Idea: post (serious) advice for 18-21 yr olds here...

Excellent thread, Kagy.

I can vouch about credit. I was a loan officer at a credit union before my present job for over a year. We first used the D.A.S. scoring method, where lower was better. Using that method, my father had a D.A.S. score of 6! My D.A.S. was like 200, but I had not built up much credit. My first car loan had my mother on it as a comaker because I had no credit. We later changed over to the Beacon scoring, and this was the one where higher was better.

We would approve loans, assuming their income to debt ratio was OK, if their Beacon was 620 or higher. I only saw maybe like 2 or 3 people when I was doing this job that had Beacons over 800. The saddest thing was seeing a Beacon of 450! This guy had serious credit problems. 4 charge-offs, every account had at least 1 to 3 60 day late payments & numerous 30 day late payments, several collection items including one with Blockbuster, etc. The only other things that this poor guy could have would be a Bankruptcy or a Judgement. Needless to say, he wa clueless about how bad his credit was. I remember actually asking him, point-blank to his face, "Do you not realize how bad your credit is? This will cause you not to be able to get a mortgage unless you do something about it."

I don't know if anybody here has heard of a guy named Dave Ramsey, but he has a show that comes on the radio where he gives advice to people who are struggling in debt or better yet with their credit. He also has a book called "Financial Peace". However, be prepared. He thinks that the only thing that should be financed is a mortgage. He goes so far as to saying that you should pay cash for an automobile which I think is very unrealistic.

I've been lucky that I've worked at a financial institution and that both of my parents have good credit. These factors along with being dedicated to paying things on time have helped me to have a Beacon score (last I checked when I got my Maxima) of like 760.

I have a Visa credit card, but I also have a Visa check card. I use check card for all my CD purchases. If I used my credit card, it would never get paid off. I would recommend to anyone to get a check card and use it in place of a credit card. Also, depending on the type of loan/credit card you have, make the minimum payment, but then pay extra on it in a separate payment. That way this extra payment goes mainly to the principal.

 

Hottoadie,
Where can you get 8 or 10% yield on your money right now? CD's are down to like 2.5%

 

Here is another one. Unless you make 60,000 a year dont buy a brand new car. Go after the ones that are 3 years old. They are pretty much just as good. And cost much less.

I am going to be a teacher so I will never be able to buy a new car

 

if i want to be a sports agent, will I have to go to law school?

 

My mom is a teacher and she's always been able to afford a new car. When my parents were together (at the time they were both teachers), they could both afford new cars...

 

briankagy.. good advice.. i'm not sure where i'm going to school yet. waiting on a few colleges to let me know on april 1.. but i've been accepted into UT as a bio/premed student. it was between that and going to the business school. .. and i figured if i plan on going to med school the bio route would probably be best.. just hope i dont regret not going to business school one day lol..

tis tis.. dont know if I can wait two more months to hear from these other colleges

 

Nice, real nice.

 

I'm not sure, but I believe most agents are lawyers. Sports Law is a specialization offered by many law schools. That is what I'm planning to specialize in at law school...I don't want to be an agent but I'd like to work for college athletic depts. or pro teams.

UT offers a major called Sport Management which would probably be the closest thing on the undergraduate level.

 

I'm 19 and unfortunately have made some very bad decisions in my life, particularly high school. But Jesus (Christ, not Parker)rescued my soul and now I plan to be the first black Republican mayor of Houston.

 

Young people, answer these questions three:

1.Who am I?
2.Why am I here?
3.What is the purpose of my life?

It's good to have a goal. And then to have a plan.
Don't underestimate peace of mind, especially peace
in stressful situations.
Strive for what's permanent and not for what's temporary.

 

You're thinking like an 18-21 year old. Stop it.

Over the long-haul, the stock market has returned between 8-11%.

Stay in it for the long haul!

 

Note to 18-21 year olds :

Affording something isn't necessarily dependant on what you earn, but rather what you save and how long you've saved.

I was taught early to save and save often. I have a checking account that never goes below about $3000-$5000, but at the same time NEVER gets above $10000. Why? Because I have automatic investing set up. I have auto-investing set up to transfer hundreds of dollars into mutual funds monthly. I don't ever have to decide how much to invest, and I can't really talk myself out of investing it. This money will probably be compounding at an insane rate by the time I retire.

The biggest mistake is someone who makes $30,000-$40,000 per year saying they'll never be able to do something. Fortune magazine ran an article a few years ago in which families that never made more than $40k-$50k have net worths of around $1 million. My own parents are another example. My mom averaged about $50-$65k as a nurse. My dad worked as a machine operator at an iron works until he got laid off and then had a heart attack. He never made more than $12-$13/hour. That's a yearly income of about $70-$80k while trying to raise me. Their net worth is probably in the low millions.

There is this belief among Americans today (and it's not just young, it's the older ones, too) that you live for the "now". If you want something that costs $500 and you happen to have only $501 available it must mean you can afford it. BS. You can't afford it. During the tech boom a couple of years ago, my mutual funds and stocks were returning anywhere from 30% - 140% annually. I saw people I was working with getting similar returns. I saw one person who I know for a fact was making about $35k - $45k per year buy a new Corvette C5 (about a $45-$50k) purchase. Insane. I just heard a story from a co-worker who said he met a guy who during the Internet/dot com craze made about $120k/year. He celebrated his new-found wealth by buying a Lexus SUV, another Lexus car, and a $300-$400k house. The dot com/Internet craze died, and now he has 2 payments on cars to worry about and a mortgage payment as well. Guess what? He lost his job and hasn't found one for about 6 months. The bills and interest are mounting.

