The “Come Out Better” Plan

I had two different childhoods: from birth to 9 and 9 to 18. I usually call it my riches-to-rags phase. My grandparents gave me what seemed like every little girl's dream for the first half of my life. In the second half, I was introduced to “living beyond your means.” The idea was easy to pick up on but unrealistic to maintain. It caused my understanding of money to be way off. All I knew was that if you didn’t pay, you could lose it.

Fast forward to adulthood, I learned the hard way. I maintained financial stability for myself and my children, but an injury caught me off guard. My savings had to take care of us. Short-term disability denied me. Worker’s comp took months to begin. Then I try to work again and must stop working… again. I was declared permanently disabled. Long story short, I screwed up my credit to survive. After I was able to get back on my feet, I began to tackle bills I allowed the debt collector to buy. I would pay as much as I could. After taking care of my daily life, any extra money I could spare went to that debt. I wanted to share the tips I learned in my credit-rebuilding process.

Disclaimer: these tips are from my journey. I am not a financial advisor. Please consult an actual financial adviser for advice. If you choose to use my advice, remember it’s your choice. What worked for me may not work for you.

Y Netta’s Tips:

Don’t Panic!

Many of us experience challenges in our lives. Those who live on a fixed income can’t afford to make any financial missteps. When it can’t be avoided, panic creeps in, and it is hard to recoup money on a fixed income unless you are employed. Before you begin to panic, honey, breathe. Use a calming app such as Calm to help calm those raw emotions and take a moment to think things through.

Develop a plan.

Your plan may include allowing a bill or two to slide. You’ll pay for it or on it next month. To survive, you must do what’s best for you. But before you make that decision, devise a plan to pay off your debt(s). Find a source of income to replenish your pockets.

Deposit Your Funds.

 Get into the habit of having all of your earnings (for the moment) deposited into an account. Once you get into the habit of depositing your money, set up autopay for your bills. If you know that $100 a month is due for your internet on the 3rd of each month, and you get paid on the 25th of each month, set up bill pay through your bank for the day you get paid or on your account through your service provider. That’s one less thing to worry about. Side note: if your pay date changes, remember to change your autopay date immediately.

When you have the money to spare, start paying folks back.

 I emphasize spare for a reason. There are levels to this “getting on your feet” thing. The first level is paying all your past due regular expenses first. Once those are tackled, level two begins. Level two is the stumbling phase. You pay off all of the past due bills but have new past dues coming. You may have it all or a portion of it. The stumbling comes in when you have to make a decision about which one is more important. One bill gets paid while the other is paid later. Once your accounts have been caught up, start taking care of those credit report debts. Grab your credit report, and see what’s accurate and inaccurate. Any inaccuracies should be reported to the credit bureau. The accurate ones should be written down from least to most significant.  And when you have it, pay it off or make a payment on the smallest debt you have. Once it’s paid off,  move forward to the next debt and pay it off.

Apply for a secured credit card.

Once you have your finances stabilized, you start feeling different. A different type of confidence emerges, and it feels good. Thanks to no more late fees, you have more money in your pocket. You have cash in your checking and savings accounts. You have paid off all or much of your debt; time for a credit card. Wait, huh? Yeah, I said it—time for a credit card. And not just any credit card; a secured one. Listen, having one credit card when you are financially ready can help you in an emergency. Look at it as a backup to your backup. Secured credit cards give you the chance to rebuild your credit and have a security net in the event something happens when your funds are low, or you can’t get cell service to make a funds transfer for gas. Only use the card when there is no other option. And make sure that you pay off your card balance. Only paying the bare minimum can hurt your credit score. Remember: the goal is to pay off debt, not pile it on.

Be encouraged.

 Having bad credit and living on a fixed income sucks. It’s almost like you have the worst luck and have to find creative ways of getting by with extremely limited resources. You try to stay encouraged, but money pressures outweigh you. Once you are given a hand up, you can breathe. Once you’re able to put your life back in order, you’re able to worry less. Even going through all of this, never forget to stay encouraged. Life happens to all of us. We may fall, but we can pick ourselves back up. We must learn not to add more pressure on ourselves than we can bear. We must know that it’s okay. We must normalize the fact that mistakes happen.

The facts are that even though mistakes happen, we can repair those mistakes and create new beginnings from those past indiscretions. We can’t expect everyone to start the same, but the goal is to cross the finish line to become debt free, however long it takes.

I’m sharing these tips because I want others like me to have some information on moving forward beyond lousy credit. Even with a fixed income, you can pull yourself out if you have a sustainable plan. I encourage everyone on their growth journey to do their best, and I applaud those who have made that journey already.