the goals we carry in our wallets

Posted on August 28th, 2009

“As long as we have hope, we have direction, the energy to move and the map to move by, we have a hundred alternatives, a thousand paths and an infinity of dreams.” – author unknown

This is the quote that welcomed me into the online “Pre-Discharge Bankruptcy Class” called Money In Motion. I scoffed at first. Because it was 6PM on a Sunday and I really, really did not want to take a 2-hour online course that would just remind me of how much a failure I am financially. So, yes, I scoffed. At first.

Then I realized that that quote is just another way of saying what I’ve been saying all along… happiness has nothing to do with the circumstances. I have hope. Like our President. I hope. But hope alone doesn’t inspire change. It must be backed up by action. This pre-discharge bankruptcy class is one action.

Here I am facing my computer on a Sunday evening because something clearly needs to change. This online course isn’t a reflection or a reminder of my failure. It’s feedback. It’s acknowledgment that I need a little help to change. A change in thinking. New tools.

So I make the choice to dive in and read everything in this 2-hour online course. I won’t skim. I’ll really read it and even take notes. Because I’m here for a reason, after all.

The first thing this Money In Motion course addresses is GOALS. Goals are the basis for any budget, it tells me. Your goals should be flexible and specific. It asks me to write down three goals on an index card. One short term, one mid term and one long term goal.

My pen hovers over the index card.

I write “My Goals” at the top.

Then think. Hmmmm…. why is this so hard?

For an entire year I have been training myself to NOT want anything, that’s why. I’ve been training myself to avoid magazines, zappos.com, stores of any kind. I’ve been re-conditioning myself to be able to walk into a store and walk out feeling BETTER about having NOT bought something than having spent money just to spend money. I’ve been learning how to be creative and “shop my closet” as a way to find new outfits and combinations of clothes I’ve never tried before. New clothes without spending a dime. Trading. Selling and buying used. Wanting less. Wanting nothing except what I have and being grateful. Satisfied. And I am.

Thankfully. Gratefully.

So this is hard. I’m finding it hard to write something on the card. Something that doesn’t feel completely arbitrary or simply “pie-in-the-sky.” But Money In Motion (MIM) is telling me to. Is saying: GOALS ARE THE BASIS FOR ANY BUDGET. They must be specific & flexible. Okay, so they can change. Fine.

Okay, a new pair running shoes. I actually do need those. Mine are old and worn through and given my propensity towards injuries, running on old shoes is a very bad idea. So that one’s easy.

Next one has to be between $500 and $2000. Harder. Even when we do earn money, we don’t want to just spend it on things. But experiences. The goal: acquire experiences, not things. Remember? Right. So… well, why not? A vacation. A romantic vacation. A fabulous vacation. I can commit to that goal. At the present the only vacation we have on the books is a one night camping trip to Lake Geneva, WI where we were married 6 years ago. We haven’t been back since. So… I write it down. A fabulous vacation with Bob.

Third goal. More than $5,000. Well, since our goal is to spend nothing acquiring furniture for the house on the island I’m not going to write down furniture. What else? Savings. That counts, right? Why not go large. $10,000 in savings. The idea of saving is much sexier to me now than a new car or even a new wardrobe. So savings it is.

MIM suggests I carry my goal card in my wallet where I can see it each time I go to spend money on something. And I haven’t done that yet. Why? I don’t know. Perhaps I’m still relating to it as “pie in the sky.” Or perhaps I’m avoiding something. That’s more likely. Avoiding being limited? Perhaps.

So, guess what. I’m doing it now. Right now. Putting the goal card in my wallet. Done. It’s now there. My reminder. A little gift from MIM.

I have a challenge for you.

Grab an index card and write down 3 goals. 0-$500, $500-$2,000 and over $5,000. What are yours? I think we can learn from each other. Once you’ve written your goals, take a picture, upload it & post the link in the comment section. Or… just write them out in the comments if you don’t want to go thru the whole taking the pic and uploading it business.

Either way you can join in. I just want to know, what goals would you carry in your wallet?

Filed under bankruptcy, goals, hope, money management | No Comments »

New Credit Scoring Model May Help Some Borrowers’ Credit Scores

Posted on August 28th, 2009

FICO, formerly Fair, Isaac, & Co. and creators of the ubiquitous credit scoring system, has just released a new credit scoring model, FICO 08. Under the new system, borrowers are less likely to be penalized for one-time delinquencies than in the past. Minor collections (original balances less than $100) and one-time late payments two or more years old will no longer lower your credit scores.

Many borrowers see their credit scores hammered for a collection from a forgotten parking ticket or an uncharacteristic late payment on a credit card. The newest version of the FICO credit scoring model, which is available at all three credit bureaus (Experian, Equifax, and TransUnion), should help those who pose a low credit risk.

“There’s more flexibility with missing a payment,” said Careen Foster, director of global scoring management for FICO. “If you have a more habitual pattern of paying accounts late… you are more likely to get penalized for that.”

However, those consumers whose credit usage is high could see their credit scores drop. Many people who are near or at their credit limits, even though they may pay their bills on time, may see decreases in the credit score. Approaching your credit limit has negatively impacted your credit score with all FICO models, but with FICO 08 the impact may be greater.

FICO 08 will also deal with a practice called piggybacking, which was an attempt to misrepresent your credit history and increase your credit scores. With piggybacking, a person would pay someone who has good credit to allow them to become an authorized user on their credit accounts. By doing this, the other person’s good credit would be taken into consideration in determining the credit score, thus falsely increasing their credit score. FICO 08 will determine which people are authorized users by deceptive means, but allow legitimate authorized users to be treated as they always have.

Even though FICO 08 has bee available since July, not all lenders are using the new model. Many lenders are already validating the scoring model within their own systems and some banks, credit unions, and credit card companies have begun using the new model. However, since Fannie Mae & Freddie Mac have not yet authorized use of the new model, many mortgage lenders are not yet using it. Fannie Mae & Freddie Mac are expected to approve the new model by the end of 2009.

Taking Care of Your Credit

Regardless of the scoring model used by the lenders, it is up to you to proactively take care of your credit. See my article from August 2006 about “Understanding Credit Scoring & Credit Repair” which gives tips to help maximize your credit scores and minimize the cost of your credit.

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