Is applying for a secured credit card useful when trying to rebuild your credit (score in the 500s)?
The first and best way to build credit or rebuild your credit is to pay your bills on time. Paying your debts on time has the biggest impact on your scores.
But it can also help to get a secured card to establish credit. How you handle the card won't be reported to the credit bureaus like a regular credit card but use it well -- paying the bill on time -- and it will put you in the position to get a regular credit card and your good behavior using that card will help boost your score.
I thoroughly enjoyed your 21 day fast book, it was awesome. I am still basking in it. I am still doing what is says watching my spending, I have not really done any. Bringing my lunch. I have had 20 dollars in my pocket for a whole week which is very rare. Now I am trying to get this debt out of my life. Thats my main goal and to save money consistently and budget. This was a life changing book for me because none of the book was me until I read it. I was a spender, shopping, shopping, shopping all the time I have not been shopping in I don't know how long now because of my money. But in reading this book I will continue to pull back. Thanks again and I'll be looking for the next one.
Thank you so much. I'm so glad the financial fast helped you. I've heard from so many people who have turned their life around by following the book and teh lessons in it.
So keep the progress going!
I know you don't often agree about the "store credit cards". However my husband works for a major retailer and the only way to get the employee discount (which is substantial at 45%) is to have their credit card. He went to open one yesterday and it was denied. I think the reason it was denied is there's a credit card in his name with a balance of almost 16k plus he's on our mortgage and he has a student loan. I know this sounds bad however I'm the main breadwinner and am able to pay the mortgage, his student loan and more than the minimum on the credit card. I'm assuming when he applied my information wasn't taken into affect since it only asked HIS income (and not household income). Did this just bring down my credit score as well? How does this affect his? Yes, we have debt that's a stupid monkey on my back however I'm working to get it paid down. We've NEVER been late on any payments. We're considering selling our house and moving out of state to a very low cost of living (buying) - my salary would stay the same so if that happens we'd be out of CC debt in less than 1 year and that's with carrying a mortgage.
You may be right that he got turned down because he has so much outstanding debt. But really that's may be a good thing. I know the discount is tempting but really at this point until you get that debt paid off, you shouldn't be doing any unnecessary shopping anyway. Look at the denial as a good thing. And a situation that is only temporary.
As for how it affects your credit scores. Yes, when you apply for credit, it can bring down your scores but just a little bit. And if you pay your bills on time, the scores should go back up pretty quickly.
If your husband applied for credit in only his name, the application won't impact your credit. A husband and wife do not share credit reports or scores. However, if you have joint credit accounts information from how you use those accounts will appear on both reports.
Dear Michelle, I'm sure you've seen recent studies showing that a college degree no longer brings the financial advantage it did in the past. I am a High School junior who has always wanted t be a nurse like my 26 year old big sister. She got a 4 year nursing degree from UMD and is now making good mney working three 12 hour shifts a week. She also has a second job in medical billing to pay off her student loans. While she enjoyed her time at Maryland, she tells me I could have much the same job opportunities and even salary with less time, money and effort if I got a 9 month med tech certificate from a for-profit school. I know I sound like a daytime TV commercial, but my two older brothers have such certificates in nauto mechanics and HVAC and both are doing well. I have a part time job and my parents and brothers could help me out some but I'm not as academically or culturally oriented as my big Sis, who played in the orchestra and participated in many other campus activities. I figure I can apply to 4 year colleges and see what transpires, but I'd welcome your thoughts as well. Thank you very much.
Oh my goodness. A high school junior and you're asking such a GREAT, well-thought out question?
I'm so very proud of you!!!
I love that you are looking at the end game, which is what can you earn when this is all over.
So do the math. Look at how much it will cost to attend college vs. one of the tech programs. But make sure your degree or certificate can be used to get your nursing license or be used to practice the type of nursing you want to do. You don't want to go thru a tech program only to find out the degree or certificate you get won't be accepted by the employers you will be interviewing with.
There's another option, too. You could go to community college for two year, get your AA and then transfer to four year school.
I think there is still value in a college education and the other things you learn going to college. I just don't think that a college education and college experience is worth going deeply in debt.
As you continue this process feel free to email me at firstname.lastname@example.org. We can talk thu your options.
What's your take on those credit karma sites? I signed up with them awhile ago and according to that site my credit score is 725. How accurate is something like that and is that considered a bad number?
I signed up too. Just to get an idea of my score because otherwise I have to pay for them.
It's totally free and you don't have to give them a credit card number or be signed up for a credit monitoring plan.
But be aware that the score you get isn't the same score a lender will get. Lenders use credit scoring models that are different than the ones consumers are given, even the ones you pay for.
