We got new credit in a second!! Unsecured! Wow

[Logan]

I totally agree. How is your new daughter doing?

She's great. She's a handful in the evenings until I hand her off to the wife at midnight and the believe it or no she sleeps after her feeding from 1am to 6am. We actually set the alarm to wake her up .

Logan

[Fallonedward]

Tobee, I'm so excited for you. That is really great news!!!!

after being discharged, i really thought i would wait it out about 6 months or so to apply for any credit. we had toss the topic over and over again.

one of us believes we should never have it again....and one of us KNOWS we need to get a mortgage again (guess which one I AM!! LOL!!).

ok so i did it.......i could not believe it...capital one...

we just got the answer this morning...we each applied separately we BOTH got unsecured cards....first SHOCK....

one of us got $1500-UNSECURED
and the other got $1300-UNSECURED

annual fee is $39 each.

both cards are 12.99%...so although that's high it's better than 39.99%!

i'm still floored...it's just been over 2 months since our discharge.

the only thing we can think of, is our credit cards didn't have much time to report late since we paid up until we filed....

neither of us wants credit ever....but we have an 11 year car....and we are going to have to get a mortgage so whether we like it or not it HAD to be done. so i'll use them for grocery shopping and then pay them right off...just to get some credit back on our report.

is this usual????

[LSUTiger32]

LSU..

Total interest paid on car: $728
ROTH Contributions: $7970
ROTH Value 10-15-10: $8494 My mistake--you're dead on with the ROTH value

I have paid more towards the car but as I said above the ROTH will earn interest for 20+ years. On top of that I can make a withdrawal from the ROTH with no penalties up to the total contribution if the need arises so the money remains liquid.

Logan

So, I was pretty much dead on....right? Yes, in the long run you will make more in the Roth. I didn't realize you had the money upfront, I assume you had a good deal of it because you only had November/December to do $3,000 assuming you already maxed out this year at $5,000.

I totally agree with you on the ROTH, but the point was that using credit to start the thing is stupid. In the short term, while you pay off the car loan you are actually losing money. Next year you might get close to breaking even and in the third year you could begin to make some money assuming the market continues to rise. Had you just put the money in the ROTH on the car, you'd just about be done paying it off already and then you could start the ROTH. You'd be in the same position in 20 years you just wouldn't have had the risk of having a car repoed if the worst case scenario hit you.

My point was that you did all of that work and putting money here and there for nothing. Just get out of debt and then attack the ROTH. I am all about the ROTH, believe me!

Let me add that I can see and have said in the past that I understand people want to buy a home in the future. I believe there are ways to do it without credit. FHA guidlines clearly state that you must have to either re-build credit or have DECIDED NOT TO USE IT ANYMORE. I suggest not using it anymore, but one small car loan, say $5,000 or less and a secured credit card do the same thing for you and trying to see how much of a credit limit you can get and buying a $30,000 at 22% interest. One is smart and one is what you would see if you looked up insanity in the dictionary. You can re-build your credit without going into stupid mode.

[Logan]

So, I was pretty much dead on....right? Yes, in the long run you will make more in the Roth. I didn't realize you had the money upfront, I assume you had a good deal of it because you only had November/December to do $3,000 assuming you already maxed out this year at $5,000.

I totally agree with you on the ROTH, but the point was that using credit to start the thing is stupid. In the short term, while you pay off the car loan you are actually losing money. Next year you might get close to breaking even and in the third year you could begin to make some money assuming the market continues to rise. Had you just put the money in the ROTH on the car, you'd just about be done paying it off already and then you could start the ROTH. You'd be in the same position in 20 years you just wouldn't have had the risk of having a car repoed if the worst case scenario hit you.

My point was that you did all of that work and putting money here and there for nothing. Just get out of debt and then attack the ROTH. I am all about the ROTH, believe me!

Let me add that I can see and have said in the past that I understand people want to buy a home in the future. I believe there are ways to do it without credit. FHA guidlines clearly state that you must have to either re-build credit or have DECIDED NOT TO USE IT ANYMORE. I suggest not using it anymore, but one small car loan, say $5,000 or less and a secured credit card do the same thing for you and trying to see how much of a credit limit you can get and buying a $30,000 at 22% interest. One is smart and one is what you would see if you looked up insanity in the dictionary. You can re-build your credit without going into stupid mode.

LSU,

2 things,

1st, One reason I did not want to put too much down on the car is I wanted the money to remain liquid. If I pay off the car the money is gone and even though my company is making money I wanted to error on the cautious side. My company is hiring again so I'm not thinking about a furlough which is one reason I've accelerated my car payments.

2nd, If I didn't contribute to the ROTH last year I can't catch up...it's that time value money thing. So the 5K I put in last year will earn interest and compound for the next 20+ years. If I hadn't contributed to the ROTH I would never have been able to catch up.

