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New to site, been on a 6 year journey out of debt. It was 2012, I was aware that I was having health issues and my working days were at a cross roads. I felt that something physically was wrong. I decided to retire, I always wanted to take an early retirement but was not a great financial planner. I volunteered for the ongoing RIFs that my company had been offering to downsize/rightsize or whatever you want to call it. I was given a severance package, tenured into the pension plan & was a few years away from Social Security. I had invested somewhat in the 401K plan so I wasn't destitute.
After I retired, took a nationwide vacation for almost a month, paid off some of my debt, less than I should have but thinking I was bullet proof I figured my income would sustain me until I could add SS. Health issues raised it's ugly head. It was Sept '12, subsequently I spend the next 9 months having surgery, doing treatment & attending rehabilitation. June of 2013 was my release date. I took stock of my finances, I had no mortgage, 2 auto loans, 1 personal loan & a group of credit cards, VISAs, MasterCards, AMEX & 2 retail stores along with 2 gas cards. All told with the medical bills, (2 years of co-pays because the timing of my treatment) I was in debt to the tune of $63,000, 40% of it was medical co-pays,remember I had no mortgage. Of the remaining $39,000 half was unsecured the rest was secured.
I was dumbfounded & looked for any relief I could find. To make a long story short, I read Dave Ramsay, Suze Orme, Howard Clark,,,etc. Everything I could think of. I cut up my cards, canceled accounts with no balances (not many). Started my first real dedicated budget. It now has become my lifeline, changed many times over the 6 years, after deciding to go on a cash only basis I started on the 'snowball' path but needed more motivation so changed over to pay the lowest balances first (ignored the interest rates). I did pay a little more than minimum on the higher balances but worked to pay the lower ones first. I found it gave me more satisfaction to see the closed sign on them as I progressed. The gas cards went first then I worked on the retail cards next. Following success with those I started working on the credit cards, they were all about the same interest rate so I paid the lowest balances first.
It took about 2 years to wipe out 7 cards ($14,800). I was left with my auto loans & 1 large personal loan (household goods) the auto loans were low interest & bank financed so I wanted to show a longer term for credit reasons. It took 14 months to pay off the personal ($5,400) leaving my auto loans ($16,000) for last. I finally paid them sold one (didn't need 2 being retired). It's been since my payoff. My credit had taken some dings at first because of the medical I had reached an average of 580 at all three bureaus. I had swallowed my pride, I had called my credit cards, but only one would work with me. Luckily it was the largest. The other 6 refused & I believe that they may have been the reason my credit was dropping. All I was asking was a break on my rates & a workable repayment plan. My income was limited but at least we could eat, no vacations or extras. I had set aside an emergency fund to avoid disaster. Watched my health, exercised, ate properly & limited my entertainment.
Over the last year and half I had decided to re-enter the credit life once again. I was approved for a low limit ($500) card. It was a rewards card, I kept it paid off, usually only used for my utilities. I did pocket about $75 in rewards my first 12 months but the card carried a $39 annual fee. I still have the card, now with a higher limit but still pay it off monthly. I learned to carry a 10% utilization rather than zero, it would ding my FICO because of the debt to limit ratio was always zero. They want you to have a little debt for a good score. I opened another card 6 months ago it is also a rewards card. It has a much higher limit & no yearly fees. I buy all the groceries & dining with that card getting 3% for dining & 2% for groceries, over the six months I was able to pocket a little more that $100. I now get about $5 from the first card & $12 from the monthly close to $200. No interest, that equates to about $150 annually after the $39 fee.
Last month I opened an Amazon Prime account I applied for & was accepted for a Amazon store card that gives 5% back on all purchases. Something I use pretty regularly. I also opened an on line bank account to pay off all the credit balances along with keeping my current Credit Union account (Social Security, pension & 401k) away from possible hacking, still get all the cash available at the end of the month for my savings account (another local Credit Union), emergencies & petty cash fund. Just this AM I applied for and was approved for my third card MC from a national issuer, it will also be a rewards card. I cut the cord 3 years ago for my TV went to on line streaming saved another $80 a month. I have a wireless account that has no contract with limited talk/text/data cost is less than $50. It's turned into a bookkeeping nightmare that I understand.
My FICO scores are all now in the low 700's, Not having a mortgage or auto loan does hinder the FICO scores a little but the benefit of not having massive debt is reward enough. Lessons learned was use only debt you can afford to pay off each month. Use the rewards to offset the prices & fees, pay cash when it's convenient. Saving for big ticket items, avoid long term loans. Keep auto loans to a 3 year maximum, buy used. Plan for the worst, hope for the best, definitely do comparison shopping when able to. STAY OUT OF DEBT!
