You think you get it, but you still don't get it. That's cool, but allow me to let you in on a little secret: You know what my current auto loan interest rate is? 2.25%. It's like free money, AND it pluses up my credit score. Why do I care about a credit score? Being able to be financed for a small business venture, if the opportunity arises. You HAVE to use other people's money to get rich. The "I built this company from the ground up stories" are almost always bullshit, and involve an angel investment. My dad is rich, but I'll be damned if I ever ask him for a dime. I have a lot of solid business ideas for when I get out of the service, but almost all of them require in excess of 1 million to get off the ground. A bank will give me that money. For the same idea, at the same bank, they will tell you to fuck yourself.
Three additional scenarios in which having good credit to secure quick loans is important: - Your house burns down - You are involved in a car accident (not injured) - You are injured (in aforementioned car accident, doing yard work, whatever) If you have decent insurance, your insurance will cover a good portion of the expenses, but you're a fool if you think they will cover every dime. Personal example: My step-dad was involved in a rock climbing accident a few months ago. He is a RN and has top of the line health and accident insurance, which covered his time in the ER, ICU, and immediate care following discharge. What it didn't cover was the helicopter ride to the hospital, the many CAT scans and X-rays he has had on a weekly basis, physical therapy, or PTSD therapy. Nor did this account for the 3 months he was unable to work. Suddenly he had $50K of medical bills to take care of, and was down $20K in work hours. It's hard to come back from that. My point being, you may try to avoid getting in debt, but sometimes it's out of your control. You don't want an unfortunate incident to be the downward spiral of your finances.
Look dude, lots of other people here who know more than I do have told you why this might not be the best idea in the world. Knowing your other posts, though. I'm willing to accede that you're perhaps right for your case. Perhaps you CAN get along just fine without much credit history, although your making a tradeoff. If the lost money in interest and the risk of financially catastrophic events is worth the extra peace of mind to you, whatever. Your choice. The problem is when you go and saying things like this: This is obviously patently false. Beyond what others have said about why they're clearly useful for many people, you always stubbornly refuse to consider that you are not the typical case. For starters, if we're to believe your previous claims about your income/savings (whatever, let's take them as a given)...you're in the upper 1% or so for income. For your age group, it's more like the upper 0.01%. It's bloody wonderful that you have this pile of cash sitting around, but almost no one else your age does. Look outside of yourself for once. The overwhelming majority of people, particularly in your peer group, are not like you. "I don't need or want one, so no one else should. They're a scam!" displays such poor reasoning abilities that I'm absolutely astounded that you're able to dress yourself in the morning.
True, suckling on the parental teet is a good backup plan, but did you ever consider that a couple years down the line you might change your mind? Or that you may have to move to a different area to continue to work? Or that despite the fact that the whole past year or so has been good to you, it's entirely possible people will start chasing jobs like yours and due to the supply your earning capacity will re-normalize?
Or, y'know, if he wants to get laid. Of course, if he can pull being over 19, living with the parents, and getting laid, he could conceivably just quit working and mooch off some rich girl with the kind of game he has. I've made my share of questionable decisions, not any massively harmful ones, but signing up for a gym membership I'm not going to use (the shoulder says "crunch!") to the tune of $25 a month wasn't smart. Neither was going out to eat three times a week. Of course, these are easily fixed, even if the underlying habit does take some effort to not revert back to. In the realm of good financial decisions, and I hope I'm not too far off-topic here, but what are the guidelines for playing it smart when getting a credit card? Is it wise to shop around for interest rates? Are there varying factors affecting which cards work best for who?
I posted this a long time ago elsewhere, but credit cards a game, if you know how to play it they are an interest free loan with cash back, phenomenal deal. If you don't know how to play it they can fucking ruin you with interest and fees. If you're in the former category AMEX has the best rewards around, have one of those lying around for most purchases, I also recommend a Visa or Mastercard for places that don't take Amex. That said Amex rapes you on rates, so if you're the type that will carry a balance, stay as far away as possible and get a card with a very low limit and very low interest rate so you can't fuck yourself that bad even if you try. If you want to know which category you are in ask yourself this: do you view credit cards as an easy way to make everyday purchases and only having to reconcile it once a month, or do you view them as a tool to buy things you don't have the money for now, but most certainly will later. If you chose the second response go for the low limit card with low interest.
