I think I see where you’re coming from, LordVor, and of course I understand that no financial strategy is risk-free.
But when I plug in the numbers ($200 monthly, 10.00% savings rate, 7 years) with the default tax and inflation rate, I get $19,148. That makes sense, because without any interest at all your deposits total $16,800. What numbers were you using?
Oops. I had put in four years.
:smack:
-lv
Ah, I see. Because with 7 years, the only way to come out with 10k on that calculator was to jack the inflation way, way up. And if that were reality, I expect we’d have a lot more to worry about than our mutual funds. :eek:
http://www.bankrate.com/brm/rate/cc_home.asp?link=5
Includes a credit-card chooser. Bankrate is an excellent site overall for comparing financial products (mortgages, etc.), and contains articles giving a pretty basic primer on a lot of financial topics.
Working Assets. Some money will go to a good cause.
Like cuauhtemoc, I believe that a credit card is not the best way to go. Some people do well with them, most do not. I, personally, don’t see it as being worth the risk. There is nothing wrong with saving. Patience, dear.
As for the apartment thing: I have absolutely shitty credit (student loans), which may have been a problem, but I offered to pay first and last month’s rent up front-this is normally accepted. That pretty much takes the risk out of it for the person you are renting from.
I guess you and I are swimming against the stream, captaindoesnotlikeyou. BTW, love the username!
Your debit card agreement should state explicitly that you not use the card for hotels or airfare. Big problems can occur because of they way these types of businesses get authorization.
Aside from that LordVor and Shodan have good solid advice (IMHO).
Full disclosure: On my own, with and without credit cards for 24 years. I love my c/c’s, I hate carrying cash. I pay them off every month and enjoy my AMEX rewards.
I’m not sure what you mean by this. I’m not aware that my debit card agreement states anything of the kind. I know that hotels sometimes put “holds” on portions of your balance when you check in with a card. If the cardholder is aware of this, and has enough in his account to cover the spread, what’s the problem?
cuauhtemoc makes one very good point-- to exist in North America, it’s obligatory to have credit. If you ever want to rent a car or get a hotel room, you’ll need a credit card-- it’s the first thing they’ll ask for.
As for which credit card, just stick to one or two cards with no annual fee, and pay them off every month. Think of credit as a 30-day deferred payment, and you’ll be fine.
Getting store cards is easy, but fairly pointless. It’s been my experience that most stores ‘piggyback’ their cards on your existing credit. ie. ‘you’ve got Amex? Then we’ll give you our Sears card’
One of my branded debit cards had specific protections (for me) for hotel/airfare/rental car purchases so, it definitely doesn’t apply to all debit cards.
I have lived in a three-bedroom house that would have sold in the $350,000 range ten years ago when I lived there. The same house in other places I’ve lived would go for anywhere from $80,000 to $100,000. That $200,000 house may not be the luxury mansion it sounds like it ought to be.
Be very very careful with credit.
I have nothing to add about credit cards, except to say that I owe way, way to much on mine. (And yes, I’m actively trying to pay them down.)
But I had to comment - 25% down on a house? :eek: I guess it’s all in where you live. I live in northern New Jersey, and right now you can’t even buy a townhouse for less than $250,000. When we were house shopping last year, we saw a run down, (tiny) converted trailer on a piece of land just barely large enough to hold it, in a not-so-nice area of what’s a generally OK town.
$240,000.
I see that whiterabbit lives in a similar area. Teaches me to hit “preview post”. 
I, uh… Thanks, I guess, but I didn’t make that point. In fact, I was trying to make the exact opposite point, that you can do without a credit card. The need for credit is a myth that’s perpetuated by the financial establishment. Having bad credit can hurt you, of course. But bad credit is something you get by not paying your bills. Refraining from going into debt does not equal bad credit. Refusing to enter into personal credit card agreements, which are universally horrible for the consumer, does not equal bad credit. At least not yet, but it might someday if the banks have their way.
Risha, I also live in Northern New Jersey, and I know the real estate market is all out of whack (one of many, many reasons I’m trying to get out of here). But take a minute to think about why it’s so expensive. All you hear these days is “Buy now! You’ll never get another chance to take advantage of these low, low interest rates!” I thought about buying something last year, and talked to an agent. I was looking for a one or two-bedroom condo. I told him what I made, and he said I should probably be looking in the $150k to $165k range. So let me get this straight: I can have the lowest interest rate in forty years, but I have to pay three times what the damn place is worth? Screw that!
