The Finances and Debt Thread

[gourimoko]

Thanks for help everyone. Now I read in the thread that I should pay off the lower amount of the two cards first? Why is that? Or did I read it wrong?

You want to get your utilization per card as low as possible.

So calculate the balance divided by the limit of each card to get the utilization percentage, then focus on the cards with the highest percentage favoring cards with higher dollar value balances.

Your credit score is based on utilization, not only dollar value, but it also takes into account total utilization over all your cards.

 

[gourimoko]

Also once I get these cards paid off, should I start putting some extra cash to my student loans as well?

Nope.

Paying off your student loans, as paradoxical as this might sound, can hurt your credit score.

If you are trying to build your credit, you don't want to start closing accounts; you want to open accounts and maintain good payment history.

Installment loans, student loans, auto loans, help your credit with good payment history; utilization isn't calculated or weighted the same as your credit card accounts.

 

[BMAN]

Just added up what I spent in booze and going out to eat...

 

[BMAN]

Laptop decided to take a shit. Any apps people can recommend for budgeting?

 

[FiveThous]

Laptop decided to take a shit. Any apps people can recommend for budgeting?

Mint

 

[The Oi]

Saw people talking about credit here but haven't read back more than a page. Sorry if I'm duplicating other posts. As a guy that pulls many, many credit reports per day, I can tell you that the more available credit you have the better. That's the TLDR.

(1) Please, please, please do not close credit cards ESPECIALLY if you're not using them. I can see doing it if there's an annual fee, but immediately replace that credit card with another one that has a similar limit.

Why? Because if you had a total of $20,000 revolving debt available and you were using $4,900 of it...when I see that, I'm happy. You're using less than 25% of your available credit. Assuming you're a good payer on your installment debt (monthly billing) and you don't have judgements and collections items, your credit score will be strong.

Let's say you now pay off and close a card with a $15,000 limit on it. Now you have $5,000 available and you're using 98% of your available credit. Not good.

(2) Do not let accounts go into collections and if you do let one go into collections for whatever reason, assuming it's small...just pay the fuckin thing. I don't care how much it hurts your pride or what an attorney would tell you.

For as long as it's on your credit report, it's fucking you. I promise you it's worth it to pay a $50 Verizon collections item that you've decided they fucked up on. Same for medical bills. I pull Equifax and on Equifax, collections items are literally the very first item we see. Many lenders when they see more than one unpaid collections item will kill your deal before scrolling down to your revolving debt and you can fuck off if you think they'll get all the way down to installment debt. Reason being, they're going to assume you're a pain in the ass and if you're a pain in the ass on a $50 bill what are you going to be like when you get a $1,000/month bill?

(3) If you get behind on child support, whomever pulled your credit threw your shit in their recycle bin. If it was a guy, he forgot about it in 10 seconds and probably won't call you to tell you your deal is dead. If it was a woman? She wants you to die.

 

[jvlgato]

How high is the score where you immediately think, 'looks great, let's go!' and anything higher doesn't really matter?

 

[KI4MVP]

(1) Please, please, please do not close credit cards ESPECIALLY if you're not using them. I can see doing it if there's an annual fee, but immediately replace that credit card with another one that has a similar limit.

Why? Because if you had a total of $20,000 revolving debt available and you were using $4,900 of it...when I see that, I'm happy. You're using less than 25% of your available credit. Assuming you're a good payer on your installment debt (monthly billing) and you don't have judgements and collections items, your credit score will be strong.

Let's say you now pay off and close a card with a $15,000 limit on it. Now you have $5,000 available and you're using 98% of your available credit. Not good.

To add to this, about every 6 months request credit limit increases on all of your credit cards (or rotate through them doing a different one each month). Assuming some will approve an increase, it's a ridiculously easy way to boost your credit score using the principal above that each time you do it, you lower your credit utilization percentage.

 

[BMAN]

Mint

Not sure how I feel having my accounts hooked up to an app. It's legit? Am I just being paranoid?

 

[The Oi]

How high is the score where you immediately think, 'looks great, let's go!' and anything higher doesn't really matter?