I'm not trying to beat a dead horse here, but I'm in the position I'm in because I'm good at what I do. Ive been working since I was 13 so I've got a good work ethic. I get paid what I do because my boss knows that [tonight for instance] he could call me up to go to Thunder Bay for a week, and he can count on me to work 18 hours a day to get the job done. If I have to move for work I'd rent a cottage or small house in the country of the area I'm working in. I don't think I'd change my career for many many years. I've already got a few years invested into this industry so to bail in a few years would be a waste. Actually alot of people I know manage to get laid while living at home over 19 and I'm no exception. It's sort of the "country" thing to do. The kids live at home rent free until they can afford to buy a house or take over the farm. Hell, one guy I used to work with managed to marry a gorgeous woman when he was 32 (they started dating when he was 26) and for the first year of marriage they lived at his parents house so he could pay for his first house in cash. I havent had a problem so far. I have looked at the rewards thing, but what I truly wouldn't see major rewards a year because I don't spend much a month. I've got a fuel card, my boss pays for my cellphone bill, my insurance is cheap, and I dont have to pay for rent or food. I budget myself to only spend $200 a week on whatever, and for most weeks, Ill bank $100 of that $200. Sure there's weeks when I spend more when I buy truck parts or whatever, but not that frequently.
This thread has been brought to you by the good people of visa, MasterCard, and American express (who remind you to play the fucking game and enjoy life). Why do we care whether somebody has a credit card? He's young, and hasn't felt the need to keep up with the Joneses. If he's content on buying a house and any other purchase via his giant bankroll,so be it. I'd rather him do that than run up a shit load of debt, declare bankruptcy, get the debt discharged, and have my credit lines reduced because the bank took risks it shouldn't have.
Because clearly, those are the only two options: Don't have a credit card or run up a mountain of debt. No one is saying that he needs to get a credit card; obviously he can do whatever he wants and if it works for him more power to him. All the points we're making is that having a credit history is very beneficial to people who use credit wisely.
You bet your ass they do. I pay $200 a month because of two tickets and stuff that's been on my credit in the past 6 years. I just got close to 3 grand from a severance check. Most of my friends spent it on a bunch of bullshit. You know what I did? Put up a grand in savings for for a down payment on a house, paid off 1200 in credit cards, and saving the rest to pay off my insurance in full come August. I'll be damned if I keep making the same mistakes the rest of these suckers make. You speak the truth. I bought a $19000 truck on credit at 14.9% interest due to bad credit. You know how much this is fucking me? I pay $460 a month on depreciating asset that will be worth maybe $8,000 when I'm done paying it off. At the end of the day I will have paid close to $30K for this. The people who are saying credit isn't necessary are outliers when it comes to this game. I've had it used when: Buying my truck Buying my insurance Renting my apartment Opening my three credit cards Applying for jobs Getting electricity for my apartment Getting internet at my apartment Getting a cellphone
Ah. My situation is somewhat unusual, because work often sends me places on short notice. For example: I booked a holiday to Vietnam and Laos leaving on March 7, saved up about $3k to pay for it, and used my leave allowance to go. However, on February 18, work asked me if I'd like to go to a conference in Vegas - in 3 days? I'd started packing before my boss had finished asking. The way I rationalize it to myself is that since work is paying the $3k airfare, and for the 4 nights of accommodation while the conference is on, I'm actually saving money! However, I then take holidays around the conference. I spent about 2 weeks in Vegas, and the money I had saved I still needed for Vietnam / Laos. Even better, the extra time off I had in Vegas was all unpaid leave, putting me further in the hole. So, the fiscally responsible thing to do would have been to refuse the Vegas trip, or at least not take so much leave. But - when you live in Australia, it's not that easy to get to the US - the plane trip alone took 30 hours and cost $3k. And it is against my religion to turn down travel opportunities, especially on work's dime. (Incidentally, when I came across the chapter on The High Cost of Free in Dan Ariely's book Predictably Irrational, boy did that ring some bells.) So, would I do it again? Oh yeah. A contributing factor is that I have no willpower. I start going a little bit mad after about a year without travelling, feeling trapped and stuck in my 9-5 rut. Should I just suck it up and deal? Yes. Does it make it almost impossible for me to turn down travel opportunities though? Without a shadow of a doubt.
