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Old 07-19-2005, 10:24 AM   #1 (permalink)
Junkie
 
Does anyone experience a "comfort zone" when being manageably in debt?

A year or so ago, I signed up for a credit card, both to help build a credit rating (previously non-existant), as well as learn money management skills.

I think I've done a pretty good job overall, and have not gone excessively in debt - primarily using it for gas and small purchases - and paying it down each month to a reasonable (below $100) amount.

I take comfort in knowing that I have this debt, but that it's manageable. I am not sure how to explain the feeling, and I've been raised to only buy what I can afford, which I do. Yet, the feeling of owing a manageable, and affordable, amount is reassuring to me, and I am curious if anyone else experiences it?

I am not sure what the feeling is.. Perhaps independance, that I am managing my own money successfully, and resisting the urge to go deeply into credit, while instead managing the card's usage wisely and controllably.

My card also rewards a % of spendings back, and I guess that also is part of the good feeling, though I honestly think it has minimal effect on the overall "comfort zone" feeling.

Having been reared by parents that own a single credit card, that they rarely use, and that generally have a negative view of credit in general, perhaps the fact that I am using and managing a credit card wisely, and thus proving them wrong, is also a factor in this feeling.

Can anyone else relate to this "comfort zone" feeling? And if you can, what do you attribute to its cause?
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Old 07-19-2005, 11:29 AM   #2 (permalink)
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We try to pay everything through credit whenever possible. Not only do we get a % rewards back, but we also get to float our spending for 30 days. We pay the bill in full every month so we get all the benefits without any of the side effects such as the interest charges. As long as you don't lose sight of the fact that it is not free money, you should be fine. I'd guess that we get at least $300/year back in cash rewards.
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Old 07-19-2005, 11:32 AM   #3 (permalink)
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Location: Toronto
same here. My monthly credit bills hover around $1,200 but i don't get any % back (cant be bothered to apply for the new card). I always pay my balance at the end of the month, so there are no interest penalties.
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Old 07-19-2005, 11:33 AM   #4 (permalink)
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Location: Austin....Austin, Massachusetts
i agree with you about the comfort zone i got 2 credit cards when i was 18-19 and its really helped me build my credit and its nice to know that if for some reason i have a huge problem with losing a job or unforseen problem that costs alot of money to fix...that i can afford to take care of it....

i think the cause its that i feel like that i can be responcible with the money they allow me to spend..i dont know, it just feels like a 2nd savings account that, or at work kinda like a 20-30day advance on money without intrest...

and also my parents were very skeptical of credit cards for me as well but now that i am being responcible with it, it kinda gives you that comfort zone knowing that your being responseable and stuff

i think eventually being good with credit now when im 18-20's it will help when i try to buy a house so its kinda like working towards something too
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Old 07-19-2005, 11:35 AM   #5 (permalink)
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My only advice is stop paying for your gas with your card! If you don't pay off your balance in full every month, you're paying interest on something you don't "own" anymore. Gas, food, smokes, liquor are all no-no's on the credit card.
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Old 07-19-2005, 12:03 PM   #6 (permalink)
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Quote:
Originally Posted by THGL
My only advice is stop paying for your gas with your card! If you don't pay off your balance in full every month, you're paying interest on something you don't "own" anymore. Gas, food, smokes, liquor are all no-no's on the credit card.
Good call, but I do make a point to pay off my balance every month.

Generally I pay down to $100, and then every month pay down until it is $20 less.. $80, $60, etc. When it gets to $20 I charge up to $100 and start the process over again..

Gas and groceries kick back 5% which is nice, especially if you pay the balance off every month, as you recommended.
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Old 07-19-2005, 12:18 PM   #7 (permalink)
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Location: Out on a wire.
We pay all major expenses with credit cards, to take advantage of both % back and frequent flier miles offered, including mortgage, car payments, and all utilities, which are then completely paid off at the end of the month. Because of this, we end up making money on the credit cards, and haven't actually bought a plane ticket in some two years.