Depends.

I do commercial lending so part of the scoring model depends on how the business is doing. On smaller deals, it's usually application only. On larger deals, we consider bank statements, rax returns, personal financial statements.

A strong business can offset a non-ideal credit score.

There's also a 700 credit score that's a 25 year old kid with one credit card, a joint car lease and a bunch of student loans dad is helping with and a 50 year old guy with a 700 credit score that's paid off two houses, three cars and isn't higher because he just took co-signed on two cars and another mortgage in a two month period.

So...it depends.

700 is the cutoff for most "A" commercial lending. Some go down to 675.

 

[Pick6]

Not sure how I feel having my accounts hooked up to an app. It's legit? Am I just being paranoid?

Mint is most definitely legit. They use the same encryption software that banks use. (Gouri- don't shoot me if my terminology isn't correct). Mint is awesome. I like being able to see my live overall financial status.

 

[The Oi]

We use Mint. It's tremendous and does allow you track your budget and expenditures real time.

Makes it really hard to purchase things for my wife online though.

 

[Stitches]

Mint

I use YNAB and like it well enough. Granted I have YNAB 4 which was a one time purchase and they have since gone to a monthly (or yearly?) subscription.

Steam probably still sells it though.

They have a weekly web-series on YouTube (usually they are quick, like 7-8 mins).

With YNAB, I was able to pay off two (of my five) student loans way early (apparently a bad thing from reading this thread; I had/have no credit cards with interest accruing balances) and am essentially paying 3x the principal on my house each month, while still keeping like 8-10% of my after-tax income (not household) for hobbies and such.

It also does a good job in directing you towards saving your money for not only what is important to you (a new car, a house, a family, etc), but being sure you're ready for common but infrequent expenses (birthdays, christmas, medical, HOA, etc) that you may have previously put on a card and accrued too much debt on.

 

[The Voice]

Don't listen to a damn word anyone here has said. Max everything the fuck out. I'm talking credit cards, lines of credit, unsecured loans, then when nobody is letting you borrow, overdraw all your accounts, when that dries up max out every payday loan spot and when all that is dried up declare bankruptcy. Wait 7 years and do it a again.


Sent from my iPhone using Tapatalk at your local pub.

 

[Pick6]

I use YNAB and like it well enough. Granted I have YNAB 4 which was a one time purchase and they have since gone to a monthly (or yearly?) subscription.

Steam probably still sells it though.

They have a weekly web-series on YouTube (usually they are quick, like 7-8 mins).

With YNAB, I was able to pay off two (of my five) student loans way early (apparently a bad thing from reading this thread; I had/have no credit cards with interest accruing balances) and am essentially paying 3x the principal on my house each month, while still keeping like 8-10% of my after-tax income (not household) for hobbies and such.

It also does a good job in directing you towards saving your money for not only what is important to you (a new car, a house, a family, etc), but being sure you're ready for common but infrequent expenses (birthdays, christmas, medical, HOA, etc) that you may have previously put on a card and accrued too much debt on.

YNAB is another good one, but the manual stuff isn't for me. Can definitely see how it makes you be more conscious of your spending though.

Don't misinterpret what has been said, paying off your student loans early is a GREAT thing. Gouri and Jigo's advice have been purely from a credit score standpoint. Saving thousands of dollars in interest heavily outweighs a few points on your credit score. I'm 24 and have a credit score of 750 and have never tried to get fancy with my score. Although there is a thing or two I would have done different (ex. keeping a card open), its nowhere near the extent that has been discussed. A good credit score is a by-product of good financial health.

My current strategy is to look at my budget, look for anywhere I can cut down (i've already done this pretty extensively). Yesterday my promotion ended for TWC extreme internet. I called and in 10 minutes dropped it to turbo internet and saved myself $10/month. Now I know it isn't jack shit really, but why pay it if I don't need it? If it affects my internet experience, I'll just go back to it. I take 25% of my leftover income and put it towards a "fun" account (works out to about 10% of my after tax income as well), 25% towards a savings account for house, and 50% towards paying down extra on my highest interest student loan.