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I opened a credit line because I am about to change jobs and want to make sure I have cash not just credit cards available if something comes up from starting the new job. I got a rate of 6% on it, so it's really low interest for me.
I waned to ask, do any of you do this type of thing or is this just me? I normally put all my extra money into retirement funds and only keep 2k cash in my account. I need to save more, but at such a young age of 24, I know that putting every penny I can into retirement will help me a ton.
@Anonymous wrote:
I use a LoC to make sure my bills are paid every month, including my credit cards, in full. If I stay on budget it should not be used, but if I overspend one month I carry a small balance.
I actually set my payroll to direct deposit right into the LoC. Not every bank allows that, but the combination means not only do my cards and bills get paid in full, the LoC itself gets a large payment to keep me good with them too.
I don't think this is the optional interest penny pinching strategy, but it guarantees I never miss a payment.
Canadian in seattle, what bank does that? I do have a checking loc with NFCU but I dont use it.... it is more to make sure that my utl is always low. I never really thought about using it.
@Anonymous wrote:
I use a LoC to make sure my bills are paid every month, including my credit cards, in full. If I stay on budget it should not be used, but if I overspend one month I carry a small balance.
I actually set my payroll to direct deposit right into the LoC. Not every bank allows that, but the combination means not only do my cards and bills get paid in full, the LoC itself gets a large payment to keep me good with them too.
I don't think this is the optional interest penny pinching strategy, but it guarantees I never miss a payment.
I'm basically going to do the same thing, but I put all my bills on my credit cards initially aside from my car. After I put it on the credit card I pay it off asap. Sometimes I have a small balance between months, but normally I keep below 10% utilization. I'm mainly concerned that if something comes up I might got 4 weeks without a paycheck. If I do I need to make sure I have a line with enough money to pay my credit cards.
I am using RBC Bank (Georgia) as my primary bank, and I have a LoC with them. I use them because I have all my accounts in Canada with their Canadian parent company, they're not a particularly good bank if you don't need the links to Canada. However, I would bet quite a lot of banks allow a deposit into a LoC.
I was able to give it a bit of a trial run because my employer allows me to set multiple accounts for direct deposit, e.g., $x into one account and the balance to another. So one payroll I sent a relatively small amount to the LoC account information (using the transit, etc., from the checks) and just watched to see what happened -- it worked! So next month I sent more, and it worked again, now I sent pretty much my entire salary to the LoC.
I then set up automatic bill payments for the full balance of everything I pay either using the LoC, or a checking account that is linked to it which will draw from the LoC as needed. When the dust settles after a payroll I transfer any credit balance in the LoC to a savings account, so that it's ordinarily sitting at zero -- but as I said, if one month my expenses are higher than usual (Christmas, vacation, whatever) then I run any debt on the LoC for a brief period rather than on cards or elsewhere.
Your doing the right thing by putting money into your 401(k). If you can I would recommend putting the max each year, this year I think the max is $18,000.