Still it helps you to get a general idea of how you are viewed by the scores. And a 725 is darn good.
My husband bought a place before we were together at the height of the housing market. At this point we're still very under water on the mortgage and I'm not sure when we will break even/be able to sell for a minor loss. This year we are facing increased salaries and finishing the car payment so we'll have extra money each month and we're trying to determine where to allocate it. He thinks we should throw all of the extra cash we have at the mortgage and I think we should stockpile as much cash as possible. While I tend to hate debt, I don't think that we'll be able to make a dime off of this house and will likely end up taking a loss. I want to have a large pile of cash reserves so that wherever we go next we have a down payment available (unfortunately it would be impossible to stay where we are long term -- we only have one bedroom). Which approach makes more sense?
I agree with you that if the plan is to sell the home and sooner rather than later, don't put extra on that mortgage. You may or may not get that money back.
So stay where you are and keep saving. Be sure to have a well funded emergency fund, life happens fund (for things like car repairs, etc., money you may have to bring to the table when you sell the place you have, and the downpayment and closing cost for the new place.
Last week, I was suprised to learn my car needed engine work costing $3000. I have the money, so that isn't the problem. Although, I decided to get the work done, I looked up the value of the car and saw it is worth about $5000. It long since paid off , has 95,000 miles and hasn't needed other major repairs, so assuming this goes well, should provide a few more years of use. But with the repair total expected to be more than half the value of the car, I do need to wonder if I made the right choice. My justification is that replacing it would cost more the $8,000 (the cost of the repairs plus income from selling) so this would seem to be the less expensive option even if a newer car would likely provide more reliable transportation.
Put your concern aside.
I think you were right on the money.
It's what I would have done.
@Value of College should look at the true cost of attending a four-year college, taking into account any scholarships and grants she may receive. She won't have these figures until she receives financial aid notices from the colleges and universities who offer her admission. I suggest she continue to keep these options open until she makes a true determination of the values of her many choices.
Count the cost. But if you don't get any free money, look at options that don't include taking on debt.
On the NBC Today Show, today, the financial expert spoke of the importance of contributing to workplace retirement accounts to obtain the employer matching funds. I work at a small company which has no such match and provides no profit sharing to employees. What percent of employees actually work at places where employers match their IRA contributions? How many provide profit sharing? I would like to inform my employer of those statistics. PS Love your column and these chats!
Really good questions. Can't stop in the middle of the chat to look it up but you can find answers to your questions from the Employee Benefit Reseach Institute (ebri.org)
And good for you on trying to push for a match. But even if there isn't one, it's still important to contribute to the plan to save for retirement.
Do look at Community Colleges, because most of them have nursing programs, and they give you lots of options once you've completed your A.A. Once you get that 2-year degree, you have the option of starting work, transferring to a 4-year college, or, possibly, you can work and finish your BSN at the same time. NVCC has a program in which you can get a BSN by spending 6 semesters at NVCC and two at George Mason (what a bargain!). There may be something similar up in MD as well. CC's are a GREAT option for those interested in nursing.
Thank you so much for the info.
Michelle - I feel like there's info. missing from your column regarding the parents who bought their son's home at foreclosure. Your article states that they "purchased her stepson's" home at foreclosure...and paid well below the fair market value." Was this ethical? Shouldn't they have stepped in to help pay the mortgage. I'm no fan of big banks but I believe that you pay your debts. It sounds like rather than stepping in to pay the mortgage and allowing the family to live in the house, the parents waited until it was well below market value, putting the family at risk and then picking it up at a song. Did anybody else feel uneasy about this?
I don't think you are right.
The parents had no obligation to buy the house for more than the bank would take. It was in foreclousre and often these homes sell for a song. And it wouldn't have been wise to pay more than they needed to. The obligation to pay was on the son. He couldn't so the parents stepped in to help.
By getting the home for less perhaps later they can sell it to the son.
And while I agree people should pay their debts sometimes life happens and they can't. The banks know the risk and it's the risk they take.
I participated and although I had some slip-ups, I found it surprisingly easy to follow and stick to. I know now that this is because I prayed a lot and turned all of my issues including my finances over to God. I, for many years, have tried program after program and budget after budget, this advice, that advice and NONE of it worked. This fast WORKED! The principles were probably similar to those I've tried in the past--the difference was the scriptures and references that I could look up and follow. I am a changed person, I'm digging myself out and for the first time in many years, feel like I have a plan that will work and I owe it all to this experience. Thank you Michelle---I give God all the glory as he orchestrated my participation in your FAST!!
What a wonderful testimony. Thank you so much for sharing!
