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Wow, this is news to me. I was planning to pay cash for my next car, but I'd be better off paying down a loan slowly?
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Apr 24, 2017 14:43
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Fitzy Fitz posted:Wow, this is news to me. I was planning to pay cash for my next car, but I'd be better off paying down a loan slowly? I dunno, some of these sound like typical finance guy at a dealer excuses for a thin/new credit file. I've never had a car loan, but every time I've been to a dealer, they've fallen all over themselves qualifying me, and I've had no trouble getting a mortgage. Obviously that's just anecdote vs anecdote, but I'm skeptical.
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Apr 24, 2017 14:45
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I don't think you need anything else besides credit cards in order to build excellent credit. That said if you really want to take out a loan to build better credit I wouldn't use an auto loan. Instead you can get a secured personal loan through a credit union like Alliant, pay off 90% of it almost immediately and let it sit for ~4.5 years until the last 10% is actually due. http://www.doctorofcredit.com/strengthen-credit-installment-loan-using-secured-loan-technique/
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Apr 24, 2017 14:59
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Fitzy Fitz posted:Wow, this is news to me. I was planning to pay cash for my next car, but I'd be better off paying down a loan slowly? No way man, pay the cash if you have the cash. That's the position I hope to get myself into and is one of the many goals along the way. It's just the lovely random finance person picking and choosing what they "want" to see on a credit report.
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Apr 24, 2017 15:19
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My wife bought our car, I bought our house. Both on credit, 3.5% 30yr mortgage, 1.99% on a used car. We never had anything but credit cards and student loans prior to those and no one suggested we should have. Maybe an issue for lower income or bad/little credit?
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Apr 24, 2017 15:25
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Maybe motorcycles and house boats are just harder to get a loan for?
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Apr 24, 2017 16:49
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Student loans definitely qualify as a different line of credit, or so I was told. It makes sense to me, it's usually a large 5 or 6 figure amount paid over months if not years or decades. And yeah, boats are considered a luxury good; I'm sure you could argue motorcycles are necessary transportation but I suspect most lenders view them as recreational vehicles. Someone told me the average time to sell a boat is 380 days nationally (US). Cars and houses are a fairly liquid market by comparison. Something like 5 weeks on average.
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Apr 24, 2017 19:28
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Motorcycles are easy to get loans for, it's just that they are a somewhat niche (in the US) market and very rapidly depreciating and easily-damaged assets so interest rates are high even with good credit. The bike market also appeals to the young male which in general is not known for making the best financial decisions in the first place. By taking a loan out on a bike you are virtually guaranteeing that you will be upside down on it. IMO if you can't pay cash for a bike, you can't afford it. And like-new used bikes that are only a few years old go for like half of new bike prices. Also anyone that tells you that your credit score is low because you haven't been paying enough interest is wrong and working against your best interests.
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Apr 24, 2017 19:38
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Actually, that reminds me of something that I heard a while ago. Do student loans count for your credit utilization %? I heard no, but there is a lot of wrong "common knowledge" about credit.
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Apr 25, 2017 18:56
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22 Eargesplitten posted:Actually, that reminds me of something that I heard a while ago. Do student loans count for your credit utilization %? I heard no, but there is a lot of wrong "common knowledge" about credit. No - if you're approved for a credit card with a $5000 limit, and you have a balance of $500, your credit utilization is 10%
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Apr 25, 2017 21:51
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I had a car loan once because there was a dealer promotion giving a $3000 discount if you took a loan with them. My down payment was as large as it could be and still qualify for the 3k. And I payed it off in the minimum time required (it was 3 months I think?). Anyway my point is the only time car loans are good is when you don't need them and you get more out of it than you put in.
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Apr 26, 2017 04:53
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EugeneJ posted:No - if you're approved for a credit card with a $5000 limit, and you have a balance of $500, your credit utilization is 10% So credit utilization is for lines of credit and not any other types of debt? I'm not sure if I'm understanding correctly. Maybe I'm confused because Mint's credit score screen lists the portion of loans that's still owed vs the original value. I was thinking that information would matter on all debts.
