Tag Archives: debt

Taking a Look at your Credit

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I celebrated my birthday recently.  I’m one year closer to the life of leisure and adventure that I have planned for my retirement!  And aside from a lovely day of doing my favorite things, I like to use my birthday as a reminder for things that should be done once a year.

One of the things people should do once a year is look at their credit report.  Your credit report is basically a history of all the things (both good and bad) that have been happening in your financial life.  It will show you all of your loans and where you stand in repayment.  It will show you all of your open lines of credit.  It will show you a history of closed lines of credit.  It will even show you who has been looking at your credit.  And just like with everything, it’s not always going to be correct.  That’s why it is important to look at it once in a while.

The federal government has set it up so you have access to a free copy of your credit report once a year, from each of the three major credit bureaus (Experian, Equifax, and TransUnion).  And while the pandemic continues you actually have access to a free report once per week.  But there is a lot of confusion about how to access this information for free.  There are a lot of places where they are happy to charge you a fee for this information…or even worse, set you up on a recurring subscription.  All to get information you have the right to see for free.

To request your free reports, you should visit http://annualcreditreport.com.  This is the site set up by the government to allow you this free access.   The site will ask for your Social Security number and ask you questions about your credit accounts to verify your identity (so no one else should be able to access your information).  And then, you’ll have all of the information you want about your credit history.  All of your accounts.  Whether you have a history of late payments.  How much you owe.  It’s all laid out for you.

Once I looked at my credit report and found an error.  A big error.  A mortgage that had been paid off in a refinance was showing as open.  It looked like I had about $80,000 in debt more than I actually did.  And I had to jump through some hoops and fax a bunch of documents to get it corrected.  And that’s why it’s important to look at this stuff from time to time.  It’s absolutely better to find credit report errors on your own rather than be surprised when a loan request is denied.

Whether or not you are celebrating your birthday, you should probably take a few minutes and review your credit report.  The best gift of all is peace of mind.

You Can’t Always Get What You Want

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This has been a long and fraught week for Americans as we waited through the vote counting for the determination of the Presidential election.  Not everyone is happy with the results.  And this highlights one of the most important money lessons there is to learn:  You can’t have everything you want.  If it were possible to have everything you want, I would be retired and living in a 26-foot long Airstream travel trailer towed by a brand new SUV while I tour the United States.  Instead I am working full-time from my guest room in a job that I love and I tow a tiny teardrop camper with an 8-year-old Subaru on weekends when I am able to get away.

You can’t have everything you want.  You have to accept what you have and do the best you can with it.  I have a job that I love (I get to help people achieve their dreams!!).  I’d rather have a job I love and make less money than I would if I had a job I didn’t love.  My life isn’t extravagant.  But it’s comfortable and offers me what I need.  I’ll never have an Airstream camper or a brand new SUV.  But I will someday have a good quality camper that I can stand up inside of….and likely a used SUV or pickup truck to tow it with.  And until then I have a teardrop camper and a Subaru that take me on a lot of adventures.  I can’t have everything I want.  But I can make the best of what I have got.

If you try to have everything you want you’ll end up in a financial nightmare.  The struggle with debt is a very real thing for a lot of people.  A mortgage payment or car payment that stretches the budget can cause sleepless nights as you try to figure out how to also pay for food and utilities.  Add credit card debt or medical bills on top of that, and suddenly you’re sinking so fast you don’t know how to get out.  The best way to manage debt is not to fall into it.  Do you need a place to live and a mode of transportation?  Yes!  Do you need it to be exactly the one you have always wanted?  No!  It’s better to start with what is financially manageable and move your way up over time.

Sometimes making the best you can with what you’ve got is easy, like when you choose store-brand products over brand names at the grocery store, or when you buy clothing at second-hand stores or at big-box discount stores rather than at boutiques.  Sometimes it’s more disheartening, like when you take the bus instead of owning a car.  Sometimes it’s ridiculously frustrating, like when you have to accept that you just can’t afford a trip to Disneyworld so you staycation instead.

You can’t always get what you want.  But you can make the choice to be happy with what you do have and make the most of that.

My First Loan

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Do you remember your first loan you borrowed?  Perhaps it was a student loan.  Maybe it was a department store credit card.  But more likely it was a loan from your parents.

1970s-tv

My first loan from my parents is still amazingly vivid in my mind. My sister and I shared a bedroom and we really wanted to have a small black and white television in our room.  (It was the 1970’s. TV technology has come a long way since then!)  I think I was about eight years old and my sister was about eleven.  My parents agreed that we could have the TV, but we had to pay for it ourselves. It was my very first purchase on credit.  I don’t remember exactly how much the TV cost, but I think I had to repay somewhere in the neighborhood of $30 for my half of the TV.  Quite a lot for an eight year old in the 1970’s.  My father was very legitimate about the whole thing.  He had ledger sheets where he tracked the balance due.  I would save my change and make payments from my allowance and birthday and Christmas gifts.  And within a year I had paid my debt.

While my father did not charge me interest on this loan, he did teach me some very valuable lessons about purchasing on credit.  I learned the importance of making regular payments.  I learned the joy of watching my debt amount decrease.  I learned the pride of having successfully made a fairly major purchase.  I learned that sometimes you have to sacrifice the things you want to make payments on debt.  Debt is an obligation.  Credit allows you to buy things without having the money on hand in advance, which is very helpful for expensive things like houses and cars and higher education.  But paying it off…that’s freedom!