Great Credit, Zero Savings: Reddit Explains Why a 704 Isn’t a Financial Plan
A 704 FICO score is the kind of number people brag about. It can also sit right next to a bank account holding exactly $0.
That’s the situation one r/personalfinance poster described when they asked the internet how to start making better money moves. The original post has since been deleted, but the replies are still up, and they don’t hold back.
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The Math
The 20-year-old OP lives at home with their parents and works 18 hours a week at $15 an hour. Multiply that by four weeks and you get about $1,080 before anything is taken out. Roughly $200 a month goes to taxes, Medicare and Social Security. The rest goes to groceries, gas, dining out, a phone and auto insurance, and once those are covered there isn’t much left to attack their $1,000 credit card balance.
One commenter pointed out that paying only the minimum made no sense on this budget. OP agreed: “I think I am overspending unfortunately and just need help trying to manage that.”
They had hoped to pay off the card in one lump sum, but couldn’t save enough, so they switched to $50 a month. Fifty bucks a month is a plan. It’s just a slow one. At a typical 25% APR, paying $50 a month on $1,000 takes about 26 months and costs roughly $300 in interest. That’s an estimate, but it shows what going slow actually costs.
What Reddit Got Right
Most of the advice OP received fell into one of three categories: earning more, eliminating debt and building emergency savings.
Earn more. Multiple people suggested looking for a better job, or at least one offering more hours to provide a greater income. Others suggested taking up a side gig, such as driving for DoorDash or another delivery service.
Eliminate credit card debt. This was also a popular bit of wisdom put forth by users, with most saying that tackling the credit card debt head-on and then locking the card (and locking the physical card away) is a smart move.
Build an emergency fund. Borrowing a page from Dave Ramsey, commenters suggested — sometimes politely, sometimes less than so — that the original poster refrain from unnecessary spending such as concert tickets and dining out in favor of ensuring the creation of a stable and reasonably sizable emergency fund (should car repairs become necessary, as one example).
Nice Beats Nagging
The thread’s best moments weren’t the lectures. They were the encouragement. “You’re still young and $1,000 is definitely manageable but don’t let it get any worse. You did the first most important step which is ask for opinions on how to fix it. You got this!” one user wrote.
The OP’s reply was just as human: “This is such a helpful comment I really appreciate this. A lot of these comments kind of didn’t understand what I meant so thank you for actually answering and kindly at that.”
Tough love has its place, but an OP who asked for help and got a pep talk plus a plan is more likely to follow through than one who got roasted for asking.
A 704 score measures how you’ve handled debt so far: on-time payments, no drama. It doesn’t measure whether your budget has room for those payments. A credit score can tell lenders you pay your bills, but it can’t tell whether any money is left after you do.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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