Hi Michelle, Just wanted to say than you for the idea of a "Life Happens" fund. We had life happens two times last month--the hooptie needed a bunch of work, so we paid that from the fund. Then, the next week, the furnace broke! Fortunately we had saved enough that we were able to cover both expenses. Now we are warm and have wheels and can focus on building it back up again. It was so nice to know I had that money in the bank to pay for the furnace--even if it was a hair raising expense. Thanks for getting me set up to win this one!!
Great testimony. My best friend (Hey Terri) says my idea for the life happens fund (separate from an emergency fund) is one of her favorite pieces of financial advice.
What I like about it is that you don't have to feel guilty or stressed pulling money from it. With an emergency fund, you pull for car repairs and then feel guilty or concerned with a much more MAJOR thing happens like you lose our job.
But with the life happens fund, you pull from it and then build it back up leaving the emergency fund alone.
Just a quick note based on family experience. I would encourage the young woman who wants to be a nurse to get her college degree, if she can swing it financially. Not only for the excellent life experience, but also because as you said, there are some jobs where you either need the bachelor's degree, or you can get paid more because you have it. Also, the medical world is still one where you can sometimes get a lot of assistance if you want to pursue an advanced degree. My sister in law's employer (a private hospital) paid for most of her nurse practitioner degree at a private university. And my brother's employer (a state hospital) paid his tuition for his masters in public administration at a state school. Not a guarantee of course, but something to think about and research!
Good advice. And not sure but the poster could have been a guy.
Just saying. Guys make great nurses too :)
Really - it is only worth the $5k (maybe) *after* the repair. So maybe you could have sold for $2k before the repair. I put a new transmission in a car that wasn't worth much more than that...but I didn't have to do the car shopping thing (ugh) and it bought me more time (I've had the car about 18 months and it is running fine - and so that cost me about $4500 - a new(er) car would have cost me more than that). Look for a new(er) car if you want, but you won't have been in the situation where you had to buy something RIGHT NOW. because making those decisions quickly sometimes means you make the wrong one.
True. When looking at whether to repair, look at more than what the car is worth. You have to figure out what it cost to totally replace the vehicle plus higher insurance, gas, etc.
My rule to replace is if the car has become totally unreliable meaning it just breaks down without you being able to plan to have the repairs done.
I have been doing well since the fast almost a lil too tight got convicted for getting a candy bar out of the vending machine for 85 cents and trail mix for a $1.00 that was a lot to me. I am now in real estate classes to increase my income and I am excited. Remember the car issue well I got it fixed and the mechanic knocked off $250 of the $1057.00 bill and oh yeah no overdraft fees the month of January and Feburary so excited. Ready to go I will be continuing with the fast through out the year. I work better with structure no structure I go out of control. Also, I declined the network marketing opportunity constantly pulling money out and not equaling the money coming in. Thank you again for your help
You are so welcome.
Keep letting me know how you are doing.
well, if you don't want a four year degree, don't go for it. if you want to be a nurse - go and interview nurses/people who hire nurses - and ask what they want in people who get hired. one has always also had the option of getting a 2 yr certificate as well, from what I gather.
I like your point. See what employers are looking for. Talk to current nurses.
Do the research and math.
I got my 9 month tech certificate, then an AA from a communty college and am noiw enrolled part-time in a 4 year nursing program. If you and your family can manage it financially I'd suggest skipping the 9 month program unless you need to work to finance the rest. You're correct that some 9 month programs can lead to well-paying jobs, but there are lots of these programs out there so make sure, as Michelle advises, to chose a well-established one that leads to the patient contact yu desire. So lots of options out there. Goodluck!
Love the advice people.
I had the opposite experience with the fast as the previous poster--I found the scriptures and Biblical content kept the book from being useful for me. I have no issues with your beliefs--I am simply not a religious person and the framework didn't work for me. I returned the book even though I read your column weekly and appreciate your advice and knowledge. Would you ever consider writing a more secular version? For what it's worth, I created my own fast for January and it was illuminating. I'm frugal by nature, but realized I had to make budget cuts or my savings was going to continue to dwindle. I very much appreciated the concept of a financial fast now and plan to fast indefinitely. So thank you for that!
I appreciate your point of view. I had thought about something secular but that's not how the fast was developed and I wanted to stay true to my values and the book I wanted to write.
Nonetheless I'm glad you were inspired.
Well, it sounds like this boy was spoiled beyond belief by his parents. But I do agree that he should not be sent to prison. He is a substance abuser, and sending him to prison will only harden his addiction -- he'll graduate to heroin and crystal meth in prison. He's young enough that rehab might straighten him out and get him back on track.
