MONEY Debt

10 Characteristics of Debt-Free People

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Bertrand Demee—Getty Images

They aren't afraid of credit cards but realize they're a double-edged sword.

From time to time we bring you posts from our partners that may not be new but contain advice that bears repeating. Look for these classics on the weekends.

The other day a friend and I were discussing why some people manage to live their lives in complete control of their finances, while others are continually struggling to get out of debt — no matter how much money they make.

Financial freedom can be achieved by anybody, regardless of their income level. So what is it that separates the financially free from the financially inept? How come there are some families out there making ends meet with household incomes under $40,000 and no debt on the books — or at worst, a single mortgage payment — while others make millions per year and can’t keep their financial heads above water?

The truth is, there is no single trait that determines who will successfully manage their personal finances and those who won’t. People of modest means who know how to properly manage their finances have some combination of multiple characteristics. Here are ten of the biggest:

They’re detail-oriented. People who are in a good financial position always pay close attention to their personal finances. They know how much they earn and they keep track of how much they spend and where every penny goes. Because they’ve got a good handle on the state of their personal finances, they are less likely to buy something they can’t afford.

They realize debt is a mortgage on their future. Debt is a form of indentured servitude where we end up sacrificing our future earnings in exchange for instant gratification. Financially savvy people understand that, in most cases, such a trade almost always ends up being a Faustian bargain.

Read next: 19 Secrets Your Millionaire Neighbor Won’t Tell You

They’re pragmatic. More often than not, folks who are debt-free are also practical people. As such, they understand the meaning of value. For example, they tend to look at cars as merely a means to get from point A to point B — so they’ll refuse to buy a Lexus when a Corolla will do. In the same vein, they won’t pay double for designer jeans that have the same lifespan as the no-name alternatives, and they’re open to buying store-brand groceries.

They’re self-reliant. Most people who work hard to maintain a life of financial freedom take pride in being self-reliant. They live within their means and save as much money as they can for rainy days and lean times.

They aren’t addicted to shopping. A lot of people get a high from spending money — whether they have it or not. And while such a high is not physically destructive like, say, a drug or alcohol addiction, an uncontrolled shopping habit is almost always financially calamitous.

They’re patient. Debt free people don’t achieve that state because they’re impulsive shoppers, or looking for instant gratification. If the money for something isn’t available, then they save and wait.

They’re self-confident. Financially free people never let their self-worth be defined by their possessions. They understand that their status in life is more accurately conveyed by self-confidence, rather than dubiously deceptive displays of wealth.

Read next: 3 Things to Never Buy With a Credit Card

They understand that credit cards are a double-edged sword. People who are in control of their personal finances aren’t afraid of credit cards. In fact, they embrace them. And while the financially savvy understand the incredible benefits that credit cards provide their owners, they also know that if they fail to pay them off in full at the end of each month, they will pay a heavy price. This knowledge fosters a healthy respect that keeps their credit cards from being abused.

They believe in personal responsibility. Financially responsible people refuse to make excuses. They know it’s their responsibility to put aside funds for unexpected events such as a job loss or unforeseen accident — and if they don’t they’ve got no one to blame but themselves. Short of a catastrophic medical issue or natural disaster, they also understand that living within one’s means goes a long way towards ensuring their ability to control their own destiny.

They’re not materialistic. Yes, the pursuit of expensive toys and other possessions can make life more luxurious. But at what cost? Debt-free people understand this, which is why they tend to live simpler lives that focus on the joys of family, rather than the accumulation of material possessions.

This is by no means an exhaustive list. However, the more of these characteristics that a person possesses, the more likely they are to be financially free. How many apply to you?

Read next: How Do I Pick a Credit Card?

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Verizon Lost My Cable Box and Says I Owe $2000

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Brian Finke—Getty Images

What should I do?

Question: Help! Verizon lost the cable boxes and remotes I returned to it via UPS after I moved out of my apartment. Now it’s trying to stick me with a $2,000 bill, even though UPS tracking showed it had been delivered, and even though the Verizon representative I spoke to agreed and updated my account to show that they had received the equipment.

