Recently, I emailed my readers and asked them the following question,

“I want to hear from you about the number one story or event that made the most dramatic impact on your life financially. What was it that you’re so thankful to have experienced?”

I got some amazing and uplifting stories and felt that I had to share them here.   Each of the readers have given me their permission to share their story. Here’s Lacey’s story….

About 3 years ago, I lost my car. It was not stolen although that is what I told several people due to embarrassment. Nope, it was repossessed.

I was about 3 months behind on my car payment but I usually fall behind trying to cover rent, groceries, daycare, etc as a divorced mom so it was no big deal to me. Well, it probably would not have been if the company I owed was not AIG who, come to find out, was in dire need of cash as the economy started to visibly tank in 2008.

Crashing Around Me

My world crashed because, up until this time, I depended on my car heavily. What was I to do without a car?! With a car loan still on my credit report showing “Unpaid” and “Delinquent”, no car dealership wanted to give me another car, no buy-here pay-here could offer me what may have been a decent interest rate, and I had zero money saved to buy a car outright much less come up with a good down payment. I was screwed! Emergency fund? I’d never heard of such a thing. I was trying to keep my head above water so where was this excess cash to store away for a rainy day going to come from?? That was 3 years ago…

The Change

That situation changed my life financially because I had to lean and depend on the awesome public transportation system of my city (Chicago) which I honestly was not taking advantage of.

First, I bought a monthly pass to ride the bus and train which was far cheaper than my car payment even before I added insurance and maintenance costs. Work? 5 mins from my apartment is a Metra station that takes me directly to and from work and, amazingly enough, everyone takes public transportation in some fashion to get around the city so I was not alone!

Second, I had to deal with the embarrassment and ask myself why what others thought of my car-less situation bothered me. Why did owning a car seem to signify something that it did not? It took some time and 3 yrs later I still get the shocking reaction when I tell certain people I do not and have not owned a car in 3 yrs but I’m clear on my main goal and that is financial stability – not freedom just yet.

After my car was repossessed, I reorganized my finances, cut what costs I could and/or downgraded others to the bare minimum, if possible. My $350 monthly payment which would have gone to my car was instead used to pay down other bills I had fallen behind on and start my very first emergency fund.

Checkpoints of Success

Today, I have a $12k emergency fund, I am contributing to my sad (thanks economy) but existent Roth 401k, I am putting myself through graduate school (with the help of my company’s tuition reimbursement program), and I now spend on things I know are “needs” instead of allowing others to determine that for me.

There truly is humiliation in financial despair but, looking back, if I had never lost my car, I’d still be in this downward spiral of financial destruction instead of experiencing the stability I now have. I am still car-less in Chicago with 2 kids but mom can pay the bills on time, keep more than enough food on the table, provide for all of our needs, and still put some away into savings – mom is doing awesome!

How about you? What’s your success story?

When I was 18 I was on top of the world. I had a good paying job at the mall, a checking account that was almost $500, and I felt that nothing could stop me.

After getting my first paycheck it was time to get what I deserved. I bought some cool clothes. I bought some creatine at the local GNC to fuel my desire to “get buff”. And I bought a bunch of other crap that I convinced myself I needed (but obviously didn’t).

I was a young man in control. That is until “it” happened.

The “it” was me not balancing my checkbook which in then turn led to me bouncing a check. Now bouncing a check is not a financial disaster. But in my case it wasn’t one check. It was three.

Bouncing three checks when you are 18 years old felt like a financial disaster.

If you are like so many other people today, you either missed the signs that you were headed for financial disaster (I obviously did), or you were unable to stop yourself from hurdling through it. Unfortunately, a lot of people have found themselves in this situation, and are in need of some much looked for advice as to how to dig themselves out and get back on their feet.

How Did We Get Here?

Financial disasters can happen for a number of reasons, including big events like deaths in the family, not being properly insured when someone needs emergency medical care or an uninsured or under-insured home when a natural disaster hits. There are plenty of people as well that are not prepared to handle any financial stressors because they live paycheck-to-paycheck, don’t have anything saved up, and have other debts that are in their history that they can’t keep up with by paying the minimal payments.

