Category: Debt (Page 2 of 3)

I Got Charged $600 for 15 Minutes of Medical Care

12373154_10201256124200756_7495594986045159217_nYes. You read that right. I got charged $600 for 15 minutes of medical care! Something is very wrong with the medical system in America. Can you imagine the total bill if I would have stayed in the hospital for a day?

How did I end up with this bill?

The date was October 3, 2015. It was the date I thought I was going to die. I was doing a dance routine (yes, I dance too, sometimes) at the University of Hawaii and then, the accident happened. I collided with another dancer who, by the way, is way bigger than I am, and of course, I was thrown off to the ground and I hit my head on the floor.  I could not imagine how that went, and I don’t know how I managed to finish my routine with a smile. I guess, the show must go on? Continue reading

Money and You

Summer piggy bank with sunglasses on the beach***I want to share with you the essay that I wrote for my English Composition class. We were given the freedom to choose our own topic, so, naturally, I chose personal finance– a topic close to my heart.***

Imagine yourself having cocktails and an early dinner in a restaurant somewhere in Torino, Italy while viewing the beautiful crimson sunset. Or lying on the grass with your special someone in front of the Eiffel Tower in Paris. Continue reading

Tips on Improving Your Credit Score

improve-credit-score1If Meghan Trainor is all about that bass, your budget pal is all about that credit score.

Let me tell you a story.

When I came to America thirteen years ago, I didn’t know anything about credit scores. One of the first thing that I noticed was that people had credit cards and I saw them using it at the mall and at the supermarket. They just swiped it and it seemed like they can buy anything with it. I wanted to have one.

So, after about three months of living in Hawaii, your budget pal here went to Sears and applied for a credit card. And guess what?

I got DENIED! 

My world was shattered.

Why did I get denied? Simple. I didn’t have a credit history and/or my credit score was low.

Just what is a credit score? A credit score represents how financially responsible an individual is. If you have GPA in school, credit score is the report card on how you handle your finances. It’s a measurement of trust if you ask me. Creditors (lenders) base their decision in lending you money on your credit score. The higher the better. If you have a high credit score, you are trustworthy in the creditor’s eyes. If you have low score, they would probably think that you are a high risk. The score ranges from 300-850. I probably had 301 back then.

And who are these boring guys that measure these credit scores? There are three bureaus actually. They are: Experian, Equifax, and Transunion. They are the ones who record and analyze your spending patterns and payment history. And in turn, they report how financially responsible you are to your creditors.

Anyways, let me tell you how I established mine.

Since I didn’t had a credit history at that time, my first stop was my credit union. I asked for their advice on how I can build my credit history and they offered me a secured credit card. It’s basically a prepaid card where I deposit $500 on the card and they give me a credit limit of $500. All I had to do was use the credit card, pay it off, and never to go beyond my credit limit.

Repeat and repeat and voila!! Credit history! My 301 probably climbed up to 401 or 501 after a few months. That was easy! The following were the things that I did to improve my credit score. Maybe you can try these too if you are trying to improve yours.

Tips on Improving Your Credit Score:

1.) Always pay your credit card ON TIME.

Cliche but this is of utmost importance. If you borrow money, pay it off on or before the due date. By doing this, you will have a stellar credit history. If the three bureaus recorded that you had late payments, that’ll be a red flag to your creditors that you are a high risk, but when they see that you pay on time, they would think that you are trustworthy and a responsible individual.

2.) Don’t Max Out Your Credit Limit

Having a credit limit of $1000 and you charging $1001 is BAD BAD BAD. I actually maxed out one of my credit cards before. Yikes!! But I have learned my lesson. According to the great Suze Orman, it is advisable to only spend 30% of your credit limit. For example, if you have a $1000 credit limit, it is advisable to only spend $300 of that.

3.) Check Your Credit Report And Score Regularly

Each of the three bureaus are mandated by the government to give one free credit report every year. That means that you can get one free credit report every 4 months. Go to Annual Credit Report to do so. Why do you need to check? Because there could be transactions in your name/account that you are not aware of. I’m sure you have heard about internet fraud, hackers, and identity theft. You have to be on top of your credit.

You also need to check your credit score regularly. I recommend you to check it at least every quarter. But doesn’t checking your credit score damage your credit? No. It doesn’t. You need to know your credit score so that you know where you’re at. How can you navigate a road if you don’t know where you are? You can check your free credit score at Credit Karma.

4.) Be Consistent With Your Responsible Use of Credit

In a relationship, whether it be your personal or work life, you need time and mutual trust to grow it. It is the same thing with your credit. If you are responsible with your finances over time, creditors will deem you trustworthy.

Having a good credit score is almost a necessity nowadays. Not only banks check your scores but also employers, utility companies, and others whom you may financially transact with. It has become the basis for good financial behavior.

And to close, there are invaluable benefits of having a good credit score. I am going to just enumerate a few. For one, you get low interest rates which could save you quite amount of money. You also have more negotiating power when you’re applying for loans. Another perk which I love love love is the ability to apply for cards with travel rewards. I love to travel. Check out my trips financed partly (or majorly) with travel rewards herehere, and here. And of course, on top of all these benefits, it feels awesome to have a good credit score.