Here’s the problem: I discarded the UPS tracking information after speaking with the Verizon rep in early December, never dreaming that it would come back to haunt me on my January bill.

Verizon is the one that provides the UPS return shipping label; I asked Verizon to connect me with the department that generates these shipping labels, naively thinking that they would have a record of mine. The three representatives I spoke with said they had no contact with the departments that handle equipment and shipping and were unable to connect me.

I don’t understand why the tracking number on the UPS shipping sticker that Verizon provides isn’t automatically linked to my Verizon account.

Meanwhile, UPS says it can’t track packages without the tracking number. My name and address are insufficient.

I’m at my wits’ end. As a young professional, I can’t afford the $2,000 Verizon is demanding. As a human being, I feel bullied by a big corporation that thinks it’s easier to stick me with the bill for their mistake. Is there any way to find that UPS tracking number? — Jean Schindler, Arlington, Va.

Answer: Verizon shouldn’t charge you for equipment representatives say it’s already received. But how can you prove it was received? Only the UPS receipt would work, and UPS can’t furnish you with a new one.

You’ve painted yourself into a little corner.

Looking back, you probably should have kept the receipt until your next bill. But there was no way to know you’d have this problem. Future Verizon customers would be wise to keep your case in mind; don’t throw away any receipts until at least one billing cycle is complete. You might even consider taking a picture of the paperwork with your smartphone. Got that?

I think UPS bears some responsibility here. I mean, here’s one of the most sophisticated companies, in terms of information technology, and they can’t generate a new receipt? They also can’t find a record based on an address? Did they use a carrier pigeon to deliver the receipt the first time?

Your next step would be an appeal to someone higher up at Verizon. I list many of the Verizon corporate contacts on my site. You can also turn to my consumer help forum for assistance from an advocate.

I contacted Verizon on your behalf. A representative was able to track down the equipment you returned. Verizon apologized for the “inconvenience” and credited you for the fees billed in error.

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MONEY credit cards

5 Black Marks That Can Sink Your Credit Score

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Troy Plota—Getty Images

Derogatory information stays on your credit report for 7 to 10 years.

When you’re looking to apply for a loan, lenders place a major emphasis on your credit report. Your credit history includes your amount of debt and payment history, as well as other factors, and lenders look to your past credit behavior to see whether you’ll be a good credit risk going forward. There are some things on a credit report, however, that could discourage a lender from approving you. These “black marks” could make it difficult to get approved for a loan, and could even keep you from achieving certain financial goals. If you’re planning to apply for a loan but you’ve had credit challenges in the past, here’s what you need to know about credit report black marks.

What Is a Black Mark?

Any item that may be considered negative by creditors is often referred to as a “black mark” or “derogatory information.” These items indicate some sort of negative financial behavior, such as failing to pay debts on time, and they remain on your credit reports for an extended time, typically anywhere between seven to 10 years. Some of the most severe derogatory marks include:

Bankruptcy

Bankruptcy is essentially a legal process designed to reduce or eliminate a consumer or business’s debt — or make it easier to pay off. While it does provide some form of relief, bankruptcy is considered to be one of the most damaging marks to have on your credit report. Chapter 7 bankruptcy will stay on your credit report for 10 years while Chapter 13 bankruptcy will remain for seven years from the filing date.

Foreclosure

In the event that a borrower falls significantly behind on mortgage payments, the lender may opt to foreclose on the home. If the borrower fails to pay off the outstanding debt or cannot sell the home via short sale, the property then goes into foreclosure. A foreclosure will remain on your credit reports for seven years.

Collections

When accounts are reported as being sent or sold off to a debt collector, they are considered to be in “collections.” This usually occurs when a creditor is having difficulty collecting payments on a debt. A collections account will typically stay on your report for about seven and a half years from the date it first became late.

Tax Lien

Simply put, tax liens are when the government places a lien against some or all of an individual’s assets due to them neglecting or failing to pay a tax on time. Tax liens can remain on your credit report indefinitely, though credit reporting agencies often remove them after 10-15 years. Once you’ve paid off the debt’s balance in full it will take seven years from the date it’s paid for the mark to be removed. However, you may qualify to have the lien removed from your credit reports sooner, depending on the circumstances.

