For the longest time I haven’t cared about my credit. This is stupid, a very stupid mistake, that I have made. Not that my credit is irreparable, it’s simply bad. What happened was simple. I moved out on my own as soon as possible, at 18 years old. I had no practical experience handling my own finances, and didn’t know how to save money. Worse yet, I didn’t know how to keep up on bills. So, I defaulted to just not paying anything. As you can imagine, this became bad really quickly. I became very far in debt, and I am still digging myself out of that a little at a time.
But it’s time to get serious.
Here I am nearly 10 years older, a wife, 2 kids, and dreams of owning my own home one day. Initially I had hoped to pay for that home with cash. And if I wanted to wait another 10 years to buy a house, I probably could. Thing is, I don’t want to wait. Neither does my wife. Nor my children.
So over the course of the next year I’m getting extremely serious about paying off all of my debts, including both my wife and I’s student loans, totaling approximately $78,000 on their own. Can we pay them all off in a year? No. But we can get the rest of our debts paid off, and get current on student loans, and hopefully improve our credit scores to the level that we can get a mortgage, thus saving ourselves even more money per month which we can devote towards our student loans.
It’s time to start focusing on the future.
This year we’re set to receive approximately $8,500 in tax returns. A large portion of this will be used to completely pay down my wife’s credit card, as well as my own, which we will then strategically use to transfer past due debts to current debts. The trick is to not transfer too much at once, and pay it off quickly. This way we can improve our credit by maintaining a good standing with our credit card company, while at the same time removing previous debts from our history. It’s my assumption that we can not only pay off all of our past due debts within the next year, but by doing so this way we can begin down the path towards credit score recovery.
Another part of the process is going to be growing my investments. As you’ve seen from my previous pasts, my portfolio is not that large. I plan to use this tax return to increase my holdings ten-fold, all with my dividend investing plans for 3 months to profit. The plan for my stock portfolio at this point is to develop it into the down payment for our mortgage. Allowing the dividends to work for us, and collect gradually while we improve our credit, so once our credit is to the level that we can potentially get the approval, we’ll have the down payment ready to go.
Obviously this is the start down a path which I have not yet completed. I bring it here so you can see how I do, and see if this strategy works for me, or maybe even if it doesn’t, it might work for you. I’m not an expert–if I was, I wouldn’t be so far in debt–I just have been forced to teach myself ground-up the financial world, and enjoy spreading my self-learned lessons when I can.
If you have any suggestions on how to quickly pay off past due debts without incurring even worse results, leave them in the comments.