July 26, 2007
MONEY TALK AHEAD. Come back at the next update if that bugs you.
I just got off of the phone with a credit card company (What’s in your wallet?), closing the first credit card that I received after my divorce with the ex.
When I came out of that divorce, my credit was in the tanker. Seriously, seriously bad. Although a lot of the financial mistakes in my first marriage were equally my fault, as they were the fault of my ex, my biggest mistake was trusting that he would do what he said he was going to do, finish networking school, get a well-paying job and get us out of the financial hole and mountain of debt that we had accrued in just the few short years we’d been together.
I resisted going back to work for the first 18 months of The Girlie’s life, because I really wanted to believe that the Ex would make it work so that I could stay home with her. He had the brains and the ability to do whatever he wanted, he just lacked the ambition and the confidence and as much as I loved him at the end of our marriage, this was just one of the several things that contributed to things ending for us.
So, when we got divorced, I was digging myself out of a hole. Our divorce was pretty amicable (scarily so) and our debts to our families were just about equal, so I was only responsible for supporting The Girlie and I and correcting those debts that were in both of our names. (The ones that I really had the most concern over.)
Thankfully, there weren’t many and I think I had them taken care of in the first year or two after our divorce, but my credit score is what suffered the most. I knew I needed to start rebuilding, but was very scared of any credit card or loan that I would get, as I knew the rates would be astronomical.
And sure enough, the first credit card I received after the divorce carried a 28% interest rate on a $250 limit. Likewise, when I got my Bug in 2004, the interest rate on the car loan was 22%.
The car loan was easier to get down, than the credit card. After a year of perfect payments on the car, I refinanced through a credit union and got the interest rate chopped in half. On our most recent car purchase, we’re now at an almost respectable 8%.
The credit card, however, was a different story. Since the limit was so low, I rarely used it and paid off what I charged immediately (having learned this lesson first, on the road to credit recovery). Within a year, I think they raised my limit to $500, but they would not budge on the interest rate.
So, I’ve been using it and carrying that limit for the past four years. There have still been some stumbling points along the way where I’ve relied too much on my credit cards, and so I’ve gotten the card up to the limit and not been able to pay it off immediately. For the most part, however, I’ve been able to pay off the balance, or at least keep the balance to the 30% mark (another lesson I’ve learned on the road to credit repair).
I have really been resisting doing anything with this card, simply because of practical reasons (I have built up four years of good credit history with this particular card) and sentimental (it’s so pretty with a castle scene on it and the fact that it’s the first card that I received after the divorce. The first card that was mine and helped me get back on my feeet); but lately, Jesse and I have been looking at our credit card situation and have been trying to decide what to do about it.
We still don’t carry a lot of credit card debt (compared to the national average of what? $8,000 per household in credit cards alone??), but our goal here is zero balances. And this card, while being the longest I have had, isn’t my only. Over the past four years, I’ve obtain three others, one with a marginally better interest rate, but the same limit (from the same company) and two with less than half of the interest rate of these two and three times the credit limit. It’s obvious that my credit is improving. (Jesse also had two of his one, one that we closed last month.)
So, we’ve been looking at the credit card situation, coupled with the impending possibility of my being unemployed within the next year, and sentiments aside, I decided that I need to close these two ridiculous cards. So, I decided to wait until the exact four year mark on each of them, pay off the balances and close them both.
For the first, it was this month. Last night, I paid off the $142 bucks that was on it and this morning, despite the fact that the payment hasn’t shown on their end yet, I went ahead and called to close it.
I had originally told Jesse: “If they offer me anything to keep it, I think I just may have to.”
Jesse: “Well, okay, but don’t…. ”
ME: “Okay, how about if they match my Other Credit Card in interest rate and limit? If I set that expectation then I will definitely have to close it, because they won’t be able to do that.”
Jesse: “That sounds like a plan.”
And sure enough. I called this morning, was actually serenely calm and patient with the automated phone tree that eventually led me to “To cancel your account, press 4″, which led me to a human being who was, of course, so sorry to hear that I wanted to close my account and wanted to know if there was anything they could do.
I was honest with her and told her, “I don’t expect that you’d be able to do this, but I have had this card for four years, have probably made one or two late payments at the most, pay off the balance every other month, at least, and haven’t seen a drop in the interest rate or an increase in the balance in that time. Again, I know your hands are likely tied at this point, I would love to keep this card, but the only way I can see doing that is if you’re able to match my rates on my other card, dropping the interest rate to 10% and at least tripling the limit.”
She was understanding and nice, but said the best she could do was to cut the interest rate in half. She didn’t even touch the limit issue. So, I told her, unfortunately, I would have to go ahead and close the card.
I expect this same scenario to be repeated next month, when I hit the four year mark on the second card I have In My Wallet with this company.
And while it obviously feels great to be continuing this journey of credit repair and taking financially responsible steps, it also just makes me a little nostalgic. It’s only been four years since things with the ex were finally over and three and a half since Jesse and I got together. Things have changed SO much in that time, and I am just amazed by that.
I never realized that it could take such a short time to repair serious damage to your credit score (I think there is a 2-300 point difference between then and now) and like many things in life, how easy it can be to just commit to change and the differences can be amazing.