Digging Out Into the Light

No matter what happened to get you here, it will take some careful planning and probably a substantial amount of time to get you back out and on your feet again. The first thing you should do is assess the situation so you know exactly what happened and you can try avoiding the same thing in the future. Also, it is time to accept it. Even though it is uncomfortable and no one likes being here, it is where you are at, and if you don’t accept it, you won’t ever be able to move on.

You next need to look at where you are currently and ask yourself some questions. After realizing that I had bounced those three checks, I remember sitting in my room wondering how in the heck I let this happen. You need to take into account how much money you make, how much money you owe, how much do you spend, and things like what is your credit score and if there are any long-term implications to your financial situation like health issues or I.R.S. liens.

Where You Going?

Once you have assessed where you are at, you can then figure out what your goal is at the end of all of this. You need a clear and specific goal, like planning on making a certain amount of money more each month or year. It must be a measurable and attainable goal so you can keep track of it, and so it is something that you can actually achieve. Don’t be unrealistic so that in the end you are no better off than you were to begin with and you have left yourself with another failure to deal with.

If you need, getting the advice of someone who has gone through this before or a knowledge financial planner may be in order. Make sure you take whatever steps you need to plan out your personal financial goals and to be successful so that you can get your finances back on track. Sometimes this means taking on an extra job to make up the difference and to pay things off, but it is well worth it in the end to have yourself free from the debt and back out of the crisis.

Then, you can develop your plan so that you connect where you are at now to where you want to be. Make it so that it is successful, but rewarding for you as well. Then, take action! Nothing here will happen until you actually put your plan into motion and sometimes this is the hardest step to make.

photo credit: doug88888

My combats boots from Iraq

Boot Campaign is a grassroots fund-raising effort started by 5 friends from Texas, know as the boot girls. After reading the book, Lone Survivor by Marcus Luttrell, the women were inspired to do something more for injured soldiers who had served our country. They began selling combat style boots, donating 100% of the proceeds to charities that work to support wounded soldiers.

And that’s exactly how I heard about them – through Marcus.  Marcus had served in Afghanistan around the same time I was in Iraq, but I  didn’t know his story until just this year when I read his book,  Lone Survivor (sorry Marcus that I just learned your story).

What’s even more puzzling is that I was familiar with one of Marcus’ fallen buddies Lt. Michael Murphy.  I knew him as one of the Hero inspired Crossfit workouts named “Murph”.   Which, by the way, was the first Crossfit workout that I ever puked from.   Yes, it’s that bad.  Here’s a video of some Crossfitters putting themselves through it:

When I saw that Marcus was involved with the Boot Girls Campaign, I knew I needed to learn more.

The Purpose

The main purpose of Boot Campaign is really just to honor and support our troops. Through sales of combat style boots, Boot Campaign is able to fund existing charities that work to support injured American forces. The organization that are supported by Boot Campaign are: Lone Survivor Foundation, Wounded Wear, Not Alone, and Military Warriors Support Foundation.

The motto of Boot Campaign is

“When They Come Back, We Give Back”

essentially meaning when injured soldiers come home, we will support them.

The mission of Boot Campaign is to have one million people wearing “give back” boots. There are currently 1.3 million active duty military personal in the United States, either serving at home or overseas. Ultimately, the boot girls would like to see one civilian for every active duty military person wearing boots.

The Boot Girls

The five women, Ginger, Sherri, Heather, Leigh Ann, and Mariae, who started Boot Campaign were all working professionals who wanted to find a way to support our troops. With varied backgrounds and strengths, they each bring something unique to the organization. The women of the boot campaign get no financial gain from the project, in fact, some of them used their own money to get the campaign started.

Promotion

Back in 2009, the girls asked the performers from Country for Our Country to wear the “give back” combat boots instead of their traditional cowboy boots. It was such a success, boot sales took off. Production had to be increased with outside help. In just two short years, everyone from celebrities, Hollywood actors, UFC Wrestlers, news personalities, politicians, athletes, musicians, businessmen, and hero’s have been seen wearing “give back” boots.

Buying Boots

Sales of the “give back” boots are done through the shopping page of Boot Campaign website. Boots are available in styles ranging from a typical tan colored combat boot, to shorter black boots – supporting most branches of the armed forces. They come in both men’s, women’s, and even one child’s style. Prices range from $45 for the child’s boots, to $170 for adult steel-toed boots.