You've heard of the pay yourself 1st I'm sure. Investing in my 401K, ROTH IRA and some savings is paying myself 1st. After that is where the car loan gets paid. It's the people who pay the car loan (or credit card etc.) 1st that get themselves in trouble.

Logan

PS...I'm just trying to point out that credit isn't all bad......

[Logan]

PS...I don't do this to rebuild credit, I do this to make money and save for my retirement. It just so happens that I rebuild credit at the same time.
I just signed a 2 year lease so I won't be buying a home anytime soon.....

Logan

[LSUTiger32]

1st, One reason I did not want to put too much down on the car is I wanted the money to remain liquid. If I pay off the car the money is gone and even though my company is making money I wanted to error on the cautious side. My company is hiring again so I'm not thinking about a furlough which is one reason I've accelerated my car payments.

In the other thread you said you couldn't get fired.....you weren't worried about any of that. So risk does mean something to you. If you feel like you should keep a large amount of money liquid, you shouldn't have a car loan of that size. Pay off the debt and then save a huge emergency fund.

2nd, If I didn't contribute to the ROTH last year I can't catch up...it's that time value money thing. So the 5K I put in last year will earn interest and compound for the next 20+ years. If I hadn't contributed to the ROTH I would never have been able to catch up.

I thought we covered this. The money in the ROTH did you no good. You LOST money. Yes, you couldn't have put as much into one ROTH but I believe you are married and you can do one ROTH for each person. Therefore you could have done up to $10,000 in 2010. What good does the ROTH do you if you couldn't pay the loan for some reason. You'd likely cash it out and pay off the car.

You've heard of the pay yourself 1st I'm sure. Investing in my 401K, ROTH IRA and some savings is paying myself 1st. After that is where the car loan gets paid. It's the people who pay the car loan (or credit card etc.) 1st that get themselves in trouble.

Wrong, wrong, wrong! Where people get in trouble is HAVING HUGE CAR LOANS. So are you saying that you purposely pay yourself first and if you default on the loan so what, no biggie? I don't understand that mentality. You should pay what you owe and then not go into debt again. Then you can pay yourself all you want.

PS...I'm just trying to point out that credit isn't all bad......

I agree, read my last post again. All credit is not bad......small car loans and secured credit cards are fine by mine and I would either one if I felt a need to worship my FICO and play kissy face with the banks. Not interested.

[LSUTiger32]

PS...I don't do this to rebuild credit, I do this to make money and save for my retirement. It just so happens that I rebuild credit at the same time.
I just signed a 2 year lease so I won't be buying a home anytime soon.....

Logan

Well, this car/ROTH scenario lost you money so far and your running everything through the credit card scheme costs you money everytime you shop because you are spending more than you would when you pay with cash. Trust me, when you know it's coming out of the checking account you tend to shop more smartly. I think your intentions are good, your plan just isn't. Get out of debt and then you will have all kinds of money to invest. Why take all the risk of the market and the loans you hold?

[backtoschool]

Paying cash for a depreciating asset instead of putting that money in an investment that will earn money, is not the better move. If you can get low interest on a car loan, and pay it off early, then taking the loan and investing the cash is better than paying cash for the car over several years.

I personally do not want to rely on the minimum standards set by FHA. I want choices when I go for a mortgage, and the only way I am going to get choices is to have a solid credit history post bk. FHA also says that the minimum credit score has to be over 500. That is nice, but there are not many people getting houses with that score, because there are not many loan providers willing to take that risk even though FHA says that is the minimum. No history of credit post bk is a riskier portfolio than a person who has successfully paid off several loans in full and then applies for a house in my opinion.

[LSUTiger32]

Paying cash for a depreciating asset instead of putting that money in an investment that will earn money, is not the better move. If you can get low interest on a car loan, and pay it off early, then taking the loan and investing the cash is better than paying cash for the car over several years.

I personally do not want to rely on the minimum standards set by FHA. I want choices when I go for a mortgage, and the only way I am going to get choices is to have a solid credit history post bk. FHA also says that the minimum credit score has to be over 500. That is nice, but there are not many people getting houses with that score, because there are not many loan providers willing to take that risk even though FHA says that is the minimum. No history of credit post bk is a riskier portfolio than a person who has successfully paid off several loans in full and then applies for a house in my opinion.

Actually neither is a good move, unless you are very wealthy. The depreciation itself is exactly why you should not buy a new car unless you have a lot of money. You can't afford to take the hit. You really can't afford to take the hit if you are paying interest on top of that. However, if you have the choice of paying cash or getting a loan, it is just silly to invest the money and get a loan on the car. If you have the money, use it. You are not going to make enough money to make it worth the risk. If that were the case, millionaires would be going around borrowing money on everything to invest. If you had a paid off car, would you go get a title loan on it to invest? Of course not, so why would you get a car loan instead of just paying the thing off.