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Apr 26, 2017 05:28
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22 Eargesplitten posted:So credit utilization is for lines of credit and not any other types of debt? I'm not sure if I'm understanding correctly. Maybe I'm confused because Mint's credit score screen lists the portion of loans that's still owed vs the original value. I was thinking that information would matter on all debts. I think other types of debt impact the score as well. When I check my FICO with my credit card issuers, I get the following: Citi Proportion of loan balances to loan amounts is too high FICO® Scores weigh the balances of mortgage and non-mortgage installment loans (such as auto or student loans) against the original loan amounts shown on a person’s credit report. Your score was impacted because your proportion of installment loan balances to the original loan amounts is too high. American Express Proportion of loan balances to loan amounts is too high Your FICO® Score weighs the balances of your mortgage and non-mortgage installment loans (such as auto or student loans) against the original loan amounts. In general, when you first obtain an installment loan your balance is high, and as you pay this loan down, the balance decreases. These notifications only appeared after I got my mortgage in December 2016. Additionally, this notification can only be referring to my mortgage, as I keep my utilization pretty low on my credit cards and have no other debt. That said, I think the impact is pretty minor, at least in my case.
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Apr 26, 2017 06:03
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pig slut lisa posted:I think other types of debt impact the score as well. When I check my FICO with my credit card issuers, I get the following: Other types of debts definitely impact your FICO score, but credit utilization is based on unsecured revolving type debt. Credit Cards are unsecured so over utilizing them and having revolving debt over a certain percentage is looked upon negatively because it shows you're not responsible with your spending however the reason MOST people get credit cards is to buy something they over wise can't afford to pay cash for immediately and that is where they get ya! Installment loans like auto and mortgage debt are "secured" as in they can take the car or house back if you don't pay it so while they have an impact on your score its less risk to the lender overall. thebushcommander fucked around with this message at 16:06 on Apr 26, 2017 |
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Apr 26, 2017 16:03
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Leon Trotsky 2012 posted:Capital One 360 is probably the best for him. Thanks for the advice from all, my cousin now has his first bank account, Cap One 360, with debit card on the way, and we'll figure out the next steps next.
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Apr 26, 2017 16:56
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I have some rather newbie questions about investing. I recently sold my house and am looking for something to do with that money. I currently have the following: 2 Mutual Funds 1 401k through work that I put a bit into, nothing major. Employer doesn't match but they put profit sharing money there. I pretty much just do a mix of index funds. 1 car loan at <2% interest I am trying to figure out what to do next. I don't have an emergency fund, but I generally keep a decent amount in my checking account and can move money out of the mutual funds in a few days notice. I know the correct thing to do is max out my 401k for the year, which I may likely do, but my concern is that I do want to keep a good amount of my house sale money relatively liquid because I may end up buying land or possibly buying into ownership of a small business. What are my choices here? I would like to stay away from Mutual Funds and will likely liquidate those and move them to where I put this money. I was thinking about just putting it in index funds at as similar blend as my 401k. If I was to do that through Fidelity, what exactly do they call that service? Any other options or things to consider here?
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Apr 26, 2017 22:37
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I feel like I'm missing something here. Why do you refer to mutual funds and index funds like they're radically different things?
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Apr 27, 2017 00:08
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Possibly because I don't understand the terminology. I thought mutual funds implied they were managed and index funds are unmanaged. I guess that explains why I'm having trouble finding what I think I need. That aside, any other advice or does that pretty much sound like I'm on the right path?
