friends, family & neighbors for their coupon sections if they weren’t using them. In addition, I went the extra mile and GOT THOSE MAIL IN REBATES…even the ones for just $1( as long as the postage was paid for or the rebate amount was worth paying the postage) .
- All of those rebates, along with loose change, ‘found money’ and random bits of income from yard sales or small side jobs went into and STAYED in a savings account.
- I started a daily record of expenditures, even down to a quarter used for a phone call( yes, I’m old-lol). I eliminated all stops at convenience stores, started getting most groceries at dollar stores, making all my own meals and coffee at home, packing lunches from home ( crock potting & freezing portions).
- I cut out cable, any unnecessary travel by car, called for reduced rates on EVERYTHING, and lived in 1 room efficiencies for periods at a time to save money, even though I had 2 children. I did not buy anything I didn’t need or use, did not eat out, and wore clothes only from the salvation army or what was given to me. I used this money alone for a loan costs on my first house in the late 90’s AND I bought that home ( from a friend) by using a contract which allowed paying rent for a year and that amount to go towards the down payment. Those types of arrangements are out there, just look around and ask.
- I applied for a credit card through Capital One where I sent them $300 and they sent me a secured card to start re-building my credit. I would spend $25 on something I needed( like gas) every month then pay it off on time. It took 2 years but eventually I was allotted unsecured credit , and it was increased as I went as long as I paid on time.
- Next, i purchased a reliable car( not a pretty one) through the buy here pay here program. The total cost of the car was $1500, which I paid off in 12 monthly payments totaling a little over $2000. Then, I went to a real dealership with my established credit and got a much newer car. Eventually, I was able to get a brand new one.
- All of this lead me to a point where I COULD start actually setting aside money for any unforeseen emergencies and begin upgrading because I had my basic needs met.I fixed up my 1sthome and sold it at a profit, then I bought my 2ndhome in 2000.I went to school for my LPN , and got a job after. I incorporated the “Pay Yourself First” plan. I gave myself $30 only every week( allowance) for whatever I wanted ,then I put away $25 faithfully until I could afford $50 a week.I sold my 2ndhome for a profit then I bought my 3rdhome( this time with a husband) in 2007 and completed my 2ndnursing degree(RN) in 2008 through an online course(taking 18 months) paying off the loan as I went and then got a better paying job.. Eventually I worked up to $100 savings a week and over time I saved $8000 . I also put the maximum each week into a 401k which built up to $40,000 (which I stupidly cashed in at a huge loss my Mid-life Crisis in 2012- see The Mid Life Crisis Recovery .
- Food- this is an area where most people actually have some control, they just don’t want to. You CAN pack your home prepared lunches from scratch every day. I saved an average of $25 a week just by doing this in 1997/98 and have done it ever since. At today’s prices-5 shifts a week , approximately $7-10 for an average lunch bought out, that is $1820-2600/year!
- I opted for the cheapest (and preferably free) entertainment possible. This included walks, listening to music and dancing at home, riding my bike, buying used movies to watch (only $2 at a pawn shop- today online streaming is way cheaper than buying any movies or cable- some are even free!), using household items to work out with, and playing board games instead of going on vacations, to the movies, gym memberships or out with friends to dinner or bars. For me, this saved about $300 a month! Again- it went into savings.
- Pets are expensive. I could have saved much more if I did not have them( when I looked back it cost me about $100/month including food, bathing, grooming, vet appointments and general cleaning up after them- the list is long and varied). Plus I had to buy allergy medication for myself at the average cost of $25 a month. Todays costs are much more. I have not owned one since 2012 and will not again until I am retired and have time for them- but , even then, only if I can easily afford their care and upkeep without sacrificing my own.
- At any time possible, I paid all credit cards each month before they acquired interest. I transferred to 0 interest cards every time I could.For large purchases, I paid as much as possible from any and all money not used for basic life needs and bills. Some weeks I had an extra $50, some weeks I had an extra $100- and paying off items that accrue interest is a priority! Yes, you can forego that double latte espresso or that cool hair accessory or that neat motorcycle gadget until you are at a zero balance. Start yourself a small weekly allowance for that stuff- if that’s only $10, then that’s all you get.
- Over the years I have acquired several degrees. The highest loan amount I have ever accepted for these is $2,200 . Everything else I paid for as I went, sacrificing whatever I had to so as NOT to go into debt. Sometimes I had to wait for a month or so until I could afford the next class. If you desire an education, either get a scholarship, grant or commit to the pay as you go program. In this country, too many are in debt for a lifetime with school loans and most will not overcome it until mid-life, later or never. And, consider the next item:
- It IS possible to make decent money with a simple tech school degree or by working your way up. It IS possible to get a decent wage paying unskilled job if you keep your nose clean– meaning don’t use drugs, get a DUI or acquire a criminal record AND be committed as a good employee( not coming in late, taking off, or not showing up) but also not whining,gossiping, spreading negativity and blaming others on the job. I hear many today complaining , but most are usually unwilling to adhere to common sense and would rather make excuses than viable effort.
- I’ll finish up here- YOU are the only one who can do this. No one is going to do it FOR you- no matter how witty, beautiful, or young, ..no matter how old, broke, disabled or otherwise “underprivileged” you are. Most who have never gotten ahead and most who never will are the ones who remain stuck on repeat of old , ineffective, and purposeless patterns .If you give up, give in or quit- you get nothing, not even a chance.And if you change nothing, nothing will change—-So, take a really hard look at yourself , your choices, and your situation. And maybe, just maybe- you CAN save some money, make some changes for the better, and have those very things that seem impossible right now.