• had more credit cards (we have none)
• had more balances on those credit cards (no cards = no balances)
• had any other consumer loans over the past recent years (we have none)
• had borrowed money more regularly

I completely understand how a FICO credit score works.  The lender needs to see some kind of track record showing how good you are paying back your loans.  Who wants to take a risk on an unknown quantity, right?  I guess what really sunk in for me was how completely obsessed society is with debt.  This credit score would have been higher had we swam with the sharks more often.  This in itself is almost a paradox.  Put more risk to your credit score by financing more purchases and it will go up assuming you pay them in full all the time.  However, if you put more spending on credit your actual risk of paying it back is higher.  So, by risking your credit score more it could go up…or down!  Sounds like gambling to me and that’s why I continue to strive to reach a FICO score of zero.

He filed for bankruptcy eight years ago and apparently has not learned any lessons from that ordeal.   Filing for bankruptcy is very similar to debt consolidation.  You are basically using your Get Out Jail Free card with little consequence or learning involved.  It’s like a grownup’s version of a “do over” from childhood.  With no pain involved what’s from stopping it from happening again?

On a more day-to-day note, he lives paycheck to paycheck.  Actually he does not quite make it to the next paycheck.  Once he told me how he writes himself a check for cash the day before payday.  He found an ATM that surprisingly allows funds to be withdrawn immediately after a deposit.  When money runs tight, he’ll withdraw the funds from this “deposit” to make ends meet before payday.   It gives him the much-needed cash infusion before he gets his paycheck.  Some of you might have heard another term for this act:  kiting checks.  It is classified as check fraud and playing the “float” between the time of the check being cashed and the deposit of the check itself is illegal.   In some instances, he did not make it in time and had to pay overdraft fees.  He was on the phone complaining with the bank so many times they almost knew him on a first-name basis.  If he just built up an emergency fund none of these cash shortages would have come into play.

Next,  I’ll discuss his car purchase fiasco.  He went to buy a minivan for around $20,000.  Unlike most car purchase stories, negotiating with the dealer does not even come into play here.  When he went to trade-in his old car, he learned that he was $5,000 in over his head on that one.  The dealer also somehow managed to tack on $8,000 more in an extended warranty, underbody rust protection and a bunch of other junk.  Bottom line:  he paid $33,000 for a $20,000 minivan.  This is quite remarkable.  Just on that deal alone he came out $13,000 more in the hole than needed.

If he woke up today and decided to fix his money problems where would he start?

• Make some big lifestyles changes quickly.  Sell both cars and pay cash for very cheap cars.  Or live with one car.  Driving a junker car is only temporary to get him back on the saddle.
• Cease to use credit cards – permanently.
• At each job change or pay raise, bank that money.  Do not change the lifestyle.
• Recognize that these changes today will make for a much happier tomorrow

I’ve oversimplified the remedy for his issues but the above items are great starting points for my friend to begin to enjoy that six-figure salary.

1. Called my bank and asked them for a lower rate on my car loan. I did not have to threaten them or be mean in any way. I merely told them I thought a lower rate was possible since rates had declined recently. It’s mentioned in detail on how I did it and how my brother and father did it as well right here (last paragraph on the page).
2. Called my cable company and said “I’m jumping ship and going to satellite dish. What can you do to keep my business?” Wham! $20/month off my bill for three months. That was pretty cool. $60 with 5 minutes of work. I’m still contemplating the switch to satellite.
3. My wife and I found a cordless phone at Target we liked the other day but noticed the last remaining one had an open box and was clearly a return. We have no problem buying a returned item as long as it’s in near-perfect condition. When we were about 10 feet from the checkout we lucked out and the manager of the store walked by. “Could you discount this since it’s an open box?” Wham! 20% off on the spot. Saved us twenty bucks. Luckily we did not cave in and send that money right back to the store for our five-year-old’s life desire for the moment.
4. For one summer season I paid someone to mow our lawn. Three of us were all using the same landscaper. Finally one of us had the brilliant idea to ask him for a discount since we were giving him a convenient set of customers all within 100 feet of each other. He discounted each of our bills 30% per month. All we had to do was ask.
5. I have a business checking account at a local bank (only because the Greatest Bank Ever does not offer business checking). Apparently I did not pay close attention to that business account recently and some checks bounced. Now, since my personal bank account has been at the Greatest Bank Ever for 12 years now I was pretty uneducated about current insufficient funds fees (or “bounced check fees” as they are called). After seeing multiple charges for $33 per bounced checks I about had a myocardial infarction. I then drove to speak with the branch manager. I calmly and politely explained to her that I had been banking there for over a year and was pleased with the employees and customer service. I then just asked “is there anything you can do about these $33 fees for insufficient funds?” She immediately replied “sure, we can get rid of those.” Wow, enough said. Perhaps the bank treats “business” customers on a different playing field than “consumer” accounts, but the end result made me pleased, needless to say.
6. Technically this one was from my brother, but the concepts are still the same. My brother had been planning to buy a new washer and dryer for his apartment and his roommate wanted to buy a new big TV and stereo system. They agreed to go to Best Buy together and see what kind of a deal they could get knowing they were going to be spending upwards of $2500. After they had tallied the total cost of all the items they politely just asked the salesman on the floor for a discount of $500 off the total price. Remarkably, he gave it to them.

