Keeping a credit card I don’t even use

When I left for college in 2003, my mom signed me up for my first credit card. Since I was going to school in San Diego, but my family was in Seattle, the thought was I could use this credit card if I ever needed to purchase an emergency plane ticket home. Fortunately, I never had to use the card.

Fast forward to last week. I get a letter in the mail from Chase. The letter informs me my account is going to be closed, citing a lack of activity over the last two years as the reason. At the very bottom of this two page letter there is a short blurb providing contact information to appeal the closure.

Normally I wouldn’t care. They can close my account. I don’t use the card, keeping the account open costs them money (albeit probably a negligible amount), and I don’t have any other accounts with Chase. But, even though I have no desire to ever use this credit card I really wanted them to keep the account open.


We want to buy a house. When we were pre-approved for a mortgage last month, we found out my credit score is 750, Girl Ninja’s 790. Since my credit score was slightly lower, banks would be using my score to determine what rate they would give us for a loan. Higher credit score’s get better rates. For reference, my 750 score is on the low side of “very good”. 

The Chase credit card I mentioned above is my oldest standing credit account. Did you know one of the determining factors in the credit score calculation is length of credit history? It makes sense, someone who has a ten-year track record of paying off debt on time, is probably more “safe” than someone who only has a six-month track record.

If my Chase account closed there is a very real possibility my credit score could drop to 730 or even 700.

This bumps me out of the “very good” credit standing and puts me in the “good” category. Theoretically a bank could decide to give us a slightly higher interest rate since we are no longer seen as “top-tier” loan applicants. Moral of the story, let an account close, pay thousands more in interest over the course of a mortgage. How lame is that?

If we weren’t currently in the house hunting process I’d be totally cool letting the account close. Aside from this pesky mortgage, I have no plans to borrow money, and therefore could care less about my credit score. Unfortunately, it is the standard and having a great score makes life significantly easier.

I’m less stupid than I thought

Ladies and gentlemen, I have some fantastic news to share with you…I’m not as dumb as I thought. In fact, I’d argue that I’m quickly approaching average intelligence. Booya for being un-stupid! I’ve been doing a lot of reflecting lately, especially when it comes to my finances. Turns out, I’ve accidentally made some pretty good choices.


I didn’t know a thing about money all through college. I was actually quite pathetic. I didn’t even have access to my savings account. (Confession: I use to call my mom and ask her to transfer money from my savings in to my checking ’cause I didn’t know how. Embarrassing.) I was ignorant.

Fortunately, this turned out to be a blessing in disguise. I had two credit cards while I was in college. I didn’t know a thing about they worked, so instead of use them, I just let them collect dust in the a drawer. Four years later, I graduated college with no C.C. debt, not realizing that was unusual.


I graduated in 2007. Luckily, I managed to find gainful employment shortly after. In a matter of months, I went from making $7,000/yr to $37,000. I had more money than I knew what to do with. I tried to spend it. Heck I even bought a motorcycle! It didn’t take me long to realize I’m just not a spender. Frugality is in my blood. I never had to the urge to buy a new car, or a new computer, or a new outfit. Turns out, that’s another huge blessing.


On my first day of work I had a ton of paperwork to fill out: health insurance, life insurance, etc. In the pile was a  401K form. I couldn’t even spell 401K, but for some reason I decided to throw 5% of my gross pay into it each month. Even though my 401K contributions went to a sucky investment vehicle for the first couple months (100% bond funds), I formed the habit of saving for retirement as early as I could.

The big picture:

Avoiding credit card debt, getting a job, and contributing to retirement were all pretty awesome, but the single best move I unknowingly made came from a conversation with a friend about Roth IRAs. Intrigued, I figured I should read up on Roths. That research snowballed in to an obsession with personal finance and the reason this blog exists.

Realizing I already had decent financial habits, I decided it was time to maximize my potential. And I’ve been doing just that for the last five years. It’s an ongoing process and I am definitely not the smartest kid in the room, but I’m excited my eyes were opened to personal finance at 22 and not 52.

Those are the best PF moves I’ve ever made. What have been some of your best PF moves? Maybe they were intentional decisions like never using a credit card. Or perhaps it was dumb luck, like not being able to afford a home at the top of the market which saved you from being upside down on a mortgage today.

p.s. subscribe to my blog already!

Another look at savings vs paying down debt

I love getting mail from PDITF readers. It makes me feel like I’m important, even though I’m really not. Well, it’s time we help another Debt Puncher out and share our two cents on his situation. His email says…

I just paid off the first of my 9 (yes…credit+retail) cards. It’s a huge achievement. I’m currently following the high-interest method to keep motivation high. My top priorities are:

*Paying off credit card debt
*Establishing a buffer in checking

Would you apply all your monies to paying credit card debt first or vice versa? Or set-up a plan so both can be achieved albeit at a slower pace. According to my projections, I can reach both these goals within a year.