When you click on each boot, you will get a description of the boot, but more importantly, a message regarding how much from each boot sale will go to each partner charity.

Other Sales

The website also has a variety of other merchandise for sale, including hats, dog tags, tee shirts, shirt dresses, shoe laces, and more. While it doesn’t tell you on each item how much is donated per item, like with the boots, on the page showing which organizations Boot Campaign supports, it does state that sales of boots and merchandise support those groups.

Lone Survivor

Great book from a true American hero.

If you have any interest in our military, then Marcus’ book is a must read.   This book brought back so many emotions for me from serving overseas.  I read this book from front to back in less than 72 hours and highly recommend it to anyone willing to listen.   Check it out.  I promise you’ll want to thank me later.

People with bad credit have learned to live with a low FICO score: they’re denied most rewards credit cards and have to swallow lower credit limits and higher interest rates. Conditions have only worsened.

In the first quarter of 2010, interest rates for those with bad credit spiked from 15% to 25%. But while having poor credit has always meant accepting worse terms, there are some terms that should just never be ok.

Below are a selection of credit cards that everyone should avoid, no matter how bad their credit.

The Bad Guys

The First Premier cards: First Premier Bank gained notoriety with their 79.9% APR credit card, which was then replaced by a card with “only” 59.9% interest. The latest iterations of their sky-high interest rate cards are the Aventium and Centennial credit cards.

Despite having two names, they are effectively the same card. In the first year, the card has an interest rate of 49.9% – double the average for bad credit cards – and a low $300 credit limit. The card charges a $75 annual fee in the first year, which at 25% of the credit limit is the legal maximum allowed by the Credit CARD Act. After the first year, when the act’s protections end, the card’s annual fee is lowered to $45 a year but supplemented by a $6.50 monthly fee, adding up to $123 a year.

A host of other fees lie in wait for an unsuspecting cardholder: 3% cash advance and foreign transaction fees, which are industry standard but take effect only in the second year to avoid the federal fee cap; a $3.95 one-time online banking fee, which most banks actually encourage with lower fees or rewards bonuses; and every time the credit limit is increased, a charge of 25% of the increase.

Finally, in the fine print, the cards note: “Some of these setup and maintenance fees will be assessed before you begin using your card and reduce the amount of credit you initially have available. Based on your initial credit limit of $300, your initial minimum available credit will only be about $225.” What First Premier is telling you is that you’ll be paying $75 in fees for a $225 credit limit.

Net First Platinum: While the Aventium and Centennial offer only poor terms, the NetFirstPlatinum.com card could be construed as an outright scam. The card offers a $500 unsecured credit limit, no credit check and a 0% introductory APR, and it “reports to a major bureau.”

All marketing taglines meant to rope in unsuspecting victims.

A close reading, though, shows that the card’s available balance is applicable only at the Horizon Outlet, their affiliate website. The card doesn’t report to any of the credit bureaus that actually matter, so using the Net First Platinum won’t raise your credit score. Buried deep in the disclosures is this admission: “Nor does Horizon Card Services attempt, or claim to attempt, to establish, re-establish or repair any customer credit history.” The Internet Crime Complaint Center is filled with consumers who got roped in by the Net First Platinum scam.

Prepaid debit cards: Prepaid debit cards often claim to report to “major bureaus,” and tout themselves as a responsible way to avoid overspending or stick to a budget. However, none of the major credit rating agencies will factor a debit card into credit score calculations, making the first claim irrelevant.

As far as promoting good financial behavior, a regular checking account will accomplish the same goal without all the miscellaneous fees. While free checking accounts are becoming harder to find, even those that charge monthly fees won’t charge the additional ATM, reloading, transaction, and other fees that accompany a typical prepaid debit card. A major selling point of prepaid cards is that they require no credit check, but again, neither do regular debit and ATM cards.

The Good(ish) Guys

Secured credit cards: A secured credit card requires an upfront deposit equal to the credit limit, but is far more accessible than a regular, unsecured card. Because (theoretically) anyone can qualify, it often falls under the pre-approved credit card category. There’s no income requirement, and both Orchard Bank and Capital One will consider applicants immediately after bankruptcy. In fact, Orchard Bank will approve anyone who can post collateral.

