Question for Post BK people

[kr43002]

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@Horseshoez wrote:

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@kr43002 wrote:

I will be the first to admit, I can't be trusted with credit. Unfortunatley I live in the US, where credit is almost mandatory. 

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To that comment I'll say, "Yeah, kinda-sorta-maybe, but no."  Why?  Consider the following:

• Prior to filing for Chapter 13 in 2015 I'd gone over 18 months without a credit card (my old cards had been closed and I didn't apply for any new ones).
• Once in the Chapter 13 I wasn't allowed to apply for a credit card, and even if I had, it would have been denied.  Said another way, I went nearly 7 years without a single credit card.
• So, what did I lose out on and what were my challenges during that period of time:
  • Rewards!  Many credit cards pay at least 1% (some much more) in cash back rewards; during those 7 years I probably missed out on at least $1,000 in rewards.
  • I was on a road trip and my car ate its alternator; the only shop anywhere near by with one in stock wanted $700 for it; more than I had in my checking account at the time.  That took some creative financing to get the car paid for.
  • I was on a business trip to San Francisco and opted to take the following weekend to visit family, I was unable to rent a car with my debit card, and needed to spend several hours on a bus to get to them.

Long story short, you can do pretty much anything you need to do (except rent a car at a major airport) with a debit card.

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I understand your point with debt not being a requirement. However, getting an apartment, opening a phone account (not buying one but just opening one), getting internet service, utilities, and buying a home is cheaper and requires less of a deposit with good credit. yes you can do anything without credit, but it just costs alot more upfront.

[kr43002]

I have a discover checking card, so I won't be missing alot on rewards, as I get 1% on up to 3k in purchases per month. I may go the route of just 1 card (Self) and force myself to learn to live below my means. I mean the last 6 months I haven't been able to get credit and I have been still spending every dollar. But I haven't been going out and buying stupid things, I just lost a majority of my income.

[anniea4001]

@kr43002 

The best thing you can do here is have a savings account at a different bank where you do not have a debit/ATM card and you cannot easily access it. Pretend that account does not exist. 

It is always good anyway, to have money in more than 1 bank because you never know what can happen. 

Have whatever amount you wants to save be set up on direct deposit to go to that one acccount if you can. Automated and less temptation of using the money instead of saving it. 

I personally have gotten so used to pretending my savings account does not exist that I only look at it when I get notification that interest/rewards have been deposited. And that is because I get the email notifications.

You can also try to put your money on a CD, this will force you to not touch it until it has matured. I know CDs do not pay a lot but if you lack discipline, this can help you with that. 

It takes discipline but you can do it. 

[jmw1]

I might suggest a heavy dose of Dave Ramsey, AZEO for minimum EZ credit building, and the YNAB budget app.  The documentation for YNAB sucks, but there are Youtube videos on YNAB that makes it a lot easier to understand. It may be easier to have direct deposit of your paycheck go to two accounts and not touch one of the two accounts. You need to follow baby step 1 ($1k emergency) and baby step 3 (3-6 months emergency). You took care of BS2 with the bankruptcy.  That should take every last dollar away from you for shopping. After BS3, your excess cash should be funneled away for a down payment on a house, retirement, and the kid's college fund (if any). There should be little to no money available for shopping sprees.

For me, I schedule a billpay for three days after swiping a credit card. On one card, leave a $5 balance after the new charge posts but billpay the rest of it three days after swiping. I think you might not be ready to shop with a debit card or credit card. It's ok to use cash. The only real disadvantage with cash is that some self checkout lines don't take cash. 

Do not ever get an auto loan. That's one of the best ways to be broke for the rest of your life.  Each car could be $700/month for 84 months to a bank instead of your savings account. No student loans ever. The only borrowing you should ever do is the mortgage. 

[Horseshoez]

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@kr43002 wrote:

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@anniea4001 wrote:

I am no sure anyone can help you with that other than yourself.

Self control, discipline and accountability are the only things that will keep you out of trouble.

Maybe some financial education and budgeting will help you. 

I have been budgeting since I started working and I think that is something that has kept me in check.

I pay all obligations first, then set aside some savings and last give myself an allowance for whatever I want whether that is a pair of shoes or home stuff.

That is one thing I leaned from one of my bosses when I started working at a young age. 

If you have trouble controlling your credit card usage, don't carry your cards with you, leave them home.

When you feel tempted to buy something outside your budget, ask yourself if you really need it and if you can afford it. 

I went a long while without buying anything that was not necessary until I had 6 months of expenses saved up for emergencies. Now, I am more flexible with things, but still within my budget. 

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I have a budget, I do try and follow it as close to the letter, but then I get to looking at the money in my savings account and splurge. I understand that I am the only one who can keep myself out of trouble, but is there any tricks you have to keeping yourself accountable? Any way you can fight the itch

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Regarding suggestions, I'm pretty lacking.  How about opening up an account at PenFed and having a portion of your paycheck deposited there and then never look at it?

