Congratulations on paying off you debt, TF! That's really a lot bigger accomplishment than many can understand. And the feeling... great!
Saving money and planning expenses is a lifestyle, one that many still have to learn. All my life the guys around me have made fun of me (or on the other hand, asked me for advice) on how to be more responsible with money. I have no secrets; all of it is just common sense and commitment to the task.
The first thing I tell my buddies:
quit smoking.
The next thing:
quit eating out. I bought a commercial grade vacuum sealer and buy meat that is on sale, or large pieces in bulk and butcher/repackage it the way I want.
Me and mine can eat a small sirloin of 8 oz. ( $2.97 a lb.) two frozen vegetables (.25 each per serving), a bread roll (.20) and a pitcher of iced tea (.20 a pitcher). That's less than $2.50 for a 1/2 lb. steak dinner!
I buy my pork loins at Sam's for $1.80 a lb., so using that same model, I can put a 1/2 lb. lean (all meat, no bone) chop
on the table for about $1.75.
Compare that to a Whatburger with it's 1/4 patty, no veggies, no drink, for $3.89.
Those are just a couple of examples. But the food strategy alone is often overlooked, and sticking to it will save literally thousands a year. It is easy to see how; I read somewhere that the average cost of eating out is $9 a head. Even if you only cooked one meal a day in the house, assuming an average on the plate of about $2, you would save $7 per meal.
With two people, it's $14 a meal, and over a month that's $420, just for two guys at one meal each! No go to two meals, assuming that many will still eat lunch out with business associates... you can see it's an incredible multiplier.
Quit wearing name brand clothes! Most of today's clothes have labels by people I have never heard of, nor have any of my associates. I quit wearing Levi's when they crossed the $25 barrier and went to cheaper fabric. Also, they are manufactured under contract overseas, just like all the other pants. I go this tip from a buddy that worked in a men's store years ago. Don't buy name brand clothes, but buy clothes that fit you well. Everyone will notice a good looking shirt that fits you well, no one will pull the collar back and look at the label.
Those are just a couple of ideas. I have lived that way for years, and am debt free. My house and vehicle have been paid off for years. I have no medical debt. My business is debt free. I have no credit card debt, nor any other kind of debt. In this difficult economic climate I cannot tell you what a comfort that is to me. If I had a large debt base to service, I would have to shut down my business.
Let me bring a few points up:
1.) Credit cards are not bad. Having cards with little or no balance really saved my ass the last couple of years where it was down to not having any cash, and needing to pay cetain things (house car, food). Yeah, it sucks that I now owe, but I kept them for emergencies and had big ones two years in a row.
2.) Having no debt is at odds with having a good credit score. Contrary to the "Finances for Dummies" explanation, debtors DO NOT like to see you owing money, what they like to see is money moving. They like to see credit accounts (CCs, lines of credit, etc), run up and payed off or almost off each month. That means you move a lot of money, and manage it well.
3.) You want a good credit score. It's used in finding a job (employers run credit checks because people with low scores are a higher theft risk), insurance premiums go up with poor credit, etc.
4.) With that in mind, unless you simply can't control yourself, keep your credit cards, especially if they have no annual fees. USE them each month. If nothing else, buy all of your gas on a card each month and pay it off at the end of the month. Some folks I know pay everything on their cards (including car and house payments) and just make one big payment to the CC at the end of the month. If you have several use them as gas cards on a rotating basis.
With ten years in the credit business, (construction/housing loans), I can say all of those comments are solid gold.
Well done. All true, no speculation, all spot on. If there was a sticky for credit management, that should be the first post.
I don't know if you were ever in the industry CP, but that's the best explanation of card debt management I have seen outside of the bank. And #2 is the most often misunderstood aspect of credit card score rating and management. Money flowing through your accounts in a timely fashion goes to demonstrate to a prospective lender that you are able to manage debt over a period of time.
Paid off debts could mean that you used lottery ticket money, an inheritance, or borrowed privately to do so. Creditors want a track record. Lack of track record, or a history demonstrating the ability to pay in a timely manner will cost you credit score points, making all of the bad things you pointed out come true. For that reason, I keep a small revolving debt (less than $100 balance) on my one credit card at all times.
Again, good job.
If you don't have the guts, or are lazy or a half-asser, don't even consider your own business. If you can come up with a couple grand in scratch to start a corporation properly, you can have all the credit you need in a few months.
I would differ with you on this one, except the remarks on having the guts or being lazy. Or a half ass. Those are true. :thumbup:
With small businesses skyrocketing, most banks and vendors are very reluctant to lend money or extend credit. They all want a two year history of successful business, and it has to be vetted. So no "I worked out of the house and put the money back in the business... that's why it isn't on my tax returns".
Some vendors are getting around the problems of extending credit the same way one of my construction supply companies do it now. They require that the owner/principle of the company guarantee the account, even if it is a corporation or LLP, or LLC. No personal guarantee, no credit. My shingle supplier told me last month that they lost about 1/3 of their active accounts, most due to lack of payment, some due to business closings.
My bank has another take on how to determine credit eligibility. Same as the bank of one of my sometime business partners: no credit to anyone's business that is under two years old, and the company has to have the tax returns to back up their claims of black ink. The amount of the credit extended will be determined by the success shown on the tax returns, as well as the retained earnings.
It ain't easy being self employed these days. I am glad I have 25+ years in business, not 25 months...
Robert
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