It’s possible you’ve noticed, but in case you haven’t, let me just say, I really love talking about personal finance. So much so that I volunteer for two organizations as a financial education counselor. This past Saturday, I taught a two-hour course titled Know Your Credit Report. It’s one class in a 5-part series on money management. I normally teach the budgeting class, but I wanted to challenge myself with a different topic that I actually know quite a bit about.
I don’t talk about credit often here at You Have More Than You Think because I’m not a proponent of going into debt. Although I don’t know what I’d do without my dear, sweet, precious American Express Hilton Honors card, I’m fairly averse to borrowing money. Even home mortgages make me uneasy. I use my credit card for reward points, and I pay the balance in full every month to avoid interest charges.
Man, I wish I could tell the class how I really felt about credit. But, screaming DON’T BORROW MONEY, probably didn’t meet the objective of the course. Plus, it’s next to impossible to make a single statement fill a two hour time slot.
Overall, I thought things went pretty well. There were so many topics I didn’t get a chance to cover. I’m looking forward to teaching this class again now that I know what to expect.
It’s not most people’s forte, but I quite enjoy standing in front of a group of people and teaching them how to manage their money. That’s quite an enjoyable experience for me. But you know what I really love? Listening to the experiences of individuals in the class and then talking about their experiences with you.
It’s like gossiping without the evil. The concept brings to mind people who share other people’s business under the guise of genuine concern and then conclude their gossipy rant with, “Child, I was just letting you know so that you can pray for ‘em.” Come on.
Hey, that’s not what I’m doing. Feel free to pray for whoever you want. This blog post is an extension of what I told one of the attendees to her face.
Let’s just call this woman Larissa (pseudonym for anyone who’s financially challenged). After class, we continued our discussion on credit. Larissa was infuriated her bank suspended her home equity line of credit when she defaulted on a Walmart charge card.
Here’s wear Larissa messed up. She’d recently cancelled automatic payment of her Walmart card because she’d paid off the balance. Then, she proceeded to forget to make the minimum payment after she ran the balance back up again for some Christmas presents purchased with her Walmart card. Once her bank got wind of this, they closed her line of credit. If Larissa had paid a few days late, the bank would’ve never known. Creditors wait until you’re at least 30 days past due before they report you to the credit bureaus.
What I’m about to say may infuriate some people. Actually, a colleague recently warned me that (in spite of all my liberal leanings) I’ll be a Republican some day. So here goes.
If you pay any one of your creditors 30 days late, the other creditors should get nervous.
Why are you paying your bills late?
Did you lose your job?
Do you have a drug addiction a gambling addiction a shoe addiction?
Are you caring for a deadbeat husband, child, or sibling?
Are you a deadbeat wife, child or sibling?
You paid Walmart late this month, are you going to pay me late next month?
What is your problem?!
It’s quite possible you just plum forgot to pay your bill for 30 consecutive days.
However, there’s a reason people who pay their bills late are charged higher interest rates. They’re riskier. There’s a greater chance you won’t pay your bills at all if you’re paying them late. Such behavior is, generally, indicative of poor money management.
Maybe you’re an exception, but the bank ain’t trying to get to know you personally. They’re looking for a pattern of behavior that’s consistent with someone who doesn’t pay their bills.
Back to Larissa and her outrage. She made the point that she always paid her bank on time so they shouldn’t worry about what’s going on with Walmart. I know Larissa certainly didn’t feel like her bank did her any favors, but the other alternative to dealing with the Walmart default situation would’ve been to raise the interest rate on her home equity line of credit.
Be grateful you got shut down, Larissa.
So here’s where the aptly name blog post title comes from. One of the last things I remember Larissa saying was that she was hoping to use the home equity line of credit to get some work done on her house. She slipped up and said the bank refused her access to HER money.
After minutes of listening to Larissa wax on about the injustice of it all, I had to interrupt.
“Larissa, it’s NOT your money.”
Then I told her how I really felt about credit.
The title of this blog post was inspired (actually, it was spoon fed to me) by Fin Egnr at Engineer Your Finances. I like it better than the original title: “Credit – It’s Nacho Money, Fool.”
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LOL @ "The bank ain't trying to know you personally." AMEN! Loved this post — this is why I subscribe.
Thank you for subscribing!
I have a Walmart Money Card and so far its been ok, I have less fees that my Checking account and I do not have to worry about spending more money than I have.
Checking account fees? John, you need a new bank. I have a Schwab High Yield Investor Checking account that I'm quite happy with. Here's a link if you're interested: http://www.schwab.com/public/schwab/banking_lendi...
If you have a problem with overdrawing your account, tell your bank not to allow you to overdraw your account. If they insist on providing you with the "privilege," again, find a new bank. If you're not comfortable with Charles Schwab, then I'd recommend ING's Electric Orange account.
Agree w/ Shawanda.
John – you should NEVER have to pay for your money….ITS YOUR MONEY. Get out there and find a new bank ASAP. Check out some local credit unions if you can, they are significantly more client-friendly.
@ Dogfood Provider That is one of the reasons I subscribe, too. How about this one? "Listening to the experiences of individuals in the class and then talking about their experiences with you. – It’s like gossiping without the evil."
I'm blushing. Thanks. I really do appreciate you taking the time to read, subscribe and comment on my blog.
HER money! HAHAHA!! That is what easy credit has done to this country! It's created monsters! I'll never forget calling my mortgage institution about something or other, and the rep looks at my account and says, "I have good news! You are eligible for a $___ line of credit!" She seriously sounded excited like she had just told me I won the lottery.
