FInancial Literacy And More
As part of my weekly FILAM articles, I will also be keeping track of the three major debts in my finances: credit card debts, loan on vacant land, and student loan.
Credit Cards
After paying off at least $20,000 of credit card debts in 2002, I have stopped using those plastics for a couple of years. However, I realized that not having a credit card would surely affect my credit score. Since I’m trying to re-establish my credit, I had opened a couple of credit cards again in 2004 but this time it’s a joint account with my wife. My wife just got here in 2004 so she does not have any credit history as well. We’re planning to purchase a home, hopefully, in five years but to do that, we need to start cranking up with our credit scores. We used the credit cards solely to keep a good credit history of ongoing payments. Also, we used them to take advantage of the rebates offered by credit cards.
I have six major credit cards but I’m only using the following:
My current credit card debt stands at $5,050 and this is due to the travel expenses that we incurred during our first three years of marriage and some medical expenses not covered by insurance. We always travel during our anniversary as friends had advised us to do so while we don’t have children yet. Regarding my other four accounts, I only used them once a month to keep them active and pay off the balances immediately. The reason for keeping these credit cards open is to keep my “total unsecured debt” to “total credit line” ratio under the 30% recommended threshold. This way I maintain a good FICO score. See my post 7 Don’ts To Improve Your Credit Score to understand the effect of the ratio in your FICO score.
Loan on vacant land
This one is the biggest killer in my finances. I had to admit, I got caught up with the real estate frenzy in 2005 and now I looked back and still wonder if I made the right decision on purchasing this. The interest rate on this is 10% with 10 years to pay. We’ve been paying this for almost two years now and I’m trying to work out a plan on how to accelerate this payment.
Student Loans
Initially, my rate on this was 7.25% with a $500 a month payment, but I managed to consolidate this right before they implemented a new law a couple of years ago. I am now paying only 4.00% interest rate with a $191 per month payments but the loan terms has been extended to 20 years. This would be the last debt that I have to pay because, by far, this has the lowest interest rates among the three.
JennyHow
July 2nd, 2007 at 9:31 pm
wow, you got 6 credit cards? i think you should stop maybe 3 else you’d be tempted to spend on them.
kuanhoong
July 2nd, 2007 at 10:15 pm
I do agree sometimes having too many credit cards can be a burden. If one is not careful, it can leads to overspending.
Nice to know that you and your wife travel every time during your wedding anniversary.
KRG
July 2nd, 2007 at 11:00 pm
Jenny and Kuanhoong, both of you are right. But I have also learned my lesson to limit the use my credit cards. So far, the sole purpose of keeping them is to maintain a good history of continuous payments to get a good fico score. thanks for your inputs!
Manila Mom
July 5th, 2007 at 10:49 pm
I’ll be coming back again and again to learn more from your site. Thanks for sharing such helpful insights.
KRG
July 5th, 2007 at 11:10 pm
Manila Mom, thanks for visiting my blog!
Frank Bruno
August 1st, 2007 at 8:42 am
There are a few items I call “credit report killers” that your clients should be aware of that can adversly affect their credit report and credit scores.
There really isn’t too much room here to explain in detail but I have actually made a video about the top 10 credit report killers. This video was made form the .pdf version which I wrote.
In this video I answer the most common questions I get about information that appears on credit reports.
Specifically I cover information on Charge-offs, Collection Accounts, Judgments, Inquiries, Bankruptcies, Delinquencies,and more…
In the video Your clients will learn what each of these items are and how they can affect their credit report, as well as how long each item can remain on your credit report.
The video is very informative and is solid content for your readers and clients.
The Video is Free to Watch Here
The .pdf version you can download here Free
Boost Your Credit Scores Fast! Click Here
Sincerely
Credit Expert Frank Bruno