Dave Ramsey, debt, credit cards, retirement, etc

[WaveDemon]

That's fine. As long as it shows no outstanding debt, he's in good shape. Credit history can be repaired within 2-4 years.

I know a woman who left her ex boyfriend. While they were together they had credit cards which were used to purchase appliances, carpet, etc in both of their names. The boyfriend was abusive, so she left. The ex bf stopped paying the bills for stuff that he now lived with. After the collections agencies came after both of them, he didn't want to pay anything. Lawyer this, lawer that, letter this, letter that.... the guy wasn't moving. She was sick of waiting around and wanted to get her credit history repaired (she had outstanding history prior to this incident). She made settlement with the company and paid it all off... stuff she never saw from the ex in order to clear her name. Within 1-2 years a significant jump in her credit score occured. Within another 1-2 years, it doesn't even show up now. Credit score repaired.

Doug

I'm aiming for a score of 0. No credit.

 

[douglee25]

I know some people will disagree, I believe we even discussed it here in this thread or elsewhere on the board, but it's not really possible to function with zero credit.

Everything to a certain degree functions with the evoltion of 'credit'.

Even if you don't use credit cards per say, 'credit' is needed for utilities, mortgages, school, etc. Unless you are just privately wealthy, how do you plan on functioning with zero credit?

Doug

 

[WaveDemon]

I know some people will disagree, I believe we even discussed it here in this thread or elsewhere on the board, but it's not really possible to function with zero credit.

Everything to a certain degree functions with the evoltion of 'credit'.

Even if you don't use credit cards per say, 'credit' is needed for utilities, mortgages, school, etc. Unless you are just privately wealthy, how do you plan on functioning with zero credit?

Doug

Doug

no loans, no credit cards, mortgage is not in my name, I pay cash for my college classes and books. The only thing I can think of that utilities will want with bad credit is a bigger deposit and I have no need to give them a deposit since I'm already a paying customer. We own our cars out right.

For once, my wife and I both have a decent income and plenty of money left over at the end of every month. Now we're getting out of debt.

 

[douglee25]

I guess I'm also thinking of other tangible things that depend on a good credit score.

Doug

 

[WaveDemon]

I think the 2 things that are most over rated are a good credit score and a new(ish) car.


People often fall into the trap of wanting to get out of a car that has a repair that costs than the car is worth retail. What is an owned car really worth? to me, more than most repairs. A car payment will quickly cost me more than any mechanical repair. You can make most cars run well over 200k (especially a stick shift).

 

[Matt_E]

I guess I'm also thinking of other tangible things that depend on a good credit score.

Like?

 

[Mark44]

p

no loans, no credit cards, mortgage is not in my name, I pay cash for my college classes and books. The only thing I can think of that utilities will want with bad credit is a bigger deposit and I have no need to give them a deposit since I'm already a paying customer. We own our cars out right.

For once, my wife and I both have a decent income and plenty of money left over at the end of every month. Now we're getting out of debt.

I would pay of my dept in full then. IMO

Mark44

 

[WaveDemon]

Like?

like an engine rebuild or a combination of things like brakes, ac, and struts. It's better to bite the bullet and fix what you have. Otherwise it's just an excuse to buy something newer.

I'm not saying to never buy a newer car, just don't think you're doing something better financially by buying a newer car (especially a new car). If you have a car new enough for a warranty there is a better chance for you to lose more money in depreciation than the cost of mechanical repairs.


My exception to this is an automatic transmission. I don't trust rebuilt automatic transmissions. I'll replace with a used one or buy another car.

 

[WaveDemon]

I would pay of my dept in full then. IMO

Mark44

That makes no sense when I can pay less.

I tried to set up a payment arrangement for years and they didn't want to hear it. They got the lawyers involved and now they're willingly walk away with less and I'm more than willing to pay less.



Trust me, the bank is going to be just fine. I came out on the worse end of this deal over the last few years.

 

[Matt_E]

like an engine rebuild or a combination of things like brakes, ac, and struts. It's better to bite the bullet and fix what you have. Otherwise it's just an excuse to buy something newer.

I'm not saying to never buy a newer car, just don't think you're doing something better financially by buying a newer car (especially a new car). If you have a car new enough for a warranty there is a better chance for you to lose more money in depreciation than the cost of mechanical repairs.


