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ritahayworth
I thought it'd be nice to have a place to talk about finances -strategies for saving, reducing debt, tips and ideas for making money, all that stuff goes here.
pollystyrene
Thanks for starting this thread- it's suggested every once in awhile in the community thread, but usually no one gets around to doing it.

I actually just posted a financial question in the general knowledge thread, so this is a cross-post from there, since I haven't gotten any replies!

I'm thinking about joining the 401k program at work. However, I'm in the process of looking for work elsewhere. I know that the company I'm currently working for will continue to put $ into your 401k even if you leave the company. However, would it be possible that the company I'm going to would have a better 401k program? I don't totally understand the whole 401k thing (that's why if I sign up at my current company, I'm going with the Fidelity Freedom Fund, where all the decisions are made for you over the years!) so correct me if I'm wrong, but couldn't one company be willing to match a higher percentage than another?

And if I sign up with my current company, and then leave, will I be able to transfer the 401K to the new place if they have a better program? Will the old place stop paying on it?
karianne
I agree, thanks for starting this thread, Rita. I am definitely interested in finance talk.

Polly, I am eagerly awaiting the answer to your question! I know very little of 401Ks, even though I have one.

I got married in October and my husband and I are trying to get our finances in order so we can buy a house. This thread is timely for me!
maryjo
I might read this thread by way of an education in American finances, since I'm moving from the UK to the US in a few months and will have whole new layers of bureacracy to deal with.

So in the pursuit of my general education, what is a 401k please? Sounds a bit like a pension fund?

I have a decently-paying job right now, and I need to save since in August I will be moving across the Atlantic and will have to buy many many things and live on a grad student's stipend. I have saved a reasonable amount, but I'm working freelance and so will be billed for tax (most employment here is pay as you earn, so tax comes out of paycheques before the worker receives them) and I'm afraid that is going to completely eat all my savings up... I have two more months to work and I just need to save as much as I can, I'm starting to get quite twitchy about it though I know I will manage the move and everything associated with it even if I have to get into a little bit of debt.
kjhink
Okay, I'm no expert, but re: 401k plans.

Any money you put into a 401k is yours forever unto the end of time. However, most company matching contributions have a vesting system. Each company's is different, but here's an example.

Let's say you are fully vested at 5 years (pretty common). For each year (usually a specific date in that year, say Jan. 1), you get a percentage of the money they have contributed.
Like: 1st:20% 2nd:40%, 3rd:60%, 4th:80% 5th:100%

Basically, if you leave the company in year 3, you get to keep ALL the money you invested in your 401k and 60% of the money they've invtested contributed. If you leave after your 100% vested, you get to keep ALL the matching funds.

When you leave a company, they stop contributing to the fund. The money sits there, waiting patiently for you to retire. You can roll that money over, but I don't know if it can be rolled into your NEW 401k (I think not), but you can roll it into an IRA. NO MATTER WHAT, DO NOT WITHDRAW YOUR 401K MONEY. The feds absolutely stick it to you, without benefit of lube.

Different companies certainly have different 401k programs with different levels of largesse regarding matching employee contributions. That said, though, 401k contributions are done pre-tax, lowering your taxable income and saving you money.

And karianne, I'm a mortgage loan processor in Missouri, so I have a decent knowledge of home buying stuff.
karianne
wow, thanks for all that information, kjhink! I will have 5 years at my job here in June, so that works out well. I really need to start putting more cash into the 401K as the company matches it 100%. When I first started working here I was only 26, so retirement wasn't much on my mind. It still isn't, but now that I'm almost 31, I need to start doing the responsible thing & contributing more.
maryjo
So a 401k is a saving scheme?
bgirl
yeah, it is meant for retirement. the idea is to have $ being saved that you are not enticed to spend so when you retire - holy cow - you got something. i think it is extremely important now since it looks like we may not get social security.
ive taken a loan on my 401k a few times in emergencies....$65 fee, not too bad of a hit when you really need some $.
then they just take bits outta your check each month until you pay it back. to yourself. ha.

pollystyrene
So, then, it would probably be best to wait until I'm at my new company (assuming I get this job, but really, wherever I end up in the next few months) to start it, since the old company isn't going to keep paying on it anyway? Thanks kjhink!
ritahayworth
oh, yay, I'm so glad y'all are posting here. I didn't want to start a lonely ol' thread.

