How much debt...

[Ðanisty]

$75,000 for the mortgage, about $10,000 credit card debt and $4000 for my car. The credit card debt is high because we were both unemployed for awhile.

 

[Shadow Wolf]

(I buy used old cars in cash and drive them until they die)

I've decided thats what I'm going to do should I ever need a new car. I hate knowing I've been paying my car payments for 2 years and 3 months, and still have another 2 years and 9 months. I was going to refinance it, to have a payment lower than $270 a month, but I decided since I'm so close to having it paid off, it would be much more costly in the long run.

 

[SoyLeche]

I've decided thats what I'm going to do should I ever need a new car. I hate knowing I've been paying my car payments for 2 years and 3 months, and still have another 2 years and 9 months. I was going to refinance it, to have a payment lower than $270 a month, but I decided since I'm so close to having it paid off, it would be much more costly in the long run.

Unless you could get a lower interest rate I can see no reason whatsoever to refinance a car. With a 5 year loan you are probably already upsidedown in the car.

If you need a lower payment, sell the car and get one you can afford

 

[Bishka]

The only thing that I am in debt for is my schooling. I own no credit cards, no car payments. Only school, and that' the way it's going to stay until I pay off those loans.

 

[SoyLeche]

I own no credit cards,

That's actually not all that great of an idea. You will eventually need credit (a car, a house, etc). If you don't have credit cards or loan payments you can't build credit, and your score will be lower than it could have been when you need it. My wife had no credit history whatsoever when we were married. Luckily I did, and it was pretty good. She's got a good score now.

I'd get a card or two and use them - but make sure they are paid off every month. Paying interest to the credit card companies should be avoided whenever possible.

 

[Green Gaia]

That's actually not all that great of an idea. You will eventually need credit (a car, a house, etc). If you don't have credit cards or loan payments you can't build credit, and your score will be lower than it could have been when you need it. My wife had no credit history whatsoever when we were married. Luckily I did, and it was pretty good. She's got a good score now.

I'd get a card or two and use them - but make sure they are paid off every month. Paying interest to the credit card companies should be avoided whenever possible.

I was just earlier reading an article about that: Being debt-free can be costly

 

[SoyLeche]

I was just earlier reading an article about that: Being debt-free can be costly

There is definately an art to managing your credit. I'm not all that knowledgable about it, but probably moreso than the average American.

 

[evearael]

Ouch!!! That hurt just to read!

I know, I know. She thought she was going to be able to pay it back quickly so it didn't matter, but she lost her job and was unable to find a new one for a long time.

 

[SoyLeche]

I know, I know. She thought she was going to be able to pay it back quickly so it didn't matter, but she lost her job and was unable to find a new one for a long time.

I have a friend who has bad credit. He bought a car, and I was showing him the amortization spreadsheet I had put together (I'm an actuary, give me a break). He told me that the interest rate he got on his auto loan was 13% !!! I was floored. I asked if he had put the car on a credit card - but he just had really bad credit and it was the best loan he could get. I'd never seen a rate that high on an auto loan.

 

[Bishka]

I'd get a card or two and use them - but make sure they are paid off every month. Paying interest to the credit card companies should be avoided whenever possible.

That's why we have school loans. I've talked to a couple of people around here and they have said that school loans can also build credit. I'm starting to pay those off, even before they are due.

 

[SoyLeche]

That's why we have school loans. I've talked to a couple of people around here and they have said that school loans can also build credit. I'm starting to pay those off, even before they are due.

I believe it's the paying off that builds it. I would still look into a credit card. I've heard that it is optimal for a student to have 2 credit cards. Just make sure you don't carry balances on them. If someone doesn't have the willpower to control spending, they should avoid credit cards like the plague.

 

[SoyLeche]

I'd also suggest that those in the U.S. go to www.annualcreditreport.com and check out their credit reports. You can check your report from each of the 3 credit agencies for free once a year (I don't believe it gives you your score though - but still a good idea to check it out). Probably the best way to go about it is to stagger them so that you check one of them every 4 months - just to make sure there isn't anything amiss there. You don't want to find out that there is a problem when you are trying to close on a house.

 

[Green Gaia]

I believe it's the paying off that builds it. I would still look into a credit card. I've heard that it is optimal for a student to have 2 credit cards. Just make sure you don't carry balances on them. If someone doesn't have the willpower to control spending, they should avoid credit cards like the plague.

Also, aren't different kinds of debts better than others? For example, a mortgage is considered good debt while an unsecured loan or credit card debt is bad. I'm not sure where student loans fall in there. Have recently acquired a mortgage, the student loan balance didn't seem like a positive or negative factor. Although, depending on what your min. monthly payment is, your income to debt ratio could be effected. Again, though I'm still learning all this myself. I hate financial stuff.

 

[SoyLeche]

Also, aren't different kinds of debts better than others? For example, a mortgage is considered good debt while an unsecured loan or credit card debt is bad. I'm not sure where student loans fall in there. Have recently acquired a mortgage, the student loan balance didn't seem like a positive or negative factor. Although, depending on what your min. monthly payment is, your income to debt ratio could be effected. Again, though I'm still learning all this myself. I hate financial stuff.

I don't think anyone really understands the formulas they use to determine credit scores. I'm sure mortgages are considered better debt than credit cards.

Another tip: Don't ever use large percentages of your available credit. From what I understand, having large amounts of credit available doesn't really hurt your credit much. Using large percentages of your available credit does. (I'm not sure what constitutes "large" - I'd never get close to half personally).

 

[Ðanisty]

You don't want to find out that there is a problem when you are trying to close on a house.

Tell me about it. We were trying to get financed for our house and found out that my mother-in-law had stolen my husband's identity!

 

[Bastet]

My credit card debt is currently at $0, and I want to keep it that way (I'm sure I'll use it, because I buy stuff online with it, but I'll make sure I don't spend more than I can pay off within a couple weeks). I've got a loan which was my car loan originally, which I refinanced when I needed money for an overseas holiday. That's at about $6,300 off the top of my head. I'm trying to save enough to pay it off totally by about August this year. We'll see how successful I am. :cover: Whenever I try to save, something always comes up I need to use the money for.

 

[SoyLeche]

Tell me about it. We were trying to get financed for our house and found out that my mother-in-law had stolen my husband's identity!

Ouch! Even the best of those can take months to clear up.

Not related to the quoted post: If you are planning on making a major purchase, it is probably worth it to pay the money and find out your credit score. Knowing it before hand can help you in your negotiations. It can also convince you to wait for a while for making the purchase. That decision is harder to make when you are actively in the process of looking.

 

[Ðanisty]

Ouch! Even the best of those can take months to clear up.

It took quite a bit of work. I wouldn't wish it on anyone.

 

[Quiddity]

One thing is crystal clear to me thus far. No one so far owns a house in Southern Cali. That easily over 500k...

 

[crystalclear]

debt free at the moment......