Monthly Archives: March 2017

Write a Goodwill Letter

I first heard of goodwill letters on Personal Find Nancys, a blog that sadly no longer exists.

Essentially,  a goodwill letter is something you write to a past creditor requesting that they remove a blemish on your credit report. Here’s the catch: while you were missing payments, you must have been going through some trying personal circumstances or have some worthy excuse.

Blemishes will be removed after seven years of the report date regardless, but if that’s too long for you to wait, writing one of these letters is a good way to attempt fixing the problem fast.

Before I wrote my own goodwill letter, I had a serious blemish on my report. When I first started going to school, there was some confusion about who was paying.  It resulted in me unknowingly defaulting on a payment plan. As soon as I was aware the money was due under my name, I paid it off.

But apparently that didn’t keep it from creeping up on my credit report. I figured writing a goodwill letter couldn’t hurt.

Good news!  Not only did it not hurt–it worked!

They sent me a return letter confirming that they’d remove the item. I checked my credit report, and it’s no longer on there.

Goodwill Letter Template

Before I wrote the letter, I did a little bit of research. I picked and chose my favorite parts of each example I saw, and created a template. I thought I’d share it with you today since it was successful for me.

It’s not guaranteed to work, but it’s worth the cost of a stamp to try! Keep in mind that you may need to change it up a little depending on your personal situation. If you fail the first time, you can keep trying every six months.

More Information About Dumping Your Debt

Making the decision to pay off all your debt and taking steps to do it is an amazing accomplishment. If you are in the process of dumping your debt, I applaud you! The path to debt freedom is not an easy one.

Most likely, you did not intentionally get into debt; it kind of “just happened,” so to speak. The opposite is true about dumping your debt. It won’t just happen. You have to be intentionalabout clawing your way out of it.

But, regardless of how you got to where you are today, and regardless of how you’re attacking your debt, there are some common pitfalls you may encounter during your debt-free journey — if you’re not aware of them.

Increase your chances of success by being mindful of these potential mistakes while dumping your debt.

Hiding Your Debt-Free Journey From Everyone

A typical mistake people make is not telling anyone that they are working to pay off their debt. This could stem from fear of the response they’ll receive, embarrassment about their situation, not being used to talking about money, the desire to keep things private, or all of the above.

Wanting to keep things under wraps is an understandable choice, but it is one that will have an adverse impact on the effectiveness of your debt-free journey.

When you hide the fact that you are dumping your debt from others, you cut yourself off from the built-in accountability that comes when people know what you are doing. You might be likely to fall back into old habits when you don’t have to worry about anyone saying, “Hey, I thought you were cutting back?” or “How are things going with paying off your debt?”

During the moments you feel tempted to give up (and you will have those moments), it will be incredibly easy to abandon your debt-free journey, since no one knew what you were doing in the first place.

Forget about being embarrassed; you are more likely hear, “Oh me too,” when sharing your challenges with living within your means, than to receive criticism. Don’t miss out on the support you’ll gain from those who understand.

Telling Everyone About Your Journey

Another common mistake people make when paying off debt, is telling everyone about what they’re doing. What? If hiding your journey from others isn’t good, how is sharing it with everyone a mistake too?

Well, you should definitely let people in on what you’re doing, but maybe not your ornery neighbor, your kid’s teacher, and the person in line behind you at the supermarket. Okay, there’s a little exaggeration there, but the point is, be wise with whom you do share your plans.

When you begin talking money with others, it’s natural for people to self-reflect on what’s going on in their own lives. Your choice may make them feel bad about their decisions, causing them to want to make you feel that what you’re doing is somehow wrong. Misery loves company, right?

They might choose to cast doubt on your plans, be insensitive to the changes you’re making, or be downright cynical.

So while sharing that you’re dumping your debt is a positive thing, be mindful of the people in your life that you should not tell like toxic friends or relatives who push their own agenda upon you.

Forgoing Fun

Dumping your debt involves sacrifice — a ton of it. You’re trading in your old habits for new ones, cutting back on spending, and you are working your butt off to find ways to increase your income.

