Our Debt Free Family

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We Are Officially Credit Card Debt Free!

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credit card debt free

COVID-19 definitely put a damper on our family’s debt freedom journey (at first). However, my husband has since gotten a new job and we encountered some windfalls that have allowed us to pick up some of the slack and refocus on our debt-free goals. Now, (insert trumpets) we are credit card debt free!

Being Credit Card Debt Free

Prior to this, we had about $2,000 in total credit card debt. We only had about $500 left to pay off though. So, once we got a windfall, we paid off the last account balance of $498.21, and just like that, we are free of credit cards once and for all.

Honestly, it feels pretty weird! I know it will take of lot of dedication to continue being credit card free. Now, we are one step closer to financial freedom and the ability to put that money towards other debts.

What’s Next

And that is exactly what we have planned next!

Because we no longer have credit card debt to pay off, we are going to refocus that money on paying off the tool loans, the car loan, and student loans. To do this, we are going to focus on them in this order…

  • Tool loans – roughly $10,000 owed
  • Car loan – $19,216 owed
  • Student loans – $24,185 owed

Once these things are severely paid down, we will focus on paying off tax debt and getting any other financial needs situated. Now, you’re thinking, how long will this take?

I’m hopeful it will take us between two and three years to be debt-free. The plan is to add some additional funding to our emergency savings over the summer and then attack our debt full-on. Every extra penny we have will go towards paying off each of these accounts (in that order). Any windfalls, such as cash gifts, bonuses, and over time will also go towards debt repayment.

Once we are debt-free, we will be looking to buy a home. Initially, that will be more debt, but because we are going to be financially free, it will be easy to swiftly pay the house off. Being credit card debt free has us both optimistic and thinking about our debt-free future! Readers, how did you feel after paying off all of your credit card debt? 

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What To Do If Debt Is Accrued By Identity Theft

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What To Do If Debt Is Accrued By Identity Theft

It is recommended you check your credit score at least once a year. However, those of us on debt freedom journies may check it more often. What happens when you look at your report and find something you don’t recognize? What if there is a debt on your report you didn’t authorize? Here’s what to do if debt is accrued by identity theft.

What To Do If Debt Is Accrued By Identity Theft

You’ve noticed something out of the ordinary on your credit report. First thing’s first, breathe. You will want to keep a level head and get all of the information on how to move forward clearly. Identity theft could cost countless dollars if not handled correctly, so you want to be sure to do it right.

File an identity theft report with the Federal Trade Commission (FTC). Next, you’ll want to place a minimum of a one-year (up to seven years) fraud alert on your credit report. This way, you’ll be alerted to any and all activity on your behalf.

Here is what you can expect when communicating with FTC officials about your identity theft. Take a look at the link and be sure to be prepared with the documents and information they need. When you talk to them, inquire about getting free credit reports. They can assist you with getting more than the guaranteed one-per-year.

Once you’ve reported the activity and moved forward with monitoring your credit, take the steps necessary to remove incorrect information. If needed, dispute the fraudulent accounts and request that creditors stop reporting them. To do this, send copies of proof of identity theft, which you will receive from the FTC.

If a debt collector is harassing you during this time, you also have the right to block them from contacting you (if all else fails).

Credit Monitoring Best Practices

Of course, you want to avoid identity theft altogether, if possible. It is a good idea to employ some credit monitoring best practices. For instance, services like Credit Karma and many credit card companies offer free credit monitoring. Many will also alert you if there has been a change. Sign up for alerts so you can be aware if there is anything abnormal taking place.

Additionally, it is always important to stay on top of what kind of scams are circulating at the time. Don’t fall victim to schemes aiming to destroy your credit and finances by being uneducated about them.

Lastly, if you do find anything out of the ordinary on your credit report, call the company right away and discuss what your next steps should be. The sooner you take action against identity theft, the better.

Readers, do you have any identity theft nightmare stories you’d like to share? Comment below! I’d love to feature you on the blog. 

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Why Does A Hard Credit Inquiry Affect Your Credit?

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If you are trying to better your credit score, most sources tell you to stay away from applying for new credit cards and loans. However, if you are building your credit from scratch or had no credit, you’ll need to apply for a line of credit.

The reason most advise against applying for new credit is that hard inquiries can actually hurt your score. But how and why does that happen?

What is a credit inquiry?

Before you find out how and why hard inquiries can impact your overall credit score, you should know what an inquiry is exactly. When you apply for any new line of credit, you give those lenders permission to acquire your credit report. Some companies may pull an inquiry about you without you asking, these will have no impact on your score. Your score only has the potential to be affected if you are asking for more credit. You can check your credit scores with CVS Ltd, or other similar services. 

Will your credit score change after applying for new credit?

Your credit score will go down a few points when you apply for a new line of credit. This is because your risk level goes up for lenders if you are actively looking for more available credit, especially if you apply for multiple sources of credit at one time. However, hard inquiries like auto loans, student loans or a mortgage will not impact your score much (if at all).

