The Next Chapter In Life...For The Mature Crowd.

Discussion in 'General Discussion' started by TFPrime, May 7, 2012.

  1. TFPrime

    TFPrime TFW2005 Supporter

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    So things in life go rolling along. I'm 34. Last year I took out a 10K car loan and got myself a new car. This year I've paid off my school loans, credit cards (and then canceled it) and so far, have paid off about 2000$ on that car loan. I rent, and have no real intentions of buying a house anytime soon..if at all. I'm ok with renting and randomly moving as need be. My girl who I've been with for 7yrs has her own place and we don't/won't be having kids.

    As I erase all previous debts..I'm finding I like the idea of not owing money to anyone. I like the freedom. I know in our society it's designed so as we're always supposed to be in debt..Make sure you have credit cards and pay on them and keep in debt cause it builds credit etc etc etc..But I'm kind of tired of living that way. I like being debt free.

    My girl has concerns, and I debate it as well..cause who knows what the future holds..as i pay off my debts, more and more of my paycheck again becomes mine, and it's to the point where I made almost 1000$ extra per month that I really don't spend. And once car is paid off, that'll be the exact figure each month once rent and utls are paid, that I'll have free and clear. I never owe on my taxes, always make about 1500$ back..so, I'm doing ok.

    I just don't feel the need really to take out anymore credit cards, make payments etc etc..anyone else live like this and manage? Can you get by without living off credit? Or should I just throw myself back into the system, get another card and just start it all over again?
     
  2. Aernaroth

    Aernaroth <b><font color=blue>I voted for Super_Megatron and Veteran

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    There is, from an economic perspective, a healthy level of debt, though it usually ties into a great number of intangibles and varies heavily from person to person.

    I guess the best thing is ask yourself, what is happening with that $1000 a month? Have you been saving for your retirement? Do you have any investments? What are your long term goals, and how can this money help you meet them? Getting out of debt is an accomplishment, and you should be proud of it, but that's only the start of financial planning. Maybe it's time to talk to a financial advisor about how you wnat to move forward?

    Is it possible to get by without living off credit? Yes, but for many people it's difficult (though you appear to be in a much more stable financial situation than many). At the same time, you can use credit, especially short term credit like credit cards, without feeling like you're "in debt", simply by paying them on time, staying within your limits and not accruing interest charges. Can you get away without having credit cards? Sure, but it can be more difficult than having some you only use when they make the purchasing/payment process simpler than cash, cheque, money order, etc.
     
  3. Alucard77

    Alucard77 Kaon Gladiator Champion

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    The only debt me and the wife have is our house. We carry credit cards to keep up our credit scores, but we ever if rarely use them in the way you describe.

    Just a couple of quick things for you:
    1- You shouldn't have cancelled your CC, so don't cancel any more. Cancelling your credit card actually hurts your credit scores. Not sure if the good credit history you have on that card is now wiped out or not, but they always say not to cancel the cards.
    So any other cards you have, you can keep.

    2- You can and should use your credit cards. Just pay them off in full at the end of the month. That is what we do. This way, you don't pay interest on things.

    3- The reason Credit is bad is because of the tremendous interest payments. If you don't pay off in full, you get hit with anywhere from 12%-33% interest on your CC. So in 1 year, you are paying a shit ton more. As long as you understand that, you are fine, because you do #2.

    4- Credit is a good thing, if you can keep it as such. You never know when you will need credit in life. Whether it be that you do decide to buy a house, or you want to lease or buy another car or wherever else life takes you.

    5- Depending how much you spend per year, you can take advantage of your CC. You can get one with bonus points for airlines and stuff like that. As long as you pay it off by the end of the month when the bill comes, you make out. You can get all type of stuff off of those points.

    So the trick is to use your Credit, don't let the credit use you. Buy only things that you know you can pay off by the end of the month. No need to carry over a balance if you don't have it.

    This way you have the best of both worlds. You are able to save money and at the same time you can have great credit.
     
  4. TFPrime

    TFPrime TFW2005 Supporter

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    my job has a retirement/investment package set up. It's not enough to live off of yet, but I have another 30 yrs or so to add to it. But my boss, who is all into it, says I'm doing rather well with my stock. I have this general thing set up for it. Outside of that, I really know nothing of stocks and investments.
     