Orchard Bank: Orchard Bank, a subsidiary of HSBC, caters to those with bad or no credit who might otherwise have difficulty qualifying. Their Orchard Bank MasterCard is about the easiest card to qualify for, and requires an income of only $12,000. However, it has a high annual fee: combined with processing fees, it works out to $68 the first year and $59 thereafter.

Credit unions: While getting an unsecured card might be difficult all around, credit unions tend to offer lower interest rates and fees than traditional for-profit banks. And many will extend credit cards to members with lower than average credit scores. The Spectrum Federal Credit Union, for example, offers the Visa Creditbuilder to help establish or rehabilitate credit.

This is a guest post from Jake at NerdWallet.com. If you’re looking for a good balance transfer card, be sure to check out them out. I think that NerdWallet is one of the best sites for recommending the best credit card offers for your needs.

Welcome to another field exercise edition of Soldier of Finance. Today I’m going to be demonstrating how to properly probe your credit report for possible land mines.

When I was in basic training we had to do many, many different tasks, and I have already showed you how to do a proper military low crawl. While that was definitely one of the most annoying tasks we had to do, probing for land mines was equally annoying, but it was just as vital as all the other tasks we had to do. When we were trained as infantry soldiers everywhere that we went we were on our boots or on our feet. That was our main mode of transportation, and a lot of the different scenarios that we would run were if we were doing land movements out in the wilderness and then all the sudden we came across a mine field.

Mine Field Options: You Better Not Cry

When you come across a mine field in real life scenarios you have one of three different options. The first option is cry. Obviously, that wasn’t really allowed in basic training and definitely not going to be allowed if you are on a real mission so we don’t even need to address that one. The second option you can do is trace your foot steps back, meaning that if you find yourself in the middle of a mine field you can look back to see where you have stepped in and just basically trace your steps back out.

That is one option, but what happens if you have to go forward? If your mission is to lend support to some other operation and you have no choice but to go through, then the last option is to probe your area for a mine field. Now if you’re on feet it’s not as a big a deal, but if you’ve got a convoy of tanks or Humvees or other types of trucks behind you, you’ve got to probe a large area to make sure there is enough room for those vehicles to get through.

Probing For Mines Sucks

Probing for a land mine is a very tedious process, takes a long time, and there are proper techniques on how to do it. One of the things we learned in basic training is you do not want to probe directly on top of it. That’s why when you approach a land mine field they strongly suggest first you use your hands to smooth out and feel the surface to make sure there are no land mines. Then you can either get down on two knees or in a prone position where you are flush on your belly. Once you’ve declared an area safe you can start probing.

In basic training we had bayonets and those are the big long knives- think of Rambo knives- that we would mount on the end of our M16s. Today I am using my Gerber that has a nice knife and that allows just enough cushion to where you just start probing into the ground, softly but sternly, trying to detect a possible land mine. Once you feel that ding, that could be a rock. Hopefully that is a rock and not a land mine. If you do find a land mine, then that is when you would mark it with some type of marker and that’s when EOD (bomb control) would come in or the engineers and remove that land mine safely and securely.

When I was in basic training and we were probing for land mines, I recall being out on that range for almost an entire day constantly just probing and probing and probing; our drill sergeants just enforcing it.

Probing For Mines In Your Credit Report

When it comes to looking for land mines in your credit report, you have to take just as much time to carefully analyze your report. If you’ve never printed off your report, I am going to show you how to do it on the blog so please take a look, but when you actually go and print off your report it is a very, very big and long document. I just printed mine off; it’s roughly over 30 pages filled with my credit history since the day that I first got credit. I can’t tell you how imperative it is to go through this, scour through it, just like you would if you were in a land mine field, looking for possible errors that are affecting your credit score. In this day and age it is so important to make sure that your credit history is accurate because when you go to apply for loans, whether that be a home mortgage, a car loan, a personal loan, all these type things are greatly affected by your credit score, and if you have a bad credit score because of some silly error in your credit report then you could pay and exorbitant amount more interest because of that.

What Type of Errors Are You Looking For?

So what kind of things should you be looking for?

