I have a story to tell. It's 15 years long.

[ReVeLaTeD]

OK, so not really.  But it took that long to get to this point.  I provide this story to do two things: One, to encourage those who hit a slump.  Two, to discourage those who hit temptation.

19 years old.  Myy first line of credit was I believe a Mervyns card, $200 credit limit.  I bought a bunch of clothes.  Second was Target - back in those days Target and Mervyns were owned by the same company, so it was basically a guaranteed approval.  With the Target card I bought a bunch of food, popcorn and stuff.  Don't ask me why.  Didn't pay either back.  Next was a Robinsons May card, $500.  Bought a $499 sweet shelf system with microphone input.  Don't ask me why.  Didn't pay it back.  Before all of those cards could go into a collection status, when I turned 20, I financed my first car on my own, a 1998 Ford Mustang.  Black. $19k.  Mind you, I got that car BEFORE actually having a job to pay for it (long story on how I pulled that off).  Managed to get a pretty good job working for the @Home Network.  Lost that job a few months later.  Paid a bulk sum of my severance towards the car.  Fell significantly behind in payments.  One day I parked in my parents' driveway, went in the house, looked out the window 10 minutes later, the car was gone.  No lie.  Collections tried to come after me for over $11k.  Never paid it.

Between 1996 and 2004 I got a LOT of tickets of varying types - speeding, parking, stop sign, registration, insurance red light, etc.  Never went to court.  Over $6,000 worth if I recall.

1998 I signed up for Laptop Training Solutions (let's see who remembers that name).  Basically a scam operation, I financed (with my mother) over $12,000 with a sky high interest rate that made the total well over $30k.  Was still paying on that all the way to 2004.  They ended up going bankrupt and closed up shop without notifying any of the participants.

Also between 1999 and 2004, I financed a total of 5 other cars used - a Probe, a Cutlass Supreme, a Cutlass Ciera, a Ford Tempo, and a Geo Storm.  Two of the cars were totalled in accidents.  The Probe and the Supreme were both repo'd.  I actually managed to finance both without a job (again, don't ask).  The Storm was basically paid for with cash except for one payment which I paid, thanks to some money I inherited.  Sold that to a friend when I bought a different car - the Sebring.

Started looking at credit cards again.  I've had way too many credit cards for someone my age.  Between 1999 and 2007, I had a total of four NextCard Visas (don't ask), a Providian Visa, a Wells Fargo Platinum Mastercard, three different First Premier Mastercards, four different variations of HSBC (2 Orchard Bank, 2 HSBC) Mastercards, Aspire Visa, Imagine Visa, three different Continental Finance Mastercards, Purpose Discover card, and the low end Capital One card.  The Continental Finance and Capital One cards were the only ones I was doing 100% right.

All the time I was employed - I mean literally every single year except for 2001-2003, I was claiming exempt on my tax status because my income was below the threshold.  Problem is I forgot to take exempt off and resubmit a corrected W4 when my income went up.  At a point it tripled and I never changed the status.  As a result the tax withholding was significantly understated and I had to make amends (more on that later).

2003 I moved out on my own, renting a room from a couple where the wife was sleeping with one of the other renters behind the husband's back.  Horrible place it was.  But my income was not that high and I had to do something.  Moved into my own apartment in 2004, then decided to look at Rent-a-Center for furniture and ended up with a couch (that I still own), a 50" projection that I sold, and a laptop that broke.  Total expense per month was well over $600.  Add that to the apartment rent and bills, and when I sat and did the math, I was actually spending $500 more per month than I made, even if I went without food.  Obviously not good.

Around that time, the Franchise Tax Board came lurking, asking for $12,000 on the $6,000 worth of tickets I hadn't paid.  I actually went down to the court as I didn't understand where it was all coming from.  They showed me copies of each ticket and basically said that if I ignored the ticket, they would just send it to collections and come after you later, sometimes years later.  I had a choice - pay $6,000 or get my wages garnished.  Asked for a payment plan, they said no.  Then they started garnishments.  That's when I started to take some action.