Polly, your old company won't contribute to your 401k after you stop working there, but if you plan to stay at your current job longer than a month I'd still set it up. It's fairly low hassle and there's a big upside. 401 plans roll over fairly easily from job to job, and you might as well save and/or make the extra $ (especially if your current employer matches your contribution at a high percentage).

This year is the first year I've worked for a company that had 401k and I strongly urge you to put as much in it as you can whenever you do decide to set it up. It helps lower your taxable income, since it's not taxed, and a lot of larger companies match up to 5 or even 10% of your contribution so you're basically increasing your overall salary. Also, for people like me who aren't so great at saving, it socks the money away by taking it away before you ever get to see it.
raskel
My problems are mainly with debt. This fall I'm transferring to a private school to finish my degree where I will rack up...probably $70,000 in debt before I graduate, and this is the total AFTER figuring in my scholarships and grants (which knocked $35,000 off the original total). Plus the cost of living while I'm finishing school. I'm in a very competitive field at a very good school, so in order to succeed there's not much time for working. And Mr. Raskel and I are planning on getting married the end of next year, so there's the cost of the wedding too. If anyone has any suggestions for saving money in the next few years I would greatly appreciate it.
gumby_cc
I knew this article would be useful somewhere......
<http://www.latimes.com/news/printedition/la-fi-retire23apr23,0,1598403.story>
sorry, too lazy to format.
miss_jane
Great timing with this thread - my head is about to explode from filling out student finance forms.

Also I'm not doing very well with the whole "saving for uni" thing. Yeesh.
mornington
oh, student finance forms. i fucking loooooove those babies... and they love me right back. I've just got my ones for 06/07 year and I'm thinking "here we go again".

miss jane - I gave up on "saving for uni"... I have, however, got myself a mini ISA account, and put a bit of money from my gap year in that (and money from a matured life insurance policy) which I'm not touching until after uni - or until things get really really desperate. The way I look at it is, I'm gonna be in debt whether I like it or not, but if I live carefully and budget my loan properly then I'll be in the managable bit. Student loans are there to be spent - and most bank managers will be cool about overdrafts once they know you're a student. And most parents will still want you to eat/have textbooks etc
miss_jane
I have a mini isa too, and I've also come to the conclusion that that money is staying in there until after uni (hopefully to go towards a deposit) unless I am starving, freezing, or considering unsavory activities to raise money.

Wouldn't it be lovely to win money?

Saving tips would be good for me as well as raskel!
mornington
oh, we've already marked down our flatmate as the first to be sold into white slavery if we get short of cash.

I third the saving tips as well - while I know theoretically how to save money, I never seem to actually do it.

Although I will use my student discount wherever possible, shop for fruit & veg at the market, and walk to most places etc etc. The nice thing about living in halls is that everything is included in rent (if you're in SC, budgeting for food is the biggest challenge) so it's not much to think about.
venetia
Good thread idea. I'm always interested in this stuff.

Um, what's an ISA? (Somehow google isn't doing it for me with this one.) Is it some sort of index traded fund? If so does it have exit and entry fees? Management? I'm really frustrated at the moment because after endless hours in Borders reading everything in the financial section, I worked out that I wanted to put some money into an index tracking equities fund and now I can't find one!

We got our first ever joint account yesterday - we worked out a set amount each of us can put in, and will use it to pay utilities, rent, and food. So now I'm shopping around to see whether it's possible to minimise the utility bills.
misspissed
happy to see a finance thread again! (there was one, years ago, but it either died or got eaten by the dingoes)

anyhooo...i am trying desperately to pay off my credit card debt. i am about 15K in CC debt, accumulated in the past 4 years or so. it is both embarassing and frustrating.

i went through a 3rd party debt management agency when i finally realised i was missing payments all the time and getting whacked with late fees.

the debt management agency consolidated my debt into one monthly payment, and worked with my credit cards to try and lower interest rates. i was able to get lower interest rates on 3 cards, which helps a LOT. if i don't accumulate any more debt, i should have this mess paid off in about 2.5 years.

but i RUE the day i ever ever ever started using credit cards (which sadly, wasn't that long ago, only about 4 years). god, if i could change one thing about the past, that would be it. with the payment i make now, i could have bought a new car, or even a house.

