Debt-Free Forever (25 page)

If you question an item on the file, the credit bureau will investigate on your behalf to verify the status of the entry. If an error is found, the credit bureau will fix it and send copies of the updated file to credit grantors upon request.

The longer you exhibit good credit behaviour by paying your bills on time and managing your credit wisely, the more your credit rating will improve, until you once again achieve a favourable credit rating. And if you’ve got a good rating that’s been marred by inaccurate reporting, it’s your job to fix it. It’s your credit, after all.

While I hate debt and I think carrying a load of it around is like walking around with a sack of poop over your shoulders, I have nothing against credit cards. Credit cards aren’t evil. In fact, I love my credit card for a whole bunch of reasons:

1.
Since I pay off my credit card religiously, and I have a no-fee card, there is no cost to using my card no matter how many transactions I do.

2.
Using a credit card for all my transactions saves me having to walk around with gobs of cash. Lose a card and it can be replaced at no cost. Lose cash and you’re very sad.

3.
My credit card statements show a clear picture of what has gone where so I can look back and do an analysis of my spending.

4.
Every penny I spend on my credit card earns me points that I routinely convert into groceries or other items (like my new barbeque), saving me a not insignificant amount of money.

5.
My credit card also offers purchase protection, so if the item I buy is lost or stolen within a specific period—usually 90 days—the card will replace the item. This came in mighty handy one year when I lost my cell phone while I was on a book tour. Others offer travel insurance of all kinds that can save you big bucks on everything from travel medical coverage, to collision coverage on a rental car, to trip interruption or cancellation coverage. And then there are all the free flights you can accumulate just by signing up for the right card.

GAIL’S TIPS

6.
Travelling with a credit card beats the bejesus out of pulling money out of foreign ATMs and racking up huge fees. I travel with a couple of hundred in cash and then use my credit card for absolutely everything I can.

7.
Using a credit card and paying it off in full every month is one of the best ways to build a great credit rating.

Credit cards aren’t for everyone. According to the Stats Man, the country’s outstanding credit card balance has more than tripled, to almost $40 billion, in the last 10 years. So while credit cards can be a terrific tool for the people who have the discipline to use them to advantage, there are a lot of folks out there who have fallen into debt traps using credit cards.

For a long time Canadians have been racking up debt at a wicked clip. Spurred on by easy access to credit and a desire to at least appear successful, people have spent thousands of dollars they have yet to earn. If you’re reading this book, you are likely one of these people.

But there is a new movement afoot, a movement to get out of debt and stay out of debt. If you are determined to be part of the Debt-Free Forever success story, you need only make that goal a priority and then take action. Whenever you need a reminder of the path to follow, come back to this book and these eight steps for a refresher.

This may take an hour or 12, but having a written plan means you are way more likely to get to where you want to be. Use what you learned in Chapter 2 to figure out where you are.

If you pay $100 off your line of credit and then go out and spend $75 on another credit card, you’re playing a game you will eventually lose. Put away all the credit. It’s time to start living on what you make.

In Chapter 5 you learned to list what you owe by interest rate with the most expensive (the highest rate) at the top of the list. And you learned to calculate the minimum payment on each debt—what you
have
to pay to keep current and not bruise your credit history. Then you figured out how much to repay to get out of the hole. Now it comes time to put your money where your mouth is.

You already know it’s going to cost you $300 a month in minimum payments to keep your credit history in tact. But if you want to get that credit card paid off in six months, you’re going to have to slap much more against that sucker to make it go away. It is at this point that you prove how serious you are about becoming debt-free.

Some people seem to think that because some debt is “good” debt, it’s okay to keep it hanging around forever. Which brings us to your student loan, if you have one. Decide you want to be done with that debt in five years or less and decide where you’re going to get the money: if you want to be debt-free, you have to find the money to pay off the debt. It may mean going over your budget with a paring knife. It may mean finding a way to make more money. You’ll do whatever it takes.

Set up an auto pay for each debt you’re working to pay off, taking the guesswork out of it and making a firm commitment to the process. Initially you’ll pay the minimum required on all the debt. On your most expensive debt, you’ll auto pay the amount you came up with to have the debt gone by the date you established when you set your goal.

Create a chart that shows how much you owe and your progress to Debt-Free Forever. You can use boxes. You can use a thermometer graphic. Whatever works for you. Each time your auto pay goes through, colour in one of your boxes or move your marker up the thermometer so you can see the progress you’re making. This visual representation of your success will pay huge dividends in terms of keeping you motivated.

Once you’re out of debt, promise yourself you’ll never do that again! Reward yourself for your hard work. Take whatever you’ve been using for debt repayment and, just once, splurge on something you really, really want.

Your final step, having become debt-free and done your little self-indulgent splurge, is to reallocate the money you’ve been using for debt repayment. Use one-third to boost your emergency and/or long-term savings. Use one-third to work toward a goal
: taking a trip, buying a car, redoing the kitchen. This is going to be your Planned Spending money from here on in. As for the rest, incorporate it back into your budget so you have some wiggle room.

