Authorized User Dilemma, Help!

Anonymous · ‎09-30-2017

Okay, so I've been rebuilding my credit for about 6 months. It's been going pretty well, as you can see from my signature scores. But I have VERY tiny limits on my credit accounts, so utilization is a huge problem.

I have the 99/500 from BofA and a $200 secured Discover It card. I've paid the Discover down to zero, but I'm still at $406/$500 on the BofA thanks to a couple of emergency expenses, and I can't pay it off anytime soon, and I have balances on some store cards where I bought some things I've been needing for ages and couldn't really afford. (Yes, I know some people believe you shouldn't buy things you can't afford, but this was clothes for my kids and stuff they've been needing badly for a long time, as well as a keyboard for the computer I use to work from home, so I really HAD to.) I have the money to afford the monthly payments, but not a whole lot else.

Anyway, my son added me as an AU on his $8,300 NFCU card and his $1,700 Discover card to help my utilization, which it did. I'm up over 600 on all three bureaus according to Credit Check Total.

But the dilemma is that my son recently moved out and has started being irresponsible with his credit. He's run his NFCU card up from around $600/$8,300 to $3,500/$8,300. When this reports to the credit bureaus, my score is going to tank BIG TIME. He bought something at Best Buy, several hundred dollars worth of stuff at Walmart, and a $2500 car. Keep in mind that he is 21, doesn't have a driver's license, and has never been behind the wheel of a car in his life. Additionally, he discovered AFTER he bought it that he can't afford the insurance on it, and that the Blue Book value of the car is less than $1,400.

And the other part of the dilemma is that if I remove the AU, my own utilization is going to suffer badly. I've been putting every single dime we have to spare toward paying down MY balances to improve my score, but now it's all going to be undone by his spending.

So... what should I do? What will affect my score more? I'm leaning toward removing myself and just accepting the hit to my score, because as irresponsible as he's been with his spending, I'm afraid this situation is only going to get worse.

He's running up those HUGE bills, and he works at McDonald's, so I'm very worried he's going to end up defaulting. He's been employed there over a year and works a lot of overtime, but he's admitted he's not the best employee. He always shows up early, which is the only reason he still has a job, because he's got very severe ADD and his drawer has been short a few times and he pisses customers off because he can't think when they're ordering too quickly.

I've tried and tried to talk to him about being responsible and not making the same mistakes I made with my credit, but he just won't listen.

I think I've already talked myself into removing AU just posting this. LOL

I don't really need more credit right now, so my score tanking shouldn't bother me, but we are planning to move when our lease is up at the end of spring, so I'm trying to improve my credit. We had a very hard time renting last time because of credit issues, even with our spotless rental record. I don't want that to happen this time.

Appleman · ‎09-30-2017

Tough spot to be in, I am hoping things will take a turn for the better.

Is there anyone your son will listen to? You are completely correct, he is on a bad path and not making reasonable decisions. When he realizes every dollar from his job is going to go for debt payment, he will really not enjoy his job.

I think you are correct in removing yourself from his credit cards. Things are likley to get worse and as you know it will not be helping you.I know money is very tight and that is why you need to find a budget program to help your family. Even the stopping of new credit card debt will be a positive step.

Is there any community or church support that you can turn to for help? I know it can sucks but sometimes we have to ask for help in the form of a food bank, clothing center or some type of other assistance.

Great job on improving the credit and reach out to services in your community. As you know, keep making your payments on time. Wishing you luck!

Anonymous · ‎09-30-2017

Removing yourself from his cards will cause your total utilization to go up -- am I right? It's easy to figure that out. Just calculate your total U assuming you stay as an AU, and then make a separate calculation that assumes you are not an AU. Also assume that his own personal utilization gets a bit worse in the next two months (as realistic a projection as you can guess)

What would be the two utilizations? It's really important in these situations to have actual cold numbers or you can't make the kind of fully rational decisions you need to.

Best would be two project both sets of numbers out for the next four months. Make a reasonable guess is to your total U based on all of his AU cards vanishing from your reports tomorrow (and then realistically assess what it would be in Oct-Jan) and then again in contrast assuming all the AU cards stay on your reports.

What you want to avoid is having your own total U skyrocket next month because you get removed as an AU. That's important to watch because it can cause your existing creditors to get scared when they see that, and for them to then take what is called Adverse Action (AA) against you. That could mean lowering your credit limits further or closing your accounts completely.

