For those of you wishing to build CREDIT

[STR8UP]

http://forum.richdad.com/forums/tm.asp?m=420992&p=1&tmode=1&smode=1

I'm sure there are more of these threads floating around on this site. Great info for you guys just starting out.

 

[Nocturnal]

It's funny that you bring up credit.

Yesterday I was talking to a friend of mine and found out that, as a college freshman, he is already a self-induced victim of credit card companies.

He let his parents use his credit card to pay $500 for a vacation, but they never paid him back. Being ignorant, as many people are, he decided to make the smallest monthly payments he could, basically just paying the 7% interest off. Eventually, coupled with his awful sense of money-management, this led him to accumulate about $1300 of debt between two different cards. He became smart for a while, and paid it off until it was down to $300. Now, even with a job, he has let that $300 turn into $1000. He just bought an $80 jersey last week, and now he doesn't even want to wear it because some girl told him she didn't like it.

The worst part is, even after I lectured him for half an hour about how it works, how he's screwing himself over, and how he's working 20 hours a week for almost nothing, he tells me, "Don't worry, it will take care of itself." Right. I bet that's what so many millions of Americans thought before the same thing happened to them on a huge scale.

Why don't they have any required, basic money-management/accounting classes in highschool?

 

[Interpol]

Originally posted by Nocturnal

Why don't they have any required, basic money-management/accounting classes in highschool?

Maybe because things like "NOT SPENDING TWICE AS MUCH AS YOU MAKING" should be common sense. Try making friends with smarter people.

 

[Nocturnal]

I think you'd be suprised to find out how little the average American knows about money.

 

[STR8UP]

Originally posted by Nocturnal
Why don't they have any required, basic money-management/accounting classes in highschool?

Interpol obviously has this covered, but I will throw in my 2 cents as well.

It would make sense to offer at least basic money management classes. Unfortunately our entire education system revolves around preparing people to fit into a specialized slot in our organized society and fails to address the other side of the coin. What do you do with the money once it is in your pocket?

I doubt we will ever have any decent money management classes offered in high school. The smart people will continue to seek their own answers.

Sorry, Interpol, but it isn't as simple as "using common sense". Even if you manage to discipline yourself to live within your means you can't neglect the several other facets if you want to get anywhere fast.

 

[Luveno]

I'm quite the stickler when it comes to credit cards.
I hate them.
I don't have one, and I never will. I still don't get the point of paying for something with money you don't have. Why can't I just wait and get it when I do have the money?

When I finally start raking it in, I'm not keeping any of my money in a bank. Why should they maketons of profit from my money, and give me less than a percent?? I want to make loads from it. I'd rather invest it, and keep the rest in a safe in my basement.

It truly is a shame that they don't teach money management courses in school, or make them requirements in universities. My science degree required some arts courses, but NO business and commerce/economics courses. As far as I can tell, the rich don't want competition.

 

[STR8UP]

Originally posted by Luveno
I'm quite the stickler when it comes to credit cards.
I hate them.
I don't have one, and I never will. I still don't get the point of paying for something with money you don't have. Why can't I just wait and get it when I do have the money?

Why do you hate them? They can be your best friend or your worst enemy depending upon how you use them, but it sounds like you either used them irresponsibly in the past or were taught to avoid them when you were younger.

When I finally start raking it in, I'm not keeping any of my money in a bank. Why should they maketons of profit from my money, and give me less than a percent??

They don't exactly make "tons" of money. They are a business and have expenses like any other.

I want to make loads from it.

Good attitude to have, but if you are really serious about making loads of money from investing you MUST get past your hangups about debt. Like I said, best friend or worst enemy.

I'd rather invest it, and keep the rest in a safe in my basement.

You are kidding, right?

As far as I can tell, the rich don't want competition.

BELIEVE ME, the problem has nothing to do with the rich not wanting competition. It has EVERYTHING to do with people not wiling to learn what it takes or do what it takes to make it happen.