E
veryone has regrets, right? There’s all that debt you’ve run up on your credit cards. There’s the effort you
did not
put in to finish the paper, get the project completed on time, get a promotion. And there’s the laundry, the dusting, the thank-you notes you haven’t got around to just yet. So you beat yourself up. You say you should have. You feel rotten. ‘Course, you probably don’t do things any differently the next time, giving you plenty more fodder for Mother Regret to stand over you and berate you: you fool, you simpleton, you dummy!

Here’s a Gail Bulletin: You’re wasting your energy if you’re spending time visiting with Mother Regret! Get over yourself and get on with your life.

But, Gail, all those stupid things I’ve done … shouldn’t I feel like a dope?

Sure you should. If you’ve done dopey things, then you’re justified in calling yourself a dope. But wasting good energy
wallowing in regret is counterproductive. After all, the things you are regretting are things past. You can’t do a thing about them. So beating yourself up over your mistakes over and over and over brings you no closer to where you want to be. (Feeling like a dope, on the other hand, will hopefully keep you from making the same mistake again.)

Made some mistakes? Who hasn’t? And why do you think yours are worse than anyone else’s? As Warren Buffet says, “All saints have a past; all sinners have a future.”

The first thing you have to do is stop beating yourself up. Lamenting the mistakes we’ve made doesn’t help us to see ourselves as successful, which is a part of becoming successful. So instead of focusing on all the debt you’ve created, set your eyes on the payments you are making to whittle that debt away.

While you can’t do anything about the mistakes you’ve made, you can learn from them. If you couldn’t resist making purchases because your credit card was sitting cozily in your wallet, then accept that you have no self-control and leave the credit card at home.

Making a list of your regrets, with notes on strategies not to repeat those mistakes, can be a great way to shut Mother Regret up! Grab a pad and pencil and jot down the things for which you’re kicking yourself in the pants. Now take all the new things you’re going to do differently and transfer them to your Strategies for Success List. Burn the Regrets List. Use the Strategies for Success List to help you set some goals for the future.

Many people regret the things in their lives that they never did. My mother always said, “It isn’t the things we do in life that bring the most regret, it’s the things we never did. So do it all.” I took her advice and regret very little. There are things that hurt, things that I wish had come out differently, but I don’t regret them. They were lessons from which I learned and grew.

If you have things you wish you had done, it’s time to make the Mother of All To-Do Lists so you don’t end up with Mother Regret whispering your failings, your chicken-heartedness, your procrastination in your ear. Write them down and then get busy doing them. It isn’t too late; not until you’re dead!

As you move forward, stay focused on today. Looking too far into the future can be intimidating. Looking over your shoulder at where you’ve been is just navel gazing. Be in the present. What are you going to do today, and keep doing every today, to make the life you want?

This may mean swapping some bad habits you’ve had for some better ones. If you’ve habitually used the bank machine as a wallet, racking up wicked bank charges every month, then today you will start planning how you spend your money. This month you will go to the bank machine only once a week, or twice a month, whatever works for you. And you’ll only carry as much money as you plan to spend, so you can’t use it all up on a whim. Addicted to eating out? Today you’ll make lunch. Addicted to shopping? Start using a shopping list and only buying what’s on the list.

Today’s the day to wipe clean the slate and begin the rest of your life. Will you allow Mother Regret to make you miserable? Or will you take control of the rest of your life and do only those things that keep you in the zone—the place you want to be?

At the crux of most financial problems is an unwillingness to accept personal responsibility for the actions we’ve taken. Your life is your own creation. If you feel like a victim, you have made it so. So if you’re in debt from all the shopping you did a while ago and can’t afford to even buy a new pair of shoes for your kid, you first have to accept that YOU did this.

I keep saying that I believe you can have anything you want in life if you’re willing to do what it takes to create it. If your
life is full of crap, you first must accept that you had a part in creating it. Skip the blaming. Pass on the justification. Refusing to accept responsibility robs you of your power.

Once you’ve accepted that you had some small part in the creation of your reality, you can get busy taking action. Sure, you’re going to be scared. You cannot allow the fear to stop you. Fear is a remnant of old conditioning that is a barrier to you being all you can be. Treat the fear as a signal that tells you to be well prepared and take action.

Success comes from action. Don’t shy away from doing the hard work. Embrace it. Be committed to it.
Do it!
Through it all, you must learn to trust yourself. Through your experiences, you have developed skills, strengths, and intuition. Use them. Seek the counsel of experts when needed, but rely on yourself to make the final call. Become self-reliant. The ability to trust yourself is one of the greatest gifts you’ll ever give yourself.

Change is never easy. Sometimes it’s lonely. Often it hurts. And there’s nothing wrong with grabbing a cup of tea and a friend and having a good cry. But don’t stay there. Pick up, brush off, and get moving. You can experience joy by choosing to focus on joy.

You can have anything you want. I believe that. The question is this: how badly do you want it?