\end whining.

ritahayworth
on the saving front, I heard about this guy Dave Ramsey on an old This American Life segment, and ended up listening to his show and reading his book. I'm getting kind of into it, and am trying to do his program, which in short is: get rid of all your debt; never ever use credit cards; and never ever acquire new debt. He reluctantly thinks it's okay to pay a mortgage, but that's it - not for cars, education, etc. I disagree on the student loans thing -- I think it's often worth it to go to the more expensive school/training program bc often they're better. It seems to be a pretty sensible, solid system though.

(one note: he's a Christian guy from TN, so he's pretty straight-up red state; he seems to be a good guy but his point of view is probably pretty different than points of view typically espoused at bust.)

Anyway, I'm trying to implement his suggestions for saving $$. I'm gathering everything I don't need in my apt and selling it on ebay or at consignment shops. It's not that much, but it has the double benefit of getting rid of stuff I don't really love and getting a little bit of cash. Secondly, I'm going to try to make some extra cash. I don't know if I can swing a second job but I'm going to start grading essays for Princeton Review cuz I can do that from any computer and do as much or little as I have time for. And I am going to pack my lunch!! I'm so lazy about that and end up spending too much money in $4 and $5 increments because I get up late and am too lazy! So that's my three-pronged plan for now.

Congratulations karianne and raskel on your getting married (not to each other). Raskel (and karianne, if you're interested), I don't know what you're thinking of in terms of your wedding, but it's been my observation that while all weddings are happy, joyous occasions, the more casual/cheaper/less blowout-like ones are about 10x less stressful for everyone involved. My sister came up with a bunch of ideas for saving/doing the wedding on less $$. If you're interested, PM me and I can pass along some ideas for saving/getting creative in that area.

maryjo, where are you going to live when you get to this side of the Atlantic?

Finally, another suggestion for working while at school or in addition to another taxing job. A friend of mine (who's in her mid20s, in a competitive field) needed extra cash and swears by babysitting. She likes it cuz she's earning money and she's not out spending $$, and most kids go to bed early and she ends up getting work/reading done for the rest of the night, and most parents feel more comfortable having an older sitter instead of a young teenager and pay her about $10/hr (I'm in LA where I guess that's standard yuppie rate). So she makes $50 pretty painlessly and gets her reading done on Fri nights.

aw misspissed, don't be embarrassed -- almost everyone in the US goes through the same situation. You're doing something about it, which is the important thing!! I painfully paid off two credit cards that had spiraled out of control a couple of years back. It was so dumb on my part -- they were small amounts but when I couldn't keep up the payments the higher interest rates and late payments ballooned and the totals tripled in a matter of months and became this big hulking thing. UGH. But it's so great to be free of them! I switched to one debit card and don't have a credit card at all. I really prefer that.
miss_jane
Venetia, an ISA is an Individual Savings Account. Basically its just a saving account which the government doesn't tax you for. However if you have a mini ISA you can only put in up to £3000 in one financial year. If you have a maxi ISA, I think its up to £7000 but its more about stocks and shares, than going to the bank and saying "put this cash which will magically disappear from my hand within half an hour, somewhere safe where that will not happen!".

The good thing about ISA's (apart from the tax free bit) is that you can take it out any time you want (or at least you can with the mini ISA) so it isn't like your money is trapped if you desperately need it.

My shady knowledge on ISA's :-)
bunnyb
I have a mini cash ISA but I haven't been using it for a while; I feel bad saving for a rainy day when I have debt that I have to clear.

I've been struggling recently; the boy has got his debt in order and says it's for our future so I feel bad that mine is bringing us down (although we won't be buying a house for 3 years).