I am planning to offer educational materials in the future that will allow others to learn from my years of experience. The people who are willing to pay for and use this education will profit from it. Those who say "I can't afford it" or "sounds like a load of crap" will be stuck in the same rut forever.

Point is, it is impossible to draw a map to success. Someone who has been there will READILY share their experience with you, for a price. If you choose not to take it then it is not anyone's fault but your own!

 

[Nocturnal]

Originally posted by STR8UP
It would make sense to offer at least basic money management classes. Unfortunately our entire education system revolves around preparing people to fit into a specialized slot in our organized society and fails to address the other side of the coin. What do you do with the money once it is in your pocket?

Even people going into those specialized slots should be able to get paid a middle class wage and not fall into debt.

"Last year, nearly 1.6 million Americans filed for bankruptcy"

HELLO? I thought we were one of the wealthiest countries in the world? Well, if people want to make stupid decisions, I'm not going to hold them back. But you would think that society would develop something to remedy this problem... it's really just ignorance.

I do see how much of the population would neglect something like this, as important as it is. And that IS their own fault. But if the government is trying to help the nation's citizens, it would not be a dumb idea to teach them a little bit about money.

 

[Page]

Originally posted by Luveno
I'm quite the stickler when it comes to credit cards.
I hate them.
I don't have one, and I never will. I still don't get the point of paying for something with money you don't have. Why can't I just wait and get it when I do have the money?

When I finally start raking it in, I'm not keeping any of my money in a bank. Why should they maketons of profit from my money, and give me less than a percent?? I want to make loads from it. I'd rather invest it, and keep the rest in a safe in my basement.

It truly is a shame that they don't teach money management courses in school, or make them requirements in universities. My science degree required some arts courses, but NO business and commerce/economics courses. As far as I can tell, the rich don't want competition.

str8up already has this one down, but I might want to add a few things.

Money management isn't taught in schools b/c the the teachers are mostly equally clueless in this subject as the students. You simply cannot teach what you do not know yourself, plus the state mandates what you can teach. Most likely, good investing strategies aren't on the state standards.

There is no conspiracy propagated by the wealthy to keep joe average down-- it's simply b/c Joe Average is just a dumb fvck in a world full of dumb fvcks that simply don't know any better. The most I learned in High School economics class in relation to investing was how to buy stocks. I had to learn the good stuff on my own from Kiyosaki, Str8up, and several others.

The purpose of the education system is to cram as much book knowledge into you as possible while at the same time training you since kindergarten to be just another wage slave like everybody else. It's an assembly line for building humans instead of machines.

Also, keeping money in your basement in a safe is bullshyt. I started laughing when I read that b/c You may as well leave it in the bank and get piss-poor ammount of of interest with that attitude. You can leave that money in your safe until it crumbles to dust and you still won't get any gains whatsoever on it. Plus, inflation would have you by the balls after a few years and you can sit back and watch the purchasing power of your stash go down.

Also, credit is MUY IMPORTANTE. Credit cards have gotten a bad rep, but don't blame a plastic rectangle for the stupidity of its owner who buys everything in sight and only can afford minimum payments. I'm currently working on building good credit card ratings so I can get bigger advances and use that to build banking credit in the next year.

 

[Centaurion]

I just got my first platinum and gold credit card the other week!!!!


Black Am Ex here I come

w00t w00t

I'm so friggin proud!

:cheer: :cheer: :cheer:

 

[STR8UP]

Originally posted by Page
The most I learned in High School economics class in relation to investing was how to buy stocks. I had to learn the good stuff on my own from Kiyosaki, Str8up, and several others.

Most people learn finances from their parents who a probably equally as clueless. The "big secret" of the rich is to acquire appreciating assets. They find creative ways to get their name on the deed even if the odds are against them. It is honestly THAT SIMPLE.

Credit cards have gotten a bad rep, but don't blame a plastic rectangle for the stupidity of its owner who buys everything in sight and only can afford minimum payments.