The point in all this is, stop living for the "now" as if the future doesn't exist. I was taught and forced to invest my money since I was 15 years old. I'm fairly well-off for a person of my age (31 years old). I never make payments on cars. I buy them outright. I can't stand debt. It makes me puke. I never carry balances on my credit cards and I only have about 2 or 3 credit cards of which I only use one regularly.

I can guarantee you that everything that is being said in this thread will go in one ear and out the other for some people. About 10-15 years from now you'll look back and wonder why you didn't do this or do that. I suggest parents in their late 20's and beyond stop thinking about "what if" and bang your new-found knowledge into your children's heads. Break the cycle of ignorance! Tell your kids your mistakes. Force them to do things they may dislike, but you know will help them in the long run. What good is it if you sit around and say "I coulda..." when people right under your nose "can" but they don't know any better.

 

To everyone in general, I greatly appreciate all the advice. I don't think enough young people truely value what can be learned from "our elders," so to speak.

I know very well what it's like to not have ANY money. My parents split when I was about 6 and mom remarried well, so she quit her job with Texas Eastern, which was doing fabulously in the 80's. Her husband lost his job, she left him and was basically broke. My dad was too, although he wasn't around much.

Her parents were never well to do, but they saved over the years and then natural gas was discovered on their land in La Grange. They were already building a house for their son, so they had one built for us too. And bought mom a car. And were able to pay cash for it all!!! Six years later, my mom has just about finished paying all of it back and gotten out of debt with most of her credit cards. What's hard now is that dad quit paying child support on me 2 years ago and will do so with my brother in May. She can't support 2 kids in college making $40k/year and paying off old debts. My brother and I both have had summer jobs which has helped a lot, and I'm on fantastic scholarships. So far, Dad has not contributed a penny towards paying for my college. It makes things really tough, but at the same time, I've learned the importance of money and saving. At the same time, I've also learned that you don't need money to be happy or successful. Despite financial problems, my brother and I still did well in school. We didn't always have the lastest CD or a new stereo or car, but we got by. Having great grandparents also helps out too!!!

treeman-he called me tonight. I was taking a nap this afternoon (since I was still running on the 10 mintues of sleep I got the night before he left) and about 6 people called, all of which I ignored. Then all of the sudden, it rang around 5:30 and I decided to take that one.

He said it was really cold, but they got their uniforms and field jackets issued. They were in barracks and wouldn't get room assignments until next week. Mostly, it was a lot of I miss you's and I love you's. He's still a little nervous and getting settled, but I made sure he knew I was okay and wasn't worrying about me. He also said he mailed me a letter yesterday so I should get it at school this week!

Just wanted to let you know. I was so excited!
(Oh, and I'm not and I would never, EVER, to that to him.)

Keep the good words coming guys! This is such a great thread!

 

1) I agree with the money advice above it is all on target. Only caveat is that my 1993 5 five speed Honda Accord is just about as fun to drive as the new cars I test drove recently when the 0% interest rates have been tempting me. New cars are next to credit card interest the second biggest reason why the little guy never acquires much money.

As a 21 yr old I did what Kagy did. I also went through the 7 yrs to retore my credit. No bankruptcies. Fortuantely noone would give me more credit cards.

If you want to retire early for some reason, the book "Your Money or Your Life, by Joe Dominguez will show you how.

2)As far as career/ educational advice. Don't go to college just to please mom and dad, if all you want to do is party.
I've known of many cases where smart kids did this and had disasterously low grades for a year or two. If you mainly want to party because, for example, you missed out on it in highschool by focusing only on high grades or were shy etc. just go part time at HCC or some place where you can makes some A's without disrupting your hopefully temporary lifestyle. Low grades are like a stamp on the forehead saying "****up". Avoid it if possible.

Trying to bring up a very low grade point can be even harder to repair then a credit rating and can sometimes permanently bar you from law school, med schools, mba's and other hard to get into programs.

3) Sort of in conflict with finances above, but a good substitute for merely partying in the states. Go on a trip around the world for a year-- or at least jr year abroad--when you're young and unattached. I didn't, my brother did and I've always been envious. Responsible borrowing for such educational purposes can be worthwhile.

 

Tomarrow is promised to nobody

 

I casually moved 1000 miles away from my family to finish college. Lo and behold I got married to a local girl and never was able to uproot and get back to my family.

I never imagined this would happen.

I miss my parents, my brothers, and my nephews and nieces but now there is nothing to do about it.... except visit occasionally.

 

Be careful about these types of programs. There have been numerous reports of credit card company fraud on this where people tried to cash in when they lost a job or whatever and were forced to pay full amounts. It doesn't happen all the time, but it is worth checking out.

There are other programs that handle this type of thing as well. There are even some forms of insurance that carry this type of coverage. The credit card companies use it as a way to make extra money because they are rarely cashed in.

Ulitmately, the best way to protect yourself is to carry as little credit card debt as possible. My wife and I have not used a credit card for 9 months and have entered a program to pay them off permanently. I NEVER plan to use a credit card again. If I can't afford it now, I'll just wait.

 

I forgot to mention something in that last post. One really good way to protect yourself from credit card problems if you are out of a job is set up an emergency fund that will help you pay your bills in case of problems. Many financial planners suggest a $1000 emergency fund plus up to 6 months worth of bills put away. It sounds like a lot but it sure does make you feel secure.

Also, my favorite money guy is actually a Christian conservative but he is AWESOME with money. He does a radio show and has several books.

http://www.daveramsey.com/

 

To quote the Spice Girls...

"Put it on...put it on..."