By Steve Freidell
Land Line contributor
Why do you put your name on the side of your truck? Probably to advertise your business, right?
You’ve no doubt worked hard to develop a reputation as an honest, hardworking, conscientious individual or company. People count on you to get a shipment from one point to another, safely and on time. Your word is your bond.
Your company thrives on repeat business and when customers see your truck drive onto their lot, they know they are in good hands, right? Well, your name is just as important when it comes to managing your personal finances, especially when it comes to your credit.
When people abuse their credit, lenders are reluctant to give them a second or third chance to prove themselves. Over the past year, we have seen lenders suffer devastating losses from a variety of loan programs gone bad. Both lenders and borrowers share the blame for overlooking inherent risks and being lured by quick, easy money. As a result, we are now left with extremely tight loan requirements, at least for the foreseeable future.
Your ability to borrow money for that new truck your business needs – or for the new car that your family needs – will largely be determined by your previous credit history. Increasingly, the importance of one’s credit history is extending beyond just a home or car loan. Credit histories are now on the Internet.
- If you are seeking additional freight business, your credit score could be a factor.
- Your ability to expand your business or to buy a new truck may be more difficult in the future.
- The interest rate of that plastic in your wallet is tied directly to your credit.
- If your wife is seeking a new job, her credit history (which most likely is tied to yours) will probably be examined for review prior to employment offers.
- When your insurance company updates your insurance quotes every year, in some states they recheck your credit history and base their charges on what they see.
Stress from years of handling difficult financial affairs can wear on a person’s body, which is why life insurance companies look at credit ratings. It’s important to your overall health to manage your credit with the same dedication that you devote to maintaining your truck.
Getting debt free and living debt free is easier than you think. For independent truckers, it is much like making the decision to head out on the road alone. You no doubt remember the feeling you experienced when you converted to an independent for the first time.
Becoming debt free is similar. Here are five easy steps:
- Develop a budget.
- Eliminate any unnecessary expenses.
- Use excess cash to pay down debt.
- Cancel high-rate credit cards.
- Have at least six months cash in reserves before easing up on the tight budget controls.
Without a doubt, the feeling of joy experienced by getting oneself debt free is unlike anything else. Life decisions become easier because you are making them based on good financial reasoning, not because creditors are hounding you. The liberation you feel from certain days of the month when former credit card payments were due will be exhilarating. Knowing that you can pay cash for important purchases rather than racking up more debt is sure to put a smile on your face.
The journey to a secure, debt-free lifestyle is much like setting out on the open road, unsure of what may lie ahead, but confident that you’ll get there. And when you do, that name on the side of your truck will look a whole lot bigger. LL
This material has been prepared for informational purposes only; it is not intended to provide and should not be relied upon for accounting, legal or tax advice.
Steve Freidell has assisted clients in their cash management, trading, and portfolio management of fixed income securities since 1975. Steve started his career at the First National Bank of Kansas City and later served as first vice president with Commerce Bank where he served his clients for 25 years. In 2006, he joined the DeWaay organization, the financial management company utilized by OOIDA.