As a freshman in college I made the egregious mistake of getting a credit card. “0% APR for a full year!” the envelope said. I ripped that bad boy open and started swiping my card like it was Christmas. Needless to say I was ill-equipped to handle a credit card at the tender age of 18.
I made a few other mistakes over the next couple years and before I knew it I had more debt than I could pay and at the age of 21, I had to file bankruptcy.
Because my credit was shot for the next few years I knew I had to learn how to navigate the treacherous waters of finance without the benefit of good credit. To my surprise there were many tools that helped me along the way and thanks to these tools, I was able to live a great life despite having bad credit.
Now understand that in order to utilize these tools effectively you’re going to have to change some habits, make some sacrifices, and exercise a good amount of discipline. But making these changes will help you in the long run…especially when your credit is back where it’s supposed to be.
Traditional banks these days nickle and dime the shit out of you with fees you’re unaware of. To make matters worse they have a tendency to change the order of your transactions to put you in the negative so they can charge you overdraft fees. They’ll wait until your balance is low enough, then they’ll put a transaction through that exceeds your balance to throw you in the negative….and don’t kid yourselves guys, this happens all the time.
Prepaid cards are a great way to eliminate the games that banks play with their customers. Prepaid cards never allow you to spend more than you have in that account and as a result, your spending is more controlled and you never have overdraft fees. Yes, there are reloading fees and what not but at least you’re aware of everything that goes in and comes out.
This isn’t to say that you should close your bank account and go 100% prepaid. Having a traditional bank account does have its advantages. But keeping all of your money in one account is unwise whether you have bad credit or not and prepaid cards allow you to “diversify” so to speak and avoid keeping all of your eggs in one basket.
Buy a safe
Another measure men should take regardless of their credit situation is keeping a small safe at your place. This keeps your money out of banks and your prepaid cards and gives you access to it at any time for any reason with no hoops to jump through.
Personally, I keep 20% of my money in my main checking account, another 20% in savings, 10% on prepaid cards (I recommend American Express Serve due to their low to non existent fees) and the remaining 50% on my person or in my safe. The percentages swing a few points here and there depending on the situation and time of the month but they generally stay about the same.
Plus, a safe gives you and only you access to your hard earned cash. No banks, no other financial institutions, nobody else but you. Your balance only changes when you decide it does.
Buy a car in cash
Because you have less than perfect or even bad credit, you’re not going to be able to walk onto a traditional car lot and finance a vehicle. Of course the other alternative is the go to a buy here pay here lot but your interest rate will be sky high.
So high, in fact, you’ll end up paying almost 50% more. For example if you financed a $7500 vehicle at a 20% interest rate (and that’s on the low end at buy here pay here lots) over a 48 month period, you’ll end up paying almost $11,000. Not to mention the car won’t be worth shit after 4 years.
Thing is, BHPH lots they require huge down payments because of their high risk customers. Take that $2500-$3000 down payment and buy a car outright. You’ll own the car free and clear and you’ll save money on insurance as it will be much lower due to the fact that you own the vehicle.
If you don’t have enough to buy a car in cash you’ll have to use the BHPH lot as a last resort. But once you’ve paid off the car DO NOT FINANCE ANOTHER VEHICLE! There’s no need to lock yourself into 4 more years of car payments after ridding yourself of one when you have a perfectly good running car.
People fuck up their credit getting into these lengthy contracts with phone companies because they just have to have that hot new iPhone. So not only are they paying an exorbitant amount for their plans and features, they’re also making payments on their phones which shoots that bill up even further.
Exercise some self discipline and forgo the latest greatest phones, buy a phone for a little less, and get on a prepaid plan. I own a Windows phone I paid $30 for because it was refurbished and pay $60/mo for unlimited everything, including high speed data.
Rent from a private owner
If you apply at any apartment complex, they’re going to run your credit which means you’re not getting in. Same with homes managed by real estate companies. The alternative is to rent from a private owner.
Renting a home from a private owner has many advantages. Not the least of which is that it’s almost always less expensive. Most of the time a 2 bedroom house rents for less than a one bedroom apartment at an upscale apartment complex. Best of all, few private owners require a credit check.
This will save you time and money while giving you the ability to live in a house rather than an apartment where you sacrifice a measure of privacy anyway.
In the end…
…having good credit isn’t necessary to live a great life these days. The truth is, most people don’t have good credit so the market had to adjust in order to serve the majority which are people with not so perfect credit.
As a result there are more options for persons with bad credit than there are for good credit. The trick is to exercise good judgement and temperance to take full advantage of all that’s available to you if you’re credit is cringe worthy.