Hello Moms!
I hope you all had a great weekend and a wonderful Easter. This was the first holiday I have been able to enjoy since starting law school nearly three years ago. Needless to say I cooked! Smoked a ham, turkey, leg of lamb, and a brisket. Also made some macaroni & cheese, fried cabbage, and my mom made the dressing and the best cheesecake and banana pudding I ever tasted in my life. As much as I love to eat, that is saying a lot! I was grateful to be able to get back into the swing of things. God has blessed me to accomplish my goals and I never want to make light of where he's brought me from. Part of the reason I write these blogs is so that someone else in a hopeless situation can get down enough to be just crazy enough to trust God to pull them through. But with all the prayer, there has to be some kind of action behind the faith to pull you through.
Believe it or not, I didn't just wake up one day an attorney. It was a process, it was a struggle, and it was WORK! I didn't get all the answers overnight so if you don't have the answers don't feel bad. You are not alone. I have had bill collectors calling me, I've had bounced checks, bills I was afraid to open, and utilities cut off before. I've experienced a BC life. That BC doesn't stand for before Christ, it stands for Bad Credit! When I say bad, I mean not being able to financed for a roll of toilet paper bad. I didn't file bankruptcy, I didn't find some magical quick fix agency to erase my sins of my credit report, it was a long process but doable none the less.
It is so easy for us as single moms to get overwhelmed by bills. The kids always need something: clothes, field trips, science fair, you name it - they need it. Ever have the feeling you make just enough money to be broke? I remember when I finished undergrad and got a job working for the State. All the assistance I had received during the last year of undergrad was gone and between daycare, rent, car note, insurance, food and gas, I almost felt like I had went to college and got a job for nothing. Oh and I forgot to mention the student loans that came with it. It always seemed like a crap shoot when it came to the budget every month.
I had come to the point where if the money was gone it was gone. If the bill collectors called, I'd tell them very quick and simple that I didn't have it. Of course they threatened to put it on my credit, and I was like "go ahead, if there's any room left on it. Take a number pal!" It was making me crazy for a while with calls to my job and trust me, when you're in the criminal justice field, they don't want nobody with money problems who can be bought by inmates and clients. My credit since I've finished undergrad and through finishing law school has serious impact on my career and my future. Financial responsibility is a major factor in gaining admission to the bar. It wasn't that I didn't want to pay, I just couldn't. That didn't stop me from wanting to be able to by a house or a car that would last past tax season. Brace yourself, it will be an uphill battle but it is doable and necessary for many reasons.
If you're anything like me you want to know the "why" behind anything before you get to the "how". Here's the "why"- Your financial status can be holding you back from jobs, school, relationships, and other aspirations. I'm sure I'm not telling you anything you haven't heard before but maybe some first hand experience will help put things in perspective. I know what its like to be doing your best and all you can do to keep going and that not be good enough, so don't get discouraged if right now the situation seems impossible.
Lets breakdown each element and see if we can make some sense of the "why".
Jobs - The economy is bad, and the government keeps saying things are getting better, but it hasn't trickled down here yet. Some people are having problems finding work and some are stuck in positions they hate due to the realization that changing jobs right now is very risky. Companies are feeling this too. When people get desperate, they do desperate things and that is not a risk many employers are willing to take. Employers run credit checks on their employees. I was denied a job twice because of credit. I was furious. How was I supposed to pay the bills if no one would hire me? Sad part was I couldn't blame anyone but myself. Being a business owner myself now, I can see where they were coming from. It's not that maybe they didn't want to give me a chance, but probably could not afford to take the risk. An employer is vicariously liable for wrongful acts of their employees committed in the scope of employment and if they by chance sue you, they aren't going to recover anything because you had nothing to start off with in the first place. An employer wants a person who can manage their own life. Your credit report is a written reflection of who you are, your management skills, and how you handle a crisis. Are you going to bail on the company like you bailed on your bills if things get rough?
Its unfair and discouraging but the employer, who doesn't know you from the man in the moon, has nothing else to go by. Its not that they expect perfect credit but they do expect you to communicate with creditors and make arrangements. Bottom line is, if there is only one position open, and credit is the tie breaker between the two candidates, they will choose the one who had demonstrated financial responsibility. After all, businesses are about making money and if you can't manage yours, then they can't take the risk that you'll be a good steward over theirs.