Like a lot of things, people are attributing human qualities to things. Credit cards aren't good or bad, they're tools. The idiot using them is the problem. They've got qualities that make them open to catastrophic blunder. If you, say, carry cash around, then when you go to buy something you open your wallet and know exactly how much you have. With a credit card, you see the card and that's it. When you couple an unchanged visual cue with not having to actually part with any funds then and there, that creates a powerful motivation in some people to lose their fucking mind. On the other hand, they have some very useful qualities that make them far superior to cash, such as the inability to shove dollars into your modem. It's all about how you use them. Here's some of the ways I keep an eye on my finances: 1. I have a separate account for daily transacting. I keep the balance in this fairly low. I know that may mean extra fees in some cases, but if the benefit outweighs that then there should be no issue. I don't keep savings, bill or personal, in this account. That way I know how much I have and there's no temptation to dip into funds earmarked for other things. If there are direct debit/automated payments on the account, consider whatever the total of these are to be the zero balance for the account and stick that that. Go elsewhere rather than dip below that line (if you can). 2. I take out an amount of cash on payday that I can spend as walking around money for the week, including fuel, groceries and the like. When that's gone, either consider it the end of spending until payday, or the warning bell before dipping in somewhere else. 3. I check my monthly credit card statements every month, and notate them (plus, mine have business expenses). I then pay the balance off by the due date. If for some reason I can't do that, reducing that balance to zero becomes a high priority. More importantly than that, though, is that you should get into the mind set of a credit card not being a loan but rather a means of accessing money you already have and use it in a convenient method. In other words, treat it as not spending money you don't have. Then, if for some reason you do find yourself in a position where it is used without the funds to cover it, you're already in the mindset that you have to get it paid off as soon as possible. 4. Lastly, joint accounts are bad news. If you're going to go into one, keep your eyes open to this fact. There's no such thing as "this half is mine, that half is yours". It's all joint and several, meaning that any apportionment is between the account holders and them alone - the bank (or anyone else) won't be responsible or hearing any arguments. That goes double for debt. There's no "I'll pay half, then you leave me alone and chase the other person". If the lender agrees to do that, lucky you. But they're within their rights to chase you for every last dime that's owed. It's then up to you to chase the other account holder to redress things*. * That's the situation in my jurisdiction. Your mileage may vary.
So I've been sober for almost 6 months now and parts of my life are starting to fall back into place. One of them that I completely fucked up was my finances. Not to gloat but at aged 20 through 23 I brought home $54k, $62k and $40k. Note the decline is inversely proportional to my alcohol consumption. Despite that seemingly enormous sum of money and the minuscule amount of bills I had, at this time today I have less than $8,000 in a 401k to show for it, thats it. And I still have a fairly large loan with Sallie Mae to pay off. I was making the money to pay my bills, but I completely neglected them. Its beyond stupid and I can not explain it all. My credit rating is in shambles and I was lucky enough never to get a credit card, or else I'd be in worse shape. I royally fucked my self in the ass and am just now beginning to realize the implications. Even before I made it a concern to observe my financial history I noticed how little I use my bank accounts now that I'm not drinking. Almost zero impulse buys, no frivolous purchases. All I can say is: Don't be me. Be BrianH.
Here's what you're not grasping, and the reason people are arguing with you. Yes, we understand that at your current position in life, you have no use for credit. Great, wonderful. But credit doesn't just appear overnight. You don't just decide one day that you need some credit, go out and get a credit card, and suddenly have a credit score that a lender is going to consider adequate. SO, with that in mind, there are a hundred scenarios that could play themselves out and land you in a place where you might need some credit. What if the business you're in goes totally belly-up and you have trouble finding employment? Employers care about credit scores. What if the opposite happens and you have the opportunity to grow a business tremendously, with some financial backing? Investors care about credit scores. What if you decide this isn't what you want to do with your life, and you want to move or go to school? Apartment managers and lenders care about credit scores. What if you decide to be smart, and rather than waste your money by paying cash for your next car, you want a low interest rate loan so your money can keep collecting interest? Banks care about credit scores. What if you decide you want to travel? What if your car is out of commission and you need a rental? And do you really think, at 20 or whatever you are, there's no chance whatsoever that what you want out of life could change in the next 5-10 years? The issue is that it's very easy to be fiscally responsible and build a credit score. Much of society is built around using a credit report as a sort of entrance exam for people who are trusting you with property, money, responsibility, etc. Just because you don't need one right this very minute doesn't mean you won't need one in 3-5 years, and you can't suddenly conjure up a credit score when you need it. No amount of you arguing about your current situation is going to change the fact that life isn't always stable and predictable, and a credit score is a good way to ensure that you have a backup plan.
