Young and trying to learn about money

[Quattro Pete]

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and ALWAYS, ALWAYS pay off the entire balance at the end of the month.

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I may be wrong, but I read somewhere that it is actually good to not pay the whole thing off once or twice. The way it was explained is that you're a "more valued" customer and a better "credit material" if your credit history shows that the creditor was able to make some money off of you (interest). It doesn't have to be much. Of course, NEVER be late on your payment.

 

[Quattro Pete]

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Don't waste money on vehicles! Buy a Honda or Toyota, maintain it properly and drive it forever.

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That's a big generalization. I mean, what if one of my life's dreams was to have a nice, fun-to-drive car? We spend so much of our lives in those things, commuting to work/school, etc. Why not make it more enjoyable? Not everyone treats his/her car as an appliance.

Next thing you know, someone will say: don't go out to have any fun with your friends or family. Stay home and save. You'll have all this money when you're 70 and not be able to do half the things that you can when you're young.

I guess what I'm saying is that yes, saving is a must, but don't go overboard with it and let your life pass you by.

 

[Silver02ex]

I had 3 credit cards when I was 18... Biggest mistake ever. Within 1 year I had over $4,000 in credit cards debt. It took me 4 years to pay it all off. I don't even want to consider how much I paid in insterest over time. Now i'm 23 and more responsible with money, my g/f and i have a a couple of credit card for big purchase that we know we can pay off in 2-3 month, otherwise we only use our debit card or cash.

 

[vairox]

just turned 24, have 2 cards...6,500 us bank gold visa and now american express just bumped by blue card to 4k.... pay off the entire balance at the end of the month, you dont have to incur interest to be trustworthy, forget that noise...

 

[keith]

Just the fact that you are asking the question shows that you are far ahead of most of your contemporaries. Put away at least 10% of your income and you'll retire to a very comfortable lifestyle.

Abolutely, positively, don't expect a Ponzi insurance scheme called Social Security to do double duty as a retirement plan - it isn't now and never was.

If you look at the earning power of college graduates compared to those that do not have at least a bachelors degree, it will be well worth your time to go to college. Usually the state universities will be the most economical.

When the time is right and the stars align, settle down and marry the girl of your dreams. Save and buy an affordable house, then pump up the payments and get it paid off ASAP. We purchased our modest house with a 15 year mortgage and paid it off in 7 years. We have zero debt, other than what we purchase month to month on credit cards. Mostly gas, with the 5% gas rebate AAA Visa card.

We live within our means and don't care that our neighbors are buying that new $$$ Lexus or boat or whatever. Our car still gets us from A to B. One day we will be retired and they'll still be working to pay off their debts. The only wild card is health and accidents, and hopefully we all make it through and enjoy a full life.

If there is one thing that will help you it is to be happy with what you have, rather than wanting what you don't have. I took me a while to learn that, but once the attitude adjustment occurs, it's very liberating and just life itself is pleasure enough.

 

[Pablo]

On Sunday we hiked to the end of the ridge and saw Snoqualmie falls from a viewpoint most tourists never dream of.

It rained a little on the way back. We had fun.

Cost = free.

 

[thooks]

Like some have said, never touch a credit card. Never finance a car.

A FICO and/or credit score is a score of debt. Or how dumb you have been with money.

Join a credit union. Forget a stupid bank. Banks are there for one reason- to make money off of your money. A credit union usually offers a ton of free services (Debit card, free checking, and many others.)

Get the book- Total Money Makeover by Dave Ramsey. LOTS of info in there. You are already debt-free. You are well into being wealthy.

 

[Dan4510]

Groucho Marx quote:

"Watch out for women, they are the biggest threat to money at your age!"

Groucho, not just at his age, at any age. If you get married, stay married, divorces play havoc with finances no matter how long you are married. and if you have kids, you get poorer after divorce too.

Marriage adds tremendously to income, wellbeing, and happiness, but only if you marry the right woman who has the same commitment as you do. Otherwise, stay single and keep your money.

for some interesting takes on the costs of marriage. Economic analysis and statistics.

http://www.nomarriage.com

http://www.americanwomensuck.com

Dan

 

[Shoobie]

Wow, thanks for all the great info, guys! That's quite a bit to digest right now, as I'm off to work. I do have one question, though. Where can one open a Roth IRA? Would it be through a bank, or some seperate entity? Do these IRAs earn some sort of interest? I have plenty of reading material now.

 

[wwillson]

Open Roth now = Big $$$ when you retire!

Vanguard and Fidelity both are very high quality very low cost investment companies. Both have exceptional customer support and knowledgable staff. You can't go wrong with either.

Wayne

 

[The Critic]

I'm 16 here...I'm surprised no one has mentioned my name yet.

I don't see a problem with getting a credit card, as long as you use it responsibly and pay it off in full each time. (well, sad thing is, many do not)

I personally don't need a credit card. I don't even have a wallet. I rarely spend any money. My parents buy what I need for me, so this whole thread is kind of irrelevant to me. lol

 

[pitzel]

Read the book "The Wealthy Barber". Follow the advice contained therein. Don't follow their advice to buy normal mutual funds, but rather buy index funds from Vanguard, or index ETFs in a brokerage account from Barclays or Vanguard.

Research every big purchase you intend to make. Don't feel that you need to buy something just because all your friends are (the fad right now is for people in their early 20s to buy houses with huge mortgages -- and trust me, those who do, likely will be saddled with huge debts and depreciationing real estate for the rest of their lives).