After I retired, took a nationwide vacation for almost a month, paid off some of my debt, less than I should have but thinking I was bullet proof I figured my income would sustain me until I could add SS. Health issues raised it's ugly head. It was Sept '12, subsequently I spend the next 9 months having surgery, doing treatment & attending rehabilitation. June of 2013 was my release date. I took stock of my finances, I had no mortgage, 2 auto loans, 1 personal loan & a group of credit cards, VISAs, MasterCards, AMEX & 2 retail stores along with 2 gas cards. All told with the medical bills, (2 years of co-pays because the timing of my treatment) I was in debt to the tune of $63,000, 40% of it was medical co-pays,remember I had no mortgage. Of the remaining $39,000 half was unsecured the rest was secured.
I was dumbfounded & looked for any relief I could find. To make a long story short, I read Dave Ramsay, Suze Orme, Howard Clark,,,etc. Everything I could think of. I cut up my cards, canceled accounts with no balances (not many). Started my first real dedicated budget. It now has become my lifeline, changed many times over the 6 years, after deciding to go on a cash only basis I started on the 'snowball' path but needed more motivation so changed over to pay the lowest balances first (ignored the interest rates). I did pay a little more than minimum on the higher balances but worked to pay the lower ones first. I found it gave me more satisfaction to see the closed sign on them as I progressed. The gas cards went first then I worked on the retail cards next. Following success with those I started working on the credit cards, they were all about the same interest rate so I paid the lowest balances first.
It took about 2 years to wipe out 7 cards ($14,800). I was left with my auto loans & 1 large personal loan (household goods) the auto loans were low interest & bank financed so I wanted to show a longer term for credit reasons. It took 14 months to pay off the personal ($5,400) leaving my auto loans ($16,000) for last. I finally paid them sold one (didn't need 2 being retired). It's been since my payoff. My credit had taken some dings at first because of the medical I had reached an average of 580 at all three bureaus. I had swallowed my pride, I had called my credit cards, but only one would work with me. Luckily it was the largest. The other 6 refused & I believe that they may have been the reason my credit was dropping. All I was asking was a break on my rates & a workable repayment plan. My income was limited but at least we could eat, no vacations or extras. I had set aside an emergency fund to avoid disaster. Watched my health, exercised, ate properly & limited my entertainment.
Over the last year and half I had decided to re-enter the credit life once again. I was approved for a low limit ($500) card. It was a rewards card, I kept it paid off, usually only used for my utilities. I did pocket about $75 in rewards my first 12 months but the card carried a $39 annual fee. I still have the card, now with a higher limit but still pay it off monthly. I learned to carry a 10% utilization rather than zero, it would ding my FICO because of the debt to limit ratio was always zero. They want you to have a little debt for a good score. I opened another card 6 months ago it is also a rewards card. It has a much higher limit & no yearly fees. I buy all the groceries & dining with that card getting 3% for dining & 2% for groceries, over the six months I was able to pocket a little more that $100. I now get about $5 from the first card & $12 from the monthly close to $200. No interest, that equates to about $150 annually after the $39 fee.
Last month I opened an Amazon Prime account I applied for & was accepted for a Amazon store card that gives 5% back on all purchases. Something I use pretty regularly. I also opened an on line bank account to pay off all the credit balances along with keeping my current Credit Union account (Social Security, pension & 401k) away from possible hacking, still get all the cash available at the end of the month for my savings account (another local Credit Union), emergencies & petty cash fund. Just this AM I applied for and was approved for my third card MC from a national issuer, it will also be a rewards card. I cut the cord 3 years ago for my TV went to on line streaming saved another $80 a month. I have a wireless account that has no contract with limited talk/text/data cost is less than $50. It's turned into a bookkeeping nightmare that I understand.
My FICO scores are all now in the low 700's, Not having a mortgage or auto loan does hinder the FICO scores a little but the benefit of not having massive debt is reward enough. Lessons learned was use only debt you can afford to pay off each month. Use the rewards to offset the prices & fees, pay cash when it's convenient. Saving for big ticket items, avoid long term loans. Keep auto loans to a 3 year maximum, buy used. Plan for the worst, hope for the best, definitely do comparison shopping when able to. STAY OUT OF DEBT!
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