Civil Judgment

Although criminal records aren’t included upon your credit report, civil judgments (such as a civil lawsuit or child support case) are. A civil judgment is a ruling against you in a court of law that requires you to pay damages (typically in the event that you lose a case or neglect to respond to a lawsuit). A civil judgment stays on your credit report up to seven years.

What You Can Do About It

While derogatory marks can cause your credit score to take a major hit, they won’t keep you down the entire time they’re on your report. Maintaining good financial habits and keeping the rest of your credit in good health can help you build things back up. As negative information becomes older, it tends to have less of an impact on your credit scores, provided you have other current positive credit references. Paying down high credit card balances and keeping your debt usage ratio low, and making your payments on time are all things that can help you build your credit.

It’s also a good idea to get your free annual credit reports from each of the three major credit reporting agencies to check for inaccuracies and to generally stay informed. Checking your credit scores regularly can also help you track your progress.

While it might be hard at first, it is possible to return to good financial standing with a black mark on your credit report. Provided you strive to maintain good credit behavior, you should start to see your credit score start to inch upwards and your chances of securing a loan increase. Not only that, but the habits you develop during this period can hopefully help you avoid another derogatory mark in the future.

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This City Has the Highest Debt Burden

Market Square in San Antonio, Texas
Jim West—Alamy Market Square in San Antonio, Texas

A new survey identifies the spots where credit card debt causes the most (and least) pain.

Locals like to brag that everything’s bigger in Texas. But they might not be boasting about a new ranking that places three Lone Star metro areas among the U.S. cities with the highest credit card debt burden.

San Antonio residents face the greatest credit card debt pain in the nation, according to a new analysis by CreditCards.com; Dallas/Fort Worth and Houston take the No. 2 and 5 spots, respectively. (Atlanta and Miami rounded out the top five spots.)

Using data from credit bureau Experian, the U.S. Census Bureau and the Federal Reserve, the study compared the average credit card debt total in the 25 largest U.S. metro areas with each area’s median income. It assumed that 15% of that median income would go toward credit card debt repayment each month, then calculated how long it would take an average resident to pay off his cards — and how much interest they’d pay while doing so — with a 13% APR, which the company says is the average rate for people who carry a balance.

That meant that high-income cities had an edge. The affluent San Francisco Bay Area had the lowest debt burden, with residents needing only nine months to pay off the average credit card debt. San Antonio residents, by contrast, would need 16 months to do the same, and would end up paying $214 more in interest.

Below are the top five metro areas with both the highest and lowest debt burdens:

Highest Credit Card Debt Burdens

1. San Antonio (16 months, $448 interest)

2. Dallas/Fort Worth (14 months, $382 interest)

3. Atlanta (14 months, $376 interest)

4. Miami/Fort Lauderdale (14 months, $351 interest)

5. Houston (13 months, $363 interest)

Lowest Credit Card Debt Burdens

25. San Francisco/Oakland/San Jose (9 months, $234 interest)

24. Boston (10 months, $267 interest)

23. Washington, D.C. (10 months, $286 interest)

22. Minneapolis/St. Paul (11 months, $266 interest)

21. New York City (11 months, $293 interest)

For help managing your own debt, see our credit guide.

MONEY Debt

How Etsy Helped Me Pay Off $20,000 in Debt

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Hero Images—Getty Images

Nancy Nemeth used half the money she made on Etsy to fund her sewing business. The other half went to pay down her debt.

Their marriage had a less-than-ideal start. She had $20,000 in debt. He was about to lose his home, and the bank wouldn’t negotiate. He also had a student loan, a car loan and some credit card debt. When she moved to Cleveland to be with him, she’d be unemployed. He’d have to work overtime as a truck driver just to put a few hundred dollars toward paying down the debt.

But Nancy and Dan Nemeth — both 49 years old — took the plunge anyway, getting hitched in a $300 budget wedding in April 2012. Thanks to a short sale, Dan was able to get out from under his mortgage and when they moved into a rental, they had a fresh start but a $30,000 mountain to climb — not including their car loan.