Lenders consider you to be a high risk if you apply to several lines of credit within a short period of time. For example, if you apply for five new credit cards in one week your score will likely lower due to the fact that you are seeking so many new lines of credit. A lender may see this and wonder why as well as wonder if you’ll be able to pay all your new inquiries back.

How much does a hard credit inquiry affect your credit score?

The impact on your individual credit score after applying for new credit will vary, depending on your own personal credit history. If you have very few accounts or a relatively short credit history, credit inquiries will have a more serious impact on your score.

Not all inquiries are treated the same either. For instance, if you are shopping around for a good mortgage rate, the inquiries will not impact your credit score while you are looking. It will count the inquiries made within the same time period as one inquiry instead of multiple (about 45 days time).

Improving Your Credit Score

credit inquiry

Knowing that making hard inquiries can have an impact on your credit score can make you want to avoid opening new credit lines. If you’d like to improve your credit a bit more before applying for new credit, here are a few things you can do:

  1. Make sure you pay your bills on time. Looking at the graphic above, you can see that payment history makes up more than a third of your credit score.
  2. Keep the balances low on your current credit cards. Available credit is a key contributing factor when it comes to your credit score makeup.
  3. Open new accounts responsibly. Don’t take credit you don’t need and be sure to always pay your bill on time.
  4. Check your report regularly. You can use an app like Credit Karma to check up on your score weekly and be sure everything looks the way it should as well as track your progress.

Building and improving your credit can be extremely difficult if you aren’t 100% sure how different factors impact your credit score. Avoid making multiple hard inquiries on your credit within a short time period and, of course, stay on top of your finances by regularly monitoring your score.

Photos: airpix and CafeCredit.com

What Kind of Interest Will You Have on a $60000 Loan?

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$60000 loan
Although the overall goal is to be debt free, sometimes you need to take out a loan or buy something on credit, especially when it comes to large purchases like a car or home. When looking at items that cost tens and hundreds of thousands of dollars pulling out a loan is often necessary.

A common loan amount for such purchases is $60000. With a substantial down payment you can pull out a $60000 loan to cover the rest of your mortgage or your could buy a fantastically beautiful sports car (though they seriously depreciate in value so I wouldn’t). But what are the details and the information you need to know about getting a $60000 loan?

What Kind of Credit Do You Need for a $60000 Loan?

Applying and getting approved for a $60000 loan is no small feat. Many people apply and get denied the first time they go to get a mortgage loan or loan this size. So, what kind of credit do you need for a $60000 loan and what other factors come into play?

Well, your credit does have to be decent to get a $60000 loan and not being paying tremendous interest rates. Your credit score will need to be marked in at least the “good” range to get approved for a loan this size. (Check out the credit score ranges.) In addition to having decent credit there are a number of other factors to take into consideration as well:

  1. How much money do you make?
  2. What type of bank are you applying with?
  3. What is your payment history?
  4. Have you ever taken out a large loan in the past?
  5. What are you using the loan for?

Interest Rates on a $60000 Loan

After you get approved for a $60000 loan you will want to review what kind of interest rate you’ll be paying before you accept the loan. Remember, just because you got approved doesn’t mean you have to accept the money. In fact, if you are given a better interest rate at one bank you can use it for leverage with another. Before making any decision though you should know what the average interest rate on a $60000 loan looks like.

Of course, people with a better credit score will get better interest rates. Your interest rate will also depend on what you are using your loan for. According to Bank Rate, the average interest rate on a 30-year fixed mortgage is 4.13 percent (3.33 percent on a 15-year fixed mortgage). If you’re looking for a business loan (a $60000 installment loan) you’ll likely be paying 5 to 9 percent interest. And if you’re pulling out a $60000 loan for a car you’ll pay 4.36 to 4.92 percent interest (based on your payment arrangement).

Monthly Payments on a $60000 Loan

So, given the average interest rates on a $60000 loan, what would your monthly payments be? Here’s what I found:

Using this mortgage calculator and the interest rates above your monthly payments on a $60000 mortgage loan would be between $290.96 (30-year fixed) and $423.94 (15-year fixed).

Bank Rate’s auto loan calculator helped me figure out the average monthly payments on a $60000 auto loan would be between $1078 (60 month)  and $1745 (36 month).

If you’re looking to get a business loan you’ll pay $1132.27 a month at 5 percent annual interest (for five years). At 9 percent interest, you’ll pay $1245.50 a month on a $60000 business loan.

You may also find the following articles helpful: 

No matter what your reason for getting a $60000 loan is you should always be sure that you have done research regarding interest rates. You should also have a plan to pay off the loan as quickly as possible.

Incidentially, if you’re wondering whether you can even pay of a loan like this, the answer is: yes.  Check out how runthemoney.com dumped his student loan debt.

Photo: Tax Credits