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Old 02-17-2009, 09:57 AM   #21
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Default Re: Getting credit

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Originally Posted by crappybob View Post
Debt for car = stupid

Debt for house = probably okay

Debt for school = usually stupid, the statistics on kids actually completing college now are horrible and there are plenty of companies or good old uncle sam (army, navy, etc) who will pay for your school.

Debt for any electronic device, like computers TV Blu-Ray = Really STUPID
I've never had a debt for a car, then again I've always driven shite cars! the trouble is a car can cost thousands, what are you meant to do, save up whilst spending all your money on busses? I have to say I agree though, buy a good but cheap car, something second hand and cheap rather than borrowing thousands to buy a car is definitly the way to go.

debt for electronic devices, yes, I agree really stupid, even if you don't have a TV at all, I'd say it was better to read a book and save to buy outright rather than getting into debt for luxuries.

college, really this is a weird one, you'll find that you can get sponsored for some courses, but the range of courses can be limited,
when I first went to university I went on a sponsorship, I'd applied for a sponsorship because I didn' think that I'd be able to afford to pay all the fees and such on my own, and even if I could have, certainly someone else paying was a nice thing, but I didn't like the uni, in the end I left, went to a different uni, and decided that I'd just have to pay for it myself. I'd consider an education an investment, you'd do better to borrow to get an education than not borrow and not get one, it'll pay for itself, and the interest and more in the long run. -but yes, investigating sponsorships is a good thing.

borrowing to buy a house. sadly this is the only way most people will ever be able to get a house, unless you win or inherit a lot of money! without owning a house all you're doing is paying money to live in someone else's house.
if you buy your own house you may be paying interest to a bank, but at least after 20 years of paying the bank rent you'll end up with a house rather than another 20 years more rent paying someone else's mortgage or holidays.
again, getting into debt like this is more of an investment and a good thing rather than a bad thing.

Though I agree with you, there is a credit industry, everyone that you speak to on a call desk at the card company, all their adverts, managers etc, they are all paid for by people paying off debts, because once you borrow money you'll always pay back more than you borrowed...

so yes, bear in mind that when you borrow money you're essentially agreeing to pay for someone else's wages with your interest payments!
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Old 02-17-2009, 09:58 AM   #22
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Default Re: Getting credit

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Debt for any electronic device, like computers TV Blu-Ray = Really STUPID
Absolutely true. I've seen my friends (who are in no financial position to buy anything superfluous) buy new televisions, notebooks, and furniture with their cards. When asked why, they simply respond, "recession equals sales."

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Old 02-17-2009, 10:08 AM   #23
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Default Re: Getting credit

but the question there is:-

is the debt serviceable?

if I walk into a shop and find a luxury leather sofa, usually £3000 marked down to £1000 as the shop is closing, and I know it's worth that...

do I try to save up £1000, (which we'll save takes 5 months), by which time the shop is closed and I can't get the nice sofa any more,

or do I get it on a card and spend six months paying off the card, (£1000 debt repayment, £200 interest repayment -that'd be at interest of ~40%APR as well which is almost double what the card rates are. (usually about 2% - 2.5% per month -so as the debt gets repaid the interest charged gets less too).

I agree, if it takes 10 years to pay off a card by making minimum payments to service interest, and only a tiny part of actual debt repayments is a stupid thing to do.

but if you know that you can service the debt, then why not take advantage of a sale, get something heavily marked down. provided that you are responsible, provided that you CAN and DO service the debt as well as the interest, you're getting a good thing now, and spreading the cost of paying for it in roughly the same time-scale as it'd have taken you to save).

As I said above, I agree that rather than getting into debt over luxuries you should save, but sometimes it'll work out better for you to seize the moment and get something marked down by using credit than to save up and pay the normal price outside of the sale.
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Old 02-17-2009, 10:16 AM   #24
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Default Re: Getting credit

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is the debt serviceable?
I don't know too much of their personal financial situation, but I do know they're the type of person who uses six or seven credit cards, opposed to having two or three like the norm. I also know they're the type of person who'll ask friends to lend them cash.
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Old 02-17-2009, 10:52 AM   #25
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Default Re: Getting credit

You want a cell phone other than a crappy pre-pay phone? They do a credit check. You want a checking account? They do a credit check.

If you want to pay cash for everything the rest of your life then go right ahead and forget about your credit. Having a credit card doesn't mean having 10 cards that are maxed out and that you are paying minimum payments on. There are people like that, but not a lot. Besides, we're not talking about being in debt in this thread, we're talking about how to buld credit. Not having credit is stupid. Without it you'll be resigned to a life of not having anything good because you don't have the credit to get loans and financing and whatever to buy it. Like a house, car or most stores let you finance when you buy things so you can make monthly payments. Sometimes people don't want to pay for something all at once, not that they can't afford it.
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Old 02-17-2009, 11:03 AM   #26
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Default Re: Getting credit

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You want a cell phone other than a crappy pre-pay phone? They do a credit check. You want a checking account? They do a credit check.

