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I am a prime example of WHAT NOT TO DO

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Established Contributor

Re: I am a prime example of WHAT NOT TO DO


@LOTR wrote:

First and foremost, thank you so very much for being so open and honest - not only with us on this forum, but with yourself. 

 

Someone here has a quote in their signature line that I always try to remember:  Credit can be a wonderful servant, but a terrible master!

 

After over two years of being jobless and then followed by my divorce, I too decided to go all cash.  Due to my ex trying to take me to the cleaners (financially), let's just say the lawyers made a killing!  

 

I got myself out of debt with Dave Ramsey's snowball method.  Although it may not have been the most efficient (APR-wise) it was the most effective (emotionally)  in seeing real results fast!  At that point, to me, Credit--->BAD!  Cash-->GOOD  Period.  But I've learned that if you're disciplined and develop good spending habits, you can have credit AND still be debt free.  

 

Dave Ramsey' method works until you find yourself in a situation when..well... Life happens.  And when it does, it can often deal a blow that the best financial planning can't account for.  Dave Ramsey's plan - and any plan for that matter - can't account for everything. It certainly did not account for a vindictive partner in a divorce or an 2-3 years jobless cycle.  Now having hindsight, a little credit would have gone a long way in helping me to survive until I landed a job.  In fact, I didn't need much to help to fill the financial gap (after tapping all sources), but not having that little help caused bigger problems (tax liens and almost a car repo among others).  So in 2015, I realized that the ALL CASH method would probably work in an early 1990's world, but not in today's Apple pay and Google pay world.  

 

Now, I have CCs but don't fear them as much as I realize I don't HAVE to carry a balance.  I don't HAVE to be in debt.  By only charging what I can PIF each month, I am basically living a CASH life but using it to build solid credit as well.  Except for around the holidays, I pretty much don't go spend-crazy.  I charge day to day living expenses and pay off those day to day living expenses EVERY SINGLE MONTH.  I have a budget for every category and don't go over that budget (even with charging).  Even during the holidays, though my spend may increase, my discipline stays in tact - that is PIF every month without question.  I absolutely HATE paying CC interest and so I avoid it at all costs.

 

 

Although you may have gotten an ego boost from acquiring so many cards, as you mention, it was your basic lack of discipline that really got you into trouble.  Been there. Done that!  You are young still and no doubt, you will bounce back from this bankruptcy better than most!   You sound like you have learned your lesson AND you have a job that pays well which will allow you to accomplish many financial and personal goals.  I wish you all the best!

 

Again, thank you for sharing. These stories are just as important on this site as the "rebuild" and "I got approved" ones! Smiley Happy


Matrix

 

You have a real and clear post about what your are going through. You will go far during your rebuild. Just keep pushing.

 

LOTR,

 

Youy have gave me an idea on how I can better use my cards(just charge your daily expenses(day by day) and pay it all off. That way, I dont have to track what I spend in several places(checking, cards, cash). I learn so much here and see other folks perspectives. I may not agree with all but I repsect it.

 

 

Message 21 of 35
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Established Contributor

Re: I am a prime example of WHAT NOT TO DO

I swore I would never have another credit card again too.  Unfortunately I needed credit to raise my score.  I know you posted about that score not being important but it does have an effect on your future as it pertains to rates from everything such as car insurance to a mortgage!  Higher scores mean lower rates which means savings of dollars.

 

Now I have a couple, using responsibly for that specfic reason and I have already seen the savings benefit in my car insurance as one example.  I hope that when I go to pre-qual for a mortgage in the Summer it reflects in a lower interest rate.

 

But I LOVED reading your story because it was similar to mine, although mine was brought on by loss of a high paying job in late 2008 and unable to find decent work for a couple of years so ultimately I had to file BR13.  But now I have a buttload of money Smiley Happy and increasingly good credit.

Message 22 of 35
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Valued Member

Re: I am a prime example of WHAT NOT TO DO

OP, thanks for sharing your experience, however since you're paying the debt back anyways, why ch7?..you stated you had a small car loan and a below average rent with a pretty good income. ..
Message 23 of 35
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New Contributor

Re: I am a prime example of WHAT NOT TO DO

LOTR...I agree. Discipline is key. Dave Ramsey's method is awesome; however, in today's society some form of credit is necessary. I picked on choosed parts of Dave' s plan to incorporate into my life. His book is like a blueprint so to say. If you use credit cards for regular expenses monthy then PIF, essentially the credit card company will be paying you.

