Don’t Let a Number Define You

Many years ago my (then) boyfriend (now husband) was asking me about my credit score (I find his practicality charming). This was before I worked in personal finance. I didn’t know and really didn’t care. I paid most of my bills on time, was late on occasion because of life, and it didn’t matter that much to me. I refused to be defined by it.

Now that I work with clients on a variety of financial issues, their credit score can play a big role in their lives, but mainly because they need to borrow money or use a credit card.

You need a high credit score if you want to qualify for a loan and also to receive a lower interest rate on that loan. A high credit score tells the world that you are reliable, because the person loaning you the money may not know you well enough to determine that fact.

Also, many employers pull your credit score before they hire you (because if you’re in a lot of debt you may be tempted to steal from your employer).

Otherwise, your score is not that big of a deal.

The problem is, most Americans very much rely on their credit cards and on loans to purchase homes, cars, college degrees and so on. So their credit score is important, but they’ve created a situation where they’re dependent on it, even defined by it.

Consider the person who has chosen to live “off of the grid.” Maybe s/he has dug her/his own well for water and installed solar panels to generate electricity. Not only does s/he not rely on the utility companies, s/he can make money by selling power to them. They have the power!

When you have your own well, you don’t need to buy anyone else’s water.

Perhaps there has been too much energy focused on buying other people’s water (getting loans) and less energy focused on digging your own well (saving your own money for purchases).

In a related blog post, How to Eat an Elephant about The Number (a book by Lee Eisenberg), I talked about how many people are on the quest of accumulating the “right” number of savings and investments for retirement. What I think people should do is first define retirement for themselves (not what the commercials tell you it should look like) and then be the boss of the numbers.

This approach puts you in the position of power because proactive energy is more fulfilling; reactive energy is draining. Everyone’s well is tapped on a regular basis, so why add one more tap?