How to build credit???

Huh! I told my kids avoid credits!!! No one can afford (young or old) the rising interest rates of any credits. Those fffckrs have no mercy!

Throw your plastic cards and dump it in the sewer. If you can't afford, you don't deserve to have it.
Balancing your checkbooks is not that important. What is important is your priorities & sacrifices.

 

 

The simple solution to this is to not carry a balance on your credit card.

If you don't buy things that you can't afford, then you are actually getting a interest free 30 day loan and building your credit score. This helps you get lower interest rates on car loans, home loans, etc...

 

That's terrible financial advice!

Do you expect your kids to pay cash for every car they buy? Do you expect them to pay cash for a house? You need an established credit history to finance these things. Otherwise, you'll end up with a terrible credit score and a high interest rate.

Even if you can pay cash for these things, it's not always wise to do so. If you can get a mortgage at <6%, you can take the money that you would've used to buy the house and invest it in the market and make 8% returns or better. So, now you're actually making 2% on the amount that you financed. The mortgage interest that you pay is also tax deductible, so that 6% might effectively be more like 4.5% (although if you're investing your cash, it will have capital gains taxes, but the long-term gains rate is generally lower than the rate that you'll deduct for your mortgage interest, so you still come out ahead).

 

[QUOTE=mxt_77,Oct 11 2007, 08:21 AM] That's terrible financial advice!

 

My mistake... I thought you meant that you were teaching your kids to permanently avoid credit. If you just mean to avoid it until they actually have the means to manage the credit and pay off balances, etc, then that's a different story.

However, an intelligent person can/should still start developing their credit history as early as possible. I didn't have a full time job in college (just worked summers), but I did have a credit card. I knew I had a fixed income and I used the credit card accordingly. The card had a $500 limit, so I couldn't get in too much trouble with it. I still have a card with that same bank and due to "good credit behavior" and increases in my income, etc, it now has ~$20K limit.

 

only if you assume those who hold credit abuse it.

lets say one plans to buy a car at 25, or a house at 28... an extra couple of years of (good) credit history helps nicely

 

The way you manage your financial and recognize your weakness is very good.
I'm happy for you. Too many kids today are in trouble before they reach their peak because of bad decisions (financially). Even young couple, if they are not careful they will lose. Bad financial has too much pressure in relationship.

This is not the year of the Dragon but the year of REPO!! left and right!!

 

^ For the most part, I agree with you, but I think as a parent you shouldn't teach your kid to avoid credit. You should teach them the proper way to manage it. It's next to impossible to get through life without using credit and having some sort of credit history. You don't want them to go out into the world and not have any experience with it. If you do, then you're just setting them up for failure.

 

if your insurance was unpaid and lapsed at the time of the accident then your f**ked. You'll get $0 from them for your car and your responable for any damages done to the other vehicle in the accident (just hope they don't file a medical claim). Pretty much kiss all your money goodbye for a while.


Moral of the story: don't let anyone else take care of your major payments: insurance, mortgage/rent, etc.





And a side note about the credit deal, I got screwed because I've never had a credit card and have no established credit. I'm 22 and have paid everything either cash or from loans from my parents, and because of this no bank will give me any kind of major loan. So even though I've been financially responsible my entire life, without a credit score, banks look at me like I'm a shlub. My advice, get a credit card early on with a low spending limit ($250 or so) and use it for day to day things (such as gas) and pay it on time every month. Even though you may only put $60 on it a month, just making payments on time will bulid your credit.