One of the most harmful things on your credit report is having some type of duplicate error.

What that means is maybe you were late on paying a bill where you had something that went to collection. If you didn’t pay it and you just let it sit, it could be possible that collection agency sold it to another collection agency so now you have two reports on your credit report for the exact same thing. That is detrimental to your credit report and your credit score.

Other items you might look for would be other delinquencies on other payments. Maybe you were late on a credit card payment, maybe a car payment, any type of payments you were late on; those are the type of errors you want to look for.

Other errors could be the misspelling of your name, an old address, an old job that shows you being employed there. These are the little things that you can look at just to make sure that things are on the up and up. I know when I first requested my credit report, this was right around college time. I was curious and intrigued and decided to look and see what my credit report said. What I ended up finding was I had an old gym membership from when I used to live out of state, and it was showing as if I was delinquent. I didn’t even live in the state there, hadn’t been to that gym in almost three or four years, but it was still showing on my credit report. I was able to rectify that, sent a letter, got it fix, got it taken care of. Now it is off my credit report, and now I have a good credit score. Had I never probed my credit report to find that land mine, then I never would have known any different, and they would have hurt my credit score going forward.

If you are looking for more information to get your free credit report, head over to the soldieroffinance.com blog and look under the resources tab. There I have a wealth of information that talks about getting your free credit report and also your credit score. Very, very good information, be sure to check it out.

Today I want to share a quick story.  I met with some folks that were telling me a story about their daughter.  Their daughter had received her paycheck directly deposited into her checking account.  Two days later, for whatever reason, the payroll company took the paycheck back out of her checking account, and she was totally unaware of this.

This happened right before Christmas, and the daughter proceeded to write several checks paying for things, paying for bills, etc.  Next thing she knows she gets a phone call from the bank stating, “You have some overdraft charges.  We have some bounced checks coming.”  In a frantic, the daughter races to the bank to find out what the heck is going on because she knew that she got paid and that was in there.

A Minor Glitch

As I mentioned, turns out that for whatever reason there was some glitch where the payroll company from her employer deposited the money and then two days later pulled it back out and there was no notification from them or her bank or whatever.  My clients were telling me this story about it and how the daughter was in such disarray and how angry she was and how she has to jump through hoops because of what the payroll company did to her and all these overdraft charges.  She has to collect her bank statements and all this.

Pointing Fingers

I kept hearing this casting of the blame towards the payroll company and also the bank for not notifying the daughter.  Where I agree that there is some blame to be passed that they didn’t notify her, the only thing that I could keep thinking about was why didn’t they have enough in there as an emergency fund, as a just-in-case?  If they would have had more than just a paycheck that was just recently deposited to pay their bills, she would have been more than covered, but the fact that they were living paycheck to paycheck they didn’t have the right amount of emergency fund.  They didn’t have any emergency fund obviously since they were bouncing checks.  That is all I could keep thinking about.

With hearing this story all I could keep thinking was,

“Why are you passing blame on?”

Are you going to blame them for overdraft charges when if you would have the discipline that a soldier of finance does to have an adequate savings account just in case for these type emergencies, there never would’ve been an issue.

If you are casting the blame on certain items like that, take a step back, look at yourself and say, “Am I really financially sound?  Do I need to take a second look and get my savings in order?”  Most likely, I am going to say the answer is yes.  If you want to prove me wrong then go out and do it. 

Today I am going to be talking about the skeletons in your closet. When I first signed up to join the Army National Guard, I first had to go to MEPS. MEPS was the Military Entrance Processing Station. This is where I went to take my oath, to swear in, and to also go through medical screening and provide all of my background on who I was as a person.

photo credit: adotmanda

If you had any skeletons in your closet at this point, this is where it all came open. If you were trying to hide anything, if there was anything that you didn’t want your recruiter to know about, something you had done in the past; guess what, they were going to find it.

When it came to the medical screening, I remember standing in a room with 20-30 other guys, standing there in our underwear, having these Army doctors look us up and down. Then, we had to go in the separate room, and that is where we really got probed. If we had any skeletons that we were trying to hide, this is where there was no more hiding. This is where it was out in the open, and they saw you for who you are.