We each have a separate card from the "big expense" care we share, and that one is used for personal expenses, ie mostly comic books, cartoons, and related toys for me, and I'll allow my balance to float up to, say a couple hundred dollars before I start to get antsy and pay more than the standard payment. I treat this as a fixed payment, ie, I pay the same each month regardless of balance, and pay it off completely and put the extra into savings if it's less than that.
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Old 07-19-2005, 12:21 PM   #8 (permalink)
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paid off 100%

We live within our means, not "around it"

my comfort comes from being debt free save large purchases of house and car.
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Old 07-19-2005, 12:25 PM   #9 (permalink)
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Location: Austin....Austin, Massachusetts
Quote:
Originally Posted by THGL
My only advice is stop paying for your gas with your card! If you don't pay off your balance in full every month, you're paying interest on something you don't "own" anymore. Gas, food, smokes, liquor are all no-no's on the credit card.
i agree with the food, smokes and liquor(you wouldnt believe my bill my first time in a liquor store with a credit card....ouch)

but i dont see whats the problem with gas, there alot of people that only charge gas....
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Old 07-19-2005, 12:41 PM   #10 (permalink)
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I am one of those freaky people who doesn't have a credit card. I know that I would abuse it - thus, I don't keep one. If I can't save and/or pay for it then I don't need it. Granted, there have been times where I direly wished I had one but when the need arises (ie - booking plane tickets, etc) I give my Mom the cash and use hers. I used to have an A-one credit rating until an ex fucked with that. Now - I'm an anti-card sorta person.

I just realized I should edit this.....credit is a very important thing. As long as you use your card wisely (ie...don't just pay the minimum amount please) you will build a good credit base which will become VERY important to you over the years. I didn't want it to sound like I am against credit or anything - I'm a big fan of it as long as it is moderated and used wisely.
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Old 07-19-2005, 01:17 PM   #11 (permalink)
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i charge *everything*, but i settle my accounts every month to avoid interest. i will borrow from myself out of savings, and pay myself back, but that's the only debt i'm really comfortable with that's not for a hard asset (car, house, etc...).
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Old 07-19-2005, 01:17 PM   #12 (permalink)
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It's dangerous because there is always temptation, but I think it's a good idea to have about $5k in credit that you can access at any time. It came in handy just last week when my timing belt broke. That will be over $3k.
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Old 07-19-2005, 01:49 PM   #13 (permalink)
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I had been doing the use credit cards for *everything* and pay-the-bills-every-month thing but our spending got out of hand. I have a bunch of credit cards, like 10+, but only use 2 for purchasing (Visa and Discover) and 2 for balance transfers with low percentages.

We bought a house and spent a lot on improvements and appliances, and even with 0% offers and such, this is the first month that I haven't been able to pay off all the cards.

I'm realizing that having all that credit for all these years has given me a false sense of value and that I though I had seemingly unlimited buying power. Not the case any more. I'm in debt and it will take a couple years to dig out of the hole.

Wish I had been more careful like a lot of people here. Never should have dug the hole I'm in now...
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Old 07-19-2005, 02:51 PM   #14 (permalink)
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Its amazing all these credit card companies can make a profit with almost everyone not carrying a balance! as for me, well i learned my lesson when i was younger, now have only 1 card, no balance, never use it really, just for emergenices or the odd online purchase i need to make. i am one of those people too. amazing!

my comfort zone is having my house paid for, and the only loan i carry is my car (just bought a new one). debt can ruin a relationship and rip families apart, good for you for staying out of debt and knowing how to be in control. now where was i yes....amazon.ca......
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Old 07-20-2005, 03:38 AM   #15 (permalink)
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I was unemployed at one point for 6 months, and put everything on my credit card. since then (and before then) paid it all in full. You have to realize you are paying normally concervatively 10%+ on anything left on it. Why pay more for that loan then you have to? The only balance I have left on my credit card recently was a 0% rate for 6 months, I took all the money out and dumped it into ing, and got 3% interest, and paid it off after the 6 months (never spent the money wouldn't touch it).

Personally I charge everything and anything, get a points card, as well. Think about it, if you pay it off every month, you get points, and most point cards are free, they are paying you to give you an interest free loan!

