Debt-Free Forever Gail Vaz-Oxlade (best ereader for epub TXT) 📖

With a secured credit card, you put up cash to cover your balance. Lenders often want twice the credit card limit, so if you want a $500 credit limit, you’ll have to ante up $1,000. Once you’ve established your ability to manage the card—anywhere from six months to a year—you can ask for the security requirement to be dropped and your deposit returned.

Secured or unsecured, a credit card can be the cheapest way to build your credit file. In the old days you had to take a loan, which you then repaid to establish yourself. All the while the interest clock was ticking. So you were “buying” your credit history. With a credit card, you can build a credit record without it costing you a cent. That’s because credit cards let you use the issuer’s money for a specific period of time interest free. And as long as you repay the outstanding balance in full every month, you can continue to use that credit at no cost. What a deal!

Make a commitment to never carry balances on your credit cards again. Having been to hell and back, once you’re back on track credit-wise you may find the temptation to splurge—take that vacation, buy those shoes, eat out every night for a month—almost too much to resist. Resist! While it can be tough to get to the end of the month before you get to the end of the money, know that any money you charge and don’t immediately pay off is setting you back on the rocky road to Debt Hell. Now that you’re back on your feet, you must protect yourself from the crap that life brings, which can push you back over the edge. If you’re carrying a balance on your credit cards, should something terrible happen, you won’t have a financial cushion to help you deal.

Paying your balances off in full each month isn’t such a tough habit to get into. It means keeping track of everything you spend and not spending more than you can afford to pay off when the bill arrives.

Next, get a copy of your credit report from all credit bureaus and check to make sure that they show your discharge.

When it’s time to apply for credit and you sit down with a lender, get your story straight. If you’re a deadbeat, you don’t have much hope of re-establishing your credit history. But if you got into trouble for some other reason—unemployment, illness, divorce, widowhood—you want to be able to tell your story succinctly (that’s in less than a minute) so you can explain why you had to file for bankruptcy. Tell a good story and lenders will be more willing to work with you. Be upfront and honest, and they’ll feel your pain. Show remorse and they will understand that things were beyond your control.

Stay positive. Some people are so psychologically devastated after a bankruptcy that they can’t let go of a penny. Some are so afraid of making the same mistake again that they won’t go near credit with a 10-foot pole. Some are so ashamed, they won’t tell anyone, and delay getting their credit histories shined up so they can get on with their lives. There’s no point in hiding. You need to accept that you were in a bad place, that you’ve done what it takes to fix your problem, and that the rest of your life is full of hope and promise. Don’t be so resistant to getting back on track credit-wise that you wait too long to re-establish your credit history. The longer you take, the harder it will be. When you do need credit for something important, like buying a house, you want it to be available, and you want it not to cost an arm and a leg. Having a healthy credit identity is the only way to make sure you can get credit at a reasonable cost when you need it.

Crap happens. That’s life. It’s how you deal with it that separates the grown-ups from the dopes. Roll up in a ball like a hedgehog, and you’ll make no progress. Figure out what you have to do to get through whatever it is that life has thrown at you and you stand a good chance of coming out the other end in one piece. There’s an old Jamaican saying: “What don’ kill yu, mek yu strongah!”

PART FIVE

STAY THE COURSE

12

STAY DEBT-FREE

You ought to be proud. You’ve done the hard work and come up with a plan. You’ve put your life in balance, taking care of past mistakes and minimizing future ones. You’re well on your way to Debt-Free Forever. Congratulations!

Now don’t go getting complacent. As soon as we think things are fine, we often stop paying attention to the plan. I’ve seen it time and again. We become unconscious, doing things by rote, and hoping for the best. Having been through Debt Hell, you won’t want to do this again, right? So this chapter is all about how to keep moving forward to stay Debt-Free Forever!

STAY COMMITTED TO YOUR GOALS

People are always setting goals for themselves and then beating themselves up when they miss by a mile. Then there are the folks who are so tired of missing the mark they’ve just stopped setting goals completely. From the school of “I can’t miss if I don’t throw the dart,” they’ve given up trying.

But if you don’t know what you want, if you don’t devise a plan for getting from one point in your life to another, you’re just wandering in the woods blindfolded. You’re probably going to tumble down a steep slope, trip over some roots, or fall in a hole. You will get hurt. And then you’ll be angry, frustrated, sad. Wouldn’t it just be easier to take off the blindfold?

Becoming debt-free must be one of the goals you set for