I think we can stop trying to educate him, he has no interest in listening or learning. He is a grown up (20 years old!) after all so knows exactly what his life is going to be like in the future.
If there's one thing I've learned in life, it's keep your options open. As cliched as it sounds, "Hope for the best, plan for the worst". There was a time when I had (yes, HAD) to max out all of my available credit (credit cards, credit line, personal loan, etc) when I got fucked over by a client and had to pay my developers. There was no option for me not to. Without those credit cards and lines of credit, I would not have been able to. 8 years later, I'm still recovering from it. Life is about dealing with the shit it hurls at you. Thinking that you have some say or control over that shit being hurled at you is fucking hilarious. If you can drastically increase the scope and number of options that are available to you should you need them, with little to no effort/work on your part, why wouldn't you? It's like another form of insurance, and a gun; better to have it and not need it than need it and not have it.
Just something to think about, but do you think your boss has ever used credit to ensure that you got paid? I don't know what it is that you do, but if it's a smaller company, the odds are REALLY good that the boss has personal lines of credit that are backing it. Yes.... PERSONAL lines of credit. Most "business" lines of credit are secured personally by the business owners. If the owner has shit credit, the company will have next to no chance of getting any credit itself. Really, it's just an extension of the owner's credit. Unless your company is in the rare position where it gets paid before a job is done, and is working 110% of the time, there are times when a line of credit is REQUIRED to keep the lights on. Net 30 on invoices, assuming they pay right on time, has its own set of challenges when it comes to cash flow. Just saying.
I also want to echo what the others have said about keeping your options open. My grandfather told my dad, when my dad graduated highschool, to be sure to find a job that uses your mind and not your body. "Your body will wear out, but your mind, you can use that forever." My dad was thinking about working construction because the money was pretty good. Instead, my dirt poor grandparents from countrytown, AL, paid for him to go to Notre Dame and become a physicist. Your job sounds very demanding physically, and that's great now that you are in your early 20s. But what happens when you get old or become injured? Your life choices are your own of course, but don't be so narrow minded to think that you are invincible from the hardships all us mere mortals have to deal with on a daily basis.
How many of you have learned to fly a plane? Perhaps one day, you will be in a situation where knowing how to land a plane is necessary. Maybe it will be a terrorist situation, and you will have to unarm said terrorists so some self defense courses should be taken as well. The kid is 19 years old. Guess what? He'll probably have a line of credit of some sort some day. Guess what? If he buys a house with cash (as he plans) creditors will line up dick to ass for him to borrow. You see, what most of you are forgetting is that equity and wealth are also factored into your interest rate. If the banks realize you have a assets in which they easily can recover any losses, your risk ( and interest rate) go down too. With that being said, it's silly to think the farms in his area do not use credit. However, he does seem to have no inclination to be a business owner. I remember this poster from before, and I believe his plan is to work his tail off now and retire quite young. If that's his plan, then that's his plan. The other thing is that (as he knows farming) there is a good chance that is where any business ventures will be in. The government tends to subsidize loans to this facet of our economy. The economy just collapsed 3 years ago because people relied too much on lines of credit. It's easy to say how to properly utilize them, but it's another thing when you see a $15,000 (insert thing you really want) and realize you could have it today instead of having to wait until 3 years from now and will only be using a fraction of your available credit. That's easier said than done. Personally, if this kid banks the money to by a house with cash, he'll be fine. He'll get those Same interest rates you will, and when he borrows for the first time, he will have established a credit history.