Buying A Car? Read this.

thMy friend just bought a brand new truck a month ago. He bought a new one because his old car was having some mechanical problems. Of course, before he bought it, he asked me for advice.

My first question to him was, “Can you afford it? “

Like for everything else, we all should be asking ourselves this question before we buy, whether it’ll be a small purchase or a big one.

Buying a car is a SERIOUS business. Why? Because it’s a MAJOR purchase and it can REALLY affect your finances. Will you be able to afford a $400 payment, or whatever amount that is, every month for the next 5 to 6 years? Are the insurance and quarterly maintenance included in your budget? What if your car breaks? Do you have money for the repair costs? These are the same questions that I asked him.

USED vs. NEW???

A lot of financial advisers will tell you not to buy a brand new car because its value depreciates by around 20% the moment you drive it off the lot. I say otherwise. Blame it on my experience with a second hand car. If you can afford it, BUY BRAND NEW, especially if you’re a car ignoramus like me. Yes, the car loses its value the moment you drive it off the lot, BUT you will have the peace of mind that you are the first person to use the car. Aside from this, you also get the full warranty on the car which is usually 5-10 years. To me, paying the price of a brand new car is better than having to deal with the uncertainty (quite possibly hefty repairs and tons of headache) of a second hand car. Sure, car dealers have the “certified ones” with warranties but we all know how car salesmen operate.

So, my friend and I worked on the numbers and it turned out that he could actually afford to have a new truck. He just have to cut some of his spending so it wouldn’t be too tight on his wallet every month.

The key is, BUDGET BUDGET BUDGET. And it goes without saying, don’t buy something if you cannot afford it.

How I Got Out Of Debt (Part 2 of 2)

Amazon-DebtPayoffPlanner-Featured

Light Bulb Moment

I had my “financial awakening” moment circa fall of 2004 when I was watching a show on T.V. Some of you must have a better, more solid, life changing “financial awakening” but this was mine. I was just flipping through the channels and I came across the Suze Orman Show. It is a T.V. show that talks about finance and how to manage it. I was just drawn to Suze’s advice to the callers whose have had financial troubles. Her advice were very inspiring and honest. I could totally relate to the callers. It felt like… Suze was talking to me in person! This show changed my life.

I reflected on myself at that moment and really thought through about my life. How I feel about my life. What I want to do with it. I dug deep. The result? I felt unsecured. I felt lonely even when I had the things that made me happy. I felt powerless. Where is this coming from? Why? Because I didn’t have savings and I was drowning in credit card debt. It felt like I was in a prison. My debt was my prison. What would happen to me if something comes up? I had to do something.

The Details 

So, I made a plan. A plan to eliminate the entire debt . I used the following strategies to get out of debt.

1.) Leave Credit and Debit Cards at home

This really worked for me. This way, I was not tempted to use the cards because I don’t have them. I did not cut the plastic cards or freezed them or burned them. I just left them at home. As simple as that.

2.) Be a Cash Diva

I lived off of cash. Yes. I went back to the basics. The basics that my great grandmother and your great grandmother used way back…may they rest in peace. I used cash in all of my purchases with the exception of the bills that can be paid online. It felt like I was a caveman at first but to my surprise, it worked! The reasoning behind this is, you actually know how much cash you have left in your wallet versus using credit cards where you can’t keep track your spending instantly.

3.) Don’t Use Your Credit Cards… Until They’re PAID OFF

This is like the last nail to #1 to seal the deal. Whenever I got my paycheck, I paid way more than the minimum balance payment on my card. Whenever I got extra money, it went to my debt. I was in a “pay pay pay” mode. 

4.) Keep Thyself MOTIVATED

This is probably the most important out of all the four. I surrounded myself with whatever motivated me. I kept on watching Suze Orman’s shows every weekends. I’ve read finance books and blogs specifically tailored for getting out of debt. I made an Excel spreadsheet for my debt to keep track of how much more do I have to pay. I also surrounded myself with people that does not spend like it’s the end of the world tomorrow.

Getting rid of debt does not happen on a flick of a finger. It does not happen overnight. It may take weeks, months and even years depending on how much you owe and how motivated you are. It requires a lot of mental preparation. It requires sacrifices. It requires a budget. A system.

I got real. I got real with myself. I spent less than I earned. I realized that I am not defined by the material things that I have but by the depth of my character. I learned to appreciate the little things in life. I learned to discipline myself. I stopped impressing people.

Before I knew it, all of my credit card debt was gone! None. Nada. Zero balance. Wheeew! And it’s true as of today.

It is not impossible. It is not a rocket science. I believe that you can do it too. It’s just a matter of discipline, planning, willpower and motivation.

Are you ready to pay off your debt?

« Older posts Newer posts »

© 2022 Your Budget Pal

Theme by Anders NorenUp ↑