Education - These people don't care about your credit, right? WRONG! This was a shocker for me when I went to law school. I had gotten student loans through undergrad and grad school with no problem but law school was a whole different ball game. I had to get private loans and they were based on my credit history. I was blessed with a full scholarship to law school for my tuition but I still had to live and pay bills. Most law schools, like the one I attended, do not allow you to work the first year. I had worked all through undergrad and grad school so I hadn't encountered that problem before. I still had three kids to feed and a new baby on the way so I had to take out loans to pay the mortgage and feed the kids. The first year getting loans wasn't so bad because when I applied I was still working and classes hadn't started yet. The second and third year was a different story. I hadn't worked for a year and even though I hadn't accumulated new debt, my debt to income ratio was outrageous.
Depending on what you're making now and what career you are going into, getting financial aid can be difficult and you may have to get private loans. Even after finishing law school, I had to study for that dreaded bar exam and since the job market deteriorated right when I started law school and I took extra classes to graduate early, I hadn't worked in two and a half years. I was unable to qualify for a bar study loan. Fortunately, I was able to withdraw from the Bank of Dad to cover my expenses for four months. ALL this hassle to pursue my education that has a lot of up front cost. Now of course it will pay off eventually, but my creditors didn't want to take the chance on me one day making a lot of money.
Bottom line here is, you have to put in money to make money and education is expensive. My dad was able to support me over the last hurdle but the whole journey before that was funded with student loans and my own income. There are some financial aid resources available to ease the burden, but you have to be prepared to spend money to pursue your career. Unless you have someone with bags of money waiting to write the check, you will most like end up taking out a loan at sometime in your educational journey. Not only that, you have to be able to manage and maintain while you are in school.
Relationships - What's love got to do with it? I know some of you are going to think I am way in left field with finances being a hindrance to a relationship but if you'll indulge me for a few minutes, you'll see I'm right on time. If I can get a little technical for a second, the biggest predictors of divorce are 1. Having a child before marriage, 2. Getting married under 30, and 3. Poverty. Now I'm in no way saying that you are destined to fail if you are 25 have a baby, get married and and you're poor, or vice versa for that matter. There are no guarantees. Finances can break a relationship whether we want to admit it or not. Think about it, many of us single mothers are struggling to keep our head above water as it is, we don't want some out of work, don't want to work, loser bringing us down.
My dad used to tell me that you can tell the kind of fish you're going to catch by the bait you use. I used to say that I want a man who is over six feet tall, washboard, not washed up abs, good credit, good job, loves the Lord, no kids but will love mine like his own and doesn't want to have any of his own, will buy me nice things, and doesn't mind sharing his money with me. Can I keep it real for just a minute? I was dreaming. My friend and I were talking about something she heard on the radio about women making themselves available to meet a mate. The caller was talking about Ruth in the Bible and how Boaz found Ruth while she was working in his field.
I had to come to the realization that I had to be the kind of person I was looking for if I was going to find a person with those descriptors. You can't soar with Eagles hanging with a bunch of Turkeys! Chances are, the guy with washboard abs is not going to be hanging out at the food places I frequent. A person with the body I described probably spends some time in the gym or outdoors getting physical exercise and since I did neither of those things, chances are I wasn't going to find him. You can't expect a person to meet a standard you can't meet yourself. If a man has good credit and is financially secure, he probably didn't get that way by being foolish. He most likely does not want someone he has to bail out of financial problems and who is going to mess up what he has worked to build up. People tend to gravitate towards those with like interest and values.
If you want a man with a good job and strong financial stability, we have to step our game up as well and make careers for ourselves and be able to manage our finances. If you want a guy who loves the Lord, perhaps you should start frequenting churches and getting involved with church activities, meetings and the like. Being that we are single mothers, although we very well may be able to find a man with no children, it is more likely that the person we meet will have children or want children. Its about being realistic informed in our thinking. You don't want a person who can make or break you, you want someone who compliment your lifestyle. Financial stability and responsibility is definitely something you should pay attention to in a relationship and should also be something you bring to the table as well. Face it, both of you can do bad by yourself. Additionally, just because a man makes good money, doesn't mean he wants to give it to you or spend frivolously.