I financed my Masters this year alone and am about to embark on my PhD but know that's going to be even more of a struggle (I didn't apply for funding this year as it's two applications before disqualification and I felt this year would have been a rushed and wasted attempt). In my second year I can hopefully attain a GTA position which will help.

At the moment, I am tyring to make a difference with the little things (packed lunches is definitely something I need to do as I am wasting so much money on expensive food before work). Every little helps, I suppose. I am keeping a money diary too so I can see how I am wasting my money each day as it seems to just disappear.
maryjo
ritahayworth, I'm moving to LA! Where you are, yes? And there are so many extra expenses I keep thinking of all the time...

I am trying to save extra money now... for a while I was spending like £5 a day on coffee and lunches, so that has to stop. I have trouble getting it together to make packed lunches but if I go to the local supermarket in my lunch break and buy salad, bread etc I can make up a cheap healthy lunch in the office for much less money than I'd pay in a sandwich shop. I learned how to be frugal while I was studying, especially when I self-funded a Master's degree. This year I have allowed myself to enjoy the money I was making, but I think it's probably time to sliip myself gently back into frugal-mode now.

My latest tactic (for saving when actually earning reasonable money) is to not allow my bank balance to go into four positive figures - every time it does, I transfer all money over £999 to my savings account. Since I am keeping well clear of my overdraft at the moment and I have rent and things to come out, seeing a lower balance in my current account helps me keep my spending in check.
mornington
the other thing with ISAs and mini ISAs is that the interest rate is much much higher than a standard account. I haven't put anything in there for a year, but I work on the policy that as long as its working the interest thing I can leave it to get on with it. Also you can have a few mini ISAs, whereas they don't like you to have too many other accounts.

And you can have the interest paid into your current/normal account which could come in handy
karianne
I hear the frustration on the cc debt. It sucks. I don't have much, but my husband has a good deal of it. Probably close to $12K. All at sky high interest rates. It is very frustrating for both of us. We are thinking of buying a house, but I don't know. My credit is really good, I make a good salary, & have little debt other than student loans. If we were to buy, we'd do it solely on my income and debt. Right now, he pays his payments, but he can't pay much bc/ his income is not that high. I am paying on my own one cc and trying to bank my extra income. Is that the wrong thing to be doing right now? Should I just bank a small amount & put all the rest towards his cards, and wait to buy a house?

Saving money: What's really helped me the most is cutting down on meals out & drinks. I have become a lot tighter with my money. I used to go out and blow $40 at the bar on a random night, now the thought makes me shudder. I notice a real difference in my bank account.
caroline_no
Sometimes you can consolidate credit card debt and transfer to a card that offers 0% interest for a set amount of time (mine is for 1 full year). Just make sure there isn't a fee to transfer and make sure the interest isn't too outrageous when the deal expires.

Saving tip: Always shop on sale racks!
kjhink
karianne: I would suggest saving less and paying down the husband's CC debt. Basically, there is NO rate of return on your savings that's going to match what you're blowing on interest payments to credit cards.

Depending on when you want to buy a house, you might be able to do so with minimal money down. 100% loans aren't necessarily a bad way to go, but you will likely still need some money for closing costs. Depending upon your credit scores and household income, even with his debt you might still qualify. My ex-husband and I bought a house with debt much like you're describing, and it was fine.

I've bought 3 houses, 2 while married and 1 since my divorce. I work as a mortgage processor (for about 3 weeks more, I got laid off). If you want more info, PM me. I swear, I won't try to sell you anything. ;-)
misspissed
kjhink, so even me (with my debt load) could qualify for a mortgage? i realise my interest rates won't be that great, but just knowing there is potential for me to qualify is a relief.

it is amazing how much money i've been blowing on FOOD. not even dining out at nice restaraunts -- i mean buying breakfast and lunch at work. i work in a mall, so i was going to au bon pain and starbucks almost everyday. before i knew it -- $50-60 a week is shot just on coffee and sandwiches! i could buy my whole week's worth of groceries for $60, including breakfast and lunch. it is amazing how the little things really do add up! my major expenses are pretty much fixed for the month - i know how much my rent, utilities (approx) and debt payment are going to be, so i need to really tighten my belt when it comes to the little things that i can eliminate.

and i finally created a budget for myself. it makes everything a little less overwhelming, because i am making more than enough money to cover my fixed expenses.

so happy this thread is here, it is nice to have a place to vent and share ideas.
lucizoe
What about tips for improving one's credit? Mr.Luci's credit isn't too hot and mine, since I refuse to have an actual credit card, reflects only my non-existent savings and my student loans, so also not good. This we discovered in our attempts to rent an apartment in Manhattan.