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Apr 27, 2017 00:19
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Internet Explorer posted:Possibly because I don't understand the terminology. I thought mutual funds implied they were managed and index funds are unmanaged. I guess that explains why I'm having trouble finding what I think I need. An index fund is a type of mutual fund which invests in a specific "index," such as, "All Silicon Valley companies," or "East-coast medical equipment companies," or more commonly, "The top 500 companies weighted by market share." That last little bit is important: indexes are established based on the total market share each company in the index owns in that market. E.g. Company A accounts for 50% of the market, Company B accounts for 30% of the market, and Company C accounts for 20% of the market, so your 10 shares you purchased before effectively bought 5 shares of A, 3 shares of B, and 2 shares of C. Whether or not these funds are actively or passively managed has nothing to do with it, but you're right to be wary of actively managed funds. They have a proven record (on average) of failing to beat the average market growth of the passively managed market index funds. Passive indexes are the way to go. But that all doesn't actually answer your questions. That's just defining our terms. Reddit made a cool flowchart here that gives you the basic personal finance steps. You should seek to follow the steps on that flowchart until you get to the bottom. What do you do then? The answer is establish your time horizon: when will you need the money by? Short term (0-4 years): High-yield savings account (1% interest) or a CD ladder. Mid term (5-10 years): CD ladders, I-Bonds, Muni Bonds in a taxable account if there's no state income tax on them, a total US equities index if you're feeling feisty and don't mind the risk. Long term (10+ years): US equities in an S&P500 index fund, maybe mixing in a mid-cap or small-cap value fund if you want some diversification, plus an international equities fund for total world market weighting. That's your priority list. I still haven't answered your question. That's because I really can't. Personal finance is personal, but that information all together should give you a decent idea about how to prioritize your choices. I will strongly recommend you put together at least 3 months of emergency fund because the security of having available money that's unaffected by a market downturn is kind of loving nice. You didn't mention an IRA, but you should probably open one of those and fill it for this year and every year afterward. I don't know what else. Let me know if I've totally bypassed your inquiries. Oh, yeah, what type of account are your non-401k funds held in (your "Mutual Funds")? Hoodwinker fucked around with this message at 00:55 on Apr 27, 2017 |
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Apr 27, 2017 00:52
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the ynab outage today is getting me familiar with their hilarious budgeting mixtape
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Apr 28, 2017 21:21
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This is why I haven't moved to the new version from 4. I realize they don't happen often though right? But when it does happen, I know I'd be super frustrated.
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May 1, 2017 16:59
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Internet Explorer posted:Possibly because I don't understand the terminology. I thought mutual funds implied they were managed and index funds are unmanaged. I guess that explains why I'm having trouble finding what I think I need. Don't feel bad, this is a very common point of confusion for folks starting out.
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May 1, 2017 17:36
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How long do closed accounts stay on a credit report for? And do they affect average age of credit? I have a number of student loans that I'm paying off, and I'm pretty confident that I'll be free of student debt sometime next year. My credit score is currently in the 800s (at least according to credit karma), and while I don't really care that much about my score, in the not too distant future (~5 years possibly) I would like to be at a point where I can be thinking about buying a house. If I pay off my student loans, will those cease to affect my credit report? I'm worried particularly about average age of credit, since I tend to churn cards for the rewards and then stop using them. I'm mostly just wondering out of curiosity. I'm not trying to game my score, and I pay my balances in full every month, yadda yadda yadda.
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May 1, 2017 22:17
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rotaryfun posted:This is why I haven't moved to the new version from 4. I realize they don't happen often though right? But when it does happen, I know I'd be super frustrated. first time it's happened for me and it was over after about an hour - they keep a page for it if you wanna get a sense of how often it happens - http://status.youneedabudget.com/ i touch ynab about once a week so its fine for me
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May 1, 2017 22:23
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BAE OF PIGS posted:How long do closed accounts stay on a credit report for? And do they affect average age of credit? I have a number of student loans that I'm paying off, and I'm pretty confident that I'll be free of student debt sometime next year. My credit score is currently in the 800s (at least according to credit karma), and while I don't really care that much about my score, in the not too distant future (~5 years possibly) I would like to be at a point where I can be thinking about buying a house. They stay for 10 years after the date of closing, and continue to contribute to your average age of credit and on time payments, etc. as far as FICO is concerned. Credit Karma only uses open accounts for average age so if you pay off a loan or mortgage your score on their site will drop like a rock the following month.
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May 2, 2017 00:42
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Anyone used vanguard's advisor service? I signed up, they charge 0.3% of vanguard assets annually and you can import all other 401k and tsp. My call is at the end of the month.