  5. graymer

    graymer Well-Known Member

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    I'd echo the few comments here about credit.

    Once you are out from under the weight of debt accumulated from your 20s (student loans, first car loans, any outstanding credit card debt), the theory is to still use your credit cards frequently, but only for purchases that you know you can pay off.

    Additionally, larger purchases on credit are okay as long as you budget and pay them off over time. If it were me, I'd look at saving up some money to invest somewhere: property, your own small business, or perhaps enlisting the services of a financial planner.
     
  6. TFPrime

    TFPrime TFW2005 Supporter

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    The reason why I canceled my car is, it was the card I got as my first CC, when I had no credit etc, and so I was paying a pretty high interest rate, as well as an annual fee of 100$ yearly. Now, my credit over time improved by about 350 points..from no credit to right around 650 or so in the 3. I was rated B rating. I called my card a few months back about options..I nolonger wanted to pay that annual fee, as I hear most people don't have that now days..they replied with "we can't waive that as it goes towards our customer service standards.." I didn't care for their customer service on this one, so I paid off, and canceled with the intention of getting a new one from some where eventually..maybe.
     
  7. yodafett

    yodafett Well-Known Member

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    @TFPrime - The wife and I are doing the same thing. With the plan we're working on, by the end of the year, the only thing we'll owe on is our house.

    And I absolutely agree with your actions, and respectfully disagree with Alucard77. Get rid of the credit cards. Cancel them, cut them up, burn them. Yes, you credit rating will drop. So what. Credit ratings do NOT show what kind risk you are. They show how you maintain your debt.

    FICO has the whole finance industry dancing to their mis-begotten tune. Credit scores control WAY to much decision making in the industry and are totally skewed in what they actually represent vs what they are portrayed as representing. It is designed to keep us in debt and to keep is getting more debt. FICO is completely self-serving and has no real-world application in terms of "lender risk" or "Lender Due Diligence". Any reputable company can look past a credit score, if they choose to, based on proof of income, assets, and payment patterns.

    If you have payed off the debt, and are being responsible with your freed money (savings/mutual funds/etc), you will not need to rely on your score again. Forget about it. It's ironic that the people who have the best FICO scores are typically those who don't need to worry about it.

    And if more people were being financially responsible like you, we would have a LOT less to complain about with Wall Street, the 1%, and global economic crisis.


    Disclaimer: I do in fact, work in the finance industry. Playing the "use and pay off every month" is, yes, possibly the best of both world. But only about 5% of people who set out to do that, actually maintain it. Do the math, that means that 95% of people try, and fail. Ending up right back where you are now.
     
    Last edited: May 7, 2012
  8. Gort

    Gort Klaatu barada nikto TFW2005 Supporter

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    You can live however you want. My wife and I have chosen to simplify our lives and become minimalists. Basically it means that we want less stuff and that we are rejecting the accumulation culture of the United States. There are tons of blogs and websites about minimalism and it doesn't mean the same thing for everyone. For us, it means selling our five bedroom house in the burbs and moving to a two bedroom apartment in the city. We are in the process of selling all of our stuff and it is just embarrassing how much junk we have that we don't need or even want.

    That said, you're at an age that you must be saving for retirement and if you don't have health insurance, you probably should get it. It sounds like you have both through your job, but you should consider doing more. We use an asset management attorney to help us make financial decisions. The reason we pay more for him rather than using a financial planner is that he is totally independent and works for us. Financial planners are often affiliated with a bank or other financial institution and often suggest things that are good for their business.

    Also, I don't think you need to use credit cards very often, but remember that they are secured against fraud and many debit cards are not. I've spoken to fraud experts and they say that you should use a credit card any time the card is out of your possession (restaurants) and online. Additionally, you may need a credit card to rent a car (or a moving van). Also, do your best to hide the numbers of your debit card and always cover the number pad as you type you pin. Cameras are tiny and fraud is everywhere.
     
  9. yodafett

    yodafett Well-Known Member

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    ^+1 to Gort. Those are the only cases that I see a Card as beneficial. And you can always get a pre-paid one for that. One time $10 set-up fee, and you know how much money is on there, but still able to be used for hotel reservations, etc, then you just pay in cash.
     
