i suppose i'll start with the cards...

immediately out of high school i worked as a bill collector on credit cards. i hated them/it. i soon learned all the "crafty" charges they have, and hated to hear people talk about struggling to pay bills, when my family did/does too. only this time, i was supposed to say "whatever- pay up, or get your lights turned off". needless to say, i got fired from the job. but that was years ago...

anyway, i'm currently saving money to move out on my own this fall/winter..and i'm told credit will play a role. since working for one, i vowed that i wouldn't touch a card that allows me to make believe i have more money than i do. i mean it makes sense in emergencies, but the fact that a company can charge you for not using your cards sounds like a total dick move to me. (i know. big surprise and what do i expect)...anyway...so i want to avoid having a credit card as long as i can, but i am told this is needed for an apt, and a car which i still dont have..

what do you think abou credit cards? do i have to get one really?


also, while im on the topic...what advice would you give a first time apt renter on surviving, financial budgeting, and really gettin into the swing of things?...

my brother told me if he could go back, he wouldnt have gotten an apt until he had a certain number of G's in the bank...so im building that now...i should be where "he would've liked to be" by the fall... but are there any other suggestions?


what do you wish you understood, when you first lived alone (outside of college)?
[Edited 5/6/08 9:52am]

I didn't own a credit card, until I married at age 28. Now, I couldn't function without one. I pay it off every month. If you travel, a credit card is a must for payments: hotel, car rental, dining.
By "owning an apartment", do you mean renting? or buying a condo, townhouse etc?

If I had to do it over again I would get a charge card, like american express where you have to pay it off every momth.

I would buy a house or a condo instead of paying someone elses mortgage for years and years, I shutter when I think about how much money I have spent on someone elses property.

I would keep a savings of at least 6 months of earnings, my family was willing to help me with this and I declined because i wanted to be independent.

SirPsycho said:

So...you don't have credit cards? Have you established credit in another way (car loan, bank loan, etc)? Are you buying a place? Or just renting one?

If you haven't established credit, you may find it difficult to get a mortgage (especially now). A mortgage lender wants to see evidence of your ability to make payments before they'll extend the amount of credit needed to buy a home.

And having a credit card that you pay off every month does not establish credit. You need to carry a balance on something for awhile so they can see how you handle the debt.

Credit is a slippery slope, it's true that you can't get a home loan with out it, but if you have too much debt to income ratio that will get you too.
It took me YEARS to climb out from under all the debt that I had.

Maybe just a card will a low limit and then even when they raise it have the discipline to still only use it to the same level and pay it off.

start with a budget far under your earnings and stick with it, when you start to make extra money, pay yourself first, put the additional in savings and move forward.
everyone I know who is successful with money does it that way, they live below their means and the priority is savings not spending.

If I had one piece of advice it would be, save at LEAST 9 months of what all your monthly expenses are in a high yield savings account. Do not move out until you do this.

I would never get a credit card. I would buy everything with cash, or with a debit card.

I would finance my car. That will establish some credit history.

When you decide to buy a house, do not worry about "lack of credit". Any lack of credit issue can be solved with a larger cash down payment.

But the most important thing to do is:

STAY. OUT. OF. DEBT.

For reasons previously mentioned….you do need a credit card (car rental, hotel, other)

And unlike a debit card…if someone steals and uses it, the money isn’t coming directly out of your bank account.

Look for a card with no fees or minimums (especially if you are going to try not to use it.) Rewards are pennies on the dollar—but I do hear good things about travel miles—but that is only as good as your use for it.

For what it’s worth…I bought a house 11 years ago (almost) with NO credit history. (This is well before all these special interest rate loans. 30yr fixed no problem.) The mortgage business is somewhat speculative—it’s not as smart and as thoughtful as they lead you to believe. I bet the rules haven’t changed that much. If you have a good job, money in the bank, a car you paid cash for….I bet you’ll be fine.

G’luck

Sorry guys...i typed this right when i woke up, i meant renting...thanks for the answers tho, and keep em comin

SCNDLS said:

this is what my brother said...he said if he could go back, he would've saved 10000 before he left home. I'm not too far, and i'm just now trying to correctly assess what my monthly expenses are

RodeoSchro said:

excuse my ignorance but what does it mean to finance a car?

dude, i'm still learning that,
and dealing with a maxed out credit card (i had no other choice)
AND trying to find an apartment to move by end of august.

it's hard. that's all i know.

debt, as much as i'd love to avoid it, is inevitable for me.

SirPsycho said:

Financing is when you apply for a loan to purchase a car, they pay the dealership for the car, and you pay the bank or lending institution that gave you the loan every month.
[Edited 5/6/08 10:02am]

Listen to this guys program when you have extra time.

http://www.daveramsey.com/

I think Credit Cards are a necessary evil. It's almost impossible to get a home or a car or maybe an apt (but not so much) with out any credit history.

The best way to do this is find a card that won't charge you with a zero balance or yearly charge. Use it to buy something small and can easily pay off. Most people don't think know that paying off the credit card is not a good thing. A good credit score comes from on time and steady payments. Not to say you couldn't pay off the card each month. But it is important to establish a credit history. This is how landlords and loan companies (for homes and cars) see who is a good candidate and can pay off debt on a regular basis.

Depending on where you live, being in an apt is a good idea. It allows you to figure out how to live on your own. You don't have to save up a lot. I would save up for 1st and last months rent as well as the 2nd months...just so you're ok. That 1st and last months is going to be your deposit, so it's good to save a little cash before you move out.

Now the real way to go is to own a home, but I don't think you are there yet.