Learn a couple concepts of finance:

1) Time value of money. How to calculate compound interest, net present value, and future value of a series of cashflows.

2) How the income tax system works, including the various types of income (ie: dividends, long-term capital gains, short-term capgains, interest, income, etc.).

You should also know a few things about statistics:

1) Basic probability theory and its applicability to computing an expected result or return. (once you learn this...you will never visit Vegas though!)

 

[vairox]

Michael Wan, not really... it would be good to get one and use it responsibly to build your credit... we now live in a time where if you do NOT have a financial paper trail you might as well not exist, the days of paying cash only are gone my friend....you pay cash only and a lot of people suspect you of being either a terrorist or a drug dealer (who by proxy supports terror).... even apartment managers are told that people who pay their rent with cash are likely drug dealers... thats what we've come to....

 

[msparks]

This is just wrong 100%. You people are brain washed by the banking industry in to believing that you NEED credit and that you have to BUILD credit by using it.

This is just not true, by owning a credit card you will someday use that thing beyond your ability to pay it off in a timely manner. YOU CANNOT WIN AT THIER GAME. It's like going to the casino, you might win a good portion of the time, but eventually they will get their money out of you.

Really what would be the purpose of a credit card if you have a debit card with $2000 in there? Or $10,000 in there? They look alike smell alike and work alike only difference, you don't pay interest on it. And in some cases like my bank they pay me interest if I keep my balance over $1000.

You can choose to heed what I'm saying or not. I'm telling you that I've learned my lesson and no credit cards for me. And after this truck is paid off, no more vehicle payments either. Then it's on to my house. Once I'm 100% debt free life will be so easy to live trust me

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Michael Wan, not really... it would be good to get one and use it responsibly to build your credit... we now live in a time where if you do NOT have a financial paper trail you might as well not exist, the days of paying cash only are gone my friend....you pay cash only and a lot of people suspect you of being either a terrorist or a drug dealer (who by proxy supports terror).... even apartment managers are told that people who pay their rent with cash are likely drug dealers... thats what we've come to....

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[greenjp]

Interesting advice on here. My advice, take it all with a grain of salt. People and their propensities are different. Some people have philosophies about things different from you.

Credit cards aren't evil. Get one, use it, pay it off. It's very simple! Sure some people seem to think you don't need credit, or a good credit score, but what's the harm in having it? None. Having a credit card that you regularly use and pay off will do nothing but good for you. msparks is completely off base with is all-or-nothing philosophy about credit cards. Not everyone lacks the willpower or self control to use credit wisely.

Here's my advice: get an education, don't bury yourself in consumer debt, save some cash as best you can, and absolutely do not impregnate any women!

jeff

 

[thooks]

Not having a credit card or car loan removes 90% of the possibility of you ever building "consumer debt".

Nothing but good can come from you using a credit card? ?????


Like Ramsey says, it's funny how broke people always know how to give advice on money.

 

[Razl]

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I may be wrong, but I read somewhere that it is actually good to not pay the whole thing off once or twice.

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I don't know about that. Your lenders will be happy for sure!. Carrying a balance will increase your debt to available credit ratio, which will lower your score.

I use an MBNA card for everything because it kicks in 2% of all my purchases to my son's 529 Education Fund. It's paid off every month, yet my credit report shows a large balance (basically it's the statement balance prior to paying it off). Looking at my report, you'd think I carried a balance on that card.

vairox,
Don't be in a rush to get credit. Credit is big business, which is why it's sooo easy to get today. Our parent and grandparents were "privileged" to get a loan when they were you. In addition to the credit unions, check out some online banks. I've had NetBank since they first came out and it has been great! Make sure you check out their ATM policy - some reimburse fees while others have partnered ATM locations that do not charge a fee.

 

[msparks]

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msparks is completely off base with is all-or-nothing philosophy about credit cards. Not everyone lacks the willpower or self control to use credit wisely.

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That may be true, but when playing the odds there are several factors that I can back up.

People that use credit for purchases on average spend 17% more (because they think there going to get 2% back or becuae it gives them air miles etc)

While it's true you can have a card an never pay an interest payment if you pay it off, I would bet a whole paycheck on someone who has actually done this. I'm talking not missed on single payment that was paid before the interst was due.

I've played that game (and lost) I had a discover for 10 years. Had a 10,000 credit limit. Decided to buy a few things for about 3500 that month with full intention of "paying if off" well guess what?? Mr. Murphy steped in and I had something else that I had to pay that was an emergency. Therefore I could only pay $1500 of that balance. My next months interest was over $100 on that remaining balance. There goes all those supposedly "free" point I got from Discover.

I'm just saything that you can play the odds for a while, but just like the house they will get their money out of you..

To each his own. I'm done with the credit thing. But who am I to say? Let me know which credit card you get so I can buy stock in that company (then at least your interst will be going to a good cause)

 

[vairox]

razl - i dont withdraw cash from credit cards, thats just insane...


pablo - try and get a loan with no credit history and see how far you get... the "i always pay my bills" pitch only goes so far, they want to see accounts paid off etc... if i went to a bank for a home loan and said "but i pay my electric bill every month" they would say "and so do we, your point?" yes CC are evil, yes if you are not careful and buy crap on impulse you will get burned... see the guy above

 

[Pablo]

vairox - I didn't say credit cards are evil. I said he is 17 and has plenty of time to deal with the foolishness....