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May 2, 2017 02:40
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It's my benefits open enrollment period, and I'd like a quick sanity check to make sure I am understanding this right: I am considering enrolling in a Limited-Purpose FSA (since I am also on an HDHP+HSA medical plan) this year because I am expecting to have some fairly expensive dental work done in the next year. Am I correct in understanding that there is a $2600 maximum allocation to the FSA, and come tax time my AGI will be reduced by that same $2600 (assuming I max it), the same way 401k/HSA contributions would? This is likely a dumb question with a "duh" answer, but I've never taken advantage of an FSA before since I've never had "planned" major expenses. Seems like a good thing to take advantage of with expected expenses on the horizon. Not an enormous amount of money, but at 28% of $2600 = $728... nothing to sneeze at. Edit: And it seems like it'll reduce FICA taxes, too, for an additional 7.65% of $2600 = $199, unless I am mistaken. Guinness fucked around with this message at 02:19 on May 3, 2017 |
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May 3, 2017 01:49
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Extreme newbie to finance here. Like, I barely understand what I am doing besides trying to fix my past and not make too majorly of a dumb decision now. So, I checked my credit score with Experian and no surprises it is poor. What did surprise me is that it is suggesting I open a credit card to build credit. I have mostly closed accounts now, which I don't know if I am understanding what this means. Is it worth it to make paying these closed accounts off a priority? It seems Experian thinks it would be more effective to just get a credit card. So can someone maybe explain in dumbass friendly terms what closed accounts mean and how I should handle them? I now have the money to pay them off although, of course, I would rather wait a little bit to do that if I can. And if I do get a credit card, what types of priorities should I have for one? Would it be the same general guidelines as everyone else or should I look at it differently having this poor credit score? I basically am coming out of the haze of my 20s and properly starting to care about money. This is all pretty alien to me. I just know I done hosed up.
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May 3, 2017 13:34
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Secured cards are what you'd want to look at. Go check out nerdwallet and research them. I was in your situation and I would recommend the discover it secured card. Have something insignificant like your Netflix bill pull from it, and then have it automatically deduct from your checking account, so that you can't gently caress it up. The point is to establish a record of using and paying off the card in full every month, which is a big part of your credit score. After you've done that for a year or so, you'll have more doors open up. Can't help with the closed accounts. I was lucky enough to escape my early 20's haze without any.
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May 3, 2017 13:41
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Goobish posted:Extreme newbie to finance here. Like, I barely understand what I am doing besides trying to fix my past and not make too majorly of a dumb decision now. Are these closed accounts still collecting interest? If so, at what rate(s)?
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May 3, 2017 14:16
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You should consider starting a thread and linking it here.
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May 3, 2017 15:43
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Grumpwagon posted:You should consider starting a thread and linking it here. Yes I think you are right. I have so much hitting me at once because my dad just died among a few other things, and I am just overwhelmed. I think I already made one big stupid financial decision but I cannot go back now, I can just try to not make anymore dumb decisions. pig slut lisa posted:Are these closed accounts still collecting interest? If so, at what rate(s)? I actually haven't figured this part out yet. I thought the credit report would tell me this but either I am not finding it, or I need to contact the creditors and ask? This is definitely a good question and something I should figure out next.
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May 3, 2017 16:04
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Goobish posted:Yes I think you are right. I have so much hitting me at once because my dad just died among a few other things, and I am just overwhelmed. I think I already made one big stupid financial decision but I cannot go back now, I can just try to not make anymore dumb decisions. Good luck Goobish, sorry to hear about the loss of your parent. That was what prompted some of the darkest times for me financially, but I try not to beat myself up about it too much. I hope things get better for you. One thing it will behoove you to do is to try to take as much of the advice as you'll inevitably receive to heart as possible. Some of it will sound rude, but be assured this "tough love" comes from a cynical place of watching so many colleagues, friends and forums legends try and fail to get their finances in order.
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May 3, 2017 17:13
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Goobish posted:Extreme newbie to finance here. Like, I barely understand what I am doing besides trying to fix my past and not make too majorly of a dumb decision now. Keep in mind that every "free credit score" program makes their money through advertising. The paid ones probably do, too, because they can make more money and they know they've hooked a sucker who actually pays for their credit report. Credit card signup bonuses on the marketing side are crazy good. If you click on a banner ad that leads to a credit card application, complete it, and get issued a card, you've probably made the advertiser $5-50. So, every credit score check out there is going to attach ads that say, "you can improve your credit score by applying for more credit cards, click here!" and doing everything they can to nudge you in that direction. That's why Credit Karma, for instance, sets the "green" number of open accounts at 21+, which is kind of insane if you're not churning bonuses. Yes, if you have 21 open credit cards paid on time, in good standing, with a long average age of accounts, you'll probably have good credit - but you can get to the same place with fewer accounts, too. It's far more important to establish a history of paying your revolving credit bills on time with nothing in collections. Long story short: don't trust the "advice" on improving your credit score from credit score websites. They're looking out for their own interests before yours.
