cautious rebuilding

pagz311 · ‎03-20-2017

My BK7 discharge should be this week. I have read lots of advice and appreciate all the input on these forums. I have two questions I would appreciate input on:

I’ve offers from Capital One and didn’t include them in BK though I had a card with them that I closed in good standing a couple years ago. So I will apply when I am discharged. My car was reconfirmed and will be paid off in May. I am going to use the car payment money to save up for my next car and expect I will buy a newer used card in a year. So I won’t have installment payments for a year so I am wondering about doing a selflender loan for a year?

Secondly, I am frightened. I had a great paying job and used credit cards a lot. I had to retire early and my income is now 1/3 of what I used to have. I am actually in a good position though I spent all my savings prior to the BK7 - but I am afraid I will screw up again with credit. Are there threads about this topic? I understand the importance of rebuilding. I want to walk the line of sufficient rebuilding so that in a few years I can move to more affordable mortgage and retirement location, without getting into debt again.

Anonymous · ‎03-21-2017

@pagz311 wrote:
My BK7 discharge should be this week. I have read lots of advice and appreciate all the input on these forums. I have two questions I would appreciate input on:

I’ve offers from Capital One and didn’t include them in BK though I had a card with them that I closed in good standing a couple years ago. So I will apply when I am discharged. My car was reconfirmed and will be paid off in May. I am going to use the car payment money to save up for my next car and expect I will buy a newer used card in a year. So I won’t have installment payments for a year so I am wondering about doing a selflender loan for a year?

Secondly, I am frightened. I had a great paying job and used credit cards a lot. I had to retire early and my income is now 1/3 of what I used to have. I am actually in a good position though I spent all my savings prior to the BK7 - but I am afraid I will screw up again with credit. Are there threads about this topic? I understand the importance of rebuilding. I want to walk the line of sufficient rebuilding so that in a few years I can move to more affordable mortgage and retirement location, without getting into debt again.

This is really easy to address, and should not be a problem "at all" going forward.

---> If you can't Pay In FULL because you have enough Cash "already" sitting in a checking account,

Do NOT use any credit card for that purchase. Use cash, or do "without".

If it is a large purchase, put cash in an envelope until you can pay in full.

* If I can paraphrase your post, "You haven't even received your Ch 7 Bk Discharge, and you are concerned about relapsing already"

Also, there is NO acceptable excuse for back sliding. This site is endlessly full of the most creative & passionate reasons for it happening again.

Have cash to pay for it, or there is NO purchase!

Best Wishes!!!

Anonymous · ‎03-22-2017

You are not alone. It is a scary feeling after what you have been through. I too was afraid that the CC's would be abused again, but I was so careful and never buy anything unless I can pay if right off. Unfortunately you need credit in order to rebuild your credit, just the way the game goes. Start off with a Cap 1 card, use very carefully, just put like 20.00 on it a month for about 6 months and pay off in full each month.. Ideally, you should have at least 3 cards to rebuild and you will get there. The trick is to have 2 of the cards report a balance and one report about 10.00 a month in order to optimize your score.

Again, you have to be careful, be diligent about what you do with them. I started off with only putting about 20.00 a month on each card for about 6 months until I knew I had control. Here were are over 2 years later from discharge and are scores are in good standing and CL's decent and we are building a new home. I really don't want anymore in credit cards than what I have, what is the purpose, I don't need it. Some people get into the CC game and apply like crazy and have quite a few. You really only need 3 to achieve what you need to do.

Put cash in a envelope and pay those 20.00 charges off with that every month, write everything down, keep a spreadsheet and stay on top of it.

You will also need a installment loan in order to get those scores up. You might try going to a local CU and opening a shared secured loan. It was a great start for me. You put 500.00 in every month and make monthly payment, it was a huge boost. The payments were like 22.00 a month or something like that.

I wish you the best of luck and remember, never charge what you can't pay off. I know look at things and say to myself " Do you really need this, is it that important". I never want to go down that road again, it was very bumpy.

Anonymous · ‎03-22-2017

I realized that my problem with credit card spending was not realizing how *much* I was spending when I was using my credit cards. I wouldn't touch them for months at a time, then as soon as I did, it started a chain reaction where I'd be swiping for a few days and spending more than I would otherwise. I'd check the balance a week later and find that I spent $600, $700 or more on pretty much nothing.

I've always logged every dollar I spend out of my checking account and it helped me put the brakes on extravagant spending when I saw my balances decreasing. So I set up registers for all of my credit cards also and when I do use them, I log *every* dollar I spend on them like you would in a checkbook. This tells me to put the brakes on my spending as the credit card balances are going up.

I use an app on my phone called Checkbook and have registers set up for all cash accounts, credit cards, loans between family/friends, student loans and my 401k. Probably a little OCD but it works for me.

I also have calendar reminders in my phone set that tell me when to stop using a card a few days before the statement cycles and to make payments on the cards the day before the statement cycles as well as other due dates.

I also learned that I'm no good at playing the credit card reward game. Prior to BK I was running a few grand/month through my JetBlue Amex to earn points. I fly between NYC and FL every few weeks and was getting every fourth flight or so for free. But I was picking up tabs and paying for things I otherwise wouldn't have and justifying it by the points I was earning. I probably paid for those free flights a few times over. Some can work the points responsibly . . I don't think I'm one of them.

enjoimorenow · ‎03-22-2017

The key to managing credit card debt, as others have stated, is to only use cards for purchases you already have the money to pay for in cash.

If you think you will struggle, you can just use the card for a small bill like Netflix and then pay it off, or use it as a gas card and pay it each month.

Luckily, you will mostly start with relatively small limits after BK so you can learn to manage your credit cards.

Once your car loan is paid off, your scores will drop if you do not add a secured loan.

If you have the money to put into a collateral account up front than going through a credit union is the best bet and is very cheap with little interest paid.

If you don't want to put up the money up front, then you can use a site like self-lender where they will just take the loan amount and put it into a CD which you don't get access to until the loan is paid off. This route will cost you a little more in fees and interest. For comparison, my six-month share secured loan at NFCU will cost me $1.77 in interest, while the 12-month self-lender loan I did will cost closer to $11 plus the $12 account fee they charge when you start. Either way, they are relatively cheap options to add an installment loan to your profile while you save for your next car.

BK 7 Scores (08/2016): EQ-528. TU-486. EX-530.
Current Scores (04/2022): EQ-717. TU-735. EX-736.

pagz311 · ‎03-22-2017

Thanks for the ideas. I think I will have to track credit closely. there are different paths for everyone and I don't mean to disparage anyone, but it is nice to read more about management than acquisition of credit and understand I am not alone.

I've always been a spender and very generous with others. When I was younger, I'd pick up a second job or apply for something with a bigger salary when money got tight. My options now are more limited in retirement, but I am capable of changing.