Gayla Baker teaches special education to troubled young people at a state correctional facility, and she expects her students to be disciplined about their studies and their behavior.
Now she's finding out that she needs quite a bit of discipline herself when it comes to her own finances. The divorced mother of two boys has piled debt upon debt, usually as last-ditch efforts to pay bills. And that has cost her dearly.
"When I am in desperation, I don't make good choices," she admitted.
Baker only recently realized that her credit card debt was four times what she thought it was, and both her car and her car loan were too much for her pocketbook.
But her biggest blunder -- "my greatest embarrassment," she said -- was to fall for the TV advertising hype of CashCall Inc. by taking out a $2,400 loan that carries an interest rate of 99.25%.
"She does have a head-in-the-sand mentality," said Sandra C. Field, a financial planner with Asset Planning Inc. in Los Alamitos.
Field met recently with her to sort out Baker's fiscal fiasco and figure out whether the 38-year-old teacher can reach some of her goals.
Ever since her own college days, Baker has found it tough to say no to the easy credit that companies offered her. She filled out credit card applications heedlessly -- "I was, like, where do I sign?"
Since then, she has sought help for her debt through credit counseling services, but not before it damaged her financially. Her credit report shows multiple accounts with long strings of late payments of 60, 90, 120 days and more.
Her credit score is 550, better than Baker thought it would be but "horrible" enough, Field said, to make her a risky borrower and subject to higher interest rates.
Field told her to look for errors in her credit report, and Baker found five accounts she had paid off that were still showing delinquencies. By correcting those errors and paying down her debt, Field said, Baker can begin cleaning up her credit. The planner advised Baker to check her credit report twice a year online at www.freecreditreport.com.
Field also urged Baker to put as many bills as possible on automatic payment plans through her bank to make sure they are paid on time. Her student loans, Macy's card and Target card showed perfect payment records.
"Guard those," Field said. "Just paying everything on time will change your credit score."
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