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I did some dumb things with credit cards a long time ago in my early 20s and I have one outstanding credit card card debt left. Probably less than $1200 and they will likely settle it for less. Assume my credit score is 0 or a laughable negative number. I finally make enough money that I should probably start looking at buying a house in the next year but my credit score is junk. My takehome pay is about $1600 every 2 weeks and my fixed costs (rent, phone, electric, internet) are about $600/paycheck so I don't see why I can't turn this around. A big raise/promotion goes in to effect in about a week so that will add another 250-500/paycheck disposable income. It's time to cut off this financial leg iron. This is the list of things I want to do to turn around my credit, in order 1. Pay off debts 2. Get secured credit card as reccomended in this thread 3. Setup auto bill-pay for secured credit card As I see it, I have four main debts 1. $200 - Hospital bills from last fall 2. $200 - Recurring ticket from state 3. $100 - Bicycle helmet ticket (?!) 4. $1200 - ancient credit card debt I would pay off #1,2,3 next paycheck and get a $200 secured credit card, and then in March pay off the credit card debt. What combination of secured credit card (nerdwallet recommends Capital One Secured MasterCard) and a a compatible auto-bill pay system should I look at? Is that the correct order to do things in? Once I had debt paid off how long would I be able to apply for a $12,000 used car loan (at any rate, presumably would refinance it after 12 months) after six months or so? My car needs replacement soon. Hadlock fucked around with this message at 00:12 on Feb 8, 2015 |
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Feb 8, 2015 00:05
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Hadlock posted:Probably less than $1200 and they will likely settle it for less. Assume my credit score is 0 or a laughable negative number. Hadlock posted:I finally make enough money that I should probably start looking at buying a house in the next year but my credit score is junk.
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Feb 8, 2015 00:19
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I have an old $26 library fine on my record I have about $5k in savings currently, I think the number is 10% down which would be $18-25K for the downpayment in my area, unless I am completely off. I'm open to revisions... I would imagine step one is to get my credit rating on a positive vector though. Hadlock fucked around with this message at 01:00 on Feb 8, 2015 |
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Feb 8, 2015 00:57
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10% is pushing it. 20% is better, and you also need some money left over for an emergency fund, plus some more money left over and room in your new budget for maintenance type things. Take a gander at the house buying thread. At any rate, don't dive in and buy a house and a car at the same time. Pace yourself a little bit. Suddenly committing 40% of your take-home pay to loans would probably be more of a change than you realize, and it takes a year or two to really sink in.
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Feb 8, 2015 01:07
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If your credit history is a bit ugly and you're saving for a downpayment, wouldn't it make more sense to just buy a beater outright rather than taking out a (presumably high interest rate) loan for your new car?
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Feb 8, 2015 01:12
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Ok, pretend I said nothing about the house and car (which is the end game of fixing your credit score) do the other steps that I plan on doing this month sound fine? Is there an auto-bill pay service for credit cards?
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Feb 8, 2015 01:58
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Yes, and usually! All my credit cards I've been able to set up to pull the full amount of the bill from my bank account each month.
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Feb 8, 2015 02:42
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At least very least you want to setup for making minimum credit card payments automatically. Missing credit card payments is another way your credit score can get decreased.
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Feb 8, 2015 03:28
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Hadlock posted:Ok, pretend I said nothing about the house and car (which is the end game of fixing your credit score) do the other steps that I plan on doing this month sound fine? Is there an auto-bill pay service for credit cards? The only thing that will heal your credit is time. There isn't a magic combination of accounts that you can open that will fix it faster. Really, all you can do is save money like crazy, never be late with anyone ever again, monitor your credit to make sure there are no other surprises out there, especially monitor it after you pay everything to make sure the things you paid say paid. Don't pay off any settlements until you get it in writing, don't grant electronic access to your account, and when they send you a letter that says the account is paid, save that letter for the rest of your life along with a copy of the check you paid it with.
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Feb 8, 2015 04:53
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I've been living off the grid for almost three years and am recently rejoining society. Before I left, I had a credit score of 650-670 with one old credit card in collections for roughly $1400. Since then, I haven't owned a credit card, but I have paid monthly bills on time with no missed payments and recently took out $18,000 in student loans for grad school. I checked my score for the first time in forever and it's about 550. I still haven't paid off the collections debt (maybe that's what's killing me?), but they haven't sent me a letter in 30 months and I wouldn't even know who to contact. Should I have expected a large drop in score like that?