Barring student loans (his are about 21k, mine 10k), apparently a cell phone he shut off three years ago kept billing him and now there's an outstanding bill for almost a grand on the credit report, and the occasional parking ticket, late payments on cable and credit card...he's never missed rent, though. Blah. I'm sick of this stuff.

Would it be better to pay this stuff off in a big chunk to wipe it all clean, or would making smaller, consistent payments look better? We're going to be apartment hunting again in about two months, so anything we can do quickly would be key.

Argh. We also got a letter from a collections agency asking for the fifty dollar hospital bill which I PAID last month. I'm really very suspicious of these people now. As soon as we are out from under all this shit we will never be under it again.

*clenches dirt in fist a la Scarlett O'Hara*
maddy29
Lucizoe,
I have a credit card that I don't use except for emergencies or when I have to put something big on there, like a plane ticket. But, I charge my cell phone to it each month, so that I'll have a continuous record of good credit. I don't know how you feel about that. I know credit cards are evil and I had so much debt I just had to stop using them.

I don't know about the repercussions or anything, but personally I'd feel better just taking care of all those things at once, and just wiping the slate clean. Then, go about building up some good credit.
kjhink
luci: it depends when it comes to paying off the debt. Is the debt written off? Does it appear as a "9" on the credit report? If so, don't bother. It won't help, and it might make things worse.

The best way to improve your credit is to get good credit. Get a secured card with a no or low yearly fee. Use it once a month to buy coffee or gas or something, and pay it off in full. Never carry a balance. If you really don't want a credit card AT ALL, which sounds like the case, just make sure you make at least the minimum payment for everything on time, every month.

Honestly, I don't know of much that you can do quickly. Even if you pay it all off TODAY, it likely won't show up on your credit reports in two months. The best you can hope for is pay off everything, show potential landlords or creditors your debt was paid, and thereby demonstrate you have more income every month to make rent.

misspissed, that depends. Your ability to qualify depends on A LOT of factors. As far as debt goes, it has to do your debt to income ratio. Calculate that by adding up the minimum monthly payments on all debt; divide that by your monthly income. That's your DTI, when buying a house, they look at what your DTI will be with the proposed house payment included.

For example, we've done mortgages for lawyers with $100k in debt, because they make $12k a month. And it depends on your credit score, and if you have any savings, ad nauseum. But generally, "high" debt won't necessarily rule you out.
misspissed
isn't it interesting to see the catch-22 with credit cards? it is so easy to fall victim to overwhelming debt, but it is almost necessary to have them in order to obtain a good credit standing.

le sigh.

kjhink, my credit rating is pretty craptacular right now, because i'd made some late payments in the past. but hopefully, by making the consolidated payments every month, and on time, my credit score will get a little better.

i am in NO rush to buy property, but i want to make sure that in a year or 2, i can qualify...by then my debt will be reduced by half or so...

btw, my DTI calculation is something like .315, unless i did it wrong?
treehugger
Hi, can I jump in?

I *used* to be able to just sort of spend money however I wanted (I had a DIRT cheap house)...but alas, the house was a shack and it stressed me out to no end. I started shopping out of depression and realized I had to get rid of that house!

Well, now I bought a condo and money is going to be SIGNIFICANTLY tighter...being single and a quarter mil in debt is a frightening thing. My credit is decent and I just paid off my car and my only credit card...it's just that my mortgage is so much higher than what I'm used to.

I need to make a budget and I never had to before, so I feel kind of pinched. Meanwhile my friends still want me to go out to eat, buy half the beer...and I got rid of cable to save money!

Tough when your friends are used to living the high rolling life with you and you have to quit all of a sudden.

