Money Musings 💭 that fateful day at Bloomingdale’s 💳
My first job in NYC was near the flagship Bloomingdale’s. It was probably the biggest department store I’d ever been in – it’s 9 stories high! The first time I went in and bought some clothes I was offered a store credit card that would save me 20% on my purchase.
20% off probably meant $50 in savings, and I felt like such an adult getting my very own credit card. Little did I know what I was getting myself into.
I went back to work and forgot all about it. Although I made a login to see my credit card statements, I rarely checked it. I thought I signed up for alerts and linked my credit card to my account, but I must have done it wrong.
I remember getting the feeling I should check in and see what was happening with my credit card and when I finally logged in, I saw WAY too much red. I had missed payments and was over 30 days late on one. I had also incurred a bunch of late fees and interest.
I thought that there had to have been a mistake. I remember sitting on the phone with the customer service representative, having her walk me through how to set this all up, and asking her to explain to me what I had done wrong. I felt so embarrassed and was also mad that I had wasted so much money. At the time, I didn’t even know this would be a blemish on my credit for the next seven years.
I had no idea how credit cards worked, yet it was so easy for me to open one up. When it comes to our debt, we’re not set up for success and we have so much working against us.
I’m here to help change that.
Money Move of the Week
Visualize your goals. The money moves in January are all about our goals. Last week we made SMART goals and this week we’re going to visualize them. Why? We have a reticular activating system in our brains (the RAS) that works in images, and it doesn’t know the difference between what’s real and what’s imagined. As soon as we visualize something, our RAS gets to work making what it sees a reality. A study at Cleveland Clinic showed that people who ONLY visualized doing strength exercises (specifically, muscle contractions) increased their strength in those muscles by 35%. Those who did the physical exercises increased their strength by 53%. Visualizing our goals can have a tremendous impact on our results.
You Gotta See This
Define: DEBT UTILIZATION RATIO. This is how much of your credit card limit you’re using. It’s the ratio of your total outstanding balances divided by your total credit limits. A lower debt utilization ratio is better for your credit score. Use it in a sentence: “I paid off one of my credit cards which decreased my debt utilization ratio and increased my credit score.” 🎉
Fun fact: Even if you pay your credit cards off in full each month, your utilization can still be high. How? The credit agencies can check your balance at any time. So if you have a credit card limit of $2,000 and your balance is $1,500 when the credit agencies check (maybe right before you pay it off), you’d have a 75% ($1,500 / $2,000) debt utilization ratio on that card.