“A thousand steps originated from one step” – Lao Tzu. Are you on your way to the greatest journey of attaining financial freedom? It’s a reality of life where no one manages your credit report and credit score better than you do. A 10-minute self-reflection brings you far. Take this opportunity to perform my credit repair myself.


Comprehensive income statement.

A comprehensive income statement splits into two main categories; Expenses & Incomes. Both categories are not mutually exclusive. In fact, either side of the income statement can make or break your personal credit repair. Emphasis has to be placed equally on expense and revenue segments.


Do note that this income statement is not that of financial accounting terms. It is more geared toward managerial accounting but on an individual level.


Personal expenses column.

Most consumers get into financial distress by not understanding what is an expense statement, how costly can expenses add up, why doing costing is so important, and the relevant items to be listed in an expense column.


In this topic, you’ll know the exact method in determining your personal expenses and ways to overcome “mysterious” objects from appearing in your credit card statements.


In an objective manner, under the image titled “My Personal Finance Portfolio”, you have to categorized your personal expenses into the aforementioned categories. It is imperative to do so as your monthly credit card statements and consolidated proof of receipts had to tally with this monthly expenditure tracker. Your performance is highly dependent on the types of spending incurred and whether your spending habits meet your lender’s requirements.


Sub-categories are a must to observe. Do not merely plunged figures into the “Overview” tab in the excel file thinking that it does help in breaking down your expenses. False! You might even need to do daily receipt consolidation as a form of professional individual credit repair.


The personal expenditure tracker is usually done on a weekly basis. You can choose to either consolidate paid & unpaid debts into an excel spreadsheet or simply used an online budgeting calculator for ease. Take reference to the nearest dollar, however. Scrimping for few cents or a dime does not make your financial expenses increased significantly.


Revenue column.

Another common financial problem is on focused. Many debtors placed great emphasis on scrutinizing their existing expenses in the left column but failed to achieve a balance in their financial equation. Revenue or income received on a monthly basis is equally important! You will need to put some efforts in touching base instead of throwing your monthly wage scheme into a math formula and let the excel or budget app auto calculate your net profits.


Taking references to the above personal finance portfolio, it is important to observe the influx of your revenue. Common ways of receiving incomes are, but not limited to, a full-time employed job, part-time ad hoc duties, a paid committee member, freelancer work, multi-career divisions, work-from-home income, temporary worker, domestic helper, dividends from equities, coupon payments from bonds, or other forms of active & passive income streams.


Actually, you might be thinking that your expense column should be higher than your revenue counterpart. Wrong! Once you’ve established a base for streams of passive incomes, semi-passive work incomes and active employment incomes, the realization of equality materializes. Do try to live a minimalist lifestyle to further enhance the probability of income segments surpassing that of your personal expenses.


As you can see, a proper balance does help financially in doing a personal credit repair. You too adopted financial prudence in management of outstanding debts while rendering provision of bad debts to your creditors. It does build trust among lenders too!


A Balance Sheet

Finding hard to retain earnings even after doing up a comprehensive income statement planning, this is where your personal balance sheet steps in. A balance sheet acts as a pivot in handling short- and long-term assets & liabilities. The balance of both segments are as important as your comprehensive income statement, thereby leading to an affordable credit repair.


Current account.

Noticeably, your personal current account contains short term incomes and expenses. This account mainly targets shorter term outstanding expenses such as consolidated loans for the year. It may be simply paying off latest credit card bills and interests, annual credit card fees, servicing off mortgage interests, and improving your credit report score.


Doing a current account consumes time. You’ve to seat down and plan for total year end reporting. Be accountable for your individual efforts albeit not requiring to show anyone (but you might want to reveal your diligent efforts to your spouse). It’s crucial to share your debt burdens for an immediate relief as your kin might have better ideas in settling your outstanding loans – perhaps seeking a 0% balance transfer account or negotiating on your behalf with local credit bureau offices.


The amount of unpaid efforts shall not be wasted. If you’ve been consistently tracking your current account and short-term liabilities (usually under a year or so), chances of recovering a bad credit score and removal of bad information claimed by your creditors increased significantly. You’re now in control of anything under a 12-month period, financially secured for the year.


Longer-term liabilities.

Another financial sorrow is your long-term liabilities. Unless your empire builds up a wealth of at least 2.5 million (an accredited investor), costly liabilities such as existing mortgages, autos, and other fixed liabilities drain your energy in performing credit fixes. An urgent cleanup program might not be necessary as of now.


Emphasis on focus. This segment is a challenging one due to the longer tenures as well as total debt servicing costs involved. Generally, your liabilities had a lifespan of approximately 3 years and up to 20 years. Shorter periods are usually installment plans for fixtures & fittings whiling longer terms are auto loans, mortgage debts and insurance plans.

Note: Personal savings plan with local & foreign banks are deemed as liabilities until completion of principle payments.


Do invest some time in learning the art of managing longer-term loans. One way is to adopt what many investors are doing: A debt snowball technique. It is wise to lower your interest charges and rid off smaller debts. Let the longer ones run first as you’ve an asset or security pledged to the long-term liabilities and dealing with secured collateral loans (usually at discounted interest rates).


Fixed assets.

Finally, fixed assets are a headache for many investors. Ever heard of the term, “Asset rich, Cash poor”, it applies for most people who treated their homes as an asset for retirement planning. Although there is nothing wrong for you to deem your personal home as an asset, the matter of fact not generating rental yields or any income is proven to be a liability.


Sophisticated investors performing individual credit repairs do not take into consideration for their primary residence as an asset. Even banks do not consider your private homes as an asset class. You’ve to possess liquid assets such as cash & cash equivalents, checks and other forms of liquid stocks & callable options. Such asset classes can be deemed viable solutions to doing an aggressive credit repair.


A sense of urgency is understanding the difference between fixed assets and liquid assets is almost obligatory. You need to know which asset classes pays and what assets to totally avoid buying. It is because a fixed asset usually requires some forms of financing that might hurt your credit score and affect your credit report. Don’t forget about today’s economic uncertainties, a qualitative factor to be taken into serious consideration.


Good to know about personal: perform my credit repair myself

After digesting an intense credit repair review, you should be prepared to take up an individual credit repair. Not one segment mentioned above is unimportant. Every step & process is an official flow in repairing bad credit. Never assume that your debt obligations, cash at bank, borrowed money, income receivables, or even your career is secured at any point of time. This calls for wisdom on doing a natural credit repair.


Quote of the Day: “Help yourself, help people – KIG Hall [2013-2018]”


Relevant Topics

» Plan for debt repayments early: Time your aggressiveness right!

» Start a daily plan for credit repair: Devise a plan to get out of debts!

» Optimization: Highly effective credit repair techniques!

» What you need to know about a credit repair: Knowledge is freedom!

» Dos & don’ts of a credit repair: Dos and dons of a credit repair!


This article was originally published on March 02, 2014. It has since been updated.