No regrets though. I love the new place and I think the depression shopping is done for..although I've had a hard time curtailing that "new house shopping" thing.

*edited to add*...I just re-read my post and me being depressed because of the house being a shack sounds kind of shallow....what I mean is, it was literally, truly a shack. The basement caved in on it last summer. It wasn't just that it didn't appeal to me...I had recurring nightmares that I was standing in it and the walls would come crumbling down around me. It was a genuine $$moneypit$$ nightmare house. Which is why I got so stressed...having to fix basically the unfixable.
kjhink
misspissed, It sounds like you did your calculations correctly. 31.5%. Does that sound correct? It's not bad.

In 2 years, you should be able to buy if you'd like. You might still be looking at a sub-prime loan, though. Debt consolidation is viewed by mortgage lenders pretty much like a bankruptcy. A lot will depend on how much your credit score improves.
karianne
I am so glad to see so many people in here!

Kjhink, I PM'ed you.

kjhink
karianne, I replied. Did it not come through? I tried to PM you this, and that wasn't working either. Lemme know if you want me to resend.
venetia
Wow, I wish we had these ISAs in New Zealand. At the moment the govt taxes me 33c to the dollar on interest for my savings. (Our interest is comparatively high though, 7.2%, so it evens out)

I have this bad habit of paying off my credit card debt within one day of incurring it. Or worse, putting the money onto it before I spend it. I have never ever been offered a higher limit than my initial $500, whereas my friends who don't pay theirs off for ages have limits of thousands and thousands! I think I need to work out a system that makes me look better.
kjhink
Venetia, if you want a higher limit for whatever reason, call the credit card company and ask for one. I assume you can do that in New Zealand. Stateside if you did that they'd probably increase your limit quite a lot.
anarch
great thread.

article on ever-escalating wedding bills

review of Money, A Memoir by Liz Perle, which I got out from the library a couple months ago.

Excerpt: "If [a girl who babysits] does a good job, someone will say, "You're so good with children." By contrast, if her brother mows lawns to earn money, he's likely to win praise for being enterprising. No one will tell him, "You're so good with lawns."

The author's description of her attitudes toward money and men when she was younger frustrated me, but it also explained the behaviour of some of my friends that I've had trouble making sense of. Interesting read.
venetia
Why didn't I think of that? Thanks Kjhink.

"You're so good with lawns" tee hee. That reminds me, I found this book quite interesting: Nice Girls Dont Get Rich: 75 Avoidable Mistakes Women Make With Money.
maryjo
Okay, since there's a financial expert in the room (although this is not about mortgages):

Kjhink, what happens to one's credit rating when one moves internationally? I probably have a decent rating in the UK - I've had a credit card for about 5 years and though the limit isn't high I pay it off regularly, plus I have a mobile phone contract. I'm not in any debt except for student loans. But I've been told that when I come to the US I will effectively have a credit clean slate - no credit rating, which means I won't be able to get a contract with a cellphone company or a credit card.

Friends who've been in the same situation tell me that the only way I'll be able to get a c-card will be through my university's credit union (I'll be doing my PhD) and that I really had better do that if I ever want to have an American credit rating. I hadn't particularly planned to get a US credit card, though I had thought I'd keep my British one (it has no monthly fee)... but I do really want to be able to get a contract mobile phone, and perhaps buy a car on credit. Do you (or, indeed, anyone else) know how this works with the international stuff and what I should do?
steppe_child
Sorry, Maryjo, I live internationally but it is the other way around: I am an American overseas. However, worst case scenario you can get a "pre-paid" credit card, which sounds stupid but it is how some people in debt shore up their credit rating. It seems like getting a PhD and showing some financial records would be enough to get a credit card.

Anyway, my question to the group is: Can anyone give me advice about the frequent flyer credit cards? Is it really worth it? I have always had just regular cards but am wondering if a "rewards" card is all it is cracked up to be.
lucizoe
Thanks so much, kjhink! We have to sit down with it again to hammer it all out; I'm unsure as to what all the damn numbers mean.

