Friday, June 20, 2014

The Art of Credit

My world has turned into a search for credit, good credit, excellent credit, credit that will buy my house. I have lived off the grid on a generous budget for about 20 years, living within my means, and still living well (with a hiccup here and there when money was tight for a few days and food scarce), but that is not good in this credit obsessed world. I must have excellent credit and credit is a trap. At least as far as I see it.

I've been where my bank account emptied because of my ex-husband's inability/unwillingness to pay his debts. No matter what the divorce decree said about who paid for what, all the creditors cared about was money, specifically, my money. An attorney emptied out my checking and savings account without notifying me, which they can do once, and I didn't find out about it until the check for my rent bounced. Then checks for utilities, phone, groceries, and a loan to a family member also bounced. That's when I found out I had NO money and when I decided to go off the grid. That was about 20 years ago.

Now I'm being forced to deal with credit again and it's confusing and complicated and like looking down the basement to Hell and knowing the only way to get where I want to go through is down into the darkness and through Hell.

The first step of my credit plan worked fine. And then things started happening. A bank credit card I had applied for sent me a letter asking why I had not sent the paperwork necessary to prove my identity. I already had, but they obviously had not received it yet. The next day as I was getting ready to call the bank and ask if they had the information yet, I received an email that congratulated me on my brand new credit card, listed the last 4 numbers of the card, and said the card would arrive in 7 business days. That will be the middle of next week. I have no idea what the limit is, but anything over $300 will be beneficial at this stage of the move. That cushion will put me over the hump so that even my most generous estimations will be secure. Better yet, I will soon be the accredited user of a bank credit card, not a debit card, and credit will be established and accruing points.

I already have a plan in place for that too. I will use that credit card instead of my debit card to pay for all purchases, like groceries, and set that amount aside on my debit card until the end of the month, at which time I will then pay off all but $10 or $15 of the balance. The mortgage broker, Ingrid, said I should keep a $10 to $15 balance on the card every month. I've always thought that paying off the whole balance every month was better, but evidently it is not. I prefer the pay the whole balance plan and thus save myself paying interest, but maybe the point is paying the interest. I don't know, but I have an alternate solution. I'll pay the balance off every other month and leave a $10 to $15 balance on the other months.

Now I find out that a bank credit card isn't enough. I should also have a store card, like J. C. Penney (they already turned me down because I don't have a credit rating) or Macy's or Sears (hard to get) or Neiman Marcus (high end, but would look good on the report). I'll just have to decide what store will look best on my credit report and buy myself something small every month or two. Probably every other month if I go with Neiman Marcus. Pay it off like the bank credit card and not leave a balance if it's Neiman Marcus, which will require me to save the money well in advance. I am moving into a brand new house and will need a lot of new things, like furniture, drapes, curtains, curtain rods, patio furniture, throw rugs for those awful commercial patterned rugs, etc. Talk about debt.

I don't want to get ahead of myself, especially not with credit. I'll plan what I need and buy it as I can afford it once the major expenses, like utilities, phone, WiFi, mortgage, and gas for the car, are paid off first. I can still live within my means by using credit as long as I keep my head. Too bad no one taught me that when I was a child.

That's the thing. Parents thrust their children out into the world without explaining how credit works and why it is important and how to write and live within a budget, etc. Children are unprepared for life as an adult, though kids yearn toward the time when they are no longer under their parents' thumbs and able to stay up late if they choose. When a child's dreams are set on drinking alcohol, deciding their own curfews, and choosing who they will and won't allow into their lives, something is definitely wrong. Parents should train their children how to be an adult the same way they taught their kids to ride a bike and swim and do the dishes.

I remember asking to take ballet lessons and to get a membership to the local swimming pool, which was $15 a summer, and being told no because my parents couldn't afford it. That baffled me for a long time. How could they not afford $15 when Mom wore tailor made clothes and formal dresses for Eastern Star every year that made my $15 membership to the pool look like  a tip? A closet full of shoes and blouses and suits, most of which still had the tags on, boxes of makeup, several jewelry boxes full of necklaces, earrings, bracelets, and diamonds, but a $15 pool membership was too much to ask. That doesn't even take into the account the first edition books that filled several bookcases, the brand new furniture and carpets every 4 or 5 years with drapes to match, the brand new televisions, and the expensive vacations, but $15 for the pool was too much.

I got a job and paid for my own pool membership, but I still didn't have a clue about credit or how it works or how to manage a budget. That knowledge came after years of debt and marriages to two men who didn't have a clue about the true meaning of joint account and balancing the checkbook.

When it all comes down to it, I still would not have bought a house until now, but I probably would have had a lot more money in the bank for a down payment and excellent credit by now if I had only been taught and had known how important it all is.  I have learned, but the fire walk has been painful and long and it could have been avoided if my parents had taught me how it all worked.

I have learned patience and that I don't have to have something immediately. I have time to buy bedroom and office furniture for my house, time to choose and save for area and throw rugs for the living room and bedrooms, time to buy matching plates and good silverware, time to do it all and time to save for it even with credit. I can wait. I have time.

And now I have credit, but I'm still going to live within the budget that has kept me safe and not in debt to anyone. It will be the best of both worlds and a lesson well learned. Credit is a necessity, but good credit, even excellent credit, is an art.

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