Called up the Debt Relief Legal Clinic and inquired about Chapter 13 bankruptcy.  I actually chose that specifically because I knew that even if I filed bankruptcy, it'd be no good if I didn't start learning some responsibility.  Being forced to make payments and paying them within my means was going to be the only way I would get out of the rut.  But really I was pissed at the FTB for refusing to even work with me in what was obviously a time of need as they knew my income was not that great.  I was willing to pay my creditors but not what they wanted to get from me.  DRLC got me all filed and dialed in by July 1st of 2004.  Payments were a more reasonable $625 per month.  The attorney made it a point to say, "nobody ever finishes the program".  All that made me do is get more focused and determined to do it.   Included Rent-A-Center, who tried to call me in violation of the stay, the student loans, the tickets (Which wouldn't be paid off, but it forced the FTB to stop garnishing and take a payment arrangement when the BK was over), the old collections, everything.  Unfortunately I had to include the Capital One card, which I was taking really good care of.  I hated doing that.

2006 I'm browsing the web one day and see something about the Student Tuition Recovery Fund for California.  Seems that, if a private school closes due to bankruptcy or something else beyond the student's control, they can get their entire paid tuition reimbursed.  But I only had like a month to do it, because it seems my mother had trashed the notification that I would have received informing me of my right to file.  So I scramble to collect up every single receipt and stub (that I fortunately had kept) including the BK paperwork, and additional stuff from my mother, and get it all filed.  Took months but I got the full payoff back, which ate up pretty much all of the BK balance, and I had enough left over to pay my mother back who had been helping to pay on the student loan.  I then paid the rest of the BK payments and got it discharged successfully in 2007.

Then began the hard road to recovery.  By this time my income had increased substantially, but the IRS and FTB were coming after me for back taxes in excess of about $10k.  I made payment arrangements with both and began making monthly payments, corrected my W4 in the process.  I still had some money left over from the STRF so I used it to help pay off the tax debt.  It was EXTREMELY difficult to get any credit.  But I found a local used lot who was willing to sell me a car I wanted, a purple Sebring, for a fair price.  Financed it and made the payments as required, never missing any.  2008 I financed another car and traded in the first, trying to get some additional tradelines.  I was stuck dealing with used cars, making upper middle class income, yet unable to do anything credit wise, and having the mistakes of my youth constantly haunting me.  Credit score in the mid 500's.

2008 is when I started to get lucky.  HSBC Auto Loans refinanced the second car with a better rate, and my score went up slightly.  I managed to get some of the subprime cards - Contintental Finance, Aspire, Imagine, Total, HSBC and some other blue one, plus all of the FIrst Premiers and all that.  Credit lines were constantly maxed out, especially Contintenal, but I tell you what - I never missed a payment.  Not one.  I stayed on top of every single card.  Managed to get set up with Citibank for my banking, as before I didn't even have direct deposit, and did Citigold.  That gave me an automatic line of credit that I still have, and it reports as well.  Added all of the credit cards to my bill pay so that I could keep tabs on them and keep them paid timely.  When the end of 2008 rolled around I was in a position to do my third trade for a newer car and was determined that it would be my last used car.

Next thing I did was go through each my credit reports and methodically do cleanups, checking for items that weren't mine or were wrong, getting disputes filed.  The majority of incorrect information was fixed. 

Aspire went out of business, Imagine went out of business, I closed Total, closed HSBC, and eventually paid and closed Continental.  Normally this wouldn't be a problem, but all of those cards mysteriously deleted themselves from my credit report, destroying my AAoA, because Contential Finance alone, if it had still been on the report, would be 5 years old from when I first signed up for a card with them, Aspire 4 years old.  Lost all of that, so I had to rebuild from scratch.  I continued to pay my bills strictly, limiting my expenses as much as possible.  I got bonuses from my job every now and then which helped keep things afloat.  But I still had some tax stuff looming, it seemed every year they were coming after me for some 4 year old debt of some kind.

2009 I did not apply for any sort of credit at all.  I just paid cash for everything.  Was trying to let inquiries fall off now that I knew how the game was played. 600-something credit score.  Getting better, but still not there.

2010 I started opening up a bit.  Got the Hooters card which is currently my oldest and second largest tradeline.  They've been good to me.  Then got HSBC, which I only got because of the rewards.  Later in the year, GE Money Bank opened up to me a bit, I got JCPenney, Best Buy, Chevron and Amazon.  I closed JCPenney and Best Buy because the limits were too small.  Late 2010 I got a fairly large stock cashout from my old company, and used the money to pay off every card I have fully, get caught up on some bills, and buy new technology.  Used the rest of the money to pay off the remainder of the tax debt (which came back again, BTW).