You're young. In time everything, in regards to credit, will make sense.

Goodluck with everything.
goodcreditgirl1
Message 24 of 35
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Re: I am a prime example of WHAT NOT TO DO

LOTR...I agree. Discipline is key. Dave Ramsey's method is awesome; however, in today's society some form of credit is necessary. I pick and choose parts of Dave' s plan to incorporate into my life. His book is like a blueprint so to say. If you use credit cards for regular expenses monthy then PIF, essentially the credit card company will be paying you.

You're young. In time everything, in regards to credit, will make sense.

Goodluck with everything.
goodcreditgirl1
Message 25 of 35
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Moderator

Re: I am a prime example of WHAT NOT TO DO


@LOTR wrote:

First and foremost, thank you so very much for being so open and honest - not only with us on this forum, but with yourself. 

 

Someone here has a quote in their signature line that I always try to remember:  Credit can be a wonderful servant, but a terrible master

Again, thank you for sharing. These stories are just as important on this site as the "rebuild" and "I got approved" ones! Smiley Happy


Love that quote! 

And I agree this post is just as, if not more, important! 

 

Got some pruning to do... No more new cards!
Message 26 of 35
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Frequent Contributor

Re: I am a prime example of WHAT NOT TO DO

Wow, it takes A LOT of guts to post this. I give you props!!!! My boyfriend is also in Chapter 13 and has to pay off 100% of his debts due to his income. Thankfully the 3 years will be up in Late October and hopefully the discharge will soon follow so I can get him on his rebuild journey.

I hear ya when you say being on this site can be damaging for SOME. It takes a lot of self-control to be able to have all these awesome cards with huge limits and be able to be responsible with them. I wish you the best of luck in the future and I will follow your journey in the Bankruptcy section. Sending lots of positive vibes your way!

Filed Ch7: 6/21/17
Discharged: 10/03/17
Current FICO8 Scores as of 2/10/2019: EX 651, TU 678, EQ 679
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Message 27 of 35
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New Member

Re: I am a prime example of WHAT NOT TO DO

I think you are amazing for posting this and so many people need to see it including me. The credit game can be fun but it can get out of hand really fast. Thanks for helping us keep our feet on the ground.
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Message 28 of 35
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Senior Contributor

Re: I am a prime example of WHAT NOT TO DO


@buildingcreditfromnothing wrote:
OP: I'm curious as to why you'll be paying $2100 per month. Did you propose to pay off 100% of your unsecured creditors in your Chapter 13 plan? The reason I'm asking is that creditors treat a bankruptcy the same way (blacklisting) regardless of the amount they're repaid in a bankruptcy.

Maybe you should ask your attorney to recalculate and see if you can pay less per month.

I wish you the best of luck.

Creditors will have it marked as a BK but they also have on record any loss or payment plan made. So in the OP case they would have a payment plan noted and zero loss when the plan is complete. That should keep them of the blacklist.

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Message 29 of 35
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Senior Contributor

Re: I am a prime example of WHAT NOT TO DO


@mattmix36 wrote:
Due to the view of my state's bankruptcy court, if you can repay 100%...then you must. Otherwise your repayment plan will not be approved. It's a pain in the butt for sure, but I'm not too worried about it. Paying the 2100 a month will effectively reduce my "usable income" to 75k per year. I already live well below my means so this will not be an issue. I'm GAZELLE INTENSE!!!!

Thank you for sharing your experience. This will help alot of people out.

 

Im curious if you had looked at other options in paying your debt back, like DMP from a non profit credit counseling service?

 

 

American Express: Platinum Charge, Optima, Business Gold, Delta Business Platinum
Barclays: Arrival+ WEMC
Capital One: Savor WMC, Venture VS
Chase: Freedom U VS, CSR VI
Citibank: AAdvantage Platinum WEMC
Elan/US Bank: Fidelity VS
Credit Union: Rewards Visa
FICO 08: (2.4.20) EX: 832 / EQ: 840 / TU: 833
Message 30 of 35
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