As mentioned at the start of this article, you needn’t be a high-pressure, manipulative customer to get these kinds of deals. Use some common sense, a little research and then just ask.

Top 10 Reasons Why You Should Join USAA

1. I’ve been a member since 1993 and my parents have been members for a couple decades beyond that. When you call them for service on your accounts or policies their computer screen must have a big fat window on it that says “Mr. Hutter has been a member for over 14 years!” because they treat you like royalty. Most banks couldn’t care less even if you opened the account with your friend Rockefeller or Carnegie at the turn of the 20th century.
2. During years that their premiums collected exceeded their claims paid out, they send you a refund check. Yes, you read that correctly. Does your financial institution EVER EVER EVER send you money back saying, in essence, “we charged you more than we needed to last year. Here’s the difference.” Plus, the check comes around the holidays which is very convenient. I don’t have statistics but I bet I have received refund checks four of the past five years including 2005, the year of Katrina and Rita.
3. You can deposit checks from the comfort of your own home with USAA’s revolutionary Deposit@Home program. Basically, you need a scanner, a computer and an Internet connection. Scan the check, upload it to USAA and within 60 seconds the money is in your account. Pretty incredible for a bank, huh?
4. If Step 3 is too complicated for you, just mail your checks to them, free of charge, in the USAA-supplied postage-paid envelopes. Again, never leave the house to deposit checks. I recently opened a business checking account with a local bank (only because USAA does not offer business checking) and I asked the branch manager if her bank allowed me to mail the checks for deposit. She replied “sure, just send me an envelope addressed to me and I will deposit it for you.” Wow, thanks. Ever heard of USAA?
5. I can withdraw money from any ATM with no fees. Yes, again you read that correctly. They credit you 10 withdrawals from any ATM up to $2 per withdrawal. I have to laugh (and do) when I see my friends drive out of their way to use their bank’s ATM to save the $2. And spend that money in wasted gas driving out of their way.
6. Their consumer auto loans can’t be beaten. Great rates and top-notch customer service. Oh yeah, two years in a row and counting by J.D. Power and Associates for #1 highest in overall customer satisfaction among loan service providers. Source is here.
7. USAA received basically the highest aware a business can get from J.D. Power and Associates for overall customer service. Source is here.
8. USAA just recently received #1 customer service champs here from BusinessWeek. A new survey BusinessWeek just started and USAA gets #1 first try.
9. A plethora of praise from members (and even a laid-off USAA employee!) can be found here. Excerpt: “I am a former employee laid off a few years ago, and have to say here that all of the tough decisions made during that time were right on the money!!- There was so much duplication across the enterprise … that it would have been irresponsible to the members to not tighten up the ship.” If a polar opposite phrase exists for the words disgruntled ex-employee then that guy is it!
10. I willingly tell the phrase “don’t put all of your eggs in one basket” to go jump in a creek when it comes to USAA. I have researched the competitors and I have five bank accounts with them (two for the household and a savings account for each child), two life insurance policies, homeowner’s insurance, auto insurance, a personal floater policy for my wife’s wedding ring, and a partridge in a pear tree.

If you are active-duty military or have parents that are USAA members I cannot urge you strongly enough to join this stellar organization.