Quote:
Originally Posted by kittygilchrist
To have zero debt ever would likely mean: - You'll never have a reliable vehicle
- You'll never buy a house.
- If you own a business, it is unlikely you can do more than scrape by.
That said, the reason to avoid debt is not that you are avoiding debt itself, it is that paying interest should be avoided whenever possible. My advice is a bit opposite of some here, which is to say, build your credit history. Go to the FICO website, study strategies to build credit. I would go as far as to suggest using credit you don't need, AS LONG AS YOU PAY IT OFF EVERY MONTH BEFORE YOU OWE INTEREST. I can say that because I know you are a temperate and frugal young man.
Be aware of the seasons of the economy. We are in a season of extremely low interest. It's likely that at some point interest rates and home prices will go far higher.
An example of using the seasons of the economy to your advantage:
If you are renting instead of paying a mortgage, this is an excellent time to buy a house because renting is the opposite of investing, as you are paying for something you will never own.
Even though you would be paying interest on the home, you are also paying for the house itself.
Regarding investing in a IRA or 401K, the funds can be invested in many different things, and most of the choices are risky for losing money.
If I were you, the first thing I would do is build a nest egg. Ask the bank how much is required to put money a CD, which is safe, and gives you a smidgin of interest paid to you. I give this advice knowing you and your situation. Everyone needs an emergency cushion of cash in case of a vehicle loss or breakdown, being temporarily unable to work, and so on.
When these funds have built up, then you are in a position to leave an emergency fund and use the extra to start paying off the truck early to save that interest.
Still reading? Finally, make sure you don't scrimp on "investing" in insurance. Make sure your vehicle is covered for collision, and that you have medical insurance. This is a gigantic risk that many young people take without ever thinking about what would happen if.... |
This post is correct. Kitty is absolutely right. You have to have credit. In fact.. that was what I would actually talk about. Credit and credit scores. We had credit... when the interest was less than what we were making on our money. Any time a company would offer "free" credit... We took it! 2%??? Easy call! Good credit scores means you can take advantage of all of those deals... you won't get them with bad credit.
We lease our vehicles. We don't keep vehicles longer than a couple of years. It doesn't pay to buy them. And for those who would say they drive too many miles... You pay for the miles either way.
As to buying a house.... I agree with Kitty. We bought our home. But there is a different way of thinking now. The paradigm today is rent. Things have change since we were your age. We would go into our jobs/professions for life. Now.... not so much. Kids today need to be mobile. They need to be able to move to get the big break. "They" are telling young adults to not be so "tied down". Travel light.
To the person who said to invest in yourself! Wow.... Big applause to that! Even to invest in how you look! That young person dressed one level above his/her level... Will be promoted first. Don't just stop at education.... Studies show... even your weight will make a difference in your success!
So much good information on this thread... I agree with the person who said they wished they had done this when they were younger... But we didn't have the computer then.
Good luck... I wish you well...