Money Talk
I really hope everyone reads this. If you really think I'm wrong, then just skip it - don't reply and tell me how you do it... it doesn't work. I hope you can read this and listen with your heart and understand that I'm trying to help
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Credit is an evil game, and an unfortunately necessary one in today's society - forget getting a home loan if you have zero credit - but so long as it's not used except in an absolutely 100% emergency situation,(ie, a cruise with friends does not count as an emergency) and your account is monitored on a regular basis to keep them from pulling a fast one on you, there is no harm done.
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You have to make a decision that you WILL NOT BORROW MONEY. Car breaks down? That's what the emergency fund is for. If the dog gets sick, perhaps you can't afford to take care of an animal right now. If someone dies, I think they'll understand my not being there at 30% interest.
I'm not saying your wrong for doing those things (We have a Dog, and we get it), but it's got to be a conscious decision to not go into debt.
The funny thing is, when you have an emergency fund, it tends to keep Murphy away. Things that were big emergencies before become minor inconveniences. The problem is, no one restocks the emergency fund. You have to STOP SPENDING in order to build it back up after an emergency.
-Tiger Nick
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I agree 100% that it has to be a *conscious* decision to go into debt. No denying that. Should one never go into debt? That all depends. Otis a matter of weighing ups and downs in regards to the situation as a whole.
For example, Joe and I just went our & financed a bed for our roommate, who has been sleeping on a folded out futon up until now. The money she gives us in rent - which, I will add, is not necessary for housing expense as we have had no trouble paying our bills with just our two incomes, we opened up our home to her since we are relatively close to her school and she needed a place to stay, not because we neded the money - is going to be more than enough to pay off the bed. We made a conscious decision to committ the amount she gives us each month, to the bed we purchased for her room (which will become a guest room if/when she moves out) to paying off this bed. We have six months at 0% interest, but can pay it off in four. And we'll do so, because to us, having a decent credit score is important.
On the other hand, we've been to the 'maxed out' end of things too, and we know how much money is lost in finance charges and bogus fees. We know how much of our monthly income is eaten up by payments; now that our credit cards have been paid infill, we have $150/month more to toss at our car loan. When that's gone, we will have a total of $300/month to add to savings. We have learned - sadly, the hard way - how much of income can be freed by not being in debt.
Ultimately it's up to the individuals as to whether or not it's 'worth it' to go into debt. 11% interest was worth it, to us, to see family at Joe's grandpa's funeral. There had been talk of a family reunion that we had already declined because we couldn't afford it. Circumstances changed, and grandpa's passing made sure we all got together anyway. We did make the decision that the extra debt was worth it, to us, to be emotional and mental support for family members in a trying time. I think it's easier to say you would decline to go when it is still hypothetical; personally, I would rather have the option of being able to pay 10-15% than not go at all, but that is just me. :3
In the long run, impulsive use of credit cards certainly leads to trouble - we DON'T carry them with us unless we specifically need them - and if you have to consciously put the card in your wallet, it's harder to impulse spend. But conscious use of credit cards can be okay -- so long as you are aware of the potential (and highly likely) consequences.
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I know how life is, too.. Our emergency fund is only 1k, so it will stave away most emergencies, not all. If our house floats/blows away, we're fucked.
But the big problem with credit is your betting towards the future (let alone people living beyond their means). If someone buys a $500k house because they make $200k a year together, if one of them loses their job, they're fucked.
At the same if you forget to budget for something, get a bill that's over the amount you expect, and the car needs a $150 part, you're screwed. Oh fuck, it's time to register the cars, too, and you just bought an Ipad you had to have a month before, because you had a little extra money. It happens; I get it. But if you saved money, or got another job to pay for the ipod and have a little more extra money, this would all become a minor inconvenience. OR if you said, "NO" to the Ipad, you might not be so screwed.
The only way to allow life to happen is to save money to pay for it WHEN IT DOES happen. You're old enough it's not IF, but WHEN!
The only way to get more money is to reduce lifestyle, or make more money. Dave Ramsey recommends that people who are in a mess of debt / trouble get a second job doing anything (like delivering pizzas). I've suggested this to others, and am amazed at the response of not being able to work more - but they sure have time to hang out, party, and play video games.
In the beginning, credit wasn't evil - it was a luxury. But now, Victoria's Secret sales girls aren't selling panties, they're selling Credit Cards. It's out of control. Sales quotas aren't based on sales figures anymore, but how many credit cards you get out. How often do you get asked if you have a store card? That's my point. Besides the way people use it, which you get.
-Tiger Nick
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I have exactly one store card: Fashion Bug. I don't shop there often but they have good dressy clothing in my size, and they send out good coupons to card holders. (I just got two $10 off a purchase of $20 when you use the store card.) you can immediately pay off you balance in the store, so it is just adding a middle man and again, helps the credit score.
As for the second job thing, yeah that gets me too. I love working from home, but believe me, if things got too tight I'd hit the pavement and find something additional in a heartbeat. Even so, Joe snags overtime when he can and I will babysit the shop downtown for my old bosses on e in a while, just because it's extra cash in the pocket. If we don't have to apply it to bills we will either stash it away, or maybe treat ourselves to a nice date night, which we only do if we can afford it.
So many people see credit cards and loans as a way of extending their lifestyle but all it does is restrict it, more and more. I've seen the bottom of the barrel, working for a sub prime auto finance company, so I know what these people end up paying in the long run, and it DOES quickly amount to 30% interest. A two year car note costs around $500/month at that interest rate - easily close to a rent payment for some folks. I could NEVER afford that!! But it's the penalty for letting your debts (and l, consequently, your credit) get away from you. If might be a 'lavish' lifestyle for the first few months, but it quickly turns into a hard-to-escape hell. :(
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