Credit Score & Debt???

Question

My credit is score is 529. And I have some credit card debt, and miscellaneous debt that I need to handle. I turn 35 years old today, and I want to seriously make a change with debt and financial situation. BUT, I don't know how to start. ANY IDEAS FOR ME?

I'm a teacher who makes appr. $2075 a month. (i live in Oklahoma). Please help me out. What should I do to increase my credit score, get out of debt, and maintain some sense of financial stability? Thanks for your help.

Answer 1

Credit score is based on your payment history, and the amount of debt relative to your earnings. Chances are that with a score that low you have bad marks on both counts. You should try and improve both, it will take a few years. Reduce your debt, and with the amounts you do have outstanding, make sure you make timely payments.

Answer 2

Are you up to date on payments? The best way to fix that is to pay off the ugly debts asap, like charge-offs, repos, etc. Then pay off those credit cards you should have never gotten, like Sears, Kay Jewelers, etc. As long as everything is up to date (which means not over 30 days late) your score should start climbing.

I'm in a similar situation and this is what a financial institution told me. I make about the same per month as you and to really get a jump on it I'm taking a second job delivering pizza at night. You might do something like that.

Answer 3

Start a budget/plan to payoff your debt.

Once you're debt free, pay off any credit card bill in full and on time - all the time.

More info/advice: http://moneycentral.msn.com/community/message/board.asp?Board=WomenInRed

Answer 4

You are a teacher. Excellent. You are capable of taking on a reading assignment.

You need to research personal finance. I recommend starting with the Personal Finance for Dummies. Read that book and then go thru its references and find more books to read. I made a goal of reading at least one personal finance book a week this summer. I have learned a lot.

Also, there are lots of resources available to you online. This site
http://www.bankrate.com/brm/news/Archive.html
has lots of articles on many different money subjects. Spend a few days and read the articles that you feel are relevant. Actually, I have spent months going thru articles on there.

Don't put too much emphasis on credit score. If you take care of the rest then the credit score will usually go up as well. Credit scores do need attention however, but tackling the debt and the savings is a better place to start.

My first tip. Start up your 403(b) at the school. You don't have to go whole hog on it. Go with the minimum. That is usually around $50 a month. Start is now and you will be happy for it when you retire. Trust me. If you postpone it then it will not be as helpful to you when you retire. Don't go with annuities. If annuities are the only choice you have then try to get more selection in your plan or go with a Roth IRA. Learn more about 403(b) at this site
http://www.403bwise.com/

Next up. Start putting aside a little bit of money each month into a savings account that you do not touch. This will be your emergency money. You will only go into it for emergencies. Real emergencies. No vacations or dinners on this money. This money is your financial blood and you do not want to lose it. Many times we need emergency money. If we do not have it then we go deeper into debt and/or ruin our credit. Start saving the money. Even a little bit will help. How much? Let’s say $50 to $100 a month. Can't afford that. Then go with $25 a month. Do whatever you can afford. See if you can get the money taken directly out of your paycheck and put into the account. If it never falls into your hands then you will be less tempted to spend it.

Ok, now the debt. You need to stop using the debt right away. If you have credit cards then stop using them. Get a check card at the bank or credit union. Be careful with it though. A check card has less loss protection than a credit card if it gets stolen. Figure out who you owe the money to and what are the terms. You should be able to quickly know this information. If not dedicated to memory then use a spreadsheet. I recommend the spreadsheet. Are you making minimum payments on those debts right now? Ok, that is good in one sense. In others it is bad but we are just starting.

There are two schools of thought on how to pay them off. Of has you focus all extra money into the payment with the highest interest rate. Once that is paid off then you move on to the next highest but also add whatever was the minimum payment on the first account. You roll all of those payments together and keep it up until you pay everything off. The other is the same except if focuses on the account with the smallest balance first. Pros and cons. Well focusing on the highest interest payment will result in you paying everything off quicker and with less interest paid. Focusing on the lowest payment will mean that you will get those accounts closed faster and you can start to see results sooner which may help you out. It depends on your situation. When I did it, I got lucky and my highest interest was on the smallest balance. You want to pay off credit card debt, school loan debt, car loan debt, department store debt, and whatever kind of debt you have. Do not include mortgage debt in this round of debt killing. It is a different beast and should not be included with those others.

You are probably saying. Hey, great information but I cannot afford these options. Sure you can. You may have to adjust your budget to do it. You do have a budget, right? You also check at the end of each month to see how well your budget worked, right? For most people, the answer to those questions are "no". They are not controlling their money and it is going off in all directions. A little like trying to keep water in a wicker basket. It just flows away. You need to start keeping track of how much you spend and how much you make. The secret to financial success is spending less than you make. That little sentence is the gem in this whole book I have written here. However, it means nothing if you cannot predict with some reason how much you will spend in a month and how much you will make in a month. If you cannot tell exactly how much you spent last month or can tell exactly what you spent it on then you will have trouble spending less than you earn.

Another good thing for you is that there are lots of extra situations for you to make money at a school. Game workers, summer school, bus driver, extra duties. There are usually lots of jobs that need to be done. Go and check with HR and see what is available. Don't be embarrassed. Tell them you want to get a jump on Christmas or something.