Well, Mr. Anonymous Reader Guy, if I were you I would stop paying your credit cards, forget about savings, head to Vegas, and bet it all on black. Thanks for stopping by, hope I helped 🙂

Haha, I’m only kidding (unless you’re feeling lucky then GO FOR IT!). I’ll answer your question by sharing a little bit about my journey. As you may already know, I started my PF journey with $28,000 in student loan debt, and just a few hundred dollars to my name. Making the decision to save vs pay down debt is not an easy one. In fact, I wrote this post, this post, and this post about it.

Personally, I hated the idea of not having any liquidity. Dave Ramsey suggests saving up $1,000 in a checking account and throwing all discretionary income at your debt. It’s not bad advice, but it’s not what made me feel comfortable. I totally would have lost sleep knowing I couldn’t even write a check for next months rent if crap hit the fan. You can’t pay rent with a credit card so I needed to have money in the bank.

That said, I would not recommend doing what I did and OVER save. At one point I had $20,000 in the bank,  but only $17,000 in student loans (you can read about it here). If I could go back in time, I would give myself a swift backhand to the face for that one. I totally perverted my enthusiasm for saving and kept that student loan around longer than I should have. I was a very bad Ninja.

So my advice to you is probably going to be the most incredible advice you have ever heard in your entire life. Go get a pen so you can write it down. Ready?

Don’t drink and bike, you might spill your beer.

…Oh wait, that was advice I gave to my alcoholic friend.

What I meant was, you should probably save some predetermined amount ($2K, $5K, or whatever) while making minimum payments on your C.C. But the second, and I mean the second, you’ve accomplished that goal, pay down those CC’s like there’s no tomorrow. It may not make the most financial sense to keep your CC balances a little longer, but if you’re like me it makes a lot of PERSONAL sense. Besides, it sounds like you are gonna knock out both goals pretty quickly anyway, so the difference in interest paid is probably relatively small.

That said, I realize I am only one voice in this PF world, so I’d like to turn the soapbox over to the PDITF readers and see what they would do. How much did you put in savings before attacking your debt? Anyone else out there like me and OVER save? How do you balance financial sense (paying down the CC ASAP) with personal comfort levels (saving up a decent chunk in savings)?

If you have any questions, comments, or just a funny YouTube video you want me to check out, feel free to shoot me an email.

My path to debt freedom

Getting out of debt is simple in theory. Earn more than you’re spending. Use discretionary income to pay down debt. Become debt free. It’s that easy. No really it is.

That said, the path to executing those steps is often not easy; financially, emotionally, or otherwise. I’ve now been debt free longer than I was in debt so I rarely touch on the topic. Today, however, I thought I’d share the ways I got out of $28,000 student loan debt in 2.5 years.

Spend less than you make. 

You have to start here. If you are living paycheck to paycheck, or worse, using a credit card to float from one meal to the next, you gotta get something figured out. Either cut your expenses (if you can) or take on a part-time job. The only way your debt can be paid down is by having a buffer.

Save some money. 

Dave Ramsey says save $1,000 before you start aggressively paying off your debts. That’s cute and all, but it didn’t jive well for me. Paying off car loans is great, but liquidity, in my opinion, is greater. At one point I had $17,000 in the bank and only $15,000 in debt. Looking back, I wouldn’t have been so aggressive with saving money, but don’t feel bad if you want to work towards $5,000 in the bank before you really get serious.

Remember, a paid off student loan can’t put food on the table, but a healthy emergency fund will. Liquidity is king.

Decide how much you want to punch your debt in the face.

I made minimum payments for a few months after graduating. It wasn’t until I realized that only $20 of my $179 payment was actually reducing my student loan balance that I needed to get my stuff together. That meant over the course of a year I’d pay $2,148 to Sallie Mae, but only $240 of that actually improved my financial picture.

I got pissed. There was no way I was going to make minimum payments. So I started making double payments. I did that for about six months, then started making triple payments. As my income grew, I started paying $1,000/month to Sallie Mae. It wasn’t until a few months before my wedding that I decided I really wanted to kick Sallie Mae in the uterus.

Girl Ninja was debt free, and I didn’t want to be the one responsible for bringing debt to our marriage. In May 2010, I took $10,000 out of my savings account and paid Sallie Mae off for good.

Decide if you even want to be debt free.

