A friend of mine, Chuckie, has a podcast which I listen to regularly, but when I tuned in last month, he was having an incredibly important conversation with a local guy ( local to me that is. Lol) known as The Urban Financier. It was about everything finance, entitled ” What’s your credit like?” and it became a bit of a checklist about what I’ve learnt over the years. I thoroughly recommend you tune in, You can listen to the podcast here on Soundcloud or on Spotify here
It was still on my mind, when as I always do each month, I logged into my credit expert account, and there, clear as day, was the number I had waited to see for a very long time. 9 9 9. ( Not related to the UK emergency number on this occasion!)
*Disclaimer*: For those in the know, I posted a picture of my perfect credit score to my Insta story. I should probably state now, I am by NO MEANS some financial guru – otherwise I’d be rich ( I can assure you – I would be. LOL) but just reached that very small goal – in a massive journey! But sooo many people messaged me on Instagram, I thought why don’t I do a post. For proper financial advice – please find a financial advisor – I’m just sharing with you some of the tips I used over the past two decades.
I read in the Metro the other day ” a staggering 85% of adults experience stress regularly, with money being the most common cause” according to Digital Healthcare provider Forth. It’s apparently the leading cause of stress amongst millennials, particularly those aged 18-34, saddled with student debt.” I guess it just reminded me how important a conversation like this is to have.
Especially when I’m all about affordable luxury travel, I learnt very early on in my travelling escapades, being broke for the gram is NEVER worth it and would never be something I’d advocate. Find a Deal! There’s always one to be had – I assure you. ( Also there was no instagram when I started travelling. Lol)
I’ve been looking at my credit score since I was at Uni in 2000 ( Yes – I’m older than you presumed) After leaving Uni and going to work for a financial advisor a couple of years later opened my eyes up to the importance of things like pensions and how mortgages worked, but I was still making crappy financial decisions when it came to borrowing.
I was approved for credit cards, one of which I used to go on trip of a lifetime to New York, I mean it was free money right? Very wrong!
The worst card I had at that time though? A store card! The APR was astronomical – they still are on those sort of cards. I remember when I started working at a company in Central London in 2007, hadn’t yet paid off my 2 credit cards from all of those trips of a lifetime yet, but realised what the hell APR was, when the interest started to be applied to my monthly instalments. I was aghast!
I was always fighting against monthly installments, I just presumed if you paid the bare minimum that was good enough and I somehow still managed to have some form of social life by doing that.
Then there was that beautiful overdraft you get with a student account, you know the one that is over a £1000 – yeah I lived in that!
Crazy as it sounds my mum worked for a bank at that time, yet I don’t think I ever asked her for any advice till it was almost too late. I decided to get a loan to consolidate all the debt and pay that off. Job Done? Yeah for then!
I can’t tell you how happy I was to finish paying that off, but there was another card. See Living in London, as wonderful as it is for us Londoners, it’s also one of the most expensive cities in the world to survive. The card was always to make ends meet and I was just never quite earning enough to have anything left over. I’m sure many of you can relate.
Financial Education is completely extinct from the curriculum, when you grow up in a working class family as I did, this was never common place knowledge about how easy it was to come across money that wasn’t REALLY yours, or free for that matter, or about the importance of paying it all off and keep to your monthly commitments.
I distinctly remember friends saying things like, “Oh I’m not paying my phone bill this month – they can get it when I have it!” Ummm.. not a smart move. Thankfully that’s advice I didn’t take on board. See every time you don’t pay a monthly commitment a little mark is made against that month, that can eventually build up.
I eventually started to do my own basic research and work out how to improve my credit score. I signed up with credit expert and looked at how bad the situation was or how good it actually was, the point was I had no clue if it was good or bad! Your credit score can make all the difference to your chance of getting credit (but there is no guarantee). So get your credit score here with Experian, FREE FOREVER as a great starting point
It wasn’t at all bad, in fact, I’d never been late paying any bill, they were all on direct debit, so despite making the bare minimum, what i had showed is, I paid and eventually cleared it – I can’t remember what my score was then, but much lower than of course today’s score.
