Quote:
Originally Posted by polarity
Thanks for all the information, my wife is always better about the spending than I am honestly. So this is something she will understand fully. I do agree that the idea would be to go cash and get away from credit, but for me I think keeping good credit will be mandatory even if my goal is to be credit free. I learned long ago that just because you don't have the money for something doesn't mean you won't need it. You always need to be able to deal with unexpected financial emergencies, if that's from savings that's great, but if not your credit needs to be good enough to get a loan with an interest rate that isn't going to throw your entire financial plan out the window.
Just a thought.
-William
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Following that thought, my desire is based on getting rid of credit cards, not nessicarily get away from using credit.
Loans are one thing. They cover mortgages, financing, and personal loans (secured and unsecured). These (typically) have a fixed term to them, where a regular payment is made X number of times. Unless you agree to something nutty, your terms won't change. Interest rates can be higher or in some cases lower than credit cards, and limits comparatively.
I have **great** credit in that area. I could walk into any bank and walk out $5K richer right now, and the bank wouldn't bat an eye.
What I'm getting rid of is revolving credit, ie, credit cards. They have no fixed terms to them. APR's are adjustable, at the discretion of the credit card company, a payment is due as a small percentage of your debt to the credit company, to where if you made only the payment they invoice you for...it'll take 30 years or more. The only advantage a credit card has over a bank loan is sometimes you can get a new credit card with a 0% APR for X months. As long as that balance is wiped out before the X Months are up, you're fine, if not, you get nailed for all the back interest. Also, they like to catch people on not making any payments over that intro-rate. Just because it's a 0% APR at the moment, does NOT mean that it's $0 payment over that time period - in fact, they can end that "promotion" because of non-payment during the 0% introductary rate. It's crap like that, that just has me saying that credit cards are pure ****.
The second goal is to get rid of any other debts as quickly as I can. It's money I'd be paying out over the long term, and by paying it off early, I'm skipping a lot of interest. Some people are fearful of paying off a debt early because you skip all the interest - sure, it hurts a TINY bit, but having an account paid/closed and done with - is much better.
Anyhow.