Exactly. It has nothing to do with credit itself and EVERYTHING to do with the way it is ABUSED instead of used wisely.

 

[Aztec]

STR8UP, nice to see that you're still floating around and contributing good advice on the forum.


Do you know a site that gives rules of thumb in spending? i.e. Not exceeding 25% of your net income on apartment rent. (I'm not sure if that's the right quote though)

 

[STR8UP]

Originally posted by Aztec
STR8UP, nice to see that you're still floating around and contributing good advice on the forum.


Do you know a site that gives rules of thumb in spending? i.e. Not exceeding 25% of your net income on apartment rent. (I'm not sure if that's the right quote though)

Thanks. Been tied up for awhile but decided to see what was up around here lately.

Great question, BTW. Truthfully, these ratios are B.S. Just another way that people want everything distilled into a digestable package.

The problem is that even if someone were to tell you that you should only be spending "x" amount per month on rent or whatever, this is only going to help you on the defensive side of your finances. It doesn't help you on the MORE important offensive side.

Shouldn't each individual be able to create their own budget based upon their situation? Most people have only a few bills they have to deal with monthly. How hard can it be? Rent, utilities, car payment, insurance, food, healthcare....why can't they be interchangeable? Point is, if you make $1,000 per month and want to "save" a little each month, what does it matter as long as you are hitting your goals?

That said if you are taking the "other" road to wealth (NOT the "save and buy mutual funds" road) you will eventually find that as I said above these ratios only help you minimally by keeping your head above water since they are only defensive measures. If you are asking this and your goal is to retire in 40 years, my advice might be different, If you are thinking in this way your mind is in stagnation mode. You only account for earning a certain amount of money and try to compartmentalize everything to fit into that reality. If you look at it from a "how MUCH MORE can I make" frame of mind you will find that it isn't nearly as important to worry about this stuff.

 

[Luveno]

It is paramount that one must accumulate debt to acquire riches. Yes, it takes money to make money.

But for my current purposes, I don't see the point in getting a card that's supposed to represent money I may or may not have in the future. If I do have the money to buy something, then why do I need a credit card? It's truly a paradox to me.

Credit is important, if you have an average joe salary yes. You're a slave to the wage and to the credit rating. What a great life.

Buying something with money I don't have is ridiculous. Investing in index funds and buying a car are two totally different things. I'm going to wait until I have the money in my name to go buying frivolous material goods.

Although I wasn't being literal, why not keep it in a safe? If I'm not making profit off my money that's fine as long as nobody else is either. My point is that I'm not giving the banks my hard earned money to make more profit than I do from it. I could make more profit from it myself than just hold onto it in a .03% account or whatever miniscule number they offer these days. You guys mentioned how joe blow the dumb fvck doesn't have a clue about what to do with his money. He probably has it in one of these accounts too.




=

 

[STR8UP]

Originally posted by Luveno
It is paramount that one must accumulate debt to acquire riches. Yes, it takes money to make money.

But for my current purposes, I don't see the point in getting a card that's supposed to represent money I may or may not have in the future. If I do have the money to buy something, then why do I need a credit card? It's truly a paradox to me.

You want to have and use credit cards because it helps build your credit. You don't want to be in the position where you are ready to start buying assets and not have credit. It takes YEARS to build a credit score.

Credit is important, if you have an average joe salary yes. You're a slave to the wage and to the credit rating. What a great life.

You are only a slave to your own actions. If you do not use credit wisely it will bite you in the ass. If you use it correctly it will make you rich.

Buying something with money I don't have is ridiculous. Investing in index funds and buying a car are two totally different things. I'm going to wait until I have the money in my name to go buying frivolous material goods.

Unfortunately it is difficult to establish credit without starting on the consumer side. I initially established credit with department store cards and a car loan co-signed by my uncle. Don't worry about paying a little bit of interest as long as you keep things under control.

Although I wasn't being literal, why not keep it in a safe? If I'm not making profit off my money that's fine as long as nobody else is either. My point is that I'm not giving the banks my hard earned money to make more profit than I do from it.

