Keep Your Eye on the Prize
Everyone has goals that hinge on money. They want to add an addition to the house, or take a vacation, or put their children through college. Your goal should be to get out of debt or at least reduce it to a specific, manageable level. Once you have accomplished that basic goal, you can use all the extra money you’ll have each month to reach other financial goals.
Keeping detailed records of your spending for one month will help you see where you may be frittering away your money. It won’t, however, provide you with all the information you need to develop a realistic spending plan. You may have quarterly tax or insurance payments, for example, that didn’t show up in last month’s spending.
To get a better idea of what’s realistic for each spending category, pull out old check registers, receipts, and credit card statements from last year. Tax records can also be useful. Try to figure out approximately how much you spent monthly in each of your budget categories. Don’t be judgmental here; simply total the amounts you spent. (It’s likely you will find that some of your money just “disappeared.” Don’t worry about that money. Just document as much as you can.)
In the world of financial fitness, getting out of debt is perhaps the ultimate challenge—a marathon of money management requiring discipline, skill, and endurance. But just like getting in shape physically, the rewards—more money, less stress, and great financial habits—are tremendous.
If you don’t owe a lot of money, you may want to go for the fast burn and just get rid of your bills as quickly as you can. But if you’re like most people, and owe a bundle, you’re going to have to dig your way out the slow and steady way. If you try to go at it too fast and too hard, you’ll burn out long before the bills are retired.
Foreclosures
Those added to your report before December 29, 1997, can be reported for seven years from the date of foreclosure. Those reported after that date can be reported for seven and a half years from the missed payment that led to the foreclosure.
Repossessions
Both voluntary (where you turn in the car or property) and involuntary (repo man) repossessions added to your report before December 29, 1997, can be reported for seven years from the date of repossession. Those reported after that date can be reported for seven and a half years from the missed payment that led to the repossession. Again, it’s up to the lender to report that original delinquency date along with the repossession listing to the credit bureau.
There are ways to repair and rebuild your credit and put the past behind you. Here’s how:
Face the Music
Get a copy of your credit report, preferably from all three of the major credit reporting agencies. You’ll need all three to find out what each is reporting and to learn where you need to make corrections or improvements.
Know the Ground Rules
You’ll no doubt find information on your report that you think is inaccurate or incomplete. Here are some common areas of concern:
If you have “bad credit” you are not alone. Literally millions of Americans have less-than-perfect credit ratings—but not all because they are deadbeats who just aren’t responsible enough to pay their bills on time. Many people with bad credit ran into tough financial situations that set them back for a while. Some have bad credit because they went through a messy divorce or a temporary period of unemployment. Others may have faced credit difficulties because of a serious illness, a new child in the family, or a small business that didn’t make it. The trouble is, bad credit ratings usually hang around long after financial problems are over.