There are some things you can do regardless to reduce the chance of AA. These are actions you should be taking on the cards in your name. For one, make sure you are always paying more than double the minimum payment on each card. People who are carrying CC debt and who are paying close to the minimum payment are highly associated with risk for the creditor. People who are paying a good deal more than the minimum and who are charging almost nothing in new charges are displaying a responsible desire to pay off their cards -- these people are far lower in risk.

Another crucial thing you can do is to get each card at < 69% individual utilization as fast as you can and then keep knocking the debt down further each month, with the goal of paying off all CC debt entirely. (After that you can allow one card to report a small balance once a month, but this is not really debt.)

My advice is to crunch the util numbers as I suggested and then you can develop a plan, which might turn out to be keeping the AU cards for a month, while working hard at lowering your own CC debt. Then once you are down to < 69% and have established a strong recent track record of lowering your CC debt, then get rid of the AUs. You can't make these decisions without knowing the actual numbers.

Anonymous · ‎09-30-2017

FWIW I'd suggest using Goodwill for kids clothes or emergency computer needs. It'll save you a ton of money up front and in interest.

What's your budget breakdown between minimum necessities, preferred upgraded necessities, debt reduction and luxury spending?

Anonymous · ‎09-30-2017

@Anonymous wrote:
FWIW I'd suggest using Goodwill for kids clothes or emergency computer needs. It'll save you a ton of money up front and in interest.

What's your budget breakdown between minimum necessities, preferred upgraded necessities, debt reduction and luxury spending?

Total household income is about $4500.

Rent and utilities takes about $2000-$2200.

Car payment is $333.

Car insurance is $140.

Food is about $600. We eat a lot of stuff like ramen and rice.

Household necessities (diapers, shampoo, dish liquid, toilet paper, etc.) is about $200.

Medical insurance through my husband's work is $450.

CC payments total about $250.

We don't spend much on entertainment. Maybe $50 or less. I have Netflix.

We almost never buy clothes. Husband's work boots are so bad his feet get wet when it rains, but we can't buy more.

I think that's about it. That leaves somewhere between $200 and $300 per month, and I've been putting most of that toward paying down our debts.

Oh, I forgot my business expenses for my freelance business. I pay monthly:

Adobe Creative Cloud $30

DropBox $10

Microsoft Office 360 $10

Book Report Software (thing for authors) $10 (I could probably cancel this if I had to.)

And once per year, I pay:

$130 for hosting for my websites

About $120 for stock photos

When that is factored in, there's very little left.

We wanted to move this year when our lease was up, but having a kid in the hospital for an extended period ate our savings up completely so we had no money for a deposit, and to pay both the last month's rent there and first month's rent at the new place. Hoping to move when the lease expires next June. Rent was $1,400 per month when we moved here, and in 3 years has risen to $1,508. It's freaking crazy. Now that our two oldest kids have moved out, we can downsize if we can just save up enough. But on this income... how? And we still have 5 living at home, including two in diapers that we're trying hard to potty train.

We've cut out SO many things. We've cut out restaurant trips, our beloved fishing trips (because with no boat we lose TONS of gear and line to weeds underwater) and gas costs a fortune, Hulu, trips to the movies, my magazine app subscription that I REALLY miss, shut off cable and left just the internet because I need it for work anyway... we've cut back until we bleed.

I've been trying to get my freelance income up, but it's been really tough lately. There's a TON of competition in every area I'm in lately, and it gets worse every day. And even if I got a traditional job, I have no degree so I wouldn't make much, and I could only work 2 days per week because my husband uses our only car the rest of the week. And I'd rather die than lose the only 2 days a week I get to see him.

It's tough. But we are still blessed that we have enough income to survive, even if only barely. So there's always a bright side.

tacpoly · ‎10-01-2017

If rent is $1508/month that means you’re budgeting $492 to 692/month on utilities?! Is that really true?

Also you’re budgeting $800/month on food & groceries for 5 people including 2 toddlers. I know diapers are expensive, but is there really no way to reduce this cost? I saw in passing that amazon gives additional discounts for diapers.

Make your own bread, for example. I use the Artisan bread in 5 minutes system. You can get 5 loaves for the price of a bag of flour and yeast. Beans and rice are always good. Serve stews on top to stretch them. Buy your meat with bones because you can always use them (specially the chicken carcass) to make soup stock. Then you can make hearty soup with lentils or whatever veggies are around without needing to add meat.