Debt, financial stress is what can ruin a family.
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Old 07-20-2005, 04:49 AM   #16 (permalink)
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Hmm, you guys have a strange and foreign credit system :P
Down here in .au, the only credit rating you get is a bad one. I use my card more or less entirely online, or if I need a bit of cash to get me through till next payday. It's only a small limit, 2 grand, but I've yet to get it to much more than half that. Managed to nearly wipe it with my tax return, too, so I'm happy.
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Old 07-20-2005, 05:16 AM   #17 (permalink)
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We have had three different credit cards. When we bought our house and then refinanced we finished paying off the two cards that were left then. The interest rate on one had gotten bumped up when we missed a payment and it was at a ridiculous 22% interest that made it impossible to pay off while paying just a little more than the minimum even. We are debt free now except for the house. We tried to base our ability to pay for that on hubby's income alone so that if anything happens to him and I got a job I would still be able to make the payments on my own.
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Old 07-20-2005, 05:36 AM   #18 (permalink)
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Until I was married, I never owned a credit card. Granted, I had no credit rating, but I also had no debt. It was nice. Now, I have 2 credit cards and currently am in debt with them $1500.00 and I also have a $10,000 line of credit, $8000 of which is owed. I have a mortgage, but no car payments.
Debt sucks. I am NOT in the comfort zone with my debt. I don't care about the LOC as much, but those credit debts are eating me up. i've got to get a hold on them.
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Old 07-20-2005, 08:35 PM   #19 (permalink)
Riiiiight........
 
Quote:
Originally Posted by Jimellow
Generally I pay down to $100, and then every month pay down until it is $20 less.. $80, $60, etc. When it gets to $20 I charge up to $100 and start the process over again..
Is there any reason why you want to carry a balance on the card? You can still build a credit history without carrying a balance.

It seems that your expenses match your ability to pay. So instead of carrying a $100 balance on your card, how about aiming to have $100 in savings. When you reach $100, spend it down to $20 and start saving $20 more a month.

Exactly the same as what you're doing now, but without the interest (which at say 15% of an average balance of $50, works out to be about $7.50 a year. Thats a movie ticket!)
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Old 07-20-2005, 08:51 PM   #20 (permalink)
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Quote:
Originally Posted by dimbulb
works out to be about $7.50 a year. Thats a movie ticket!)
damn... i'd still need almost 1/2 more year to get to $10.50... bastard! :shakes fist in air:
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Old 07-20-2005, 09:33 PM   #21 (permalink)
Riiiiight........
 
OT........

Quote:
Originally Posted by Cynthetiq
damn... i'd still need almost 1/2 more year to get to $10.50... bastard! :shakes fist in air:
The Loew's on 34th and 8th charges $9.50 though.......
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Old 07-20-2005, 10:55 PM   #22 (permalink)
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Quote:
Originally Posted by kutulu
It's dangerous because there is always temptation, but I think it's a good idea to have about $5k in credit that you can access at any time. It came in handy just last week when my timing belt broke. That will be over $3k.
Was the mechanic nice enough to use a decent amount of lube when you paid? Not to derail, but a timing belt should not cost more than $500, including labor.
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Old 07-21-2005, 07:48 AM   #23 (permalink)
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Quote:
Originally Posted by dimbulb
Is there any reason why you want to carry a balance on the card? You can still build a credit history without carrying a balance.

It seems that your expenses match your ability to pay. So instead of carrying a $100 balance on your card, how about aiming to have $100 in savings. When you reach $100, spend it down to $20 and start saving $20 more a month.

Exactly the same as what you're doing now, but without the interest (which at say 15% of an average balance of $50, works out to be about $7.50 a year. Thats a movie ticket!)
I don't really spend much at all, so all my money goes into savings anyway..

I like to start at $100 and pay my way down so that I get used to paying things consistently on time every month, and also in the habit of paying the bill on time to avoid my percentage rate being increased to something ridiculous.

Also, it's a practice of self control for me. I like knowing that I have a credit card with a limit of $1k or more, but that I am not taking advantage of it, and getting deeply in debt.

I'm very frugal with my spending, and outside of cell phone, gas, and a few bill payments, I honestly can't remember what the last material thing I purchased was. I bought a book on Sunday for $14.

I basically like the idea of having a little debt, so that I can pay it down periodically and get into good habits. I don't need to use the card, but the added benefit of getting a small percentage back on gas and groceries, as well as getting into the habit of paying bills promptly, while avoiding the temptation of going deeply into debt, and also slowly building a positive credit rating, is something that appeals to me on many levels.

Also, I'm under the impression that "actively" having a credit cards requires using it, or making monthly payments on it, and that is also partly why I choose to use it for gas and occasionally groceries. By actively using, and making payments, on the credit card, it is "active" and thus helping my slowly improve my credit rating.
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Old 07-21-2005, 10:14 AM   #24 (permalink)
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Quote:
Originally Posted by MrSelfDestruct
Was the mechanic nice enough to use a decent amount of lube when you paid? Not to derail, but a timing belt should not cost more than $500, including labor.
Simple replacement? Sure.