Now, I've joined the 700 Club which I consider a significant achievement, though it took me nearly 8 years to get here.  It's getting easier to get the things I want, and while I'm stressed at work, I'm not stressed at home.  Used to be the opposite was true.  I have some good cards, a line of credit, and a 2011 car.  I'm not rich by any stroke, and my cash reserves aren't where I want them to be, but considering my age I think I've done fairly well to have gotten this far basically on my own.  TO those who denounce technology, I will say that without technology, I wouldn't have been able to do it.  Being able to research and do my bill pay online and document what I was doing was critical.

To anyone who's young, I will say this: You will be tempted by a lot of things.  It's easy to **bleep** up your life.  It's not easy to fix it.  Credit in particular is unforgiving.  You can **bleep** up your credit within minutes; fixing it will take YEARS, sometimes decades.  The system is designed to make it hard for you to keep your stuff straight.  Don't get tempted.

To anyone who's old and has hit a rough spot, I will say this, and I say it with nothing but endearment.

The first step to recovery is to blame nobody but yourself.  I didn't start recovering until I stopped blaming unemployment, my parents, my friends, my girlfriends, etc. for my bad spot.  It was all me.  It was always me.  It was a lack of direction, a lack of focus, a lack of responsibility, a lack of work ethic, a poor personality, a missing sense of organization and structure.  Until I stopped and looked myself in the mirror and said, "you got yourself into this, you have to get yourself out", I wasn't going to improve.  Once I came to terms with that reality, the rest was easy - do the exact opposite of what I'd been doing.  Get more varied job experience, more lucrative skills, get noticed, get raises, get promotions, push myself harder than I thought I could go.  Maybe I don't get to go out to clubs every night with my friends, maybe I don't get to tour the world with a loved one.  Maybe I have to sacrifice all of that for now.  Until I'm happy with my current life, I can't live a fantasy.  I have to stick with reality and move forward. 

It's hard, but necessary, for anyone serious about recovery.  It's hard work.  It's stressful.  It sometimes seems as though there's no end of the tunnel.  But keep pushing.

[rinstarangel]

Awesome post!  Congrats on all of your hard work!

I had some similar stuff happen when I was 20 (now 30) and it's still haunting me and I am in the process of cleaning up the mess of my youth, so your story is great inspiration!  I can't wait for the day that I will not be sitting at home, overwhelmed and frozen due to anxiety over my financial situation. 

Keep up the good work!

[nyqutie]

Great Cautionary Tale.  I'm glad to see that you have emerged stronger, happier and more financially responsible.

Good Job!

[PixieQueen80]

Thank you so much for posting your financial history.  I am in a similar situation and is currently re-building my credit by paying down debt and hopefully will also add a mortgage in the near future.  Your story is extremely inspirational because from looking at your yearly score improvement I see many similarity with my own.  Again, thanks!

[jackig64]

Awesome post...great to see the honesty with your self and the ability to put your self out there.  CONGRATS

[cgreer72]

Great post! I advise all the younger people I know to NEVER get yourself in a bind when it comes to your credit. Its so easy to **bleep** up, and so difficult to repair.

[ReVeLaTeD]

Thanks all.  Those who are struggling, I can say not only from living it, but having worked in the credit industry (and to be honest, that job is a good reason why I was able to identify a clear path to recovery)...the system is designed to protect the companies, NOT the consumers.  It's a punitive system.  But once you learn certain tricks, it gets easier to work around.  Some of it is common sense, but some of it actually requires a good brain about you.

