“Credit is a tool. Similar to many other tools, credit has the potential to build something strong and durable, but it also has the power to cause destruction and damage,” wrote Jacob Tolman, an incoming graduate student at the University of Utah David Eccles School of Business and winner of Self’s $1,000 Scholarship for Aspiring Entrepreneurs.
Tolman’s submission on his personal experience with credit exemplifies the Self spirit of a realistic and responsible approach to financial empowerment. His aspirations to pay down his debt and empower himself to take control of his finances make him a role model to all. A competitive year, Tolman was chosen out of nearly 100 applicants. In addition to receiving a $1,000 check, Tolman will also gain access to Self’s free credit monitoring services.
Tolman has always had a basic understanding of personal finances. However, he had his first encounter with well-meaning but ultimately inaccurate information on credit several years ago.
While attending a nine-week personal finance course, Tolman felt at odds with certain teachings. Though never claiming to be a financial aficionado, Tolman balked as the creators touted a cash-only, completely debt free life. Tolman understood the basic principles of the teachings - namely the importance of living within one’s means - but believed there surely was a simpler solution to credit than avoidance.
“As a result, I began a journey to uncover for myself what I believed was a good, and assuredly more realistic, approach to credit,” Tolman said.
Motivated to attain the freedom that only fiscal responsibility can provide, he developed a precise and deliberate plan to positively build his credit.
“I have one credit card and use it only for specific, pre-planned purchases for which I have the funds on hand to cover the expense,” said Tolman. “By having this open, revolving line of credit, I am able to work on building up my credit score by using the card and paying off the balance regularly and on time.”
With his credit strategy in place, Tolman, a current Project Manager at the Church of Jesus Christ of Latter-Day Saints, has been persistent in his dedication to financial responsibility. Although balancing a credit card, student loans, and a car loan, Tolman wrote, “throughout my entire credit history, I have never missed a payment on any line of credit or bill.”
Although the course’s debt free message made a lasting impression, Tolman views his current debt as an opportunity to reach financial stability. “Freedom from debt is important to me,” said Tolman, “but I also understand and accept the realities of living in a world where having credit matters.”
His goal is to pay off all of his debt within the next five years.
“Fortunately, I have a solid knowledge of the power of credit. I look forward to the edge that understanding credit will give me as I move ahead not just in my personal life, but in my professional life, as well.”
At Self, we hope this scholarship empowers Tolman to reach his financial goals, and we’re excited to see the greatness that’s in store for the next generation of pioneers.
"Tell us how you interact with credit. Are you doing anything to build credit history today? If so, are you using a credit card or some other form of credit building tool?"
Throughout my life, I’ve heard a variety of differing opinions on the subject of credit. Several years ago, I enrolled in a nine-week personal finance course for the purpose of increasing my fiscal knowledge and improving my budgeting practices. While I found the program to be beneficial and enlightening in many ways, I felt at odds with the information that was presented concerning credit. The creators of the course strongly pushed the idea that all debt and the borrowing of money for any reason was a bad thing, something that must be avoided at all costs. They claimed that by living frugally and saving up enough money in cash, you would never have the need to borrow money or go into debt. This was one principle that didn’t quite sit well with me. As a result, I began a journey to uncover for myself what I believed was a good, and assuredly more realistic, approach to credit.
Though I certainly do not consider myself a complete financial aficionado, I do have a passion for fiscal responsibility and the freedom that comes from being in control of my finances. With that in mind, I have developed what I believe is a healthy relationship with credit, and am working continually on positively building my credit. My interactions with credit are precise and deliberate. I have one credit card and use it only for specific, pre-planned purchases for which I have the funds on hand to cover the expense. For example, once a week I go to a gas station to fuel up both of our family cars. This fuel purchase is one that I make using my credit card. The following day, after the purchase has shown up on my credit card account online, I immediately pay off the existing balance. By having this open, revolving line of credit, I am able to work on building up my credit score by using the card and paying off the balance regularly and on time. Additionally, I am able to benefit from the rewards that using my credit card has to offer by way of a cash back program. This limited and very controlled use of my credit card has proved to be advantageous to me as I work to build my credit.
In addition to having and using a credit card, I also have two loans for which I have scheduled monthly payments; a car loan and a student loan. My car loan is the third of its kind that I have taken out with my credit union. The previous two car loans were paid back in full and in advance. Throughout my entire credit history, I have never missed a payment on any line of credit or bill. Freedom from debt is important to me, but I also understand and accept the realities of living in a world where having credit matters. When the time comes for me to purchase my first home, I want to approach my mortgage lender with a sizeable down payment and a robust credit score. In the meantime, I am working on slowly and steadily building my credit and paying off my existing debts. I maintain a meticulous household budget and have the goal to be debt free within the next five years, completely paying off the remaining balance on my car and student loans.
Credit is a tool. Similar to many other tools, credit has the potential to build something strong and durable, but it also has the power to cause destruction and damage. It all depends on who is wielding the tool and what knowledge and expertise they have concerning the use of the tool. Fortunately, I have a solid knowledge of the power of credit. I look forward to the edge that understanding credit will give me as I move ahead not just in my personal life, but in my professional life as well. As a graduate student beginning my MBA studies this fall, I am excited to venture onto the path ahead as I set out to build my future with this valuable tool.