You Have Less Than You Think

It’s possible you’ve noticed, but in case you haven’t, let me just say, I really love talking about personal finance. So much so that I volunteer for two organizations as a financial education counselor.  I taught a two-hour course titled Know Your Credit Report. It’s one class in a 5-part series on money management. I normally teach the budgeting class, but I wanted to challenge myself with a different topic that I actually know quite a bit about.

I don’t talk about credit often on my blog,  You Have More Than You Think because I’m not a proponent of going into debt. Although I don’t know what I’d do without my dear, sweet, precious American Express Hilton Honors card, I’m fairly averse to borrowing money. Even home mortgages make me uneasy. I use my credit card for reward points, and I pay the balance in full every month to avoid interest charges.

Man, I wish I could tell the class how I really felt about credit. But, screaming DON’T BORROW MONEY, probably didn’t meet the objective of the course. Plus, it’s next to impossible to make a single statement fill a two hour time slot.

Overall, I thought things went pretty well. There were so many topics I didn’t get a chance to cover. I’m looking forward to teaching this class again now that I know what to expect.

It’s not most people’s forte, but I quite enjoy standing in front of a group of people and teaching them how to manage their money. That’s quite an enjoyable experience for me. But you know what I really love? Listening to the experiences of individuals in the class and then talking about their experiences with you.

It’s like gossiping without the evil. The concept brings to mind people who share other people’s business under the guise of genuine concern and then conclude their gossipy rant with, “Child, I was just letting you know so that you can pray for ‘em.” Come on.

Hey, that’s not what I’m doing. Feel free to pray for whoever you want. This blog post is an extension of what I told one of the attendees to her face.

Let’s just call this woman Larissa (pseudonym for anyone who’s financially challenged). After class, we continued our discussion on credit. Larissa was infuriated her bank suspended her home equity line of credit when she defaulted on a Walmart charge card.

Here’s wear Larissa messed up. She’d recently cancelled automatic payment of her Walmart card because she’d paid off the balance. Then, she proceeded to forget to make the minimum payment after she ran the balance back up again for some Christmas presents purchased with her Walmart card. Once her bank got wind of this, they closed her line of credit. If Larissa had paid a few days late, the bank would’ve never known. Creditors wait until you’re at least 30 days past due before they report you to the credit bureaus.

What I’m about to say may infuriate some people. Actually, a colleague recently warned me that (in spite of all my liberal leanings) I’ll be a Republican some day. So here goes.

If you pay any one of your creditors 30 days late, the other creditors should get nervous.

Why are you paying your bills late?

Did you lose your job?

Do you have a drug addiction a gambling addiction a shoe addiction?

Are you caring for a deadbeat husband, child, or sibling?

Are you a deadbeat wife, child or sibling?

You paid Walmart late this month, are you going to pay me late next month?

What is your problem?!

It’s quite possible you just plum forgot to pay your bill for 30 consecutive days.

However, there’s a reason people who pay their bills late are charged higher interest rates. They’re riskier. There’s a greater chance you won’t pay your bills at all if you’re paying them late. Such behavior is, generally, indicative of poor money management.

Maybe you’re an exception, but the bank ain’t trying to get to know you personally. They’re looking for a pattern of behavior that’s consistent with someone who doesn’t pay their bills.

Back to Larissa and her outrage. She made the point that she always paid her bank on time so they shouldn’t worry about what’s going on with Walmart. I know Larissa certainly didn’t feel like her bank did her any favors, but the other alternative to dealing with the Walmart default situation would’ve been to raise the interest rate on her home equity line of credit.

Be grateful you got shut down, Larissa.

So here’s where the aptly name blog post title comes from. One of the last things I remember Larissa saying was that she was hoping to use the home equity line of credit to get some work done on her house. She slipped up and said the bank refused her access to HER money.

After minutes of listening to Larissa wax on about the injustice of it all, I had to interrupt.

“Larissa, it’s NOT your money.”

Then I told her how I really felt about credit.

The title of this blog post was inspired (actually, it was spoon fed to me) by Fin Egnr at Engineer Your Finances. I like it better than the original title: “Credit – It’s Nacho Money, Fool.”

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  1. Katryna says:

    Great article, Shawanda! This reminds me of the time during the housing boom when a broker was trying to get me to refinance my condo. He kept saying “you’ve got all that cash just laying around there! Get it out!” I kept thinking “but that cash isn’t mine. I bought so I could fix my monthly payment and not have it go up every year like the rent, so why would I borrow more?”

    Keep teaching!

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