“His take home pay was only $2,000 a month, so Dan did all the overtime he could to bump it to $2,600,” Nancy said. “We paid just over minimum payments at first.”

Then, her love of birds, bags, and sewing changed everything.

“I love to craft. So one day, a friend was watching me sew at home and mentioned she wanted a couple things made for a friend’s birthday,” Nancy said. “So I sewed a few items for her. Then that turned into another item for another friend. Then (a different) friend said, ‘Hey, put your stuff on Etsy.’ I didn’t know what it was at the time. Within a couple months… I made enough for a new sewing machine.”

 

Nancy started making handbags and clutches, often with designs inspired by her pet birds. She made a vow that half the money she made on Etsy would go back into the business, but the other half would be used to pay down her debt. She was making a “couple of hundred” a month for a while, but eventually saved enough to upgrade her machine, which soon was running 10 hours a day, 6 days a week.

“I spent every day sewing and making my little shop bigger and better,” she said. “Studying how to expand and do social media to get my little shop out there. It has blossomed so much.”

And while the business blossomed, the Nemeths’ debt shrank fast. She averages about $2,500 in sales a month, which means she puts more than $1,000 a month toward paying down her debt. They’re not finished yet, but the $30,000 mountain is now more of a $10,000 molehill…plus about $8,000 remains on the car loan.

Paying down debts can also have a positive effect on credit scores – making payments on time and keeping revolving debts on credit cards low relative to credit limits have a big impact over time. This calculator can show you how long it’ll take you to pay off your credit cards.

“We will be completely debt free in ONE year. Can hardly wait,” she said. “Then all the extra will go into savings and a portion to our dream trip to Europe.”

Etsy wasn’t the only step the Nemeths took to attack their debt problem. They also cut out almost all extras. When they go food shopping, they bring the budgeted amount in cash, and never overspend. They plan date nights well in advance so they have something to look forward to, and make choices to keep those costs down, like eating before going to the theater to avoid paying for expensive candy and popcorn.

But finding a way to supplement their income has been the most important step towards climbing out of the hole they were in.

“I have always said do what you love, and if you can find a way, make some of that dream happen,” she said.

Her husband has gotten into the act, too. He recently went back to his old hobby performing comedy. He puts half his comedy income into paying down debt, too. Laughing together is helping their relationship, too.

While their marriage didn’t have an ideal financial beginning, Nancy actually thinks that might have made them closer.

“I think it’s just that we are proud of (our) really tough beginnings being together, but overcoming so much at the same time,” she said. “Go figure. You’re supposed to meet and get married when things are great and all that. But our (story) is opposite. Maybe that was a good thing. Maybe seeing the worst times at the beginning gives a healthy dose of realism and something to really bind a future together. It was a struggle… but nothing we could blame each other for. Just a desire to get out of this life that we ‘think’ we should have according to the white picket fence syndrome.”

And the couple might be able to get out of debt even sooner than expected. After Credit.com began chatting with Nancy about her debt, Etsy featured her store, Birds and Bagz, in an email. Orders spiked for a day, and she earned around $3,500 in July.

“Paying off another credit card tomorrow,” she said. “Feels great.”

What did the couple do to celebrate?

“We are treating ourselves to sushi dinner tonight…which of course we go at happy hour, which is half off,” she said. “Never pay full price.”

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Help! I’m Getting Divorced. How Do We Split Our Credit?

credit card cut in half
Sergei Aleshin—Shutterstock

Both partners are equally responsible for debt accrued while married.

Q. I’m getting divorced and I want to make sure to separate my credit from my wife’s. How can I do that?

A. You’re wise to want to protect your credit, and your question is a biggie.

We turned to Kenneth White, a divorce attorney for Share and White in Edison, N.J., to tackle this one. He said without all the details of your situation, he can’t provide the most comprehensive advice, but he had plenty of items for you to consider.

Short of filing for divorce, there is no efficient way to isolate yourself from your wife, White said.

“Specifically, while you are married to your wife you are part of a partnership,” he said. “Think of it like a business enterprise within which you are each potentially entitled to 50% of the benefits as well as being 50% responsible for the liabilities.”