People really need to learn (and teach their children) that credit limits are not equivalent to pay raises or free money. Until then, I'm afraid we'll just continue to see more and more Larissas!
You know I've actually heard people say they thought credit cards were free money. I just don't understand how or why someone would think a business would give them free money for no reason. Because they're awesome? They might be irresponsible, but I find it hard to believe they're that clueless.
I told myself years ago that I would never use credit again. Guess what? You dont know what life will throw at you. Now I am using credit (medical card – 0% interest for the first year) to get some much needed dental work done. I'm also building up MS related medical debt month by month. I know its not the same as using credit cards for junk, but it doesn't FEEL much better. Debt is debt.
I can't imagine how stressful that must be. The best we can do is plan and hope that's enough. Sometimes it is. Sometimes it isn't. When it comes to health, I wouldn't encourage anyone to choose death or extreme pain and suffering to avoid going into debt. You do what you have to. Once you're well (if you're one of the fortunate ones), you try like heck to avoid that situation again. I do think about what I'd do if I didn't have health insurance. I have some ideas, but I know that insurance is really complicated and can be overwhelming. Even when you have it, your medical condition still might not be covered. Oh, and did I mention expensive?
Since I'm an accountant, I know exactly what my insurance premium would be under COBRA if I were to leave my job. I've factored it into my emergency fund. I know that insurance is good, so I'd think long and hard before I dropped it even if another insurer offered me a cheaper option. It sickens me how many health insurers try to get over on people.
I wish there was a way to avoid multiple sclerosis,
but at least I am healthier in other ways. More than I have been in years passed (very active, healthy diet, etc). I do have insurance and its $345 a month, not to mention high out of pocket costs (that's the part that's a killer). I have no dental insurance so everything is out of pocket. Had I stayed in California, my COBRA would have been close to $450 a month WITH the stimulus bill. Fortunately in Oregon, we have a program that offers insurance for those of us who cant get it outside of a group plan, but its not free.
Carla,
That's amazing. Don't ever feel like your not worth the money. I had planned on writing a post on this topic, but you've given me the perfect lead in. Americans overspend on junk, yet cut themselves short on things like food quality and medical care.
Smart move relocating to reduce your medical expenses. Were there other financial benefits from the move? (lower taxes, rent, etc). Also, have you considered negotiating/haggling with your dentist and/or doctors regarding your bills? Can't hurt to ask, I'm a big proponent of finding value and never paying full price for anything.
Good point. I saw an article in Real Simple magazine about a month ago that talked about how to save money on health care.
How to Save $5,000 This Year: http://bit.ly/csFSXj
Here's an organization mentioned in the article that seems to have a lot of helpful resources: http://www.oralhealthamerica.org/
I also wanted to mention another article I found on the Wall Street Journal's site.
Hard-to-Insure Find Novel Way to Get Coverage: http://bit.ly/ckdqC5
I'm not sure it's helpful to you, Carla, since you live in Oregon, but maybe other people could learn something from it.
I was born and raised in the Bay Area and we moved to Portland to basically have a better quality of life. Lower cost of housing, good quality medical care, lower business expenses and taxes, great city, lots of things to do, etc. I can at least ask my dentist to see if negotiation is possible. Thanks for the tip!
If you haven't already, do the same with your medications. I once expressed concern to my allergist that name brand medication for a chronic condition, like asthma, can get expensive over time. My copay is only $20, but, uh, you know me. My doctor ended up giving me a 30 day free sample. She mentioned that she tries to save samples for her patients who don't have any health coverage. So, I think all doctors are becoming more sensitive to their patient's needs to cut costs on medical care.
Unfortunately, MS medications only come directly from the drug companies (no generics, too specialized), but the companies themselves do offer discounts to people who cant afford it. They can cost over $30,000 a year so they subsidize a lot.
the cost of your medications, even with the help of the drug companies, might be helped thru a medicaid program. those programs have an income limit and an asset limit, but if your out-of-pocket expenses are exorbitant enough, the limits might not apply. i think the rules change from state to state, but they're worth looking into. the way health expenses add up…it's so, so tough to deal with.
I have nothing more to add, other than…I want to be like Shawanda when I grow up! I remember so clearly when I had NO debt, nada! Car…paid for, credit cards…paid in full, mortgage…nope! What happened? Love and marriage honey, love made me stupid…getting married broke the bank! If only I had it to do over again. But with Shawanda's no-nonsense insight and suggestions I know I can turn it around! Holla!
Thanks!
I'm not sure if you're referring to marriage or the wedding, but since your comment made me think of weddings, I have a little something to get off my chest. I'm 99% sure when the time comes for me to get married, I'll do it at the court house or Vegas or somewhere real cheap. I'll skimp on the wedding, but it needs to be clear to my significant other I'm expecting a nice sized, high quality diamond.
When men find out you're frugal, they think they never have to spend any money on you. I do enjoy nice things. Think I'm gonna be walking around with a cheap piece a glass on my finger. Please!
if having sensible financial outlook makes you a republican, then i am faaaar more right-wing than i ever thought. i never knew!
(and yes, i agree with everything you said to larissa! i'm trying to teach my boyfriend about finances now that he has a steady job and i'm amazed at how much he has to learn about budgeting and credit–at 35, you'd think he'd learned to be a grownup about this stuff by now! but i'm so glad that he's willing to learn.