by a.b.

Thank you to Liz Weston for interviewing me for her piece on financial dread. I guess I’m no longer even semi-anonymous (no worries), but I figure in a week no one will remember my name anyway. Heck, I can hardly remember it now.

Some of the commenters had some great points and questions, so I thought I would put everything else out there:

yclept brought out that the key is if you don’t have cash, you don’t buy. Well, yes, but sometimes you do the best you can once you’ve gotten into the situation. When I wasn’t paying it off every month, I was going against my better judgement, what I’d been taught; it was just a bad situation. I did better when I figured it out.

tazo24 had a host of questions (Hope this answers them, if you have any others, let me know):

  • How much did it actually cost me in fees? The unfortunate thing is I would’ve never been over my limit if I’d canceled the credit protection service. I estimate I paid at least $600 in credit protection fees; I also paid $120 in late fees, and about $400 in overlimit fees. Considering I only had a $3000 balance, this was ridiculous.
  • How many points were shaved off my credit score? I actually don’t know how many were shaved due to my own stupidity. I know I checked it right after I got married (2003) when we got an apartment and I believe it was at 570. A year later after just making payments regularly, it was in the 630s. Today,it’s around 720, and I couldn’t be happier.
  • How hard does it get before you can’t get an apartment or job? I’m honestly nervous now that I’m not semi-anonymous that my past mistakes could effect me getting a job, but I’m in a field that’s known for flaky people, and they don’t do financial background checks. I’ve also never held a cash-handling position. A co-worker of mine in Las Vegas was denied employment in a large casino because of a bankruptcy, in a non-cash handling position even. Regarding an apartment, I’ve had to pay higher deposits before, but I’ve never been denied due to my credit history.
  • How much does insurance go up when you score drops? I was paying $250 a month for insurance, but I’m not sure how much of that was because I was under 25, and how much was because of my score, and how much was because I was accident prone.
  • What has been the actual impact? Well, I still can’t buy a house yet, and since my husband and I are still paying off student loans and remaining credit card debt, I don’t think we’ll be able to start a family any time soon, if at all. In the long run, I’m actually not upset that I went through this, because I learned the hard way, and I learned faster. I would hate to have made these mistakes at 45 and had it jeopardize my retirement.
  • Then if she had done 1 thing at the beginning – what would the result have been? The disturbing thing is there are several “one thing”s I should have done. If I had dropped the credit protection service, I wouldn’t have gone over my credit limit, and would have saved $1000 in fees. If I had called my credit card company and asked for them to work with me when I started to get scared, I would’ve been ahead of the game. If I had decided not to go back to school, and just kept working, I would’ve been debt free a long time ago.

beenthereinpa noted that doing a balance transfer to reduce your debt is nearly impossible once you’re in the hole. I agree, but I don’t generally get a new card to transfer a balance. Most of the transfers I make are where I get an offer on a card I already have due to a history of on-time payments. Regarding your situation with the bank, I would have called them and argued that since they advertise the convenience of 24 hour online banking, you were under the impression that you could make payments 24 hours a day and they would be applied that day. It never hurts to get a little cranky when the bank’s being sneaky.

FrEddddd is appalled by the lack of financial education that young ones receive. I think I did receive a strong financial education, but the education I received is no longer applicable today.

What I can remember is how much personal finance has changed with the passing of time. I’m still a young punk (not even thirty), but I remember a much different world in respects to credit and debit. For example:

  • Twenty years ago, my dad had two credit cards, a Diners Club, and a VISA for emergencies. In 2005, according to CNN Money, “The average number of bank cards per cardholding household is 19.3 — typically eight bank cards, eight retail cards and three debit cards.”
  • Ten years ago, before my father passed away he decided to teach me about real estate transactions, at a “generous 10%.”
  • When I was looking at my first apartment at 21 (almost seven years ago), I was not asked for a FICO score; I was asked to show a history of on-time payments and consistent income, or I needed a co-signer.
  • For the average person, up until a few years ago online banking didn’t exist.

The financial world has been changing. I feel very blessed that I’ve overall been getting smarter, even though I still do dumb things. It disturbs me that personal finance changes faster than people can keep up. In many cases it comes in the guise of new products, sales pushed on a consumer as a need instead of a waste. One day, when I’m debt free, I will live my life as if credit doesn’t exist, and I will sleep better every night.

Photo Courtesy of fedcomite