While you remain married, White said, there are no “my assets” and “her assets,” such as your 401(k), her bank account, etc. Regardless of whose name may be associated with the asset, there is a presumption that all assets amassed during the course of a marriage are “marital,” or another way to view it: “ours.”

Similarly, White said, all debts and liabilities amassed during the marriage are potentially divisible equally between the parties to a marriage regardless of who specifically amassed such debts or liabilities.

White offers this example to drive the point home:

“If you win the lottery the day before a complaint for divorce is filed, your wife will have a claim for 50% of the lottery proceeds,” he said. “Win the lottery the day after a complaint for divorce is filed and she has no claim to such proceeds.”

It works the same for any debt that’s amassed prior to a complaint for divorce is filed, he said, and any debt amassed by one party to a marriage in his or her independent name after a complaint for divorce is filed will likely belong to that individual party.

Accordingly, the only way to begin to isolate yourself from your spouse, potentially protecting new assets and to be protected from new debts, is to file.

White recommends you meet with an experienced family law attorney who can review the specifics of your situation.

Going through a divorce is also a crucial time to monitor your credit. You can get a free annual credit report at AnnualCreditReport.com.

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MONEY Debt

Living Out of a Suitcase Was The Best Thing for My Family’s Finances

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Richard Drury—Getty Images

Friends were shocked when we told them we were selling everything and moving from one country to the next, but we wouldn’t have it any other way.

The year was 2013, and by all outward appearances, my husband, William, and I were living the good life in St. Louis.

He was finishing up his MBA and had an internship at a well-known consumer-products company that was sure to put him on the corporate fast track—all while running his own successful tutoring and test-prep business on the side.

I was juggling getting my Ph.D. in reproductive epidemiology while also being a mom to our pride and joy, Desmond, then 2.

But during William’s last semester in the MBA program, our family took a life-altering trip to Spain as part of his study abroad offering. What was just supposed to be a three-month trip overseas turned into two years … and counting.

Since then, we’ve lived and worked in five different countries, from Hungary to Peru—and have even added to our brood along the way.

Our nomadic lifestyle may seem a bit unorthodox to some—family and friends were shocked when we told them we were selling all of our belongings to pack up and ship out—but we wouldn’t have it any other way.

The best part? It’s done wonders for our finances.

Truth be told, the career and life paths we’d always envisioned for ourselves weren’t quite panning out.

Despite the fact that most business students would have killed to have William’s internship, he was disillusioned by corporate life.

The monotony of his day-to-day routine coupled with having to work for someone else, just didn’t feel natural to him. He wanted something more.

I was feeling a similar dissatisfaction. I’d been working on my Ph.D. for almost five years, and continuing my research while caring for a little one left me struggling to maintain motivation. I was gradually falling out of love with academia.

All of this prompted William to pose a question before we embarked for Spain for his study abroad program: What if we didn’t come back to the states at semester’s end?

What if we stayed in Europe for a few more months—one last hurrah before putting down roots?

I thought he was crazy.

We had a toddler and a mountain of debt—more than $100,000 in student loans between us, a $25,000 business loan, and about $6,000 of credit card debt. We couldn’t go gallivanting around Europe like carefree college students.

But when I saw he was dead serious, it stirred something in me. I couldn’t help but feel like maybe this could be an amazing adventure for our little family.

So we got out of our lease, moved our stuff into storage, and found an apartment in Barcelona through Airbnb for $1,200 a month—not supercheap, but still less than the $1,500 we were spending to rent a home in St. Louis.

Once we settled in Spain, William had yet another crazy idea: What if we never went back and instead built out his tutoring business overseas?

We had both been employees of the company back when we lived in Salt Lake City, and when the opportunity arose, the entrepreneur in him decided to take out a business loan to buy the company from its previous owners.

When we moved to St. Louis for his MBA program, William continued to manage the business remotely, hiring two codirectors to oversee the roughly 15 tutors we employed back in Salt Lake City. He drew a salary of about $35,000—but being abroad made us realize there was an even greater opportunity to make money.

William could meet with international schools throughout Europe and pitch them our services, in which one of our tutors would spend a few weeks doing SAT/ACT prep at their schools to help students who wanted to attend college in the U.S.