  10. TFPrime

    TFPrime TFW2005 Supporter

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    hmm, the prepaid is an option I'm not against. When I first got my card, it had a 300$ limit to it, which is what I wanted..nothing major, worst case scenario I could pay it off with one paycheck and be done...if I maxed it out. Then they raised the limit to 500, then 700 and then 900$ and I quickly found myself making like 50-100$ payments, but not paying off---and then using it again as I paid on it...the interest rate was an additional 20$ a month, and then there was all these random fees that were another 10$ a month, and then the annual fee of 100$ every Jan..it got out of hand. That's why I tried calling them about options to get it back under control, change my limit to less again, and get rid of that annual fee..but they couldn't/wouldn't so I left.
     
  11. Alucard77

    Alucard77 Kaon Gladiator Champion

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    Yodafett,

    I 100% agree with what you say, unfortunately that is not how the game is played. I wish it was, but it isn't.

    From what I am reading TFPrime is financially conscience person, so I was giving him advice based off of what I thought he can handle.

    I have told my sister to cancel and cut up her cards, because she definitely is not as financially conscience as TFPrime.

    TFPrime,

    As for investments, that is a whole nother ball of wax.

    Unfortunately, Financial advisors are full of shit in every way possible. The problem with them is that they make money regardless if you make money or not. Sure some act like they have your best interests in mind but do they really?

    For me personally, I think god/the real world is pointing me in the direction I think I need to go with my money. At this point me and the wife need to get a bigger house, because we outgrew our house. So we were going to lose so much money on our current house that I decided to find the best thing. So I am going to rent it. Rent will actually bring me an extra $100 per month over the cost of the mortgage. If I only have to spend a $1000 here and a $1000 there for the next 20 or so years till that house mortgage is paid off, I would be looking at $5,000 a month at least when I finally retire from that one house.

    I have been talking to a couple of people, and they all say that real estate right now is the strongest investment to make. I wouldn't be a land lord if I had my choice on a private house. The real money is in buying strip malls and stuff like that. The prices are dead cheap on those.

    My accountant friend is moving his business to NJ and is buying a 3 story building for $220. He is going to have his business in there and rent the other 2 floors to companies. He figures the place will pay for itself in 5 years.

    But that is what makes us comfortable. You need to find out what makes you comfortable.
     
  12. Aernaroth

    Aernaroth <b><font color=blue>I voted for Super_Megatron and Veteran

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    It sounds like you could use some education on finances, and especially your retirement/investment situation. Seems you're confident of your boss running things and letting you know it's okay, but you'd probably be better off having a clear picture of where your money is, what it's invested in, how it's doing, and why/how. If only so that you can better plan for yourself, and protect yourself if something happens with your boss. You could also look into some investments outside of work now that you seem to have some more disposable income. There's plenty of good online resources on investing, but again, I'd reccommend talking to a financial planner.

    There are cards out there without annual fees, but high interest charges are more or less universal. If you pay your balance completely and on time each month, however, they're not much of a problem though. You could look into one of those as well, if only to make things like hotel rooms, online commerce, and rentals easier.


    I completely disagree. Most financial advisors have no incentive to have you invest in a way that is disadvantageous to you, because this will decrease your ability to invest in the institution they represent, as well as decrease the reputation of their firm in an industry where competition is a very real thing. Most banks have financial advisors who will talk to account holders free of charge, so it's in their best interest to tell you how to best invest your money, since doing so will increase the bank's profits as well. Some may point you towards services the bank offers, obviously, but there's also usually reasons for this such as disincentivizing service/use charges.
     
    Last edited: May 7, 2012
  13. TWINTURBO

    TWINTURBO Mandiprime97's badass :)

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    CC suck, I am paying off mine and going to keep one just to have it. , I am 38 this year and I own both my cars.
     
  14. Alucard77

    Alucard77 Kaon Gladiator Champion

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    In theory. But there are countless examples of how big houses gave one piece of advice to one client and another to another knowing they would make money on both ends.

    I am not saying that all financial investors are crooks. I am just saying that if you go to any regular financial investor at a local bank/Bear Stern, you can probably do better then them if you did research yourself.

    Plus I always love the whole, well the market is down, so your down too. You have to ride the market. Yeah, I know, but tell me what the fuck you do for me again? I could have done that.

    I don't need to pay some guy money if I am a long term investor.