My exception to this is an automatic transmission. I don't trust rebuilt automatic transmissions. I'll replace with a used one or buy another car.

Sorry, I was asking Douglee what other tangible things he meant..

 

[The Penguin]

Sorry, I was asking Douglee what other tangible things he meant..

My wife and I have her house on the market to lease.

the first candidate had a 188 credit score with bad history of late payments.

where do you think his application went?

insurance rates are also based on credit score to some degree as well.

 

[AtomicPunk]

employers are starting to run credit checks too

 

[SuperJETT]

I always hear how insurance rates are based on credit score, but have never see why or how much. Why would insurance be tied into how often you borrow/repay money?

 

[Matt_E]

My insurance is not tied to credit. I've asked the companies before.

I agree that lots of things are EASIER with a credit score, but they are not impossible without it. After all, what does a zero score mean?
You're dealing with a person that won't borrow money. Is this a bad thing?

 

[madscientist]

we have made it down to less than 11k on credit cards from 25k in the last 1.5yrs.. not bad. still have the house and wifes car.

 

[WaveDemon]

The plan is to go from a combo of secured and unsecured debt of ~$330,000 to $0 in the next year or less.

 

[The Penguin]

I always hear how insurance rates are based on credit score, but have never see why or how much. Why would insurance be tied into how often you borrow/repay money?

credit score also includes how you pay back the money you borrow. On time. Late? How late, how often?

 

[douglee25]

Penguin pretty much answered for me. Credit score may not be directly tied to everything even in terms of repayment, it basically is how companies determine what type of person you are or qualities you possess. Think about it... you walk down the street and see 100 people. You ask the 100 people if they are 'stand up' people or not (meaning a good, trustworthy individual). I bet most would say absolutely. Now go pull their credit history. I bet you may come away with a different opinion by the time you're done analyzing the data. Who would you lend money to in that case? Who would you trust with the keys to your house? The person with an 800+ score or someone with a 0 score?

I'm not disagreeing that cash has its places, but not everywhere. I'll give you a couple of examples.... 1. My buddy has a business. He tried to go buy a van for his business but they wouldn't sell it to him because he didn't have a credit score when he applied for a loan. Why? Because in the past he paid for everything cash. 2. My Dad has currently started a new business in the past few years doing multi-dwelling rentals plus flipping houses. He bought this one house cash in order to expedite the sale. He later went to get a mortgage on it while it was being rehabbed in order to free up some capital. He had a hell of a time finding a bank to lend to him. Why? Not because my Dad's credit rating was bad (he's over 800 something), but rather the business was too new to have even established credit. He paid cash for the house!!

Doug

 

[Matt_E]

Think about it... you walk down the street and see 100 people. You ask the 100 people if they are 'stand up' people or not (meaning a good, trustworthy individual). I bet most would say absolutely. Now go pull their credit history. I bet you may come away with a different opinion by the time you're done analyzing the data. Who would you lend money to in that case? Who would you trust with the keys to your house? The person with an 800+ score or someone with a 0 score?

Honestly - I'd be more impressed with the guy having a zero score, as that implies he's never borrowed money before. He very likely doesn't need me to lend money to him.

I'll give you a couple of examples.... 1. My buddy has a business. He tried to go buy a van for his business but they wouldn't sell it to him because he didn't have a credit score when he applied for a loan. Why? Because in the past he paid for everything cash. 2. My Dad has currently started a new business in the past few years doing multi-dwelling rentals plus flipping houses. He bought this one house cash in order to expedite the sale. He later went to get a mortgage on it while it was being rehabbed in order to free up some capital. He had a hell of a time finding a bank to lend to him. Why? Not because my Dad's credit rating was bad (he's over 800 something), but rather the business was too new to have even established credit. He paid cash for the house!

Both of those examples are issues only if the person wants to borrow money.

 

[SuperJETT]

You don't get a zero score, you get "no score".

'to free up capital' is an excuse or sophisticated way of saying 'i used up all my money and need to borrow some'. If you don't have the money, don't buy something, it's pretty simple and in the long run since you're not paying interest, YOU MAKE MORE MONEY AND CAN BUY MORE TOYS.

BTW, Apple is a debt-free company and has tons of cash. It does work.