It's an interference engine. I have a 20 valve 4cyl. 12 intake and 8 exhaust. When the timing belt breaks in an interference engine you are guaranteed to have the pistons smash into a few valves. In my case, all eight exhaust valves and 8 of the 12 intake valves were fucked. The exhaust valves are $80/each and the intake ones were $30 each. That's $1k just for the fucking valves. Once you add in the timing belt, you're at $1500.

On top of that, there is the water pump, the tensioner, getting the other 4 intake valves machined, labor for the machine shop (which took apart the head and put it back together) and the mechanic and ya, it's about $3k.

Believe me, I called other shops that specialize in VWs when they gave me an estimate. They were all within that range and a few said they doubt they could do it for that price. I'm somewhat lucky that none of the of the pistons were cracked because that can happen too. Regardless, I think the final bill should still be accompanied with a heavy dose of lube.

Lesson learned, buy a Toyota next time (almost all of their engines are non-interference)
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Old 07-21-2005, 11:32 AM   #25 (permalink)
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good habit: paying it down consistently

best habit: paying it all off every month.


Quote:
Originally Posted by Jimellow
I don't really spend much at all, so all my money goes into savings anyway..

I like to start at $100 and pay my way down so that I get used to paying things consistently on time every month, and also in the habit of paying the bill on time to avoid my percentage rate being increased to something ridiculous.

Also, it's a practice of self control for me. I like knowing that I have a credit card with a limit of $1k or more, but that I am not taking advantage of it, and getting deeply in debt.

I'm very frugal with my spending, and outside of cell phone, gas, and a few bill payments, I honestly can't remember what the last material thing I purchased was. I bought a book on Sunday for $14.

I basically like the idea of having a little debt, so that I can pay it down periodically and get into good habits. I don't need to use the card, but the added benefit of getting a small percentage back on gas and groceries, as well as getting into the habit of paying bills promptly, while avoiding the temptation of going deeply into debt, and also slowly building a positive credit rating, is something that appeals to me on many levels.

Also, I'm under the impression that "actively" having a credit cards requires using it, or making monthly payments on it, and that is also partly why I choose to use it for gas and occasionally groceries. By actively using, and making payments, on the credit card, it is "active" and thus helping my slowly improve my credit rating.
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Old 07-23-2005, 01:25 AM   #26 (permalink)
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Before getting married I had a job that paid me a lot of money, so I always paid for everything with cash. When I decided to get married I went town to pick out the engagement ring. I had plenty of money in the bank to pay for the ring, but I had decided pay for the ring on payments so I could cover expenses for the wedding etc. Because I didn't have any credit rating I couldn't get any credit and had to get my mother to co-sign. After that I got a credit card and use it every now and then in emergencies.
Credit cards are a good thing to have as long as you don't abuse them.
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Old 07-24-2005, 12:05 PM   #27 (permalink)
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I just want to know how you manage to get a card with no credit history. I feel like I could live with a little bit of debt (less than 100 each month) and feel fairly comfortable with that. But right now, I can get anyone to give me a chance.
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Old 07-24-2005, 12:15 PM   #28 (permalink)
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Quote:
Originally Posted by FrellingSmeg
I just want to know how you manage to get a card with no credit history. I feel like I could live with a little bit of debt (less than 100 each month) and feel fairly comfortable with that. But right now, I can get anyone to give me a chance.
secured credit card. you give them $100, they give you $100 in credit. over time they give you more credit as you prove you are worthy..
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Old 07-25-2005, 10:04 PM   #29 (permalink)
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I take comfort in knowing that after seven years all my bad credit will go away. Which happens to be only a couple years away. BTW, im not retarded, i just had a mid life crisis a few years ago that doesnt seem to end.
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Old 07-26-2005, 11:26 AM   #30 (permalink)
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Stop by a college campus during opening week in the fall and there should be plenty of credit card offers in the union area. They usually have a desk setup with someone trying to push applications, offering some worthless toy to pull you in. Just sign up for one of those and you'll have $500 credit. Make a few purchases, don't go over your limit, and don't be late on your payments. Ideally you would pay in full every month. 6-12 months later you should be in a position to get an increased credit limit if you request it.

We pay as much as possible on credit, including utilities, and never go over $5k. I think a visa and mastercard with $1-2k credit limits should be plenty for a 1-2 person family. They obviously can go much higher though. I've run across people with 50k and 100k credit limits.
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