I believed in the plan, but the thought of living in—not just visiting—so many different countries terrified me. But if we were going to try this, it was now or never.

So I put my Ph.D. on hold and became our family’s Chief Travel Officer.

5 Countries, $300 Rent, $0 Credit Card Debt

We stayed in Barcelona for about five months, taking in the culture, loving every minute—and mapping out our next destinations based on whether there were international schools close by, our interest in the region, and the cost of living.

Our next, three-month stop was Budapest, Hungary, which was a much cheaper place to live. By avoiding renting in a tourist area, we were able to get a great apartment for just $300 a month.

It was then that I realized how living abroad could actually be good for our finances because, if we planned well, life could be so much cheaper.

When the holidays rolled around, we headed back to St. Louis to sell all of our personal belongings and officially leave our U.S. life behind. But, first, we made a pit stop in Rome—which is when we discovered that our second baby was on the way!

Giving birth in a safe place where I felt comfortable, was important to me, which is why we chose to live next in Colombia. I was born there and still had family there, so it was comforting to know we’d have some support.

After finding a fully furnished apartment in Bogota for $900, we headed out there in February 2014—and welcomed our second son (named Roman, in a nod to Italy) in the spring.

We didn’t have international health insurance at the time, so we paid out of pocket for the birth, which only added up to $1,800, including all of my prenatal visits. Since then, we’ve gotten family coverage for just $200 a month.

In the eight months that we were in Bogota, William took countless meetings, nabbing new contracts and growing the business even more. He gradually increased his salary to about $45,000 a year, and the company helps subsidize such expenses as flights for business meetings, as well as our rent. I also brought in occasional income by doing some freelance research and public-health data analysis on the side.

While we don’t get a tax break from living abroad—we still have to file U.S. income taxes—we do get some tax write-offs for any business-travel-related expenses we have to cover.

This new life has allowed us to get our $6,000 credit card balance down to zero last year—and pay off our $25,000 business loan.

And while chipping away at our student loans will be a slower endeavor, we’ve been able to contribute to a 529 college savings account for Desmond, open a trust account for Roman, and maintain an emergency savings fund of about $2,000.

Our next goal will be to resume contributions to a Roth IRA, which we’d put on hold during graduate school.

Living frugally, of course, helps a lot. For starters, we always opt for cheap housing, even if it means choosing less-prime neighborhoods. Our rent abroad—including furnishings, WiFi and utilities—has averaged $1,000, which is about $500 less than what we were paying in St. Louis.

But, without a doubt, our biggest savings has come from no longer having to pay for gas, insurance and repairs for two cars—we quickly familiarize ourselves with public transportation in every new city. I also do a lot of cooking at home, using seasonal and local ingredients as much as I can, to save money.

In cities where the cost of living is higher, we keep stricter tabs on our expenses, so we know when we’re close to going beyond our budget. Plus, living out of suitcases means we can’t accumulate much stuff—so no extravagant shopping sprees for us!

These frugal habits have accompanied us in the five countries we’ve lived in—Spain, Hungary, Colombia, Peru and Mexico—and the dozens of places we’ve visited. We’re currently back in Bogota, but it’s off to Japan next to build an East Asian client base.

The Intangible Perks of Our International Life

One of my initial concerns with living abroad was how the kids would adjust, but they’ve taken to the nomadic life with ease.

Desmond has attended four different preschools, and in just a few short months, we’ll enroll him in an all-Japanese kindergarten. Once he gets to first or second grade, we plan to home-school because we know international schools can get very pricey.

In our opinion, these experiences have helped shape Desmond into an outgoing, fearless kid—not to mention that he now speaks Spanish fluently!

People ask how long we plan to keep up our gypsy lifestyle. The honest answer: I’m not sure. There are times when I think I’d love to own a permanent home, but then I look around and realize that we’re living most people’s once-in-a-lifetimes.

We’ve spent the past few years marveling at Machu Picchu, taking overnight train rides through Transylvania, and braving the outdoor markets of Santiago.

We may not be millionaires, but we also aren’t struggling. When we started this journey, the company had one international class. We have 11 classes starting this fall, and even more in the works for the spring semester—which has more than doubled our profits.