Can you convince your son to move back home? it seems he’s more disciplined with you around.

Anonymous · ‎10-01-2017

I'd like to add about Good Will that I once bought an expensive Saitek Flight Stick set for the computer there. It was around a 300-dollar set for 40 dollars!

In terms of food, and this maybe a stretch for you at first but once you get into the swing of things it is quite helpful.

I found a local "small" butcher in my area that also slaughters on site. You can buy beef in 1/4, 1/2, or whole cow. This meat is aged for two weeks (its the same as 30 days due to the volume of other cows being hung at the same time.) My most recent order was @ 3.19 per pound dressed on a half cow. I paid around 900 dollars for it.

My order came about this way.

80lbs ground beef

a half brisket (which is still enormous compared to what you get instore), about 30 steaks cut at ¾ inches, around 30 roasts 3-4 lbs each, 8 lbs cube steaks, sirloin steaks, stew meat, flank steak, Beef Ribs and more. This will last us for about 8 or more months. In addition, I bought 40 chickens at case price which was 1.19 a pound. They halved 20 of them and left 20 whole for an additional 100 dollars or so. All the meat came wrapped and ready for the freezer.

While the investment is somewhat unsettling upfront, it is much cheaper than buying it from the grocery store over time. In my estimation, I save around 2 thousand dollars or more by doing it this way. The truth of the matter is this. I cannot afford to pay 2-3 thousand dollars for meat in a given year. So spending 900 on a side of beef allows me to eat better in the year because I would actually buy less meat for the same price, if I were just buying a piece of meat at a time, instead of a half a cow at once. I do have a large chest freezer that fills up half way when I bring home the meat. If anyone is interested in doing it, buy a chest freezer that does not auto defrost, otherwise it encourages freezer burn. I realize you’re in a tough position and mu advice may not seem all that helpful at this moment but perhaps you can find a way to get there.

One last thing I would like to say, both Costco and Sam’s club offer 1 day try us shopping passes. Some items that you’re eating now you could get bulk on by taking advantage of that and lowering your cost over some months.

As far as your son goes, I guess some life lessons you have to learn on your own, when they are unwilling to learn from others.

Anonymous · ‎10-02-2017

@tacpoly wrote:
If rent is $1508/month that means you’re budgeting $492 to 692/month on utilities?! Is that really true?

Also you’re budgeting $800/month on food & groceries for 5 people including 2 toddlers. I know diapers are expensive, but is there really no way to reduce this cost? I saw in passing that amazon gives additional discounts for diapers.

Make your own bread, for example. I use the Artisan bread in 5 minutes system. You can get 5 loaves for the price of a bag of flour and yeast. Beans and rice are always good. Serve stews on top to stretch them. Buy your meat with bones because you can always use them (specially the chicken carcass) to make soup stock. Then you can make hearty soup with lentils or whatever veggies are around without needing to add meat.

Can you convince your son to move back home? it seems he’s more disciplined with you around.

Yes, we pay close to $300 per month just for electricity in the summer because someone is here 24/7 and we can't turn the AC off while we're gone for the day like a lot of people. Then we have a fixed budget plan on the gas, which is almost $90 per month. $80 for internet, which is the cheapest option we have around here. Water is usually $60-$100. It's dropped slightly since the two oldest boys moved out, but we still have five living at home so utilities are a nightmare. We've even taught them not to leave water running while they brush their teeth, take shorter showers, turn lights off when not in use, etc. But with a family this size and a house this big, unfortunately bills are still going to be crazy.

And my husband is absolutely adamant that once the kids move out, they are NOT coming back, so that's not an option.

Another reason our food budget is pretty high is because my husband HAS to have meat at every meal, and he absolutely will not budge on that for any reason whatsoever. Believe me, I've tried. I can't even get him to let me make vegetable soup or spaghetti without meat, and it has to be LOTS of meat, not just a little for flavor. Believe me, I really like meat, but I'm realistic enough to know we're having trouble affording it. But there's no reasoning with this man at all.

