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Discussion Starter · #1 ·
I'm 19 years old and looking to build a little credit. I want an electric drum set for my apartment. The kit I want costs $800, I have $400 saved. The plan is to get a job so I'd have income. After that, I'd buy the kit with a credit card and pay at least double the minimum payment until it was payed off. Is this a good way to start building credit? Or is there a smarter option?
 

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get a job, save up another 400, don't bother buying on credit.

credit is just the ability to owe other people money.

all it does for small purchases like this is make it so that you can pay more to the people you owe money to, than you would pay if you just bought the thing straight up.
 

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Discussion Starter · #4 ·
I had a part time job, then I moved 350 miles away soooo couldn't work there anymore. I have a job now but it's working for my college and I hardly make anything. So I wanted a part time job like I had before. Is it not good to build credit? I'd rather pay for it all. That's how I've always done big purchases. But I didn't know if bow was a good time to build credit for future purchases like cars.
 

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I had a part time job, then I moved 350 miles away soooo couldn't work there anymore. I have a job now but it's working for my college and I hardly make anything. So I wanted a part time job like I had before. Is it not good to build credit? I'd rather pay for it all. That's how I've always done big purchases. But I didn't know if bow was a good time to build credit for future purchases like cars.
of course it is good to build credit, only people that are nutty that want to "stay off the grid" or think the government is monitoring their thoughts think credit is a bad thing. How else are you going to buy a nice car and a nice house unless you have a few mattresses full of cash guarded by your "merica freedom fighter independence guards" lol.
 

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Credit can be a good friend or a terribly powerful enemy.

While you're still in college, I wouldn't worry too much about it. If you're taking out a student loan, just make sure you pay it off FAST after you graduate.

Once you're out of school and employed, you'll be able to get a credit card or two. Get in the habit of using them but paying them off in full every month. Over time, you'll be able to raise the limits on the cards. When you're ready to buy a car, use a loan for a small part of the balance after a good down payment (you may need to have a co-signer), and make sure you pay extra on the loan every month and pay it off early. A few purchases done 30-days-same-as-cash can also help, as long as you pay them off on time or early.

Look for advice from people that have lived a while without bankruptcy, foreclosure, reposession, etc., and take your time.

This month marks 30 years since I graduated from college. In all those years, I don't think there have been more than 3 or 4 times I carried a credit card balance over into the next month. I have always paid extra on car loans and mortgages and cleared them early. I own my present home, and paid off its 30 year loan in 11 years. Consequently, I have a perfect (literally) credit rating. I also have zero debt.

What that allows are options. I have a home equity line of credit, below prime interest rate, that I've never tapped. I have fairly high limits on my credit cards, with no balances at all. If I ever need money and don't have it on hand (say a medical crisis pops up, or a tornado wipes out my home, or I'm stranded in a foreign country, or my car is stolen while I'm a thousand miles from home, or a Victoria's Secret model suddenly begs me to run away to Cancun with her, or....) I am in a position where I can exercise a large amount of credit quickly and then retire the debt as I'm able.

That's what I mean about credit being a friend. It can be useful when life necessitates that you spend a chunk of money you don't have at the moment.

But if you will follow the news reports about the number of people who are over their heads with mortgages, student loans, horrible credit card debt, etc., and are forced into bankruptcy, you'll understand what an awful enemy credit can be.

Build your credit rating slowly, keep your debt very, very low compared to your income, and pay off credit cards every stinking month, and you'll be fine. Take my advice and you'll find yourself financially secure in later years.
 
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Get a credit card, start using it, and pay it on time!! If you can pay it off every month GREAT, if you don't pay it off every month, pay at least the minimum EVERY MONTH AND ON TIME! Building credit does not mean using credit, it means using it, having access to it, and responsibly making your payments on time.

Unlike half-fast rider, I have carried credit card debt for a long time. Not because I really wanted to, but I didn't want to stop or reduce my savings goals to pay them off sooner, I have a lot of student loan debt, and I probably have not been as disciplined as Half-fast-rider. That being said, I frequently transfer my credit card balances to other cards so that I am rarely ever paying more than 3-4%.