Over the last few years, my most fulfilling memories have been watching my children play with kids who speak different languages and hold different beliefs. I’ve also come to realize that the best memories happen when you’re willing to surrender a little control and embrace the unexpected.

At the very least, what our nomadic life has taught us is that when we finally do settle down, we won’t need a great, big house with a fancy car to be happy. I’ve learned that you don’t need to have a permanent address to feel like you have a home.

–As told to Maryanne Hayes


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You May Have a Second Credit Report You Never Knew Existed

Darryl Estrine

It's rare, but it happens.

Credit reports often feel like a mystery, particularly if you haven’t seen yours. But what if you discovered you had a second credit report you didn’t know existed?

“It’s a pretty rare thing,” says Carla Blair-Gamblian, director of credit education for Veterans United. But every once in a while she’s seen situations where a client ended up with two credit files at the same credit bureau.

Referred to sometimes as “split files,” “fragmented files” or even “phantom files,” part of your credit history ends up on one report and part of it is on another, usually “hidden” file. Blair-Gamblian says that she’s seen only three or four cases of it in the past six or seven years, but they were always women. She speculates that a name change along with an address change may cause the mix-up — especially if a Social Security number is entered incorrectly.

“Back in the days of the manual credit files, we would see it pretty frequently,” says Connecticut bankruptcy attorney Gene Melchionne, who worked for a credit bureau before files were computerized and files may have included arcane details such as the color of your wedding dress. “Usually it was the result of someone using multiple Social Security numbers or birthdates so we wouldn’t be able to match the credit inquiries completely,” he says.

How do you know if your credit report has a doppelganger? One major tip-off is when accounts from major lenders appear on one or two of your credit reports but not all three.

“It is certainly possible that you have a creditor that doesn’t report to all three bureaus so maybe you shouldn’t be alarmed, especially if it’s a smaller regional lender,” says Blair-Gamblian. But if you have major creditors that report to all three bureaus — Experian, TransUnion & Equifax — there is no reason that they shouldn’t appear on all three of your credit reports.

If a split file does occur, it can be difficult to straighten out. After all, how do you request a credit report that the credit reporting agency says doesn’t exist? You may have to escalate a complaint with them and mention specifically that you believe there may be two files.

Thankfully, most consumers will never have to deal with this problem. “I haven’t seen anything like a split file since the dawn of computers,” say Melchionne. “In fact, quite the opposite is more likely; files that have been combined due to similar information. When I bought my first house, I was told that my credit at the bank had been confused with my father’s and that I paid a mortgage off when I was 12. ”

To prevent problems such as a split file or mixed file, always be sure to use complete and consistent information when filling out a credit application, especially if you are a junior or senior or have a common name. And to ensure your credit reports are accurate and complete, you need to check them. You can get free annual credit reports at AnnualCreditReport.com.

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MONEY Love and Money

How We Paid Off $10,000 in Debt in 20 Months

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Lisa Dell and Cory Tiffin No wonder Lisa Dell and Cory Tiffin are smiling

Think there's no way to get out from under your credit card debt? This couple proves it's possible.

When Chicago couple Lisa Dell and Cory Tiffin tied the knot three years ago, they had $10,000 in credit card debt spread across four cards—a common problem among their peers in debt-ridden Gen Y.

But the newlyweds, who had already been practicing frugal tactics for months to pay for their wedding, decided to apply their methods to a new goal: erasing their debt. The move is likely to offer emotional as well as financial dividends: MONEY’s survey of 1,000 millennials and boomers found that 70% of millennials and 77% of boomers say properly managing debt repayment makes for a healthy relationship.

To tackle the problem, the couple took a systematic approach.

“Once we got to the point where we could afford to pay more than the minimum on our credit card balances, we made paying off that debt our top priority,” says Tiffin. Initially the couple, now 31 and 29, started paying the minimum on their lowest-rate cards and double the minimum on the highest-APR ones. “But we kept feeling we weren’t making progress,” he says.

That feeling of stress and frustration is why many financial experts recommend starting with the smallest balance. Enjoying an early success can be a big motivator to stay on track with your payment plan.

