As you may know I have recently turned my financial life around, it is by no means perfect but it is on the right path. I no longer take money for granted, I always pay my bills on time, and I don’t accumulate debt. I decided to keep one credit card open in order to help rebuild my credit score. Over the past few years I had a really high income with a really low credit score. That’s because I had a lot of open credit cards that were maxed out to the credit limit.
Keeping one credit card open, using it, and paying it off every month shows financial responsibility; and it has definitely helped improve my credit score. Closing my (several) other credit cards and making regular payments is not enough to increase our credit score. In order to build and maintain a good credit score we have to be actively (and responsibly) managing our open credit.
I am not going to lie, calling my credit card companies and asking them to close my existing credit cards because I could no longer afford to have them was very hard and it was also a little bit shameful. It is very difficult for a young professional with an income of over $100k to admit that she needs help with her finances. But now that my financial life is back on track I definitely don’t regret making those phone calls. I am actually proud that I was smart enough to ask for help, and I love seeing my credit card balances get lower every month.
I have come to learn that people don’t need to live on credit. We don’t need 5 credit cards and a line of credit to live. We don’t have to accept every single credit card that is offered to us, smart money management is knowing when to say no. All we need in life is to be happy, and being thousands of dollars in debt doesn’t make me happy.
I got into debt because I was careless and spoiled. I thought that having credit cards made me mature, but it actually just made me irresponsible. Spending money on materialistic things such as clothes, trips, and food actually showed just how immature and financially irresponsible I was. I thought that spending money would make me happy, and it did; but only temporarily.
I decided to change my financial spending habits. I decided to make the conscious decision to start paying off my debt because I was sick of making only the minimum monthly payments. I was sick of getting my credit card statements in the mail every month and not seeing the balances getting smaller. I was sick of living pay check to pay check, I wanted to get out of debt.
I cut down my monthly bills and I used the extra money to start paying off my debt. I called my credit card companies to negotiate lower interest rates, and I set up biweekly pre authorized payments to make sure my debt was being paid down regularly. Making a realistic debt free date will help us stay focused and become debt free. It’s easy to achieve a goal when the terms are clearly defined.
Photo by bfshadow