Plus, he absolutely refuses to not eat lunch at a restaurant when he works. For a while, I was making him lunch every day with sandwiches, chips, fruit, etc. Now I don't bother, because 9 times out of 10 he would bring it all home untouched because he ate at Taco Bell or Burger King. He also gets breakfast for around $5 most mornings. Meanwhile, I eat a bowl of cereal for breakfast and a bowl of rice with tomatoes in it or a sandwich for lunch.

But since my income dropped, he's the major breadwinner, and I guess he feels this entitles him to just do what he wants without taking my opinion into consideration at all.

And yet when *I* spend $2.50 on an occasional Dunkin' Donuts bottled coffee he says, "No wonder we are always broke when you buy coffee that costs that much." :-/

We do a lot of shopping at Sam's, and we shop sales. The kids and I usually eat cheap. It's just my husband is so picky and I have the hardest time convincing him to eat cheaper. I want chicken; he wants beef. I want a basic salad with lettuce, tomato, onion, and radishes; he wants to add cauliflower, red cabbage, bacon bits, croutons, feta cheese, and Olive Garden dressing, or even homemade Italian. I want spaghetti with canned sauce and parmesan; he wants to add tons of beef, have garlic bread, and have a salad with it.

He claims I'm picky about food, but I'm the one eating rice or sandwiches for lunch day after day after day.

Anonymous · ‎10-02-2017

Sign up for every gig economy app you can in your area and try them all out for 2-3 weeks. I've gotten friends even in weird "middle of nowhere" towns making money using gig economy apps -- sometimes $20, $25 even $30 an hour and they work when they want to work, even 1am (such as driving for Uber).

Put all your extra time into that and try to work 4-6 hours a week. Even if it's "only" $75 net per week you can throw $300/month more at your debt.

I'd consider putting a hold on your self employment work -- stop throwing good money after bad if the market for your talents is weak.

I'd also drop rebuilding mode for now until you have a budget that works for actually using credit. Seeking new credit is not going to give you breathing room, it will only delay a harder fall and take longer to dig out of it. Focus on paying your debts, of course, but all your issues revolve around either spending too much or earning too little. Somehow you have to lower the spend and increase the income and I seriously think that doing gig economy work whenever you have an hour or two available each day will make a difference.

Also sounds like you have a very wide range of ages for kids -- are they yours or are you helping someone else in the family with kids? Don't ignore there might be local government or charity help if you have babies in the house. Look into those!

Anonymous · ‎10-02-2017

I am signed up for the major gig sites and I apply for work constantly, but someone else always seems to get it because they are cheaper or have more feedback. Heck, even when I price myself way below the competition just to get feedback, I still don't get the job. And I KNOW my abilities are far above the average. Maybe I just don't know how to sell myself or something. I do pick up the occasional job, mostly on Upwork, but it's few and far between, and their fees are ridiculous.

The kids are all mine. The two youngest are with my husband, and the oldest five are not. We do get a small amount of food stamps that helps a little, and the kids are on Medicaid. I can't imagine how much we'd have to pay for medical insurance if they weren't. When my income was higher and we didn't qualify for Medicaid, I got WAY in debt for their hospital bills. That's the majority of my credit dings--the kids' hospital bills. Our teenage daughter was in the hospital a couple of years ago for several weeks, twice. She had multiple blood transfusions and ultimately had her colon removed to save her life. Ulcerative colitis and Crohn's runs in my family. My father's mother had UC, my daughter has both, and my son has Crohn's. We qualified for spend-down Medicaid, which paid only the bills that were above our monthly income, but that left us on the hook for a few thousand for each incident. We used our savings to pay part of the bills, and set up payment arrangements for the rest, but when my income dropped, we couldn't make the payments on the debt anymore and it went into collections. I tried to work something out, but they just said, "We already worked with you. We gave you a payment arrangement and you broke it."

The main reason my income dropped is massively increased competition in my main field. I was self-publishing romance books, and suddenly everyone on the freaking planet decided to do it, and my income dropped from a relatively comfortable lifestyle to near poverty almost overnight, because now you have to pay to advertise your books or you'll never be found in the crowd, and I just don't have $5,000 per month to throw at Facebook ads and such like the bigger authors.

Now I'm scrambling to find something else. My old business partner and I are getting back into the field we used to be in, so hopefully that will work out well. She and I used to make six figures a year before we quit to go into self-publishing. I'm thinking we can get that back. Might take a few months, but I'm confident we'll get there, because our old contacts are still willing to work with us.