These prices are what the market will bear right now, like any commodity. But the only reason the market is bearing them is that it’s all borrowed money! If everyone who was about to borrow $350,000 for a house decided to wait until they had at least a 20% down payment, prices would plummet, and people would get a lot more for their money. But people are not that smart, or patient, so banks with pockets as deep as the Marianas Trench are lending money like crazy, everyone is paying too much for their home, they’re all mortgaged to the hilt, and the only ones benefiting from the situation are the banks themselves.
And what the hell is here that’s worth paying that kind of money anyway? The chance to make big bucks in Newark or New York City and commute two hours a day? That’s not an even trade, as far as I’m concerned. Maybe if you work for Big Pharm or one of the other local industries your commute won’t be so bad, but you’ll still pay too damn much for a house.
I don’t anymore, though I don’t know what houses cost around here. I can’t quite afford even an apartment right now, though that’d be true pretty much anywhere.
It was a nice enough house, I guess, but $350,000??? This was in the LA area right near Venice.
cuauhtemoc, you make an excellent point - housing prices around here would probably be much lower if everyone was borrowing less to buy them.
On the flip side, though, even if my house had been $100,000 instead of $260,000, I couldn’t possibly have saved up a 20% down payment any time soon. We have excellent credit - despite credit cards, car loans, student loans, and all. Still, my husband and I would have been living in our crappy apartment for at least another five years, probably closer to ten, instead of our comfortable home on a quiet suburban street. The extra money it will cost us in the long run (and I’m well aware that it will total in the hundreds of thousands of dollars) is worth it to us in order to enjoy those extra years.
Incidentally, I don’t and wouldn’t commute to any of the major cities (especially New York City). Anybody who commutes more then an hour for anything but the most dire of reasons is nuts. I moved here to take a job I loved, which happened to be in Bedminster (a very expense northern/central Jersey town, for those who don’t happen to live around here). Many of my coworkers live in Pennsylvania because of the housing prices, but like I said, I’m not willing to commute that far.
I’ll tell you, if I had $52,000, I wouldn’t put it down on an ridiculously inflated property either, because it’s not worth it to me to live here, but everyone has their own priorities, and I understand that.
However, if you’re making mortgage payments on a $260,000 house and are meeting the expenses that go along with it (and making payments on credit cards, student loans, etc.), you probably have enough income to have been able to save that 20% in considerably less than ten years. I don’t know how old you are, but how much of a time investment would you be willing to make in order to save “hundreds of thousands of dollars”? What if it meant the difference between retiring a millionaire or a thousandaire?
And I don’t know how crappy your old apartment was, but even if it was as modest as my grandparents’ first home (a rowhouse in South Philadelphia), they lived there 40 years before they could buy a single home in a comfortable, suburban neighborhood, and they didn’t even save hundreds of thousands of dollars in the process. Today, we (Americans) feel ourselves unduly burdened if we have to wait six or seven years to attain what our grandparents worked their whole lives for. Who benefits most from this mindset? Well, you get your house six or seven years early, and your bank gets hundreds of thousands of dollars more of your money - money that could be growing in investments for you instead of them. When I look at it that way, it looks like they win.
But of course, that’s just my way of looking at things, and you may see it differently.
Borrowed money is not a dirty word. And I suspect many people are not mortgaged to the hilt. If you have bought a house 10 or 15 years ago, and had a reasonable increase in income, your mortgage is now a lower percentage of your salary than it was then, especially if you have refinanced. (Unless you take out home equity loans to pay for current expenses - I’ll join you in condemning those.)
Mortgage payments do not go up. Rents do. If you rent, you get no benefit from the increase in property values. Now, if you are sure they are going to plummet, it does make sense to rent and wait for the crash. But when I bought in Northern California 8 years ago, the price seemed absurd, and it is even more absurd now. I would have been in much worse financial shape now if I had rented.
And you don’t want a housing price crash. That happened in Lousiana and Texas during the oil crash, and it isn’t pretty. People walk away from houses, banks are stuck with them, credit freezes up, and it is a real mess.
And who sets what a house is really worth? When I was a kid, paperbacks were 50 cents, and I could buy a shirt for $3.99. That’s the value of these things to me, but I still buy new shirts and new books. The first house we bought, a nice 3 bedroom in a good neighborhood, was $40K (in 1979.) I’ve gotten over buying houses worth a lot more. Credit, used wisely, is not evil.