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Feb 8, 2015 05:38
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Blinky2099 posted:I was lucky enough to have a father who gave me a credit card to use during college for books and engineering tools. It's an AMEX and for some reason it's It's a charge card. They have no limits, but you can't carry a balance. I'm not quite sure how it factors utilization, but the long credit history should help your credit score quite a bit. I'd just leave it open, if your really worried about utilization ask your dad to pay it off and it use it before you apply for a loan.
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Feb 8, 2015 07:42
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Aliquid posted:I've been living off the grid for almost three years and am recently rejoining society. Before I left, I had a credit score of 650-670 with one old credit card in collections for roughly $1400. Since then, I haven't owned a credit card, but I have paid monthly bills on time with no missed payments and recently took out $18,000 in student loans for grad school. I checked my score for the first time in forever and it's about 550. I still haven't paid off the collections debt (maybe that's what's killing me?), but they haven't sent me a letter in 30 months and I wouldn't even know who to contact. Should I have expected a large drop in score like that? I guess my first question would be: Why do you care? If your grad school experience is anything like mine, you won't really need credit until after you're done, and at that point paying on your student loans will help your score a lot. If you're sure nothing new bad has come on your report since you left, it's possible something good fell off your report, or taking on the student loans have increased your debt enough to affect it. Collections (and all bad marks) affect your credit less the older they are.
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Feb 8, 2015 15:54
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Aliquid posted:I've been living off the grid for almost three years and am recently rejoining society. Before I left, I had a credit score of 650-670 with one old credit card in collections for roughly $1400. Since then, I haven't owned a credit card, but I have paid monthly bills on time with no missed payments and recently took out $18,000 in student loans for grad school. I checked my score for the first time in forever and it's about 550. I still haven't paid off the collections debt (maybe that's what's killing me?), but they haven't sent me a letter in 30 months and I wouldn't even know who to contact. Should I have expected a large drop in score like that? Things like paying credit cards on time, total credit utilization and also length of credit history are the bigger factors in driving the score. I would probably get 1 or 2 credit cards just to help you build a credit history: http://www.myfico.com/crediteducation/whatsinyourscore.aspx  You want to start carefully building your credit card score to +750 ASAP since later on in life/post grad school having a low score will costs you piles of extra money each year due to not being able to get the best possible loan terms. Basically everything from car loans to a mortage get more expensive with you have bad credit.
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Feb 8, 2015 17:04
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That makes sense. It's been three years since anything has been in my name in the way of monthly payments, and my days of regularly using and paying off credit cards were 5-10 years ago; it's been all cash or debit since then. E/N decision-time: I'm in a fairly stable financial situation at the moment, but I hate it. I'm 30, living with my parents in a suburban/rural area, and rely on them for rides everywhere including to school. I'd love to bike to the university, but the roads are busier than they should be and it's dangerous, especially when I get out of class at 10pm (obviously public transportation doesn't exist). I hate being house-bound around my parents constantly, but with this free time I'm completely caught up with studies and may pull my first 4.0 semester ever. My living expenses here are nil, and if nothing changes I'll have an MBA for less than $24,000 in debt. I don't have a job and where I live makes it hard to find one unless I had a car. I'm looking at beaters under $2000, but even then it's coming from loan money at almost 7% interest. I don't even know if I want a car; it's essentially just to get me out of a house and to a job in order to pay for the dang car. I view the car as just an excuse to spend money. While it'd be cool to see friends, I can't afford their lifestyle. What I really want is an apartment next to the university. Rent is cheap; after all bills and even food I'm only looking at $1150 a month for my own 1br. Everything from grocery stores to strip malls with potential jobs will be within walking distance. It'll also give me a chance to get involved at the university, something that I was never able to do at my giant undergrad school. The problem here is that I'm afraid either my loan debt will get out of control, or I'll end up like I did in undergrad and work 40 hours a week just to see my GPA plummet. I wish the current situation were tenable. Two more years of this is just a long time, and I've never lived alone. Right now, other than class, I leave my house once a week and I'm dying. i say swears online fucked around with this message at 21:35 on Feb 8, 2015 |
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Feb 8, 2015 21:30
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Aliquid posted:That makes sense. It's been three years since anything has been in my name in the way of monthly payments, and my days of regularly using and paying off credit cards were 5-10 years ago; it's been all cash or debit since then. E/N decision-time: Money isn't everything, living a liveable life is important. If you have to take an extra few thousand now to get started, and you get a job to start paying some of it, you can make it work. I would plug numbers and see how much debt it would add, and it's a basic question of "is it worth paying the interest and paying for this later to live better now?"