If you want to pay cash for everything the rest of your life then go right ahead and forget about your credit. Having a credit card doesn't mean having 10 cards that are maxed out and that you are paying minimum payments on. There are people like that, but not a lot. Besides, we're not talking about being in debt in this thread, we're talking about how to buld credit. Not having credit is stupid. Without it you'll be resigned to a life of not having anything good because you don't have the credit to get loans and financing and whatever to buy it. Like a house, car or most stores let you finance when you buy things so you can make monthly payments. Sometimes people don't want to pay for something all at once, not that they can't afford it.
I agree with ya here tommy, As long as you are not a complete IDIOT with your credit cards they are totally fine. I'm sure all these people that are saying how they are horrible and have no use in the real world still live at home with their parents and have no real responsibilities. If you ever plan on getting a house or owning a car that is respectable you will need a large amount of credit especially in the current economical situation. In order to get a loan you are going to need a 700 credit score or above nowadays and you will not do that by having 1 credit card that you pay monthly unless you have 10 years to wait. In order to build credit you have to have a lengthy report that is all paid on time. 1 missed payment is bad. I'm not saying that everyone should have 10 credit cards because that is actually bad too, and just because you make your payments on time the amount on the card in relation to the max limit is also a factor too. Say you have a 10,000 card with 9500 on it and you pay every month on time your credit is still going to be significantly lower than if you had 1000 on it and paid every month on time. A good rule of thumb is never keep more than 1/3 of the max limit on a card at any time.

Another thing if you ever want to rent a car you need a credit card. If you want to reserve a hotel room for a vacation you need a credit card. If you end up after paying your bills for the month and you blow out a tire and no way to get to work in the morning your gonna need a credit card. In an extreme time of need putting things on your credit card is completely justifiable, but just cuz a new Video card comes out that you want doesn't mean cuz you have a credit card you can get it and pay for it later. Use it wisely it is a great tool....Use it foolishly you are a TOOL....
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Old 02-17-2009, 11:21 AM   #27
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Default Re: Getting credit

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I agree with ya here tommy, As long as you are not a complete IDIOT with your credit cards they are totally fine. I'm sure all these people that are saying how they are horrible and have no use in the real world still live at home with their parents and have no real responsibilities. If you ever plan on getting a house or owning a car that is respectable you will need a large amount of credit especially in the current economical situation. In order to get a loan you are going to need a 700 credit score or above nowadays and you will not do that by having 1 credit card that you pay monthly unless you have 10 years to wait. In order to build credit you have to have a lengthy report that is all paid on time. 1 missed payment is bad. I'm not saying that everyone should have 10 credit cards because that is actually bad too, and just because you make your payments on time the amount on the card in relation to the max limit is also a factor too. Say you have a 10,000 card with 9500 on it and you pay every month on time your credit is still going to be significantly lower than if you had 1000 on it and paid every month on time. A good rule of thumb is never keep more than 1/3 of the max limit on a card at any time.

Another thing if you ever want to rent a car you need a credit card. If you want to reserve a hotel room for a vacation you need a credit card. If you end up after paying your bills for the month and you blow out a tire and no way to get to work in the morning your gonna need a credit card. In an extreme time of need putting things on your credit card is completely justifiable, but just cuz a new Video card comes out that you want doesn't mean cuz you have a credit card you can get it and pay for it later. Use it wisely it is a great tool....Use it foolishly you are a TOOL....
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That's why I feel that everyone should have 1 credit card for emergencies. If you travel, it's nice to have a credit card in case something happens like a blown tire or car trouble.

Just be smart about things. Having good credit is part of being an adult and shows you are responsible enough to pay back money. Adults are able to walk into a bank and get a large sum of money for whatever, and have the responsibility of paying it back.

Anyone who says you don't need credit is a kid and has never had to deal with real world financial situations.
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Old 02-17-2009, 02:20 PM   #28
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Default Re: Getting credit

I fully agree with Tommy and Poker, Thanks guys.
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Old 02-17-2009, 05:18 PM   #29
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Default Re: Getting credit

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Originally Posted by crappybob View Post
Good luck with your life of servitude.

The "only" reason to go into debt is to buy something that is going to pay for itself and then some and you are sure that you could sell it in short order for more than you owe.

Debt for car = stupid

Debt for house = probably okay

Debt for school = usually stupid, the statistics on kids actually completing college now are horrible and there are plenty of companies or good old uncle sam (army, navy, etc) who will pay for your school.

Debt for any electronic device, like computers TV Blu-Ray = Really STUPID

I'm not trying to rain on your " I can't wait to start my credit history" parade, but you need to be carefull. Credit card companies make billions off of people who start out just like you buying into the credit history myth and wind up just being able to make the minimum payments on 10 different maxed out cards.

Again, good luck.
Agreed on the car, for the most part. First car I but will probably be used. Not because I'll crash it, but because I can get the car I need/want in working condition for cheap.

House, you basically have to if you don't wanna be saving until you are 60.

School is good. Companies don't pay for you bachelor's or associates for the most part, they pay for the master's

And on the electronics its stupid unless you'd rather put it on credit then pay it off that month rather than walk in with 1.5K in cash.
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Old 02-18-2009, 09:26 AM   #30
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Default Re: Getting credit

just as some food for thought with credit cards.

If your credit card is charging 18% APR and you have used it to buy a computer for 500 GBP, how long will it take to pay off, if you make just the minimum monthly payment (if your miniumum payment is 2% of the outstanding balance with a minimum of 5 GBP)?

A: 2 years 8 months

B: 8 years 6 months

C: 16 years 8 months

D: 19 years 4 months


The answer was D
It would take you a staggering 19 years and 4 months. You would also have paid 965 GBP in interest, meaning the 500 GBP computer actually cost you 1,465 GBP.
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