Are you seriously saying that if I gave you $22,000 tonight with the condition that you paid off your car that you wouldn't use it to pay off the Rogue in the name of building your credit?

[backtoschool]

Well a google analytics hang just ate my response, so if this shows up twice sorry.

I work as a principal analyst for a venture firm now, but I spent most of my career working on Wall Street as an analyst. (I am in my mid thirties now, so that is over ten years I worked on Wall Street) One of the biggest perks on Wall Street was the ability for employees to get low interest loans and use the money to invest. Everyone used these loans from the receptionist on up to senior partners. Often people used the money for cars and other things besides investing. Also, as to financing, I knew many people who had a whole lot of money, and could have afforded to pay for a car for cash, who would take advantage of 0% financing or 1.9% financing and would finance the car instead of paying for it.

But I see your point LSU. Cars depreciate and are underwater quickly, and therefore paying for them either way, is throwing good money after bad. I pay off my loans early, so my cars are never underwater. And as to your example, I have to admit that if you gave me $22k, I would use most of it to pay off the Rogue, but I would still leave a balance there because I want the positive trade line reporting for awhile.

[LSUTiger32]

Well a google analytics hang just ate my response, so if this shows up twice sorry.

I work as a principal analyst for a venture firm now, but I spent most of my career working on Wall Street as an analyst. (I am in my mid thirties now, so that is over ten years I worked on Wall Street) One of the biggest perks on Wall Street was the ability for employees to get low interest loans and use the money to invest. Everyone used these loans from the receptionist on up to senior partners. Often people used the money for cars and other things besides investing. Also, as to financing, I knew many people who had a whole lot of money, and could have afforded to pay for a car for cash, who would take advantage of 0% financing or 1.9% financing and would finance the car instead of paying for it.

But I see your point LSU. Cars depreciate and are underwater quickly, and therefore paying for them either way, is throwing good money after bad. I pay off my loans early, so my cars are never underwater. And as to your example, I have to admit that if you gave me $22k, I would use most of it to pay off the Rogue, but I would still leave a balance there because I want the positive trade line reporting for awhile.

LOL! Nice.....I hear ya! Now look, just because a bunch of geniuses on Wall Street do something hardly makes it right. 95% of them are broke. Speaking of, I gotta go check out Gordon Gekko part 2!

[backtoschool]

LOL! Nice.....I hear ya! Now look, just because a bunch of geniuses on Wall Street do something hardly makes it right. 95% of them are broke. Speaking of, I gotta go check out Gordon Gekko part 2!

Very true LSU. I still have a lot of habits good and bad, that I picked up from my Wall Street days. I am still going through the process of trying to figure out which ones are the bad habits and which ones are the good habits.

I went to see Wall Street 2 and it gave me post traumatic stress disorder. I do not miss working for Wall Street at all to put it mildly....

[Logan]

[QUOTE=LSUTiger32;461425]In the other thread you said you couldn't get fired.....you weren't worried about any of that. So risk does mean something to you. If you feel like you should keep a large amount of money liquid, you shouldn't have a car loan of that size. Pay off the debt and then save a huge emergency fund.

/QUOTE]

Why don't you read what I said again. Big difference between fired and furloughed. I don't think you know what a furlough actually means.

On the ROTH/Car loan thing...I'm an idiot..I shouldn't have saved for retirement--I should have paid off my car instead--screw retirement...

Call me in 20 years and ask me what my retirement is worth.

Done arguing with you LSU since you know what's best for me. I'll pay the car loan today and stop contributing to my ROTH IRA.

[Logan]

Wrong, wrong, wrong! Where people get in trouble is HAVING HUGE CAR LOANS. So are you saying that you purposely pay yourself first and if you default on the loan so what, no biggie? I don't understand that mentality. You should pay what you owe and then not go into debt again. Then you can pay yourself all you want.

You consider 22K a huge car loan? There you go again telling me what I should do. The difference between us is I'm trying to educate people by giving them ideas on ways they can use credit to their advantage and/or save for retirement etc....

You on the other hand just want to chastise us for taking on any debt.

[LSUTiger32]

In the other thread you said you couldn't get fired.....you weren't worried about any of that. So risk does mean something to you. If you feel like you should keep a large amount of money liquid, you shouldn't have a car loan of that size. Pay off the debt and then save a huge emergency fund.

Why don't you read what I said again. Big difference between fired and furloughed. I don't think you know what a furlough actually means.

On the ROTH/Car loan thing...I'm an idiot..I shouldn't have saved for retirement--I should have paid off my car instead--screw retirement...

Call me in 20 years and ask me what my retirement is worth.

Done arguing with you LSU since you know what's best for me. I'll pay the car loan today and stop contributing to my ROTH IRA.

Yes, you are right. I am a moron and I don't know what a furlough is. What does it matter, either one will be a REDUCTION IN INCOME. Yeah dude, I'll call ya in 20 years and we will see which one of us had the plan that worked better. LOL!