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Feb 8, 2015 23:34
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What advice do you have for someone in their late twenties who is looking at life insurance policies? I think I'd also like to make sure I understand what a life insurance policy does: - Pays for your funeral when you die naturally/in an accident - Some policies may serve to help with medical costs that are not covered by your primary health insurance I currently have life insurance through my job. I'm thinking about it because my doctor is talking again about my possibly having a prolactinoma (benign tumor near the base of my brain). He initially told me last June that he ruled out the possibility of a tumor after reviewing an MRI, but in January he told another doctor, right in front of me, in the exam room, that he thinks I have a small tumor that wouldn't show up on the MRI. I'm getting a second opinion on this, but anyway... I got to thinking that I should start looking at something more permanent than life insurance through my job while I'm young and relatively healthy, especially since a lot of jobs seem to be contract and without benefits. I've lost 40 pounds, but I think I need to lose 60 pounds to reduce my blood pressure/cholesterol and get decent rates, and I also have an anxiety/polycystic ovarian syndrome/hypothyroid/sleep apnea diagnosis. The PCOS, anxiety and thyroid diagnoses might not go away but I'm pretty confident I could eliminate the diagnoses for blood pressure/cholesterol/obesity/sleep apnea if I continue to lose weight. Hopefully that could help my rates. I think I would start looking to see if there's something out there with better rates than what my job offers, and that would be more long term if I switched jobs or had to take a contract position. I remember a friend of mine worked in sales for Modern Woodmen and tried to sell me a life insurance policy for $1/year or some other ludicrous rate. This was when I was 23, and before I got most of my diagnoses, and I feel dumb for not taking it. Is bankrate.com the best place to look? I put down a lifelong policy so I would have something to pay for my funeral if I live to be 100 and the rates were like $70/month. legsarerequired fucked around with this message at 03:02 on Feb 9, 2015 |
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Feb 9, 2015 02:52
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Duckman2008 posted:Money isn't everything, living a liveable life is important. If you have to take an extra few thousand now to get started, and you get a job to start paying some of it, you can make it work. I would plug numbers and see how much debt it would add, and it's a basic question of "is it worth paying the interest and paying for this later to live better now?" If moving to an apartment and buying a cheap car is for the two years to complete the degree then the borrowing is about an extra $50k of loan excluding interest. I know I didn't like living with my parents and moved out after the first year of study but living costs were cheap and I borrowed very little. It's a tough choice but you could live with your parents for two years of suffering, move to an apartment by yourself, or you could potentially move in with some other post graduate students. You'll find that living with others splitting the bills will generally be cheaper and gives you a bit of social life.
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Feb 9, 2015 03:07
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legsarerequired posted:What advice do you have for someone in their late twenties who is looking at life insurance policies? quote:I think I'd also like to make sure I understand what a life insurance policy does: - This is what health insurance is for, not life insurance. If you have bad health insurance, get a better policy. Unless you have dependents (spouse/kids), you don't need life insurance.
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Feb 9, 2015 03:10
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It is a single, simple question to figure out if you need life insurance: Is someone dependent on you financially (e.g. children, parents co-signed on your student loans)? If no, then you do not need life insurance. If yes then buy a level term policy (approximately 10x-20x your annual living expenses). That is it.
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Feb 9, 2015 03:56
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Devian666 posted:If moving to an apartment and buying a cheap car is for the two years to complete the degree then the borrowing is about an extra $50k of loan excluding interest. I know I didn't like living with my parents and moved out after the first year of study but living costs were cheap and I borrowed very little. It's a tough choice but you could live with your parents for two years of suffering, move to an apartment by yourself, or you could potentially move in with some other post graduate students. You'll find that living with others splitting the bills will generally be cheaper and gives you a bit of social life. Schools also tend to have lots of services to help people find shared cheaper off-campus housing. Finding a place with other grad students sounds like the best bet for getting out the house but keeping extra living expenses low.
