My parents have always been good about teaching good money management habits. I recently closed my first savings account and the original "signature" was that of a 4/5 year old who is just learning to write their name.
I remember having to save up my allowance for what I wanted (usually candy) and when I borrowed money from them for larger items, we wrote down how much I owed, when I'd pay it back and we'd keep a running tally posted on the refrigerator.
My father is definitely responsible for my credit habits and understanding. During my teenage years he instilled the idea that you always pay your monthly cc statement balance in full. He also added me as an AU when I was still a teen, and I got my first credit card and took out several consumer loans in college with the sole intent of paying them faithfully and establishing credit. I purchased several properties and took out more loans, and the net result was a credit score of 792 by the time I was 28. And both my father and myself have normal, middle class level incomes. He taught me the value of delayed gratification and prioritizing the future ahead of today's wants. We rarely went out to eat as a family, and I often heard that a particular store or restaurant or entertainment source was too expensive, and that we can do something just as good at home for a fraction of the $$$. I definitely picked up my father's aversion to large dinner tabs, much to past girlfriend's chagrin! lol...
He also exemplified the priority of having no mortgage debt, paying off his home in under 10 years through sacrafice, which I have also sought to emulate thus far.
The last thing my father told me - just before he shook my hand, wished me luck, and nudged me toward the Childrens Home where he surrendered me when I was ten years old was...
1) Never Eat at a Place Called "Moms".
2) Never Play Cards with a Man Named "Doc".
3) and Always Sit with your Back Against the Wall.
Everything else...Life, Women, Sailing, and about Credit, I learned by trial & error. What a long road it's been.
I learned by my father who would preach if you don't have the money to buy it then you can't have it.
Now the lessons I've learned were from lots of reading, taking classes and listening to Suze Orman really. I've followed everything to a T pretty much.
But life isn't so easy...things happen and you do make a few mistakes here and there and boy do you learn a harsh lesson from it all.
I've also learned not to become so darn obsessed with the fico scores too. It became my a bad obsession where I was killing myself trying to reduce the revolving debt I had, only to end up being sick. My scores were good and I guess I wanted to raise them up more. Like getting an A on exam and keeping that 4.0 GPA in college. Not anymore. I'll do the best I can and not worry about the fico scores. In today's volatile market it doens't matter what you're scores are.
This whole mess has taught me even more, that what I once had to have "right away" can now wait or not even get it at all.
Live by your means and not by your greedy wants ....you'll be far better off money wise.
Credit habits? I learned my first year in college when I walked past a table and someone offered me a free rug and lamp if I just signed here. They filled in the form and I signed for the rug & lamp. Then this weird plastic card showed up in the mail saying I got $500. I was only 17.
Im from the West Indies and growing up if you didn't have a few pence for something you could window shop and use your imagination. You never ran in and try to get it on credit. Credit is a different animal in my country. Credit is a guy with a notebook with your name on a page and two columns for "owed" & "paid". LOL
They would come around with the merchandise cart and my gran would go look over and buy a trinket here or there on credit. If you defaulted, you would see him every single day. Every day you did not have it another figure would go into the "owe" column and eventually you may just find that he will no longer allow you to come within 30 feet of his cart. Then you got Blacklisted. That is credit where I come from.
I lived a really isolated life with my mother. School, tutoring and home. No TV, no phone, no computer. So when I got this shiny new plastic card another dormer at university had to tell me what it was. I thought it was free money, so I bought my books with it, the girl from the dorm came with me to show me how to use it. I paid for one of her books because she was so nice.
I didn't think anything about it until I got this bill in the mail saying I owed $500 but I could send in $20. I sent the $20 and got another bill the next month saying the same thing. So I sent in the next $20 thinking it would go away. After the third bill I called the number on the paper wanting to know what was going on. They said I had a credit card and I owed them money so I should send payment in full of $500. I told them they could shove the plastic. I didn't even own a bank account back then as everything was cash, cash, cash in our house.
Then I got a statement showing what my student loan was and how much I owed so far. I calculated what 4 years would cost and decided working would be best. I couldn't even afford my textbooks that weren't covered by the loan and grants. So, I got my first job, first paycheck and first bank account at age 18. They sent me a plastic card too and I called the bank to tell them I didn't want another credit card. The bank said it was an ATM card so I could get my money out. I wanted to know why I couldn't just go to the bank window like I'd seen my dad do when he wanted cash and she said the ATM was easier. Ah...no it wasn't. I almost freaked out when my card went in the slot and wondered how to get it back. I got help from my cousin with that first transaction.
So, that first credit card went to collections and then sent to a lawyer's office who called me every single month. That's when I learned about credit reports, balancing a check book, and paying bills. I actually had to call my cousin to get coaching on how to write my first check.
I look back and laugh at the hilarity of it all now. Me at 17. I did tell my mom thanks alot after she scraped herself off of the floor from laughing at my first experiences on my own as a "grown-up". I don't think I'll ever live it down though. So naive I was. Ah, well...that's life. I didn't get another credit card until I was 24. Who said getting old is something to be afraid of? Im just glad I have the knowledge I have now and Im giving my kids better preparation for life than my mother did.
If you think that was funny you should have seen the look on this kid's face in high school when he knocked my bag off the cafeteria bench, said "My bad" and I said "Yes, that was my bag". I lived an intersting life.
Note to parents: Don't be overprotective! Kids don't break and we hate looking stupid when you forget to tell us stuff!
My credit habits are a direct result of my parental(dad mostly) influence.
His simple ideology makes plenty of sense in that "You pay first, then you play with what's leftover". "If you cant afford to save for it, then you probably can't afford it, or you don't need it", is another one of his favorite sayings that I tend to invoke when planning a purchase. I try to follow these guidelines and will only finance something if I know that I can safely save the same amount of money in the same timeframe as the financing term.
When I was growing up I remember how difficult it was for my dad to make the mortage payment when he was the sole bread winner making .86 cents an hour in the local textile mill. Once the house was paid off it has -stayed- that way and has never been used as collateral for anything since. I see too many people these days confusing what they "want" with what they actually "need". Such as a roof over your head, food and the basic necessities. These things seem to have taken a back seat to impulse spending and poor buying habits in this "instant gratification" society we now seem to live in.
IMHO todays credit scenario is a mess. I just dont see how so many magical dollars are created on paper to substantiate a supposed "investment" to certain bussinesses, and it looks to be coming back home to roost for many companies in light of these recent credit failures. The way I see it, if you cant afford to lose it, dont invest it or accept credit that you dont actually need or have an immediate use for.
I just recently began building a credit file as my parents have always taken care of my needs, but I realize the importance of a good credit score, and FICO seems to have the best approach to what constitutes good personal credit management practices. Combine what I have learned on this great site with what my parents have taught me, and I think that hopefully I'm on the right track!
sally's post, asking a question of Barry about unlocking blocked credit reports, was moved to General Credit Issues to begin its own thread. As she changed the subject title on this thread to "Credit Reports Locked?", that will remain the new title.