Part III

So, when I finished the last installment I had acquired the tools for starting to climb out of the mess:

1. A working checking account,

2. A working savings account,

3. Agreements with all but one creditor, and

4. A cheering section of friends (both online and in real life) and my sweetie.

I was ready to start digging. First, I called the student loan company. I had been smart enough to consolidate the loans, and had put them into forbearance for a year, and they were about to come out of forbearance. Since you can put the loans into forbearance for up to 60 months, I decided to do so for another year. Yes, the interest would be accruing, but it would be a major load off my mind since I had other creditors that needed to be paid and fairly limited funds to do so.

I then made it my business to keep my word with all the creditors I had made arrangements with. I gained a good reputation with them – so much so that, when one account got sold to another agency, and they tried to dun me for the entire amount, the first agency not only provided me with the records I needed to fight them, but also told me what steps to take to do so!

Since I had opened the accounts with the credit union during the summer, it was easy to save a bit of money. I had had some surgery at the beginning of the summer, so I was not going much of anywhere. Staying home enabled me to put a bit extra toward my bill payments, and to save up enough money so that when the fall term began I only had to borrow about half of what I normally would have (the city holds back our first paycheck of the new term).

Further, once the new term started, I was able to switch to Direct Deposit for my paychecks. This means fewer trips to the credit union, which is good since I have to go about an hour out of my way to get there.

In fact, I managed to save enough to take advantage of a wonderful offer! A friend had turned me on to Suze Orman’s book, Women and Money, and using the code in that book I opened a money market account at TD Ameritrade. The deal they were offering was that, if you commit to putting $50 a month into this account, after you make the first twelve payments TD Ameritrade will add $100 as a reward. It’s not a lot, but it is a start toward a retirement fund.

Once I paid back the money I had borrowed for the period between the beginning of the term and the receipt of my first paycheck, I also opened a CD at ING Direct, with the goal that when it matures I can use the proceeds to cover the shortfall between the first day of this year’s new term and my paycheck’s arrival.

So, here I am, with my major problems cleared up, a little credit card debt to pay off (about $600), one creditor which is waiting for me to be able to pay it (which I will), a ton of personal debts to be paid off once the credit card debt is gone, my student loans to attack after that, a future to build, and a school aide’s salary on which to accomplish all of this.

I don’t know about you but, having come this far, I am looking forward to the challenge!

Part II

So, how did Dee and I begin to clean up the mess we were in?

Well, it was hard…add to the financial issues the stresses of a long-distance relationship, and several apartments we were supposed to be getting falling through, and you have a recipe for depression and inertia.

The first thing we each did was start making payment arrangements with our various creditors. Then we set up support networks. See, one thing that inspired us was a friend who decided that he was going to clean up his finances and post about it in his blog. Although his situation was nowhere near as dire as ours, we were in his support network, and it inspired us to get more aggressive about cleaning up our stuff.

We timed it right, too. As we were making our plans, the government passed a law that allowed everyone to pull their credit reports once per year without paying for them. This gave us each a chance to see who would be hitting us for what and, also, a chance to correct information that was incorrect.

Now, paying things off was costing me money, because I was stuck using money orders. Several years prior to our efforts a so-called friend had bounced about $800 in checks on me, and could not pay me back. It took me a year to pay the bank back, and then they refused to reopen the account, although they had promised me they would. My next step, therefore, was to try to find a way to get a checking account. Since the bank had reported me to Chex Systems, I could not find a bank that would open an account for me. Fortunately for me, my ex was willing to help out by writing checks when I needed them, which cut down on the cost of money orders.

But I am nothing if not persistent. I kept looking on the Internet, and found a few places that offered lists of financial organizations that would help people who had been, as it were, branded by Chex Systems. Not only did I find a credit union whose only requirement for membership was that I either live or work in Brooklyn, but said credit union has a great bill-paying feature, where I only get charged if I don’t use it once a month! Now I could pay off bills without having to pay for the privilege!

After the collection agencies were paid off, I acquired a Visa card and a MasterCard for emergencies. I also acquired four store cards from stores I regularly shop at: Macy’s, Target, Avenue, and Sears. This was for specific purchases that would take less than a month but more than one paycheck to repay. (All four store cards currently have zero balances, by the way, and the MasterCard and Visa are being paid down as I write this.)

I pulled my credit reports for the second time last September. To my great delight, there were nine or more accounts in good standing on each of them (including the student loans), and four adverse items or less on each. Several of the adverse items were duplicates, which I was able to correct by calling the report issuers. The remainder of the adverse items should be gone by September 2009. That means that by October 2009 I should be able to start apartment hunting again! Also, once I get the two credit cards paid off, I can start repaying the various friends who have helped me along the way! You cannot imagine how I am looking forward to watching those debts disappear!

(To be continued)