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May 3, 2017 18:06
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I'm 27 years old, I have no debts, and I have a steady 9-5 that pays me $70k/year. And while I'm not making any concrete plans based on it, my skillset can get me a much better paying job; I'm shopping around right now and if that works out then my income will probably be around $100k/year. I have about $13,500 in retirement funds right now and have begun socking away 10% of my income for retirement. I have $22k in cash; a six month no-job-same-apartment emergency fund for me would be $10k so I have that covered. I share a two bedroom apartment with my boyfriend, a freelancer - I pay $900/month and he pays $200/month and covers the internet bill, which is $50/month. All in all since I live in a desirable location in Austin, Texas, the rent is a steal. My biggest discretionary expense is going out to eat 2+ times per week and drinks at various times per week (a consequence of having an SO and having friends.) I could cut back if I had to but my situation is pretty comfortable and these things are a form of entertainment so I don't have any plans to do so. So things are very comfortable for me at the moment, financially, but I'm at a sort of crossroads where I want to have some better goals. I have a small indie studio and make video games in the evenings and I pay for things like audio and art on contract, but I can't afford to pay another developer or hire anyone as an employee. I can't afford to quit my day job to just work on video games, and I really don't want to, because I learn a lot at my day job that I can turn around and apply to my passion projects, but right now I've maybe spent $2k total on developing my games; I would love to be able to drop many more thousands into them. At the same time, I'd also like to put money away for a house or some other big ticket item that I might want 5-10 years down the line. (Or hell, I want to adopt a baby some day, maybe in my mid-30s, I know that's expensive!) I also am way behind on saving for retirement, so part of me thinks the most responsible thing to do is to toss more cash into retirement (I did max out my Roth contributions for this year  ) So in your opinions, what's the best way to hit all or some of my goals?
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May 5, 2017 19:02
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make sure you max that retirement at least in your Roth if your 401k is lovely, I think we talked about that already when you posted somewhere else. After that, you really have to plan what your goals are, prioritize them, and put timelines to them. If you have 5 year goals, start saving cash in savings, maybe CD ladder. If you have 10 year goals, maybe you want to take on a bit more risk.
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May 5, 2017 20:08
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KYOON GRIFFEY JR posted:make sure you max that retirement at least in your Roth if your 401k is lovely, I think we talked about that already when you posted somewhere else. So, side note on this: My 401k is Vanguard and seems to be pretty good, but my employer match is lovely. Is that worth setting up a Roth for? I have to imagine it isn't.
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May 6, 2017 13:12
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Always Roth unless you're a certain age. Employer matches will always be in a traditional though. So even if you set up Roth, employee match will go into traditional.
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May 6, 2017 13:49
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Magnetic North posted:So, side note on this: My 401k is Vanguard and seems to be pretty good, but my employer match is lovely. Is that worth setting up a Roth for? I have to imagine it isn't. If by "lovely" you mean "there is no match" disregard the following. Here's the pretty much always correct order of operations for basic retirement investment: 1. Put money in to the 401k until you max out your employer match. 2. Set up a Roth IRA provided you are below Roth income limits, ideally also with vanguard. Max this thing out $5,500 a year. 3. Max out your 401k contributions. 4. FSA if you have one where you can still contribute more money. 5. Other tax advantaged savings like 529s and the like if they match your long term goals. 5. Taxable brokerage. If your employer doesn't offer a match on 401k, skip to #2.
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May 6, 2017 14:04
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KYOON GRIFFEY JR posted:4. FSA if you have one where you can still contribute more money. I think he means HSA, which carries over year to year. FSAs expire at the end of the year and are only good for predictable/recurrent medical expenses. If you have access to an HSA (by taking part in an HDHP) you aren't eligible for a regular FSA (covering e.g. doctors, prescriptions, hospitals, dental, vision). But you may be eligible for a Limited FSA which only applies to dental and vision expenses. For me personally, the majority of my medical expenses in a typical year are dental, and I have very few normal medical expenses. So I set aside a little less than my expected dental + vision expenses in a Limited FSA and max my HSA to get a bit more tax optimization in there. It may not be worth the hassle for most people to do both the HSA and Limited FSA, though.
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May 6, 2017 15:47
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