I DO know that it's not undoable, and technically, we could put off the apartment hunt for at least six months to a year if necessary. Blah. Credit cards. I.hate.capitalism.
maryjo
I just went to the bank and was reminded of this thread...

I was only there to get some money, but the cashier asked me if i'd had a savings review recently... I've been saving in an account with a pretty low interest rate, but since I will be using the money i've saved in August I didn't think it was worth looking around to get a better one. He pretty much convinced me to get an ISA though, since I can apparently still access my money and the high tax-free interest rate is calculated daily so I would get interest on my money when it's paid in April even if I took most of it out in August...

I'm going to look into it further and schedule a proper review with the bank, but that seems like a sensible course of action.
kjhink
Oh, how I wish I was an expert, but no. Just someone who has read a lot and has already made the VAST majority of mistakes out there. :-)

I believe you're correct in assuming that you will have a blank credit slate when you arrive here. However, my experience on US college campuses is that you can't swing a dead cat and not hit an offer for a credit card. College students are generally offered cards because it is assumed that their folks will bail them out if they get into trouble and because nabbing them early will make them loyal to the card company.

You will probably be able to nab a credit card offer from a table or from a bulletin board on campus. Note: the card will probably have a low limit and a crap rate, but it probably shouldn't have an annual fee. Use it to by lunch once a month and pay it off and you will rapidly build good credit.

That's the easiest way I know of to build good credit here. If, for whatever reason, you can't get a traditional card, steppe_child's suggestion to get a secured card is a good one that will work like a charm.
karianne
kjhink-i didn't get your PM. Do you mind resending it? I don't know what is going on.
maryjo
I bet they are less willing to hand out the credit cards to grad students living on puny stipends who don't have well-off parental guarantors! I shall do my best, though... :-)

And thanks - you're certainly an expert from my point of view.
maryjo
La la la, I'm hogging the thread.

I'm in the same position as venetia regarding credit cards - I've had the same one for 6 years, but because I don't spend much on it and pay off what I do spend right away, they've never increased my limit beyond the original £500. Well, when I get to the US I am likely to have need of a higher credit limit than that, in case I need to buy things before I get a US bank account sorted out. So I called my credit card company to ask them to raise it. Which they were happy to do... up to £600. Apparently I just don't spend enough money to make them willing to raise my limit by anything significant (£1000 was what I was hoping for). Damn.

My mum reckons I should just apply for another credit card, and I dare say she's right, but what a hassle! I hate the idea of having millions of the things, but I hate the idea of being stuck without access to the money I have and need when I arrive in the States even more.
venetia
Do you think paying off your student loan would affect your credit rating? Or is this just a lullaby of mine? Gah, I only even found out there was such a thing as a positive credit rating about 5 years ago. Where I'm from what a credit rating is mostly black marks against you for bounced cheques and bad debt, so it didn't occur to me that there could be a good one as well. I thought a good one was a blank slate. I'm such an idiot.
pollystyrene
Your mention of paying off a student loan reminded me of something, not necessarily in relation to credit rating, but just a general way of thinking when it comes to finances. It's a lesson my dad taught me, a few years ago, before I had a house and a car and had piles of cash lying around (ha!) I decided to pay off $900 or so of my student loans just because I could. I told my dad about it and he said that while it's okay when I have money to do that, student loans are designed to be paid off over a long period of time, by carrying a relatively low interestg rate (usually less than 10%, as opposed to a credit card, which can be over 20%) and he said the bigger lesson is that the real cost of something isn't how much you spent, it's what you can't buy as a result.

So, yes, I paid off a big chunk of my loan, but was the $50 a month I was paying that big a deal? No, especially back then before I had to deal with the responsibility of a house, car, dog, etc. I'd rather have that $900 now!
venetia
I don't really understand that principle? The interest on the loan is higher than the interest the money would get in a bank if you held on to it and didn't pay it off?

I'm really happy right now about my loan, because the govt just froze our student loan interest, and I'd been saving my ass off but hadn't paid any back (we were already frozen until graduation), so now I will gain interest until they unfreeze me. With any luck it will compound to the full amount.

This is a New Zealand site, but I find the calculators for loans really useful: sorted.org.nz
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