One of the things that’s been fun for me lately is meeting PDITF readers when I travel. They often start sharing their financial situation with me shortly after we’ve shaken hands – kinda weird when you think about it since I’ve only known the person for 2 minutes.

It’s not uncommon for them to say something like “Well I have a car payment, but it’s only because my other car broke down and the dealership gave me an incredible deal on this car.” I typically stop them mid sentence because I get the sense they think I’m judging them.

Do I have a car payment?


Do I think they’re dumb for having a car payment?


Car loans aren’t my cup of tea, but who the heck am I to tell them they can’t afford one? If having a $150 car payment makes you sleep easier than writing a $10,000 check and paying cash, I have no problems with that.

Contrary to popular belief, you can be both financially stable AND have debt.

Move on.

Paying off my debt WAS NOT a significant part of my personal finance journey. I thought it was at the time, but now that I’m a few years removed from the situation I can tell you it’s not. Paying off your debt is just one of the many challenges you’ll face.

Maintaining an emergency fund, saving for retirement, creating multiple streams of income, investing for the mid-term; the journey never ends. Paying off my debt was just one small drop in my massive personal finance bucket.

Hear this… You need to have personal finance goals outside of debt freedom.

That’s all I got.

How would your list differ from mine?

p.s. my favorite nail from yesterday: Sexy Beast


I can buy anything I want.

As I logged in to Mint to give the ‘ol bank accounts a quick check, I realized something. Girl Ninja and I can pay cash for virtually anything we could ever want (excluding a house). Too be honest, it’s kind of humbling. I don’t feel like we can buy a 2013 Porsche Cayenne, but the reality is we could buy two. When the crap did that happen?

I guess this isn’t too surprising because if you DON’T feel like you can buy a Porsche, you DON’T buy a Porsche. Not buying a Porsche leaves more money in my bank account. Simple stuff.

That my friends is called financial peace. It’s been a long journey. A journey that started with a negative net worth of $28,000 and an annual income that was only slightly more than that. There was no windfall or inheritance. My boss never doubled my salary overnight. It wasn’t always easy; I sold my motorcycle to buy GN’s engagement ring because I didn’t want to take money from my savings account.

Sometimes making good decisions hurts. Bad.  

We are impatient people. We selectively forget it took us four years to accumulate our student loans, yet we complain when they haven’t been paid off in six months.

Patience, grasshopper.

You didn’t get in to debt overnight, and you wont be getting out of it overnight. Stay the course. Make wise decisions. Live within your means. Then one day, you’ll be able to buy anything you want.

p.s. part of me wants to go buy a Porsche now. 

p.p.s. Come win $200 over at MANteresting.

A picture’s worth a thousand words.

The End.

Lightly Slap Debt In The Face

Debt is quite possibly one of the most interesting pieces of personal finance. It’s relatable, as the majority of Americans have some type of debt (credit cards, student loans, mortgage, car payment, etc). But what is really interesting is the way it can polarize the PF world. I mean just look at the title of my blog. It’s pretty clear I’m not a big fan of debt. In fact, I once wrote a post titled “Good debt is for dumb people.” I do, however, realize that MY opinion isn’t the ONLY opinion.

Debt freedom is not a prerequisite for financial freedom. In fact, I’d take out a $20,000 car loan today if it meant I could have $40,000 in the bank six months from now. Does that make me a PF sell-out? Perhaps I should change my blogs name to Lightly Slap Debt In The Face?

Sure, I don’t have plans to go in to debt anytime soon. Yes, I plan to take on a mortgage one day. No, I don’t think you are going to Personal Finance Hell for having auto loans. Yes, I think you’re stupid for having a degree in Art History if you have $100k in student loans. But at the end of the day, what I think/do/say doesn’t really matter for anyone but myself.

I’m not gonna beg you to pay off your car loan sooner, because what you do doesn’t really effect me. Heck, maybe you’ve found some clever way to leverage car debt and use it for financial gain (doubtful, but possible)? Just because I don’t gamble with bank loans, doesn’t mean you shouldn’t.

We are all adults here so I’m going to assume you can make adult decisions and determine how much debt you’re comfortable with. I have no authority to demand you curse the name of Sallie Mae, or rebuke your love of credit cards. Afterall, I’m just an immature dude, with a blog, and REALLY crappy drawing skillz that likes to throw his $0.02 in on the boring world of personal finance.

So now that I’ve gotten that off my chest, I’d like to ask you a few questions. What debt have you sworn off for life? Any debts you plan to repeatedly incur (i.e. car loan)? Do you use any type of debt as a means to become more financially stable? If so, how?