With all that... My credit score is over 800. That's WITH credit card debt, student loan debt over $50,000 and I don't make THAT much money. My score is that high because I ALWAYS pay EVERY debt on time and I often pay much more than the minimum, and I have been doing this responsibly for 20+ yrs.

You can ruin your credit exponentially faster and greater than you can build it.
 

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when I was 18 I had my dad co sign a $4000 loan with me. I paid it off in 1 year and after that my credit score was like 720.


another idea is to get a credit card to buy gas with, and just pay it every month.
 

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Keep in mind that credit rating isn't the whole story. It's possible to have a decent rating, yet have very little credit available. You can be making all your payments, maybe even paying a little extra, have never made a late payment in your life, been with the same employer for a long time, no reposessions, etc., etc., but still have large debt and be unable to borrow more money.

Credit is a tool to be used judiciously. Seek to have borrowing ability, not just a good rating. That way you'll be able to tap into a money resource when you need it, like to buy a home when that place you've dreamed about suddenly goes on the market, or adding on a room when your wife unexpectedly finds herself expecting, or when the septic drain field needs to be replaced at the same time a lightning strike kills your well pump and a week later you learn that the house has to be re-piped (happend to me; no joke), or when you get an inside tip on a sure thing in the third race at Hialeah.

Go into debt cautiously, with a defined means to retire the debt as quickly as you can. Living with constant debt is like trying to swim with a brick in each hand.
 

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BTW - another suggestion for handling debt. This requires self-discipline, so only do this if you trust yourself to stick with it.

When you finance a major purchase like a house or a car, get the longest loan with the lowest interest rate and the lowest payment that you can. But don't pay it off that way! Pay extra, double if possible, every month.

By getting a 30 year loan on my house, I had a low rate and a small required payment. I made substantial extra payments (paid the loan off in 11 years), but over the years when an emergency happened I didn't have to come up with a large payment that month.

For example, when we had had to re-pipe the house, we paid the plumber over a couple of months and dropped back to the required 30-year payment on the house for those two months. This kept our monthly outlay about the same, and once the emergency was paid we went right back to the b***** house payment.

Setting things up this way makes it easier to make payments on time and preserve your credit rating even when life's inevitable emergencies happen.
 
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Ramsey has helped many people. His plans work, but whether they're appropriate for you depends on how you want to live now and later.

If I'd followed Ramsey's approach, I might have arrived where I am today a few years sooner. But along the way I wouldn't have gone sports car racing, I wouldn't have bought motorcycles, I wouldn't have taken up cave diving or enjoyed dive trips to the Caribbean, my wife wouldn't have her horses, etc., etc.

Ramsey's plans work well for people who have gotten into financial trouble or are prone to do so. For example, he recommends not taking out 30 year mortgages. But 30 year mortgages are a great idea if you pay extra and retire them early (see my post above). This takes discipline and isn't for those who are prone to get into financial difficulty.

I prefer to live life with a bit more balance. I think it's important to have some indulgences along the way, to balance what is spent today and what will be saved for tomorrow. Some things are best done while you are young. If you want to climb mountains, explore underwater caves, ride horses in jumper competitions, drive racecars, skydive, whatever, you will be most physically able to do such things while you are middle aged or younger. If that means it takes 5 or 10 years longer to pay off your house, so be it.

Living your younger years like a monk while you sock money away for your latter years only works if you make it to those latter years. Many people don't.

My point is balance. It's important to enjoy all phases of your life, while still preparing for a comfortable retirement.

Of course, that's just my personal philosophy. It's not right for everyone.
 

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Discussion Starter · #13 ·
This may have been the most successful discussion on SBN. Good job gentlemen. I've learned a lot.
 

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$400 isn't going to establish much if any credit anyway.
it takes a good long while to build it up with credit cards. but it's still the easiest and often the only way to start.