    Also, these guys never really explain the tax ramification of stuff. I happen to have a great accountant that I am friends with that comes up with 3x as good stuff as any other Financial consultant comes up with. A lot of times I will take tax penalties, because he shows me how I would still make more money even with the tax penalty.

    Financial consultants are good for people that know little about finances. If they take the long term approach, a financial consultant will be fine for them. If you want to make real money on your money, unless you have millions, a regular financial consultant won't give a shit about you.

    Yet again, a great accountant is his weight in gold. Literally.
     
  15. Aernaroth

    Aernaroth <b><font color=blue>I voted for Super_Megatron and Veteran

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    Countless examples? Post five that are specific and cited, and that deal with an advisor, and not a broker. Advisors, as they are organized in the way most people will interact with them (that is, you aren't investing millions or with a hedge fund trading firm) won't be directly profiting off your investment, so there's nearly no incentive for them to mislead.

    Sounds like you've got your ducks in a row. The OP doesn't, and could stand to hear what an advisor has to say.
     
  16. Alucard77

    Alucard77 Kaon Gladiator Champion

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    I agree, he should talk to a financial consultant. Everyone can benefit from at least a talk. Also, if I could find a good FC, I would love it. I have yet to find one that I even remotely trusted.

    As for consultants vs. brokers. The line gets thin. That is my problem. Went in for an advisor, all the sudden we are talking about brokers. Not sure how they try to get from step one to step 2 like that, but I have had that happen more then a couple of times.

    Also, for the OP, I strongly recommend picking up Personal Finance for Dummies. I know it seems weird, but this is considered by many one of the best finance books out there. It is very informative.

    TBH, all of the financial guys I ever went to gave me the same advice as this book. If you don't fully get what the book is saying, then definitely talk to a financial advisor.
     
  17. Tenebrouser

    Tenebrouser Craft...or is it crap?

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    I really don't understand the OP.

    What's the problem again?
     
  18. Alucard77

    Alucard77 Kaon Gladiator Champion

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  19. Easterling Capt

    Easterling Capt I am Vern Schillinger

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    Im not going to comment on everything but those ppl living on thier Cc is a darn moron. If you dont have the money for it, save up and buy when you can. The mentality of ppl is that I need to have it NOW NOW NOW and I will worry about the paying later. The way I see it the living if your buying a house or aprtment is probably the only time anyone should take a loan, and a smart one aswell. In sweden there came new guidelines saying if you dont have 15 % of the value fo the place your buying you dont get a loan.

    Edit: Before soem one makes a smart comment, yes there might be diffrent situations around the globe but in most western countries this thinking should apply. Sadly it dont.
     
  20. Scantron

    Scantron Well-Known Member

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    For basic financial advice, I'd direct anyone to Clark Howard, particularly the podcasts of his radio show. Following his advice has saved me thousands of dollars over the years, as well as motivated me to set up a retirement plan and really start saving.

    There's nothing inherently evil or bad about credit cards...as long as you use them properly. IE - Pay off the balance, in full, every month and never have outstanding charges greater than ~30% of your total available credit at the statement closing date. Do that and not only will you never pay a penny in interest, but you'll be able to have a great credit score as well, with very little effort.

    Personally, I have four credit cards: One is my main credit card from my bank, which has no annual fee and gives me 1 - 4% cash back, depending on the purchase category. I use this card to buy everything...but I treat it like a debit card. Every Sunday, I gather my receipts for everything I've purchased with the card that week and transfer money online from my chequing account to my credit card to zero out the balance. Not only have I never paid a penny in interest on this card (I have no idea what my interest rate even is), but with the cash back feature, I've earned a cheque for ~$100 every year, so the bank pays me to use their card. One of my other cards is a Target store card, which I treat just like my main card, but also saves me 5% on purchases at Target. Again, I've never paid a penny in interest on that card, but the discount has saved me about $100 in the year or so I've had the card. My other two (no annual fee) cards are my 'strongbox cards'; I keep them locked in my strongbox, take them out once every six months, make an ~$10 purchase on each, pay them off right away and put them back in the box for another six months. That keeps them as active accounts, the unused credit on them increases my available credit and I've had both for a long time...all of which is a great boost for my credit score.

    Basically, it is easily possible to live without going into debt on credit cards...and even to make a little money, and earn a great credit score, if you have the discipline.
     

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