O’Girl had a funny post recently about how her SO would always throw in a “have you fixed your credit?” into every conversation. Like, “I see you shaved your legs. Did you fix your credit yet?”
I admit to having been in that situation long ago. Of course part of how I came out of it was that Hawk was picking up the tab for rent, we shared a car, etc. But the basic idea of what got me straightened out is what got the bills paid.
At the risk of starting Story A and going into Story B before going back to Story A (see upcoming review of We Thought You’d Be Prettier, once I slog through the rest), I need to give a little background on how I ended up in such dire credit straits.
It was partially my fault. I worked in retail and spent meal breaks spending more than I was earning that day. Not every day. Part of that was that I lived at home and my mother (remember her?) would go into her paranoid rants if I worked and didn’t buy something that day. You were in a mall and came back with no material goods? Buying a sweater or something was easier than listening to that.
See, my parents had no credit. My mother, as you may remember, has an obsession with things. Owning stuff. Having possessions. She has a very clear idea of the concepts of “deserve” and “mine.” So my dad, who made a middle-class living, would allow her to get things on credit (store credit, credit cards, etc.) and then he wouldn’t pay the credit bills. I had a king-size waterbed in 8th grade, which I didn’t want, b/c my mother decided it was the proper bribe for me to move from FL to PA and they had no intention of paying for it anyway. For some birthday, I got an organ (of course I had nagged for a piano since I was teeny) which was also never paid for. So when my father went to trade in our station wagon in the late 80s (it was maybe 2-3 years old), we had gotten the new car and had to return it when the credit app was denied. Of course they denied there was any credit problem.
I found out years later, when trying to straighten out my credit, that someone had gotten a loan in the hometown bank in my name while I was away at school. It was paid but the principle of the thing is what counts. They were using my SS# to get credit.
When I graduated college, I had no money and no job. I also had no one to help me with those things. I had no idea how to look for a Real Job and I didn’t have parents to fall back on for help with the rent. So I lived at home. I offered rent but they wouldn’t take it (they demanded “back rent” when I moved out — hee!). So I did what else I could, like buying the groceries and such.
Finally the station wagon could take no more and I had to get a car in my name. Sticker price? $8888. Payment? About $250/mo. See, I had a good rating but practically no income. I looked long and hard for anyplace that would even finance a car for me. I wanted some kind of used $1k thing but my mother absolutely wouldn’t have it. My SIL even found me a used Suzuki samurai for $1000 or so & started teaching me how to drive stick so I could get it (and pay for it up front, I might add).
Thing was, this included a trade-in of the old beat-up station wagon. So my car became the “family car.” My dad was supposed to be retired but he never could stand staying home with my mother and to this day works practically a full-time schedule now selling shoes. So anyway, he had a part-time job and I had a full-time job and a car was necessary. You may remember the story about the car from the night I moved out.
So the deal was that, in exchange for use of what was legally my car, my father would make the payments on the car. I should have known better. To shorten this already-long story, when I moved out, I found that the payments were months and months behind, all in my name. I sent a payment of $500 and the finance company demanded another $500, which Hawk (who I was only dating at the time) wired the money on my behalf. And the finance company was calling me at work every day wanting more money. Of course, I had nothing left. I was using my last $10 to buy enough gas to get to work and something from the grocery store. I lived with Hawk’s cousin, who started charging me rent after a month, which was fine but unexpected and took all the savings I had scraped up during that month. Money sucks, when you don’t have it.
So once Hawk & I moved in together, nine years ago this week, I got tired of the calls about the car and I told the finance company “Come and get it.” “What?” “Come and get the car. You want money I don’t have. This car isn’t worth the hassle. Come and get it.” “You want us to repossess the car?” “I want to voluntarily have the car repossessed, yes.”
It sat, keys in and locked, in our apt building parking lot for a while. I waited for them to come and tow it away. Finally they did. They auctioned it and it paid off the remainder of the car debt.
In the meantime, I was forced not to pay on all the credit cards I had. I had continued to pay my student loan payments (just over 1/4 of my income but the govt wouldn’t let me suspend payment since they only counted the federal and not my loan through the university).
I found a job in Erie, first working the cosmetics counter at the local department store and then, about six weeks later, as a reporter for a local weekly, a job I kept until the paper closed and I briefly went to grad school (another story). As I said, Hawk paid rent, we shared his car, we shared food bills, etc. My income went toward fixing my credit, damaged by a year of mess and problems.
Here’s how I got out from under the mountain of debt:
(1) Give a little away. I know it sounds stupid but I believe in karmic law. The Christmas I was last living at home, I donated a toy to Toys For Tots and I had a bout of good money luck. I noticed that every time I gave a little something somewhere, it came back to me. If you don’t believe in karma, you can believe in tax-deductible donations.
(2) Set aside a fixed amount for payments and divide it accordingly. Let’s pretend it goes like this, balance-wise:
Credit card A: $1200
Store card B: $600
Store card C: $550
Credit card D: $230
Store card E: $90
If you’ve got practically nothing to pay them, even that $90 balance can be daunting. First you need to write a letter to every creditor saying you’re in a program to repay your debts. Ask them to stop charging you interest and to freeze your account (ie: no charging by you, no interest charges by them). Believe me, they’ll be happy to get paid. Let’s say you have $50 per month that you can afford to pay to everyone. Tell them, “I can pay you $10/month until my balance is paid.” They will take it. I thought they’d scoff at me but not a single creditor did (and I didn’t use a debt counselor; I did this all myself). Then you pay that $10/mo to everyone.
Here’s the trick: any extra money you can spare, send it to your lowest balance card. Yes. The lowest. Let’s say you manage to scrape together another $10/mo. Send Card E $20/mo. In five months, they are paid off. Excellent!
Now take the $20 you were paying to Card E and pay Card D. Now Card D is getting $30/mo. The balance there at the start is now $180. In six months, they are paid. Take that $30 and put it on Card C. The balance after 11 months of paying $10/mo is $440. You’re now paying them $40/mo. Another 11 months and they’re paid off as well.
The best part is that once you’re putting more money on those higher-balanced cards, the faster the balances disappear. The time between paying off Card E and Card D is forever. Between Card B and Card A? Practically no time at all.
Hopefully you’ll have more than $10 a month to give everyone but I know how it is when you don’t. The key is to pay off, pay off, pay off. Don’t be tempted to dent balances. Eliminate them. When the card is paid off, asked to have the account closed. Make sure your credit report reads that you paid the balance, not that it was a write-off. Use checks or pay in-store if you can so that you have receipts. A lot of my creditors tried to say I was a write-off. I challenged every write-off with the credit bureaus and wrote to my former creditors with proof of my payments. It took a little more time but my credit report was cleared.
I still had a low credit score for many years after everything was paid off. I didn’t co-apply for our car loan on the Explorer b/c I wanted to be able to get a good APR (we did). Now my credit score is slightly higher than Hawk’s (both are near 800; mine is higher b/c he has student loans & such in his name only).
(3) If you get credit again, make it good credit like a bank loan. Get the lowest possible APR and pay the loans off. After 7 years (in my state), my old credit score was washed away.
Anyway, that’s how I did it and I hope that’s helpful to someone else. It can be done, even if your main meal is baloney-on-hand.
1 Comment
June 14, 2005 at 1:10 am
Tell them, “I can pay you $10/month until my balance is paid.”
I’ve tried that before. It’s never worked. Glad it worked for you, though.
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