I still had to co-sign a loan for a motorcycle for my brother and he had a card for several years at that point.

be responsible with your income to debt ratio. the banks etc will keep offering more and more to you. that's what gets so many people into trouble and debt they can't afford to pay back.
they get offered a credit card for $5k at first then they max it out. after a few years the bank ups it to say $8k they max it out, and so on. before long something happens they need the payment money they were using for the CC for something like a new car or hospital bills and now you can see how their life is spiraling out of control.
most people are dumbasses with credit and money for that matter. I know people that run their checking account (the only money they have) down to several dollars every week/month etc. only a serious fool does shit like that.
 

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Discussion Starter · #15 ·
I'll run my checking down to $50. But I always have enough in my savings.
 

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I've been using a credit card since I was 18. right now I have three lines of credit, all at a zero balance as I only really use one of them.

I pay my CC off weekly. had a loan on my first motorcycle when I was 17 and paid that off in 1.5 years. financed my car but paid it in full within 2 months. and I'm currently financing my current motorcycle. I had a credit of like 730ish when I applied for the latest loan.

I've never held credit card debt, I only spend what I can afford to pay off right away. basically use the credit card and pay it off and you'll have good credit.


Sent from Motorcycle.com Free App
 

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I just graduated and have worked on building my credit through college.

Some things to look out for: as your credit improves you will get tons of credit (often credit card) offers with 0% for a few months. You don't have to take these, but this is how young people fall into debt. They think "I'll start a new card" and then overspend and have debt.

However, being responsible is easy with money if you do some smart things.

First, have a job. You say you are in school, look for on campus positions. I've owned my own business and worked on campus through school earning nearly double the minimum wage. I know a lot of people who used this to pay off their school debt, but I didn't bother for a few reasons. Primarily, because it isn't accruing interest until I'm completely done with school (all my UG loans are subsidized) and the balance is low (<$30,000) so I didn't see it as being all that important right now.

Second, get a credit card AFTER you get employment of some sort. Does your university have a local credit union in the area you can use? That would be better than a bank. Use it to pay for small purchases, such as gas, etc. Don't think about making the minimum payment, think of it as simply your debit card: never use more than you need. Set a budget way ahead of time (I recommend You Need A Budget software which is available free for students) and follow it strictly. This will help you build a safety net while paying off your credit card.

Once you feel secure, take out a small loan for something IF you can afford it. I took a loan for my motorcycle that I got my sophomore year. Once again, as has been said, low interest and long loans are great. Mine is a 5 year and I'll finish paying it off this summer (3 year point). However, you could instead pay off your student loans if they're accruing interest. If they aren't accruing interest I wouldn't worry about those nearly as much.

Some people will say it is irrelevant, but depending on what field you are going into bad credit can hurt you. Some institutions will run a credit check upon employing you, and you wouldn't want this to hold you back. Additionally, good credit = lower interest rates on things. Building credit now will save you a ton when out of school and looking to buy larger things on credit.
 

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Mango, if you're still in the mood for financial advice, make sure you're always getting a good return on your investments. You're on the right track by attending college, but you'd do even better by transferring to Georgia Tech (my old alma mater), rated as having the best return for your money:

Colleges That Help Grads Earn Top Salaries: SmartMoney List

You might also consider that one in six Ga Tech graduates are millionaires.

Be sure you select the right major, too:

The 13 Best-Paying College Majors: PayScale List

Note that nearly all the best paying majors are in engineering, with a few in math/science fields tossed into the mix.

:star
 

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Discussion Starter · #19 ·
That's funny pharmacy isn't on their list.... Starting salary is higher than most mid career salaries on there. I have a friend at Ga Tech. I'm happy at St Louis College of Pharmacy. I'll take the 99% pass rate on boards and 99% job placement. Assuming I make it through haha.
 

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Pharmacy is a tough major. When I was doing my math degree at Samford, I knew several pharmacy majors and they worked their tails off. One went on to become the head pharmacist at the UAB Hospital in Birmingham (IIRC).

I don't know much about pharmacist salaries, but I would suspect that running a hospital pharmacy or something similar would beat standing behind the counter at a Walgreen's. I could be completely wrong, though.

Of course, simply selling drugs on the street probably pays best of all.... :)
 
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