Embracing Your Skeletons

When it comes to becoming a soldier of finance, if you have skeletons in your closet, this is where it has to stop. This is where you have to swallow and accept the fact that you’ve made some poor financial decision in your life. If you have a lot of student loan debt, if you have been racking up credit cards like you’re going out of style, if you have no savings and nothing saved for retirement, it’s time to stop being in denial and putting these skeletons in a closet and try to hide it.

You have to embrace it.

You have to accept it.

These skeletons, these poor decisions that you have made, they shouldn’t be a hindrance. They now need to be a motivation to move you to the next point to get you where you need to be financially.

Stop Hiding

If you have skeletons in your closet, stop hiding them. Accept it. It is time to move on. I know it is going to be tough road. When you look back at some of these decisions that you’ve made; trust me, I have made some pretty, pretty bad decisions in my life, but it is accepting it. It’s realizing that, yes, you did wrong, and that you can do better, that you can improve. If you have skeletons in your closet, it is time to open that closet up, look at them, embrace them, and then it’s time to move on.

Whenever I was in basic training, each recruit, each private was assigned their own roster number.  That roster number was our identifier.  We had to put it on all our gear.  I had to have it strapped across a tape on my Kevlar, which is our helmet.  It dictated as far as when we would eat chow and what order we would fall in.  It also would designate when we would draw our weapon from the arms room when we had to go to the different ranges.  Our roster number was our second name.  First name was Private, and the second name was our roster number.  Every time you heard your roster number yelled by a drill sergeant or a captain, you always knew either you were called to do something, or you got caught doing something you shouldn’t have been doing.

When it comes to your financial life, your roster number is your credit score.  A lot of people don’t realize how important and how vital your credit score is when it comes to your financial life.  Let me give you a few examples.  If you have a very weak or poor credit score and you go to apply for a home loan, you may be assessed a higher interest rate than you would had you had a better credit score.  Sometimes depending on how bad and how low your credit score is, it could be a half percent, a quarter percent, and if it is really bad it could be almost a full percent, just depending on how bad your credit score really is.

You do have ways to improve your roster number or your credit score in your financial life.  See, in basic training, my roster number was it.  There was no getting to the front of the line.  It was all dictated by last name and what not.  With your credit score, you can improve it, whether that is paying down debt, consolidating your debt, getting certain things off your credit report that shouldn’t be on there because you have already taken care of it.

Those are different ways that you can improve your credit score and give you a better roster number for your financial life.  Come back to the blog and more Youtube videos as I address other ways to improve your credit score or your roster number to show you how you can succeed financially.

Photo license: Attribution

Today, I am going to be talking about checkpoints. Whenever we were running our operations in Iraq, we always had to call into our command center to let them know whenever we crossed various checkpoints. The idea behind that was so when we were out away from base, if we called into our TOC (Tactical Operation Center), we would let them know, “Hey, we’ve just crossed checkpoint 1-4.” They could look on the map and know, “Okay, here’s where 2-2 Alpha team is at.” That was our call sign. That way whenever we had multiple operations going out, they could always keep track of where we were just in case we had to support another mission, another team that was out. It was very imperative that we always acknowledged to our command center where we were at so that they were always abreast of what was going on.

When it comes to your own financial life, when you cross various checkpoints you want to be able to record that and keep track of that. By hitting these various checkpoints, these are pivotal points in your life that you need to have documented, not only to have a record of it, but also to have momentum going forward.

What kind of checkpoints would I be talking about?

Well, let’s say that one of the checkpoints you have is paying off one of your credit cards or paying off one of your student loans or having a savings account set up for your kids college tuition or a kid’s braces fund, just as an example. By hitting these check points and having that acknowledgment, it is one of those checks off your to do list, your accomplishments list, that now you can have a record of, but also have that satisfaction of knowing,

“Yes, we’ve finally crossed that checkpoint.”

That is why it is so pivotal to have these checkpoints.

Whenever you are in the soldier-of-finance process, whenever you are accomplishing these feats, you’re going to have tons of checkpoints that you’re going to accomplish. There is a bunch of these that you are going to be crossing off and be able to celebrate and be able to enjoy, and that is a good thing. You want to have a lot of checkpoints because you want to have a lot of these successes that you can enjoy in and bask in and just be,

“Awesome! Yes, we’ve done this! Now to move on to the next checkpoint.”