I volunteer in prisons and years of throwing people away without giving them meaningful help to rehab their life doesn't serve society. Because guess what? Many of them get out of prison. Then what?
it makes so much sense...when i see those commercials about 'unexpected expenses' I want to throw something at the TV. The ONLY thing unexpected is what they are exactly for. You *know* there will be expenses (house, family, car, whatever) - you just don't know *which ones* will happen. But they happen every month....
You are absolutely right!
If you have a car, it will need maintenance or repairs. That should be expected.
I happened to talk to my doctor's assistant yesterday, and she told me that she chose to become a physician's assistant (PA) rather than a nurse because it was much quicker to become a PA and they generally get paid a lot more. She also said that PAs have more autonomy than nurses (other than advanced practice nurses or nurse-practitioners).
But I would say think about what you want to do along with the money you will or won't make.
Hi, Michelle. I religiously read your columns, emails and chats but can't participate live in the chats -- I have to work! My husband and I are 62 and 63 and my parents are in their 80's. Like one of last week''s chatters, we have all benefited from real estate appreciation far more than is likely for our children and grandchildren. It's also true that taxes were much lower "back in the day." However, there's another side to the story. I don't think my parents ever ate out or went to a movie while we were growing up. They are still uncomfortable when we take them out to eat and only reluctantly let us throw large but not extravagant parties for their 40th and 50th wedding anniversaries. A few years ago we installed and pay for cable TV, which they enjoy, but they refuse to let us a/c the house because "window fans work just fine." My husband and I, while not that thrifty, live well below our means and take advantage of the many free cultural and historic opportunities in the DC area. We have theater and symphony subscriptions and have been to Europe and taken a cruise, but we rarely eat out, drive economy carrs and are generally careful with our money, My parents have never had a credit card. We use ours only for such things as booking online travel, and pay it off every month. In contrast 2 of our 4 children run through money like water and the other 2 aren't much better. Theydrive expensive cars, take expensive vacations, dress their children in designer clothes and have credit card debt up the kazoo. As far as we can tell they have no savings for retirement. Since they and ther spouses have well-paying jobs they are able to do this, but we are dreading the day when they ask for help. We'll try to follow your advice when that happens! I'm sorry for this long comment but, although we love our children dearly, this "we want everything now" mentality drives us nuts.
I really appreciate the time you took to express your thoughts.
I'm right there with you.
Drives me nuts too!
the other issue w/ the value of college is that so many jobs require that you have a college degree. after several years of experience they don't necessarily care WHAT the degree was in, only that you have one. i have a degree in german & that never stopped me from getting programming jobs. if you get a certificate & start working as a nurse & then discover that you don't like it as much as you thought you would - you will then have to go back to college to get a degree. my son is talking about going to mechanic's school. i want him to get a 2 year degree at a minimun. if he hates being a mechanic or wants to move up or on, it won't be so hard for him to finish up school.
I see your point. If you can go with no debt might be worth it.
But he could also still go later.
Nursing does not require a 4 year degree, but many certificates are not a RN! What my nursing friends recommend is getting your RN from a community college (Montgomery and Prince George's have this) and then if you want a BA, MA, or doctorate, a lot of hospitals will pay for it if you work there. I recommend you check out their programs first-- they are far more affordable than UMD and are only 2 years.
Hope the high schooler is still on and reading!
After reading the earlier question, I used Credit Karma for the first time. It's telling me I have an excellent score of 773, which I'm of course glad to see (and isn't a real surprise). But when they break down the score, it gives me an "F" for not having enough credit accounts. Since it's one "F' and the rest "A"s, and the final number is good, should I just ignore and continue with what I'm doing?
Keep doing what you are doing.
I am the first person in my family to graduate from college and then professional school. I was blessed to have all of my schooling costs paid for by my parents. My parents did very well financially, but prioritized saving for college for their children over buying expensive cars or doing any other foolish things with money. It's been 13 years since graduation and I have never asked my parents for a penny. I have never been late on any payments and am very fiscally responsible. I drive a 10 year old Honda and instead contribute the max to my 401K, IRA, and save a bundle each month. I consider it a privilege to be able to work for the government, without having to worry about paying back huge student loans. When I had my first child two years ago, I immediately put funds into a 529 to save fore college. I understand the value of an education and know the doors that can be opened. The most important thing to me is to continue the cycle.
Yup, continue the legacy.
And consider whom else you can help. We've helped other relatives with college costs.
Such a great gift.
so taking your advice from the mortgage underwater question - I should just save?
Money cannot buy the joy of young love, but enough money, especially in retirement when you don't have the hassle of work or commuting, can buy a lot of moments of contentment. My wife and I saved, and followed the 3 rules of consumerism: 1 Do we NEED it? 2. Is it a good value? 3. Is it at a reasonably good price?