I hate to say it but you sound like one of those wacko conspiracy theorist nut jobs that thinks everyone is out to get them. How can you survive without a checking account? Do you go to 7-11 and buy money orders to pay your bills? Doesn't sound like a fun life to live, but to each his own....

 

[Oxide]

I am very glad STR8Up is back.


Credit card purchases creep up on you guys, take this one from me. I've read all the advice on them, and was very careful when got my first platinum.


I needed to pay a part of my tuition, about $450, and best way to do it was over CC. Then i added a laptop purchase to that, for convenience, really. (i had the money in my checking to cover that)

However, as things went on, i needed to spend money from checking on unpredictable purchases. I suddenly realized i didnt have the $1800 i needed. Now, since i didnt have the full sum, i figured out i will pay smaller amounts and take the interest hit of $30-40 a month. Now guys, this is the downward spiral.

Right now i can cover about 70% of the debt, which i should be doing..actually right now. The biggest trap about Credit cards id say is not having the full sum you need. If you have just below, you no longer want to put all that towards the CC because you simply need cash for other things. Very dangerous guys.





STR8UP. I have a question man, i would love if you answered.

Today we went to look for a house for me and my best friend, we are sophmores in college and figure living in a house would be good instead of rent. However, it is more like his dad buying a house for us to live in. We still need to pay rent. Today we picked a house ( the best college house you can possibly imagine.. on a lake, with a hot tub, deck, 3 season patio) about $189k (its in mankato) ..

Now, my friend apparently cosigned with his dad, so he is the owner. AS the house equity goes up he will get half of the money.


His dad said "The rent will be $435 a month" . I looked at him like , i can barely cover paing $335. He said, "well, dont worry, we will figure out how much you can pay later".

One of the options is i can go for the smallest room in the house, and then my rent would be dropped by a $100. This much i can offord for such a great place.


Now i love this place, and my best friend is like my brother, so he flat out told me we will work something out, becuase he wants me to live there and understands that i am not getting help from my parents, however, i am a little bummed out becuase i am the one who wants to build my real estate path and start making steps towards financial independence. I guess since i dont have any money besides may be $350 a month i cant dictate being a cosigner or anything.. but it kind of makes me sad becuase i still end up paying rent..


Would you stick it out by paying rent while in college and just try to do something from there? Any other suggestions?

 

[STR8UP]

Originally posted by Oxide
Credit card purchases creep up on you guys, take this one from me.

Yes, you do have to be very careful with credit cards. It's easy to overextend. Keep a close eye on your spending habits and make sure you keep it all under control.

Would you stick it out by paying rent while in college and just try to do something from there? Any other suggestions?

Great question. My girlfriend is facing the same issues. She is wanting to get into the game but since she is still in school her resources are pretty tight.

I wouldn't get too stressed over not being able to start immediately. It is great that you are positioning yourself to move in that direction. I was in the same situation. I had the itch at 18-19 but didn't actually really get rolling until I was about 25 when I slowed down on the partying and had finally established some credit. Keep moving toward establishing your foundation (mainly credit and knowledge in the beginning) for when you are in a better postion.

I know you weren't asking a question about your rent situation, but I would be careful. It's easy for people to say "don't worry, we will figure it out later" in order to avoid conflict. If I were you I would work this stuff out up front because as in any transaction where money is involved you don't want even the slightest misunderstanding, if you can avoid it. I am going through an issue now with business partners who have been friends of mine for years. I obviously didn't do a good enough job of explaining to them what they were getting into and now I am paying for it.

 

[Oxide]

Thanks for responding.

It is one of the hardest things when money comes in between friends. It is ackward and an unpleasant experience, becuase you feel like you are brothers, and yet one person is starting to look like a stranger to you.


I saw that "we will figure it out" part glow in red. That is why i talked to my friend and we both acknowledged that my rent will be lower becuase i cant pay it all, hell he said he will help me pay it.