Whenever you begin the process, remember that you are going to have these checkpoints. You need to assign these checkpoints and know what these things are that you are trying to accomplish and to be able to cross them off the list and to celebrate it. Checkpoints are a good thing. Have lots of them. Whenever you actually cross one, check it off, celebrate it, enjoy it, and move on.

Hey, this is Jeff Rose from SoldierOfFinance.com, where I am teaching people to enlist, take charge, and succeed in their lives financially. Today I am going to be talking about a topic that we will be talking a lot about here at the blog and here on the YouTube channel. Today we are talking about Debt, and today that comes with a Capital D. Today’s title is

“‘I Don’t Have That Much Debt.’ ‘Really?’”

Notice the “Really.” That is the key part here.

This is a meeting I had a little while ago. I was meeting with a couple who was planning for retirement. They had about 5 or 10 years out to retirement, so it was good that they were coming in earlier rather than later. A lot of people don’t come in until sometimes it is too late. They still had a good 10 years left, so I was very impressed that they took the time out of their busy days to actually sit down with a financial planner, to help them map out their retirement goals.

The Meeting Begins

I started meeting with them and started asking the usual questions. Along the way the topic of debt came up, “What are your liabilities?” And, they both responded with,

“Oh, we don’t have that much debt. Our house is paid off. We don’t have that many consumer loans.”

I thought, “Wow! This is really impressive.”

Here we have a couple who is 10 years out from retirement, and their house is already paid off. That is pretty incredible folks to hear that. Especially with me being a financial planner, it is really exciting to hear that these people already had their house paid off and to also hear that there is very minimal debt. We looked at their savings, and they could probably have done a little better job on the savings side, but I am hearing “house paid off” and “not much consumer debt or credit card debt“. I was thinking, “Nice! This is great!”

The Truth Begins to Comes Out

I asked them how much debt to you have?” They responded with. “Oh, we have 2 car loans, a total of about $15,000.” I was like. “Well, ok, that is debt. Is there any other credit card debt?” “Oh yeah, we have some credit card debt.” I go into, “How much is that?” They both didn’t know. I was like, “Ok.” So that really surprised me.

We left the meeting, and I wanted them to report back with the amount of debt they had, the amount of interest that they were paying on their debt, just so they could both actually see it in person so we all knew what we were working with. It was about a week or so later that I got an email.

The email I opened just floored me. As you recall, they told me that they didn’t have that much debt. What we ended up finding out was not only did they have the $15,000 loans on the vehicles, they also had a camper that was just under $10,000, and over and above that they had over $25,000 of credit card debt – $25,000!!!

We have this couple who comes to me and makes this bold claim that they don’t have that much debt. Really?!?!

You only have $50,000 of consumer debt!

The worst part was that they had some department store cards that they were paying closer to 18% to 19%; I want to say one card was even in the 20% range. It was like they were just kidding themselves, telling themselves that they didn’t have much debt. When they actually had to do some digging and start looking, really kind of looking at themselves, they saw, “Wow maybe we have kind of let this go.”

I think it was a really good eye opener. It was for me because it once again makes me think how many people out there are disillusioned with the thought that, “Oh, we don’t have that much debt.”

Having Debt is Not the Standard

I go back to my younger days when I was in college and talking about student loans with a lot of soon to be graduates. I would always hear students saying, “Oh, I only have $15,000 in debt.” “I only have $10,000 in debt.” “I only have $30,000 in debt in student loans.” Only $10,000! Only $20,000! It is not just only. That is a lot of debt! If you can avoid it at all costs, do it. If it takes working an extra job, if it takes applying for scholarships, if it takes applying for assistantships, do whatever you can because debt will just consume you. I started down that path, and luckily I saw the light of day and was able to rectify that situation. Do not be one of those who just assumes that debt is ok and more importantly that you just assume that oh you don’t have that much debt and you don’t take the time to truly realize how much debt you really have.

So ask yourself, “You don’t have that much debt. Really?” This is Jeff Rose, SoldierOfFinance.com.

These opinions are for general information only and are not intended to provide specific advice for any individual. To determine what may be appropriate for you, consult your financial professional prior to investing.