So thought I’d give YOU some of the tips that worked for me, of course your situation maybe more complicated, but hopefully this is a starting point for some.
– Order your credit report. Don’t bury your head in the sand. Experian is the most trusted credit score provider*. The Experian credit score gives you an idea of how lenders view you. Do it… Check you don’t have any financial associations with anyone who has had bad financial history. Check all the entries are to do with you and you know each one. If anything is incorrect – reach out and correct it – immediately.
– Be on the electoral roll register. This is quite crucial. I mean I could sit there and judge you for not using your right to vote, but I won’t. Just know it impacts your credit score. You can register Here
– Do a budget –Use my Budget Template, a very smart friend of mine, used to watch me constantly write my budget down each month looking at my online back statements, when she handed me this template that she electronically did in Excel. I then adjusted it and the rest is history. My friends laugh at me saying I’ve got my quill and ledger out, because I LIVE in this budget template & my online banking account. It allows you to put in all your outgoings, your income and it’ll calculate what’s left. This is where I started to see stuff that I paid for that was completely unnecessary!I also started to be a bit more strict on what I spent. If I went over my “Entertainment ” budget, it was a No to going out raving or to dinner with friends – Not sorry! But it also realistically let me know how realistic those holiday trips were and when!
– Be smart about what you search and apply for. Every time you search for a new credit card, or loan application, or search for insurance etc, it leaves footprints on your report. Some soft, some hard. So don’t go on an application spree, if you get declined – stop!
– If you’ve got credit cards you’ve been paying off for a while, the chances are interest is being applied to those minimum payments, which means you paying off the minimum means the equivalent of walking up Mount Everest in heavy snow. Look into great balance transfer deals, with long transfer times. You can get 12 or even 16 months.
Pick a realistic length of time, where you know, in that time, you’ll finally pay it off. You’ll transfer the existing balance to this new card, and you will actually be paying it off without being charged interest. Beware though! If you don’t pay it off before the promotional period, you will pay for that! And cut up the old one and make contact with them to close the account, there’s no point having a plethora of open accounts.
– If you’ve got no cards at all. So imagine a friend asks you to borrow money for the first time, you’re hesitant but you say yes. They take it and at the end of the month, they pay it back on the final day. The next time they ask, same thing, so the 3rd time they ask, you know he’s good for it, he’s paid on time, so you borrow to them again. Compare that to the mate, that forgets to pay you before the day, gives part of the money a week later, and sometimes ask to borrow more. THAT’s how you need to look at CREDIT. In order for you to have a sound credit score you need to show that you are responsible enough to borrow money and pay it back on time. This is in addition to any credit agreements you have with other companies. Phone Bill, Sky, Internet Provider.
If you are about to get your first card, to build your credit, use it to make purchases you know you have the cash for and pay it off every month in full. (Funny enough this is what an Amex charge card is – you pay it off in full each month – it’s actually not a credit card) Do that for 6 months and re – visit your score. I actually pay for all my holidays on my credit cards, because there’s a level of protection those cards offer, that debit cards don’t, when things go wrong with the holiday or the company. Play the game! Credit Cards don’t have to be the devil in plastic form.
Once you show you pay off well, they will start to offer you higher credit limits which sounds like a great idea, don’t get me wrong it’s a good sign, but what you don’t want is too much revolving credit. So you don’t have to accept any credit increases if you don’t want it.
Realise the importance of paying into a pension. You do realise once you reach pension age, THAT is the money you are supposed to live on. I’ve only been paying in, since 2007 – which is ridiculous as I’ve been working since 1998, but the younger you start paying into one, the more value you will get from it down the road. I can’t tell you how many young people say to me, “Pension? that’s for old people!”
