Money is one of the most mysterious things on the planet. It’s the pathway to security, to freedom, to pleasure; it is a festering nuisance because there never seems to be enough of it, or it’s somewhere in between. It’s been around a long time, starting around 9000-6000 BCE when a funky ape named Homo sapiens started domesticating cattle and exerting agricultural control over the environment. In its first iteration, cows and plant products were money, and over millennia it has been salt, rocks, cloth, sticks, gold, silver, paper, and now…numbers on a screen living on the internet as it flies above our heads in waves of electronic ether.
Money is a ledger. It’s a way of keeping track of exchanges. A long time ago that aforementioned ape created the concept of the future, and with that invention, we created credit. Credit gives you the ability to borrow money with the promise of paying it off at a later date. If you’ve got have great credit you can borrow at the lowest rates offered, and usually that borrowing will take one of the following forms. We’ll start with the biggest first, that shining beacon of the American dream.
Mortgage: Owning a home will allow you to build equity in good markets, and it will allow you the luxury of having a roof over your head with a fixed payment in a falling market. As far as basic human needs go, buying a home gives you shelter (and probably water), with the ability to prepare food, so all human needs are wrapped up in it. No wonder people are so obsessed with buying a home. There are programs with 3% down, 5% down if you don’t mind paying mortgage insurance.
Renting vs buying, that old conundrum. There’s an old adage: buy a home, so you aren’t paying someone else’s mortgage. But even if you can, should you? Impossible for us to say, as your situation is as unique as you are. The best idea, and it applies to everything financial, is do the math. Click the link for a classic Dave Ramsey rant (Pro Tip: playback at 1.5x to turn 9.58 into 6.39 minutes of your day).
Auto: Everyone needs to get around. That’s the culture we have in America. We are far too spread out to rely on public transportation, and speaking of public transportation has a negative connotation (it shouldn’t) in a lot of cities, so having the ability to get in your own car, turn the key, and get to where you need to be on your own time is something Americans consider a necessity, because it often is. If you need a vehicle, and you can finance it, you don’t have to have perfect credit, but like all loans, the better your credit is, the better the rate is.
Credit Cards: One of the biggest questions we get asked on a weekly basis: how do I get approved for big limit credit cards? Everyone wants that 20-30k (or higher) piece of plastic in their possession. It’s like a badge of honor. The easiest way to get a high limit credit card, is to already have one. Wait what? Yeah, it’s kind of like getting that first job you want. You know, the one where they say they like you but can’t hire you because you don’t have any experience? How are you supposed to get experience if no one will hire you? Life is full of conundrums like that. You could go the short way and get added as an Authorized User, or “tradeline” (industry speak) by talking to a trusted friend, family member, or even buying one. Any of these may increase your chances. Or if you have cards in your name that have perfect (or great) payment histories and you’ve had them for a while you could ask for a limit increase (you can–and should if your income supports it–ask for a limit increase every 6 months on all credit cards). Credit cards offer the ability to earn rewards, sometimes free vacations, the ability to fall back on in an emergency. Some say they are evil, but they are necessary, being as much as 60% of your credit score. Great credit cannot be maintained without them, so get friendly with credit cards, but not too friendly. Make sure you pay the statement balance in full monthly.
Credit is not something that gets taught to the masses.
It’s something that makes most people’s eyes roll back, and we don’t blame them, but having it not only under control but in the stellar category, puts you in a position to accomplish and acquire things that are basically required in this country.
Is it something you understand, something you barely think about, or when someone brings it up you’d rather eat raw catfish liver than even think about it? Again, we don’t blame you, and if you have any questions whatsoever at any time, contact us and we will spend as long as you want making this opaque subject as clear as we can.