Consolidation Play

But Dell and Tiffin took another approach. The two moved their remaining credit card balances onto a single card with a 0% APR for balance transfers and agreed to pay $900 a month to vanquish the debt in just 20 months.

Making such large monthly payments did have its drawbacks. “Money was so tight it caused some stress and bickering between us,” says Tiffin. To end the money disagreements while keeping focused, the couple kept detailed spreadsheets and analyzed their spending regularly.

“The numbers don’t lie, so that makes it easier to have an objective conversation” advises Tiffin. “It is always more stressful when there is less money, but if you communicate regularly and keep good records, it keeps you from having a major falling out.”

Indeed, credit card debt is tied for third among the most common sources of conflict for both boomers and millennials, the MONEY survey found. And debt not only increases the frequency of money arguments, but can also affect couples’ feelings about the union. Utah State professor Jeffrey Dew found that marital satisfaction is tied to assets, so that as debt increases, happiness wanes.

The good news? Paying it off can bring a couple closer together and instill smart money habits going forward.

“The good thing about that experience was we got accustomed to living without that money,” says Tiffin. “So now we just put that same amount in savings.”

Read next: How to Deal With Your Boyfriend’s $50,000 Debt

MONEY Debt

What’s a Debt “Charge Off”?

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Adam Gault—Getty Images

It's not a good thing.

One of the most misunderstood credit terms is the phrase “charged-off.” You may have seen it on your credit report next to an old debt you vaguely remember.

At first look, it sounds almost positive, as if implying that a balance has been eliminated, removed and paid off. In reality, however, a charged-off account can actually mean trouble for your credit report and financial well-being. Here are the important things you need to know about charged-off debts.

What Does It Mean?

So what is a charge-off? Creditors, like any company, have profits and losses every year. A creditor’s profit depends on how successful they are in receiving timely payments from loans and collecting interest. Their losses commonly will be the result of someone not paying back their debt for a significant amount of time. When this occurs, the creditor will “charge off” the debt, essentially saying that they don’t expect it to be resolved and declare it a loss for the company.

When Does It Happen?

Now you may be wondering, “What exactly is a ‘significant’ amount of time”? Well, most debts are typically charged off after 180 days without receiving payment but installment loans (something along the lines of a mortgage, for example) can be charged off after only 120 days of delinquency. It’s also important to note that debts can be charged off even if payments have been made, providing that all of the payments were below the account’s monthly minimum.

Do I Still Owe the Debt?

Just because an account has been charged off by creditor, does not mean that the debt has been wiped away. (Unless, of course, you file for bankruptcy and include that debt in your filing.) Creditors still retain the right to collect the full amount of debt and have a variety of options available to them to do so. Depending upon the situation, creditors can utilize contacts from their internal collections staff, pass the debt off to an external debt collection agency, or if the debt is large enough (anywhere above the $2,000 mark) a creditor could file a lawsuit or seek arbitration. However, a creditor is barred from suing on a debt that is past the statute of limitation (here’s a list of the Statutes of Limitation on Debt Collection by State).

How Does It Affect Me?

Charge-offs are one of the worst marks to have on your credit report and can make the approval process for credit even more difficult. To make matters even worse, if your creditor passes your charged-off debt onto a collection agency, you could be forced to deal with aggressive debt collectors. All in all, having an account charged off is rarely a pleasant experience.

What Can I Do?

Unfortunately, it won’t be easy to have that black mark removed from your credit report. However, there are some things you can do to minimize its impact and put yourself in a better position. Paying off the remaining balance on your charged-off debt will change the status to read “charged-off paid” which, while still not desirable, will show that you put in the effort to right the wrong. There are also plenty of other ways to add positive information to your credit history, like keeping your credit utilization low and making payments on your other accounts on time.

If you want to avoid having any of your accounts charged-off, the best thing to do is take preventative measures. Learn and maintain positive financial habits and avoid living outside your means. Look into automating your finances as well to make sure you don’t miss any payments on your cards and put yourself at risk for getting charged-off. And don’t forget to check your credit report at least once a year to make sure everything is accurate and being paid. You can get your free annual credit reports from AnnualCreditReport.com.

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