The game I'm playing right now is pretending I'm still in my Chapter 13; instead of paying the Trustee, I pay a savings account; in just the last 13 months it has racked up some pretty impressive totals.  Are there things I can spend money on?  Yup, I mean, I drive a 15 year old car with 175,000 miles on the clock; it's in great shape, a joy to drive, and has no current issues, but hey, it won't last forever.  Can I use some new clothes, furniture, electronics, and/or kitchen goodies?  Yeah, but I just say, "No!"

[kr43002]

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@anniea4001 wrote:

All the things mentioned above are true.

And a lot of it it's just personal choice.

I personally think it is good to have a credit card with a decent limit for emergencies because even if you have an emergency fund, you might not have access to the funds right away if you keep the money on a separate acccount. I have 3 different savings accounts because you never know so it may take a day or to fo funds to transfer over.

Also in my personal experience, some places may not always accept a debit card (hotels, car rentals, etc) or they may put a big hold on your funds until the rental is over.

And unless you have a hefty amount of cash handy at all times, building credit it's always a good idea.

Let's say you car dies suddenly and you need a new one. I do not know a lot of people who can buy a car outright cash. So if financing is needed, you can save a ton on interest. I still remember my first car loan, the interest was attrocious but I needed a car badly.

Prior to that I had bought a beater in cash but the constant repairs were draining my bank acct anyway.  Add to that being stranded in the street lat at night coming back from work. So.... I still needed a car.

With that being said, if you really feel you cannot be trusted with credit, then you may be better off not getting any at all.

Credit does not have to be an enemy but I strongly believe a lot of people lack better financial education and planning. Myself included. I wish I had learned about credit ealier in life.

I have heard of people going as far as freezing their credit cards (literally) in a block of ice to keep them from using them. Thou that is a bit extreme, what works for one person might not work for another one at all. So you need to develop a plan that works for you. 

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I appreciate you understanding why I feel as tho I need to build credit. I do need to develop a plan that works well for myself. I have a cheap beater and it is killing me in constant repairs. Im saving a ton on insurance and monthly payment, but at the end of the day, I am paying more in repairs than I would be in insurance and monthly payment. BUUT the repairs are tires, brakes, coolant hoses and what not. But still Its killing me.

[Horseshoez]

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@jmw1 wrote:

Do not ever get an auto loan. That's one of the best ways to be broke for the rest of your life.  Each car could be $700/month for 84 months to a bank instead of your savings account. No student loans ever. The only borrowing you should ever do is the mortgage. 

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Speaking strictly for myself, that is bad advice.  Why would I take money out of investments to pay cash for a car when I can borrow the money for stupid low interest and let my money continue working for me?

[anniea4001]

@Horseshoez  agreed!

And what car is anyone buying that they are paying $700/month for 84 months? For crying out loud, nobody needs that. That is pure luxury, that, if you make the money to pay for it, great! But let's be realistic, it's not a need. 

Now, I live in Texas, everything is far AF, and public transpotation is non existen in some parts of the city so having a car is more like a necsity than a want. And I would never, ever, even if I could pay that much for a vehicle. Pay $300-400, save/invest the rest. 

[anniea4001]

@kr43002 

Oh trust me, I totally understand.

I am a single woman, and have no family in the state where I live. I do not have the luxury of being stranded in the middle of the road late at night with nobody to call. Or not being able to get to work for several days because I have no transportation. 

That is why to me, a reliable vehicle is not negotiable. It is a must. 

Plus if you do not own a home but you would like to in the future, building credit is a must. As far as I am aware, lenders like to see some credit history. 

Even if you want to purchase investment properties, you will need credit. I honeslty hate when people tell others seeking advised that credit is not needed. SMH

Try to rent a nice apartment in a nice area and tell me if they do not chek credit. Or even a house directly from the landlord. 

Find a plan that works for you. Maybe a mix of recommendations from different experts. Because no matte what, you are the one that needs to stick to said plan. 

[Horseshoez]

Regarding the old car thing...

During my Chapter 13 my (then) old car finally did succumb to all manner of corrosion which forced me to buy something newer.  Given I had zero access to credit at that time, I had to pay cash and ended up with a new(er) car which was then 11 years old.  At the time the body and interior were in very good condition and mechanically it was in passable condition; a year later I dumped $5,000 of needed and preventative maintenance into it and now have it to the point where I wouldn't think twice about driving cross country in it, in fact, I've done two 3,000+ mile road trips in it didn't have a care in the world whether it would do the distance.

Is my old car inexpensive to maintain and operate?  No.  Is it cheaper than buying something even so modest as a new Toyota Corolla?  Yes.  I know I am one of the few voices out there who would suggest this route, but hey, my point is, any car can break, new or old, if it's old, maintain it, and assuming you can dodge the corrosion issue, it should last for a very long time and be as reliable as a newer car.