I just looked at my "Owes" vrs "Has" sheet and ****ing a, all i can say, ALWAYS have an idea of how much you owe vrs how much you have. I have been very careful all my life and now almost found myself in tears when realized i am at least $400 short and there isnt a visible way for me to get that money.

Creditors and Debtors are not your friends, they will not wait for you when you are ready to pay, they will make you pay for waiting.



STR8UP, you are the person who set me on this path. I am going for Business management/ Business law minor but i know that Real Estate and Stocks is where im going to make my money. Business will be useful to get the inital income (when i get out of college) and then later when i have the money to try new business ideas. (kind of like you, real estate first, buisness a side thing)

All i know is, when i get out of college and get that job, i will need to be even MORE careful with finances, with all the student lawns and other new expenses, it will be challanging to find money for properties/stocks.



Good thing i am determined not to get married until i am 30, otherwise good bye millionare lifestyle

 

[STR8UP]

Originally posted by Oxide
I just looked at my "Owes" vrs "Has" sheet and ****ing a, all i can say, ALWAYS have an idea of how much you owe vrs how much you have. I have been very careful all my life and now almost found myself in tears when realized i am at least $400 short and there isnt a visible way for me to get that money.

That is a GREAT way to view money. Always think about how much something is going to be worth the day AFTER you buy it. I do this when I buy a computer, car, ANYTHING!

Think of it this way. Ever notice how the mega-rich have original oil paintings on their walls, instead of Wal-Mart posters? This isn't only an indicator that someone might be rich, it is also quite possibly one of the reasons FOR them being rich! Someone who spends $10,000 on Rooms to Go furniture and cheap decorations will be hard pressed to get a few hundred $$'s for the out-of-style junk in a couple of years. The person who used the $10,000 to buy art and antiques to furnish their place will likely find that THIS "junk" is actually worth MORE in after a couple of years!

Creditors and Debtors are not your friends, they will not wait for you when you are ready to pay, they will make you pay for waiting.

Well said. One of the most important things to understand about money is "which end" of it you are on. Are you on the receiving end where people are paying YOU interest, rent, etc.? Or are you on the other end struggling to make the payment on a car that you owe $20,000 but is only worth $13,000? It's easy to sink.

Good thing i am determined not to get married until i am 30, otherwise good bye millionare lifestyle

I doubt I would be 1/10 as far as I am today if I would have gone the marriage route!

 

[Oxide]

How's the book coming along by the way? I'd want a signed copy


On cars, i read "millonare next door" and basically they said buying cars BY POUND is one of the concepts rich do. The higher price per pound is, the higher the price. Corvette was something like $17 per pound. Ford 250 was something like $4-5

Honestly, i didnt find that book to be THAT amazing. The message was "SAVE.SAVE.SAVE." which made me think about how much am i actually sacrificing right now for a better future.

I was talking to my friend about this, and he said "Well, what good for is a nice place when you are 30 and dont go to college and dont party with hot coed and dont get laid with them at parties?!" I can see the point, but at the same time i know there is always tommorrow that will come and will kick you in the ass if you are not ready... trying to find the balance is the hard part i guess.



I did learn something from that book though. From now, i only buy cars that are aged at least 2-3 years. I will still buy nice cars like mercedes, but make sure the original owner has already taken "the hit" when he bought it brand new.

Plus, with my taste in cars, saving that money will benefit me greatly.

(if you ever been to a car show, once you get inside those "oh so cool" cars (usually around 30-50k) you QUICKLY realize how cheap everything is made. Everything is ****ing plastic. I was inside a brand new mercedes that was one of my dream cars. I sat inside, and said "Wtf?! i feel like inside my mom's subaru! Everything got that cheap plastic feel and generally doesnt feel like quality). One car that actually still impressed me was the new corvette. I like the exterior, and the interior isnt bad either.

How are you doing STR8UP, i dont remember how old you must be now, probably pushing early 30's? With a GF in college, that would be nice