A Rebuilder’s Tale - A novel by Have1

A Rebuilder’s Tale A novel by Have1 TL;DR: I’m a verbose person who wants to pontificate to you about my worldview while providing data points which may (or may not) help you figure out how you are doing in your own rebuild. For extra pomposity, I have included Uncle Have1’s pointers for financial rectitude at the end. _______________ I started out at 17 (circa 1985) with a cosigned auto loan with my mother. If I recall correctly, it was for $1700 for 24 months. Three years later I obeyed Karl Malden and added an American Express Green card. I was an adult, now: I had American Express. I ran into trouble a year after that because it appears that the government has the option to pay you your paycheck when they get around to it. I was without pay (but working every day) for two months. When I realized what was happening I immediately called AMEX and they worked with me. I did not get any late fees but I have no idea what ended up on my credit reports (it was back in the stone age). Once the pay started flowing again everything was caught up immediately. I learned from that to always have a plan for when things go sideways. And call your creditors before things go late. If you are proactive you stand a better chance of avoiding the worst of the consequences for lates. Fast forward a couple of decades. I retired and started a business. I had pretty high utilization on one of my cards (USAA) but I was keeping up on my payments. Unfortunately, I was living on half of what I had before opening the business and was taking nothing out for the first year. Then $200 a week for the subsequent years. 60 hours a week for both myself and DW for $200. No, not each. I refinanced my mortgage to lower the monthly payment (The interest rate didn’t change by much but 15 years to 30 years lowered the payment). We shed all extras: Satellite TV, eating out, gifts, etc. Eventually I realized that the stress was going to kill me if I kept it up. There didn’t seem to be a way to get the business where it needed to be to hire more help and reduce our workload. I went to my lender and told them it was time to talk about how to land this thing with as little collateral damage as possible. I wound down the business over a few months making sure that all taxes were paid, all the small businesses that I relied on had been made as whole as I could and as many of my customers as I could reach had gotten their property back and their gift cards used. DW and I worked ourselves ragged making sure that all the inventory and equipment were in the most salable condition they could be. I worked with the auctioneer to make things go as smoothly as possible. In the end the sale grossed twice what they had estimated it would. I am so grateful for the support my customers and neighbors gave us. I know that a lot of things were over bid because they knew it would help us. But, that still left me with $200,000 left on my SBA personal guarantee. I did not have that kind of money. The bank knew that and the SBA knew that. But the process is the process. I talked to a lawyer about negotiating a settlement. After reviewing my finances and assets he informed me that I had enough money to negotiate a settlement. I wouldn’t have any money left over to actually pay the settlement, however. He then told me to get all my assets and obligations organized and fill out a bunch of schedules. He told me that when I got served with the papers that the bank was filing suit to come in and we would declare CH7 bankruptcy. In April ‘16 the process server arrived at my door. In May ‘16 Bankruptcy Were Declared TM . Included in bankruptcy were all personal guarantees plus my personal loans, lines and credit cards. Of my creditors the ones who actually suffered a loss were American Express and USAA. I was current on all payments at time of filing. I had paid off my CLOC with my local bank because it was below the $600 threshold and I wanted to preserve my relationship with them. I reaffirmed my mortgage with them as well. After filing I received a letter from Military Star telling me they were going to close my card because of the bankruptcy. I called them immediately and asked that they not do so. I told them that they had suffered no loss because I hadn’t owed them anything and that I was counting on the account to assist in my rebuild. The nice lady reactivated my account. This gave me a pristine 12 year old revolving credit line of $8,200 to rebuild from. I wish I had thought to call my bank when they closed my CLOC for the same reason. They did give me a new CLOC within a few months. With the Star Card ($8,200 cl/ ‘04) and the Mortgage (‘14) aging and in hand the rebuild began: October ‘16 A month after discharge I received and accepted a Capital One offer for a Platinum card with a $3,000 limit. 0% intro APR followed by 23.24%. No annual fee. March ‘17 I asked my bank to give me a CLOC to replace the one they closed. The branch manager only asked if the bank had suffered a loss from my BK7. I told him the story and he opened the CLOC for the same amount as the one that was closed. November ‘17 CapOne PC’d me to Quicksilver and bumped me to a $6,000 CL. I don’t think it was anything I asked for it just happened. March ‘18 I pulled my credit scores for the first time because I was going truck shopping. I’ll list that pull below. After that, I will list my EX8 for each entry since that is the score I have for the time frame. Experian scores: Auto 2: 701 8: 702 9: 745 Bankcard 2: 718 8: 699 9: 736 Mortgage 2: 720 3: 701 Score8: 682 Score9: 745. I then bought a used truck for $13,000 and got a $10,000/60 mo/8.49% loan from WF Dealer Services. It was my first auto loan since the mid ‘90s. May ‘18 Out of work and fighting for treatment. Falling down after