Future Aspirations - It may not seem like it now, but time is going to pass and things will not always be this difficult. The kids are getting older, we are getting older, and sooner or later, they are going to leave the house. You really don't want your old collection items snatching the dream away. I remember when I first considered buying a house. My credit score was a 538. I was in grad school working on my Master's and my credit was still a hot funky mess from trying to stay afloat in undergrad. I was working and making fairly decent money and couldn't get financed for a doll house let alone a house for me and the kids. I had no idea what was on my credit report because I never looked at it. I was so used to being told no, that it never really shocked me to get denied. I was always shocked when I got approved.
I was living in the projects at the time and was trying desperately to get out of there. This time when I was denied I asked for a copy of my credit reports and the scores they had. I looked on there and there were some OLD collections from when I turned 18, and a couple bad checks that I wrote to wal-mart for trivial amounts like $35. After I paid those I saw in the memo of the cancelled checks, "diapers" and could remember back to those days where I had to choose between diapers and lunch money or gas. Thank God for grace! There were also a lot of late pays from when I just didn't have the money. It took about a year before I could get my score high enough to buy a home at an interest rate that wouldn't have me in foreclosure by the first payment. Getting my finances together also reduced my interest rate on my car by refinancing, and after a while I was turning down offers for credit rather than being turned down.
Now that I've told you why you need to get this done, I'm going to tell you how to go about doing it. Its no fun realizing how much debt you are in. Hey, I so wish I could tell you that I am debt free today but that would be lying and it wouldn't help you at all. I have a mortgage, car payment, you would faint if you saw my student loan debt, and yes, dare I say, I have some credit card debt left over from Christmas and from starting my two business. What I don't carry with me is frivolous debt. Living off of credit cards is a big mistake but, it is also sometimes a necessity, as quiet as its kept. But it should be an exception and not the rule.
Now I'm no financial planner and I can't say that I'm on expert on how to get out of debt. I can tell you what worked for me and how I took control of my finances and my credit.
1. Pull your credit report - Its hard to know what to do if you don't know what you're up against. Some of the items on your credit report may be old and can be deleted. Anything you see seven years or older, and sometimes five years depending on the jurisdiction, you need to dispute. Also if you see other items that have been paid, or the amount is off, dispute those too. Many of the items on my report were old and had to be deleted. You can get a free copy of your credit report from each of the credit bureaus from annualcreditreport.com.
2. Call your creditors - Talk to your creditors and see what settlement offers are available. Don't be deceived, these will show up on your credit report still and say "paid/settled for less than the amount owed". What I did for many of them was ask them to send me something in writing that says the account is paid and an agreement to remove the item from my credit report. DO NOT agree to something that you know you cannot pay. This looks worse and can start the time all over again. Many times, the time will run from the last date you agree to make a payment. If you can't work out an agreement with them, move on to the next one and come back to them later.
3. Pay small items first - Looking at all your debt will be overwhelming. Paying the items will get more items out of collections first. It won't have as big of an effect as the bigger debts but it does build your confidence when you pull your report and see there are less items on the report.
4. Keep a budget and stick to it - Making a budget is so important. But making it is no good if you don't follow it. You may have to cut out some luxuries for little while to get caught up. I didn't have cable until three years ago. You may have to take your lunch instead of buying lunch. Track your spending, you will see how quickly things add up. I used to hit a drive thru during lunch and spend about $4-$6 per day on lunch, not to mention what I spent on latté. I was spending a good $30 - $40 a week eating out. That was money I used to pay off old collections and old bills. As usual, I endured some criticism from people who thought I should spend that money on my kids but I'm a big picture person. That temporary affliction was nothing compared to what I will be able to give them in the future. Thankfully, they won't have the student loan debt I walked away with but they can also appreciate the struggle, and what we endured to make that a reality for them. It's like circumcising a baby. Sure its painful at any age, but they won't remember it if you get it done as baby, they won't forget if they get it done as men. Get your finances together early so you give them better opportunities in the future.
5. Balance your check book - I am bad at this myself sometimes. Don't try to count on that you'll remember what you have in the bank. It never fails, we always forget something. I can't afford any overage charges. I can't afford to pay $6 for lunch and $27 for the overdraft fee.
6. Be patient - It is not going to get fixed overnight. It is going to take some time. Even after you pay them your score goes down, then up. Keep paying your bills on time and pay off your back bills and collections at a pace consistent for you. It will add up and you will see your score start to rise. The main thing is being consistent in paying on time and developing a payment history.
I hope this information has been helpful. As always if you have questions or if I left anything out, please feel free to post a comment or email me and let me know. Until next time, be blessed!
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