Why do ya'll keep saying it's not a good thing to pay your credit card off at the end of each month??? This is not true. If you use the card every month and pay it off each month you ARE showing a positive history and your score will go up. I used to work for Experian credit bureau, one of the big three credit bureaus and this is what we advise people to do. I've also worked for MANY banks and this is the standard advice we give to folks.

The best way to quickly build your credit score is to open a few accounts, preferably with 0% financing for a certain period of time 6, 9, or 12 months. Purchase something that you could pay for in cash, divide the total balance by the number of months in the 0% financing period and make payments in that amount until the balance is paid off. If you're moving into a new place it makes sense to open credit accounts at furniture stores or Best Buy or something like that because they usually have 12, 18, and 24 month periods with no payments no interest. However, make payments EVERY month AND make sure you pay off the balance before the promotion expires. Remember, only do this if you have the cash to pay it off anyway. In the meantime, keep your money in a high yield savings account. So your cash earns interest while you use someone else's money to get what you need while at the same time building your credit history and score.

my head is spinning but i know this is stuff i need to hear... thanks again guys

SirPsycho said:

You'll be alright.

SCNDLS said:

I think most of us have heard that if you make steady payments on your CC's that that is better than 1)owning a card with little activity or 2)paying off your balance every month.

Certainly the latter is going to be good for your score, but is it better to pay regularly? I think Suze Orman said no.

SCNDLS said:

:hugs: i know....i dont plan to leave until maybe december...but i know next time i pack up to leave mom and dads, i aint comin back if i can help it

SirPsycho said:

canada has cheaper rent

Financing a car is the worst thing you can do. Lease one if the money makes sense but never take a loan out on one.

Here's why, as soon as you drive it off the lot, it goes down in value by thousands of dollars and every mile you put on and every year that goes by also means it going down in value: depreciation. So then, you are paying interest on the loan for the brand new value of the car. Over the course of the loan you'll be paying thousands more in interest in something that is going down in value.

Now with that said, sometimes you just need to have a dependable form of transportation and the warranties and everything else give you piece of mind if you drive on a regular basis. The suggestion is to buy slightly used (letting someone else take the depreciation hit for driving it off the lot - 15k-20k miles) and getting the extended warranties for that same piece of mind. Or saving up as much as possible so that the loan you take out will be as small as possible and the amount of interest will be as small as possible too. Even used cars keep going down in value while your interest is usually a little higher for a used car so they get you either way because I haven't even went into the insurance which is another monthly payment to go along with your car loan.

Moral of the story, try to buy with cash or get a couple of piece of shit cars and make friends with a good mechanic so you'll always have a car to drive. Minimal insurance needed, no car payments and when something breaks, you pay some cash but nothing compared to the big picture of taking a loan out on a brand new car.

Stay away from credit cards as a way to pay for little shit, just use them for large purchases and establish a credit history by never being late on a payment.

They'll get you with yearly fees, high interest rates, late fees, over the credit limit fees and on and on.

It's all a game, pay everyone on time and you'll establish a good credit history. A good credit history will get you lower interest rates (across the board), cheaper car insurance (they all look when giving you rates) and the ability to rent a nice place because landlords do credit checks too.

Oh yeah - edit

They're all fucking assholes about it, nobody cares if you lose your job, they'll just cut off your cell phone/water/cable/gas. If you play the game with that knowledge you won't be shocked when you run into a problem. The trick (as someone has said here) try to save 3 months worth of the living expenses just in case you run into a problem.
[Edited 5/6/08 12:51pm]

BTW, I learned all of this shit the hard way, no reason for you to do the same thing.

sammij said:

...and other nice features so i hear

superspaceboy said:

Paying it off every month is exactly the same as making a minimum payment, scorewise. The formula used by credit bureaus views both activities the same. However, another calculation BOOSTS your overall score when you pay it off completely because it makes your debt/available credit ratio look better. Besides you're not accruing interest if you pay it off every month. I mean why would you pay interest to keep a running balance if you could pay it off every month??? It does not help your score or your bottom line. Rather it's costing you money. And I've heard Suze say pay it off every month unless it's 0% interest.
[Edited 5/6/08 14:45pm]

Slave2daGroove said:

This may work for you, but if you don't wanna buy a "piece of shit car" and deal with repairs, MOST people will have to finance a car. It's a necessary evil, but if you're smart when looking for your loan, pay it off as soon as possible, and keep the car for 8-10 years it can work out for the best. I've owned 2 cars my whole life, both were brand new. The first I paid off in 4 years and kept for 8 years, and the current one I've had for 7 years and paid it off in 4 years as well. In both cases, I just had to pay for basic maintenance and a few major repairs.
[Edited 5/6/08 14:59pm]

we use the credit card for every purchase, and have it paid off each month in full with direct debit from our mortgage, whilst all our income goes straight into our mortgage. This way we are not spending any money we don't have to, and we get rewards points from the card, and interest is calculated daily on the mortgage.

SCNDLS said:

To pay interest on anything that declines in value is not financially sound, this would include paying off something in 4 years that declined in value. This is a basic principle in personal finance and not really "what works for me".

It's great that you can keep your cars running eight years but with the mileage I put on cars, they don't last the loan and I end up making the choice between something that will break down regularly or something that won't (usually every 5 years).

I'm not saying that saving up for a car is easy but the question by the original poster mentioned something about what I've learned while surviving and this is one thing. Being on my own almost 20 years I wasted money regularly because I was programmed that buying a new car on credit was the right thing to do and it's really not, unless you're a bank.

Slave2daGroove said:

Like, I said this works for you, but everyone's situation is different and to some people it may be worth it to finance in order to drive what they want rather than settling for something they don't want or like. Again, financing a car is often a necessary evil and not necessarily a choice for most people.