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Feb 9, 2015 05:22
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Understood! My parents kept mentioning that my grandfather's life insurance paid for his funeral expenses so I guess when I heard about this brain tumor I started thinking about getting one before my rates went up too bad. My health insurance is really good but I have no idea what kind of expenses the worst case scenario would entail here, especially if something developed while I was working contract (and since I have three years of call center experience, and 1.5 years of actual bookkeeping experience, most of the jobs at my level would start off as contract-to-hire. I could get lucky with another direct hire and I'm certainly aiming for that, but I don't know). It sounds like the answer here is to hold off until I have dependents.
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Feb 9, 2015 05:23
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legsarerequired posted:Understood! My parents kept mentioning that my grandfather's life insurance paid for his funeral expenses so I guess when I heard about this brain tumor I started thinking about getting one before my rates went up too bad. My health insurance is really good but I have no idea what kind of expenses the worst case scenario would entail here, especially if something developed while I was working contract (and since I have three years of call center experience, and 1.5 years of actual bookkeeping experience, most of the jobs at my level would start off as contract-to-hire. I could get lucky with another direct hire and I'm certainly aiming for that, but I don't know). It sounds like the answer here is to hold off until I have dependents. life insurance is payable on death, it's completely separate from health insurance. You can check you current work benefits since some more white collar jobs include life insurance in the benefits plan.
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Feb 9, 2015 05:54
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etalian posted:Schools also tend to have lots of services to help people find shared cheaper off-campus housing. I wish. It's a small school in the middle of a forest, and so a 1br or me biting the bullet on a 2br and hoping to find a roommate would be the only way to go. My graduate program has eleven other people in it. After checking online, there are six apartment complexes lined up next to the school and only one listing for a room for rent. The room is 80% the price of a 1br anyway, so I don't see much upside. i say swears online fucked around with this message at 06:26 on Feb 9, 2015 |
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Feb 9, 2015 06:22
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Aliquid, while good grades are important, the most important thing with an MBA tends to be where you get your internships. It's not like other degrees. Your full-time job in the near future should probably be looking for your summer internship. I would be surprised if there weren't an MBA thread in here somewhere, you should probably be talking to them. You may have to get a car or an apartment when internship time rolls around, so you should financially ready yourself for that.
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Feb 9, 2015 18:17
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legsarerequired posted:Understood! My parents kept mentioning that my grandfather's life insurance paid for his funeral expenses so I guess when I heard about this brain tumor I started thinking about getting one before my rates went up too bad.
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Feb 9, 2015 18:22
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Understood! I will look into it. I had another friend who had to have a giant cyst removed from her stomach. She mentioned that Aflac paid for tens of thousands of dollars relating to the medical expenses since I don't think she has very good health insurance. I'll have to ask her for more details on that one...
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Feb 9, 2015 18:32
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I'm paying about $50/year for $150k in life insurance through my employer even though I'm 24 with no dependents. I just thought it was a really good deal in case of a freak accident Wouldn't be doing it if it wasn't a 300,000% rate of return, though
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Feb 9, 2015 20:53
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Not a Children posted:I'm paying about $50/year for $150k in life insurance through my employer even though I'm 24 with no dependents. I just thought it was a really good deal in case of a freak accident You must have an awesome funeral planned.
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Feb 9, 2015 21:11
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Hashtag Banterzone posted:You must have an awesome funeral planned. I have a similar policy at work, and it means that if I die my wife would be able to pay off the mortgage immediately, which is pretty important to me and would give her a solid financial footing to raise our children in.
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Feb 9, 2015 22:22
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Inverse Icarus posted:I have a similar policy at work, and it means that if I die my wife would be able to pay off the mortgage immediately, which is pretty important to me and would give her a solid financial footing to raise our children in. But the difference between you and the other guy is that you have a wife and kids, and he doesn't. No one here is going to argue against term-life when you have dependents and/or spouses.
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Feb 9, 2015 22:23
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Guinness posted:But the difference between you and the other guy is that you have a wife and kids, and he doesn't. No one here is going to argue against term-life when you have dependents and/or spouses. Even a spouse, but no dependents, inheritable debt, or a mortgage is iffy. Guess you can give them a nice going away present though.