But an easy mistake people make when paying off their debt is assuming that experiences, entertainment, and other enjoyable things need to be dumped right along with the debt. Not true.

Granted, you will need to tweak how you go about your fun (and being extravagant with your money will need to be delayed until you have some), but you still need to be intentional about living your life and enjoying it while you are paying off debt. You do not want to look back at your journey with regrets.

If your path to becoming debt-free is devoid of anything fun, you may give up on it altogether. So, be careful of making your debt-free journey so austere and rigid, that you’ll walk away from it. Find creative, low-cost, and free ways to enjoy yourself while dumping your debt.

Attempting to Achieve Other Big Financial Goals

If you are working on paying off your debt, then undoubtedly, you are putting a lot of time, focus, and energy towards that goal. Be careful of thwarting your efforts by taking on other significant financial tasks that will compete for that time, energy, focus, and most importantly, resources.

Like attempting to lose weight by doing too much too soon, if you try to do a million and one things with your money at the same time, you will likely give up on all of them. Becoming debt-free is an important financial step that builds a healthy and firm foundation so you can achieve other long-term goals, so beware of pursuing other objectives before that foundation is set.

Know Somethings Not To Sacrifice When Paying Off Debt

Sacrifice. You’ll hear this word a lot in regards to dumping debt. And rightfully so. If you make the decision to stop living beyond your means, sacrifice is going to play a role.

Another word you will hear and need to learn is “no”. Anyone on a journey to debt freedom will quickly learn the power and importance of this two-letter word. You will need to learn how to say no—first to yourself, and then to others. In doing so, you will build resistance to anything that doesn’t line up with your goal of getting rid of your debt.

That being said, if you are not careful, there are some things that you may sacrifice and say no to without intending to. In fact, you will need to go out of your way to prioritize these three things. Otherwise, you may look back at your journey and realize you lost more than just the debt.

1. Relationships

Maintaining your relationships should by far be a priority when paying off debt—at least the ones you value. (You may need to cut loose the relationships that are toxic or prevent you from meeting your financial goals.)

As you embrace the word no, I encourage you to think about what you can replace it with. For example, no to dinner and a movie with a friend can be replaced with yes to a picnic and a free outdoor movie at your local park. Cutting back on your spending does not have to mean cutting back on spending time with the people in your life. Be creative and intentional about finding alternatives to your no’s.

When you look back on your debt-free journey, you’ll be grateful that your relationships are still intact.

2. Experiences

The amount of time it will take you to get out of debt will likely be unclear if you’re just starting out. As you progress and focus on your goals, you may gain a clearer picture of how long your journey may be. Whatever the length, avoid making it a period in your life that is void of rich and new experiences.

Forgoing vacations and eliminating your standard weekend-spending does not have to result in you sitting at home and doing nothing. Free museum days, free classes and workshops, outdoor concerts, local historical sites, beaches, parks, etc., can provide quality and unique experiences during this time.

The key is to be intentional about seeking out these experiences, otherwise, yes, you will be sitting at home doing nothing.

3. Generosity

Struggling with this category is common. I have seen many people feel pressured when it comes to gift-giving and sometimes succumb to spending money they don’t have all in the name of generosity. Or they go the opposite route and eliminate giving.

Yes, you are cutting back on your spending, so if you typically would overspend on gifts, your gift-giving may look different. You can still be generous with the resources you have in abundance like your time or a skill you have. When possible, tangible gifts can be replaced with a service you provide or a need you can meet.

While you are focusing on your financial situation, make sure that it does not affect your generosity towards others.

No Regrets

As you are paying off your debt, be mindful about prioritizing these three things. If you are not intentional about prioritizing them, you will sacrifice more than you set out to.

One of the benefits of the sacrifice while paying off debt is the ability to say yes to more things later. You want to make sure your relationships, experiences, and generosity are unscathed when it’s all said and done and to look back at your journey with no regrets