New Employment and Credit Repair: How to Do It Right

There is good news on the job front. On May 3, the U.S. Labor Department reported 165,000 new jobs were added across the country, an encouraging number compared to March’s 138,000. Congratulations if you are among the recently employed. Your new job is bound to offer emotional and financial relief, especially after a long struggle in a competitive market. If you are looking for a new perspective and a fresh start, consider implementing the following tips in your day-to-day. The results will help you stay focused on credit repair and your new career.

1. Cash in on your benefits.

If you are a newly-minted full-timer, you’ll likely enjoy some much-needed perks including health insurance and flexible spending accounts. Be sure to visit your new company’s HR department during your first month on the job. Be prepared to ask questions, including:

• What does my insurance cover, e.g., percentage of expenses covered, deductibles and premiums, coverage options (PPO vs. HMO), etc. Note: These questions are usually answered by the insurance company itself, but your HR department should have printed literature and contact numbers available.
• Do you offer a flexible spending account to cover prescription costs and other medical expenses with pre-tax dollars?
• Do you have a work-from-home option?
• Do you offer tuition reimbursement?
• Do you offer childcare discounts?

A full-time salary isn’t the only way to focus on your credit repair goals. Job perks can offer tremendous relief from everyday expenses, helping you save more and make the most of your position. Don’t wait to take advantage of the opportunities offered to you.

2. Prioritize your paycheck.

Cash flow is great, isn’t it? You’re probably feeling pretty good right now. Maybe you’re planning a little shopping spree or a weekend away with the family. To this we say, “Not so fast!” Before you get carried away, it’s important to consider how a paycheck can help you stabilize your finances. Past struggles with credit card debt, living expenses, student loans, etc. can be managed with a plan. Consider the following example:

Sebastian was recently hired as a marketing manager for a Fortune 500 company. His job comes with a full benefits package, three weeks’ vacation, and a $60,000 salary. Although Sebastian is feeling secure with his $3,750 monthly net income, he decides to pay down debt and save before celebrating. He creates a plan based on his current standings:

Credit card debt: $4,000
Student loan debt: $12,500
Savings: $2,600
Monthly bills and expenses: $1,500

The Monthly Plan:

• Reduce credit card balance by $1,000
• Increase student loan payment to cover accruing interest
• Add $500 to my savings account

At the end of six months, Sebastian has paid off his credit card bill and increased his savings to $5,600. He has also prevented interest from accruing on his student loans. With money in the bank and a firm grasp on his finances, Sebastian takes a three-day vacation and plans to pay down his student debt within two years.

It doesn’t seem so hard, does it? By prioritizing his paycheck, Sebastian was able to shake off past debt and achieve the fresh start he was hoping for. While your approach may not be as aggressive, do your best to focus on credit repair immediately after finding a new job. A little effort will go a long way.

3. Make lasting changes.

Just as we learned from Sebastian, a new job can be a game-changer with the right attitude. On the other hand, consider the danger Sebastian faced with the wrong attitude. With less than two months’ savings in the bank, his situation could have been dire without a new position. If you have ever faced sudden unemployment, you understand the stress of making ends meet with little-to-no savings. Don’t let the same consequences find you again. While you may love your new job, there are no guarantees in life. In addition to your savings, consider making some lifestyle choices to help you live as efficiently as possible. For example, if your grocery store’s prices are too steep, consider shopping at competitor locations to find the best deal. If your electric bill is through the roof, call your provider and schedule an audit to help you save in the future. The bottom line: Don’t spend more money simply because you have it. Respect your new wages by using them wisely.