standing for more than fifteen minutes is a sucky way to live. Living on 40% of what I had been making. Cut the truck payment to actual amount due from the +extra each month. Savings and selling stuff on eBay used to supplement pension. Cut back all extras. Soldier on. January ‘19 EX8: 688 One of my two Amex IIB cards evaporated from my credit reports. I do not know why. It was just gone. May ‘19 Surgery. Success. Start recovery. September ‘19 EX8: 697 Back to work. Time to rebuild savings. I applied for a Home Depot card to finance an insulation job. 0% APR intro. They gave me a $1,000 SL. I asked for an increase (the insulation was going to be $1,300) so they gave me $2,500 and a second hard pull in as many days on EQ. January ‘20 EX: 691 CapOne auto-increased my CL to $8,000. February ‘20 EX8: 691 I applied for a KwikFill charge card to get 5c a gallon discount on gas. Combined with the loyalty card that’s 8c a gallon. Net 30, reports as $500 CL on EX, no limit listed on TU and does not report at all to EQ. October ‘20 My USAA IIB credit card went poof from my credit reports. I, again, have no idea why. This leaves one IIB account, my remaining AMEX, on my reports. May ‘23 it will be history. December ‘20 EX8: 681 Wells Fargo had been offering me a 0% intro Cash Wise Visa credit card for a little while. I decided to take them up on it. They gave me a $7,000 credit line. This later (January ‘22) PC’d to Active Cash (2% CB everywhere!) at my request. August ‘21 EX8: 701 Paid off the Wells Fargo auto loan. September ‘21 EX8: 700 I decided I wanted some of the 5% CB action on my Amazon spend. I figured this was going to be a tough one because Chase. I used to have a Chase Card and Mortgage (long before the BK7) which had been spotless, but BK7 and Chase are not usually two things which go together. To my surprise, and delight, I got a $6,000 SL which was auto CLI’d to $8,000 in March ‘22. November ‘21 EX8: 700 TU98: 744 I joined NFCU in November ‘21 and opened checking and savings accounts. A week or so later I applied for an auto loan of $15,000/ 60 mos. on an $18,000 purchase. 3.99% TU 98 of 744 pulled. I think that’s a Fico 2 score. March ‘22 EX8: 701 EQ9: 726 Having had the NFCU auto loan for three months (four payments made) I applied for the More Rewards AmEx card. The three points per dollar spent on fuel and food fit my spend. I expected a $8,000, or so CL. They slapped me with a $25,000 CL @ 12.99%. 20,000 point SUB for spending $2,500 in the first ninety days. I pre-buy my heating fuels in May every year so that was simple to make. My plans going forward are to garden at least until after May ‘23 when my IIB AmEx should be off of all the bureaus. I’m curious to see how the loss of a 34 year old TL which is also derogatory will effect my scores. I still have until ‘26 for the BK7 to go away so I won’t be changing to a clean scorecard until then. I don’t really have any pressing credit needs, but I am starting to think I might want an HELOC to float a new roof and some home improvements. Credit scores in March ‘22 (Last ExtraCredit pull before I canceled): EX8: 701 EX9: 743 EQ8: 728 EQ9: 728 TU8: 698 TU9: 735 Lessons learned from this: Prioritize: Go through your weekly, monthly and annual spend. Identify the things that go first when the world kicks you hard in the sternum. Make peace with what has to go at each stage of your decent into insolvency while making the plan. First it’s just niceties and services and things you can replace later. Then it may be more valuable things and more essential services. Last is food and shelter. Have a plan. When the flag goes up execute it mercilessly. When you are on the other side of the crisis you will be much better off than if you let the spending continue until it can’t. Savings: Having an emergency fund is more important than having some cool service that you subscribe to or some neat thing you will play with for a few hours and then forget that you bought. Put that money in to your emergency fund. Sell what you don’t need when TSHTF: I turned a pile of useless (to me) crap into about $10,000 by selling it on eBay. Several hundred items from $10 (lots of those) to $500 (a few of these) in value. I did not buy it to resell it: I just had it or inherited it. I turned it into groceries and loan payments. Communicate: Talk to your lenders as soon as you know that you are not going to be able to meet your commitments but don’t jump the gun. Don’t promise things you can’t do and do do the things that you promise. Under buy: I could have bought a $50,000 truck and financed the bulk of it. Instead, I bought a truck that I knew I could make the payments on out of my pension. So if I lost my job I knew I wouldn’t also damage my credit. And, since I can afford way more payment than I have, I can afford to pay off the note in about half the time. Unless something goes bad: Then I have a payment I can still make. Pace yourself and be thoughtful: Don’t rush to get credit just to get credit. Get cards and loans that make sense for your spend and needs . Just because you can doesn’t mean you should. Think every application through. Decide if it really is something that you should do. Your scores will increase with time and good history. You can game it a little but make sure you don’t get over your head. Bank small: Small local banks and credit unions are easier to talk to, easier to work with and you can sometimes get surprisingly good credit products. One of my local small time banks has some really attractive looking Elan credit cards. I was very surprised at the features they opted for. If you made it to the end of this I have to thank you for your obvious masochism interest in the subject. Thank you. I am happy to answer questions and discuss disagreements with my pontifications.