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Feb 10, 2015 00:58
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What's reasonable to hold in savings? I max my Roth out yearly, I'm saving up to buy my next car cash, and I save about 15-20% of my NET monthly income in addition to my roth and car allotments. No debt. I also have about three or four months of expenses worth of cash in my checking. The last time I was in the bank, the salesperson (because that's what he is) saw how much I had in available cash and recommend that I invest it. I have a year's worth of minimum monthly expenses in my emergency fund. I don't own a home, but I really don't have a drive to own. I do recognize that there may be a situation in the future where it could possibly make financial sense to buy. So, beyond what I have saved for my emergency fund, should I keep another savings account for rainy days? Home? Is there a specific threshold or goal amount for those funds? At what point should I stop putting money into savings and putting the excess directly into financial investments?
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Feb 10, 2015 03:34
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3 or 4 months of expenses isn't bad. If I were you I'd keep saving until I had enough to buy the car. Then anything after the emergency fund and car fund are flush I'd put into the stock market.
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Feb 10, 2015 03:43
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Blinkman987 posted:What's reasonable to hold in savings? I max my Roth out yearly, I'm saving up to buy my next car cash, and I save about 15-20% of my NET monthly income in addition to my roth and car allotments. No debt. I also have about three or four months of expenses worth of cash in my checking. The last time I was in the bank, the salesperson (because that's what he is) saw how much I had in available cash and recommend that I invest it. I have a year's worth of minimum monthly expenses in my emergency fund. I don't own a home, but I really don't have a drive to own. I do recognize that there may be a situation in the future where it could possibly make financial sense to buy. So, beyond what I have saved for my emergency fund, should I keep another savings account for rainy days? Home? Is there a specific threshold or goal amount for those funds? At what point should I stop putting money into savings and putting the excess directly into financial investments? 401k? HSA? If you have other tax-sheltered options you might want to consider using them. Otherwise, a taxable brokerage account and index funds works for non-retirement money, too. Depending on what your goals are, if you aren't planning on needing that money in the next couple years it's a very reasonable course of action to invest it. If you're planning on buying a car in cash in the near future then I wouldn't necessarily invest that cash, though. Then again, if your credit is good I wouldn't buy a car in all-cash, either. I'd probably do like 1/3 down payment and finance the rest at <2% since rates are so low. I keep about 6 months of expenses at my current lifestyle in cash, then the rest gets funneled into my taxable brokerage after 401k, IRA, and HSA are full.
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Feb 10, 2015 03:43
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Thanks for the advice. I won't be buying the car for 4-5 years since I plan on driving my econobox until it's done. I have about $4,000 already saved towards the next car, so I may invest that and future deposits. Not sure. I'm so risk adverse! The emergency fund is done and sitting in an Amex savings acct. I guess between that and my checking, I can move towards investing all my extra income that normally would've gone into savings. If any financial bump comes along, I'll just take it out of my checking and replace it over time, pulling back on the investing. Edit: Also, sorry, no 401k match available. Blinkman987 fucked around with this message at 09:34 on Feb 10, 2015 |
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Feb 10, 2015 09:27
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Guinness posted:Then again, if your credit is good I wouldn't buy a car in all-cash, either. I'd probably do like 1/3 down payment and finance the rest at <2% since rates are so low. Why do people often recommend financing a car if you have good credit, rather than paying cash? Wouldn't you need a method of receiving a guaranteed ROI higher than that 2%? I've been telling myself I want to pay for my next car upfront. Blinky2099 fucked around with this message at 16:10 on Feb 10, 2015 |
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Feb 10, 2015 16:08
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Blinky2099 posted:Why do people often recommend financing a car if you have good credit, rather than paying cash? Wouldn't you need a method of receiving a guaranteed ROI higher than that 2%? I've been telling myself I want to pay for my next car upfront. A guaranteed ROI would make it a no-brainer, but taking a loan at 2% and investing the money you didn't use is basically a simple and cheap leveraging method.
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Feb 10, 2015 16:15
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baquerd posted:A guaranteed ROI would make it a no-brainer, but taking a loan at 2% and investing the money you didn't use is basically a simple and cheap leveraging method. I bought my car with cash like 4 years ago and have been kicking myself since. 2% return is pretty hard not to beat.
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Feb 10, 2015 16:17
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Blinkman987 posted:Edit: Also, sorry, no 401k match available. Even without the match a 401k can be a good place to park money for tax purposes, as long as the fees aren't exorbitant.
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Feb 10, 2015 16:44
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Nephzinho posted:I bought my car with cash like 4 years ago and have been kicking myself since. 2% return is pretty hard not to beat. For guaranteed return it is. The best savings accounts are still in the 1% range.
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Feb 10, 2015 16:56
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