• DO NOT miss payments on credit accounts.  Being 30 days late on your credit card payment will hurt you for YEARS.  Being 30 days late on your water bill - doesn't hurt your credit, just makes more that you have to pay.  So sometimes you can skip on the non-credit bills a month if it means keeping your credit lines healthy.
• Know how much you make per month and how much you expect to spend every month.  My first problem was that I was spending without tracking really how much I was taking home.  That's a recipe for disaster.  Especially if you do like I did and start robbing Peter to pay Paul.
• Sacrifice is absolutely necessary.  You don't HAVE to take that trip to Cabo San Lucas.  If you're in a debt hole, you need to re-assess what's important.  Again, if you **bleep** up a credit account just one time, it sticks with you for YEARS.  You can always reschedule trips when money is less tight or plan less costly trips locally.
• Make sure your tax situation is correct.  I happen to have studied the tax code ever since finding out that I was underpaying for so many years, so I know every single deduction and credit I'm eligible for to make sure it doesn't happen again.  Get an accountant or someone to help you.  But MAKE SURE you're covered on local and Federal taxes.
• Watch the tickets.  Start driving better if you're prone to tickets like I was between 18-24.  My last ticket was a parking meter ticket a month ago for $42.  Last speeding ticket was 6 years ago.  If I can do it, you can do it.
• APR does not matter if you don't carry a balance.  I think a lot of younger people miss how easy this is.  If you get a credit card, who cares that it's 24.99% if you always pay it in full every month? 
• Speaking of credit cards, if you're trying to establish credit, get a small limit credit card, use it just enough within your means and then pay it off.  Your limit should be low enough that you could pay the full price in cash if you had to.  That way you're not using credit as a crutch.
• If you're trying to control your spending, lean towards cards that are not major carriers.  So store cards and regular gas cards, instead of Visa/Mastercard/Discover/Amex.  Why?  Because if it's a specialized card, you're less able to really use it except when you really need something.  Like my Chevron card can only be used at Chevron for gas and/or food items in a pinch.  That allows me to ration how much I'm spending on gas because that's all I really charge on it.  I can then use that information to get more conservative with my driving to lower my gas usage.  A Chevron Visa could be used anywhere and the temptation is strong to just whip it out for everything.
• Spread expenses around as much as possible for larger purchases.  That way it's easier to pay off each card's balance.  Put more towards larger limit cards without going over 50% of the limit.
• If you don't have a checking account with a bank that offers bill pay and direct deposit, get one and set them both up.  Ignore the checking account fees - the days of "free checking" were a wash created by a bank that doesn't exist anymore.  So you pay $6/month...the benefits outweigh the negatives.  Soon even credit unions may charge for checking, so just get used to paying it for now.
• Master the art of Bill Pay.  Some banks can even electronically pay bills expediting payments.  List every creditor you have even if you don't plan to use that outlet to pay them.  Why?  Because then you have a one-glance listing of everyone you need to pay every month without having to manually keep track of them all. 
• On your computer, mark the calendar for every pay day.  Know and remember how much you make each pay period.  You should be able to tell, every month in a year, what check will be used for what expense.  For example,  I know that the last check before the 3rd of the following month must go to rent, so if I only get two checks in a given month, the first check must go to the car payment and any other bills, plus a little extra for food.  The rest is rent and then save whatever's left in a savings account.
• Spread your money around.  Don't put all of your cash in a single account, that's what gets people overspending.  Throw a little into at least one other account for the sole purpose of saving.  Then just leave it there and keep adding to it.  Some banks will even allow you to automatically issue money to the other bank so you can build  nest egg.
• At the WORST CASE, if you're in a financial situation at some point, still employed but just need a quick infusion of funds, don't take out a loan or apply for a credit card.  Instead, see if you can take out a 401k loan.  The interest goes back to you, there is no credit check, and you can repay in small installments out of your paycheck.  Most will offer this service and it's a better choice in a tight spot.  It has no tax disadvantage unless you get laid off or fired or quit your job.  But again, it should be WORST CASE because of course, it's your retirement money.

And the biggest two tips I can ever give.

1. If you're not good at math, get good or get Excel or something.  You have to learn to crunch numbers to make decisions about your financial situation.  You have to train yourself not to be a knee-jerk purchaser.  If you don't think you can afford something you probably can't.  Also, if you can afford something but then question if you can pay X bill, you really can't afford the item.  Buy only when it does not interfere with your required expenses.  If it's something mandatory - like car maintenance or repairs or something - see if you can borrow from friends or family first (I hate doing this, but it is better than loans/credit).  If not then consider the 401k loan.  If not that, then consider credit.  But I don't ever suggest financing car maintenance.  Remember you'll be paying interest on that work for who knows how long.
2. If you do crunch the numbers, and you see that no matter what you do, it's just not working...if your income is less than your expenses...if you're on the verge or in the middle of garnishment or foreclosure or lien or something else...and you just don't think you can recover, I will tell you not to fear filing bankruptcy.  I don't recommend it unless you just have absolutely no other choice in the matter BUT, if you're going to file and you can pay SOMETHING file Chapter 13, not Chapter 7.  Chapter 13 helps you be responsible, because if you miss even one payment, the plan will be dismissed and you'll be stuck back in the debt rut.  Chapter 7 is not only hard to qualify for, it doesn't look good at all to anyone.  At least with Chapter 13, some lenders will give you a pass if you can show positive payments to the court.  You'll also feel better about yourself for having made the timely payments.  Bankruptcy is NOT the end of the road.  Your credit will recover - in fact, your credit will actually recover a good deal faster, because the other debts will get paid and zeroed out, and eventually fall off, giving you a clean start.

Hopefully my general message helps someone.  The moral of the story is, recovery IS possible.  Hard, but possible.