Saving – is very important, and is always the goal, but please remember to pay your debt off first. If you have savings pay off your existing balance with it. They say you should have at least 2 or 3 months salary worth of savings in an ideal world, this is NO easy feat if you have an average wage living in London, so baby steps. This I still need to tackle, I like living life and going on expensive holidays – but I’d argue travelling has certainly made me who I am and is one of the biggest educators in life. ( Plus one of my cards gave me lots of airmiles!Lol) So you somehow have to create a balance. I’ve recently explored MoneyBox, it’ll round up each purchase to the nearest pound and will invest that for you. There is no short term return, but it’s money I wouldn’t miss and it may come in handy in 30 years time.
The other things are cards like Monzo ( My Link will give you a free £10 ) . This really is banking at its finest for the 21st century. Monzo doesn’t charge you for abroad spending ( there’s a limit on withdrawing cash abroad) but it allows you to set pots of different money for different things. So for me it’ll be Car Insurance, Holiday and anything else coming up. You can then transfer money into those pots, so that you can’t spend them from your available balance, which is really useful.
I moved back home before I bought a property ( sadly couldn’t afford London amongst all that gentrification) and luckily had a good few months on a good salary, that’s when I decided to sacrifice a fair amount and just pay EVERYTHING off. It was the best decision I made, because I was able to face that next stage of my life debt free. I now don’t put things on my credit card unless i know I have the ability to pay it off at the end of the month.
Probably also worth saying that we’re all a few steps from it going back the other way, so this isn’t something you should ever lose site off. Every time I commit to something new financially, it’ll dip – so you’ve got to try and keep on top of things.
I listened to the people around me who were making good financial decisions, I still certainly don’t know everything, but I would have really liked SOME of this info when I first started out making shitty decisions.
I wish I was at home longer earning decent money – because I certainly would have stayed longer and stacked! That’s a shoutout to all you kids quick to leave home! But hey – shit happens / life happens and you have to swerve and catch up.
The other thing to remember is, shit hits the fan ALL the time. In the form of Redundancy, sickness, unexpected expenses, Life throws a curve ball, that’s why really we should all be trying to stack a bit to enable us to navigate that – but it’s bloody tough!
In an ideal world you’d have a travel fund, a college fund, a holiday fund, an emergency rainy day fund and a fund for when you’re on your last legs which brings me to my final point, about the final point in life.
You may laugh at this but I suggested a death party to my family. My sister said I should think of a name change – but they thought it was a pretty good idea. Sit down, you write a list on where to find everything, you work out what plans are missing ( a will, life insurance – whatever is) and you sort it out, then you write your wishes for your funeral. I know it sounds sombre, but my community will attest to this. We’ve lost a lot of people younger than we were supposed to. Some of my mum and dad’s friends aren’t making it to 50 ( and yes even shockingly some of our kids aren’t making it to 21) but for the older generation, a lot of the time, departing earlier without their affairs in order can really leave their younger family members with some very stressful decisions to make, so just have a think about that along with all the other stuff!
I hope this has been somewhat useful! All I can add is: Follow some proper people that actually know what they’re talking about and advocate for Financial education to be taught in schools!
Seek free debt advice from the National Debt Helpline or need helping working out what to do with a specific company, Citizens Advice.
Urban Financier – young guy from NW London who works in investment banking for high net worth individuals. You can find him on Insta.
A couple of friends recommend reading the following books ( The links will take you to Amazon to purchase)
That metro article actually suggested the above too, but also
Got that all sorted? Now time to plan, prepare and book another holiday of course, after you’ve taken care of business!
Do you have any financial tips that have been useful for you?
***Please note – Sometimes I used affiliate links for products and services I like, which means I get a tiny commission, when you buy via those links. You’ll never catch me posting affiliate links about companies I don’t actually personally recommend – so trust me.***
*Most trusted based on 57% of 1086 respondents. ICM Unlimited Survey, June 2018