Interested how you survive without credit?

good question hiho, I think it would be almost impossible to get ahead now days without having some kind of credit.

I'm Just about to take out my 1st loan for my 1st house, It would take many decades for me to save the entire amount to buy a house outright.
It will take many decades to pay off a loan, but at least that money I'm paying will be going towards an asset that I will own one day. Even though the bank will take a massive amount in interest, its still better then paying rent, rent is lost money.

Gotta start somewhere

 

We need to change the school system too.

Instead of bullying kids into finishing high school and getting a degree, lets get them to work much sooner like decades ago. Then they could have half a mortgage saved up by their 20's.

 

As a teacher myself I wholeheartedly agree.

A lot of qualifications used to be obtained through technical colleges. The teaching of these proffessions was far more vocational and practical in nature.

By now teaching many hands on proffessions at university it has done 2 things:

1) Insert a whole lot of needless theory in the place of practical skills,

and

2) Been the death of the classical idea of university as an institution for one to broaden the mind through academic pursuits.

Both of these things are a great loss. People wishing to enter a practical proffession are denied a lot of practical skills, and the people going ot university for the more traditional academic studies are ridiculed by the 'tick the boxes to get a job' crowd.

 

I'm debt free currently and loving it.

However, I have come to the conclusion I will need credit to buy a house - so I will soon when I find the right place

 

This is just my experience =)

In theory this is a great idea and would be very beneficial.

I think in reality it wouldn't work at all, due to a few factors.

If kids left working at 15 like in the old days the money earned would almost certainly not be saved as an investment or put towards a house. Many younger people wouldn't be thinking about Investing for a secure future, I know I certainly wasn't at that age. =P

Also the little amount of knowledge I have on saving/investing money was developed in the last 2 years of school. =P

I Think the main reason kids are bullied into going to year 12 is that even basic jobs these days require at least a HSC level qualification. =)

 

Don't forget the difference between credit & debt. Sounds like you have heaps of credit(worthyness). Credit is based on your character, reputation AND abilty to pay. Credit is what you walk into a bank with. Debt is what you exchange your good credit for. A bank can't give you credit, the only thing a bank can issue is debt.

 

Of course you are right, I definitely mean no debt.

 

So what's next? will you be buying a cow to supply milk ?

 

Rothbard's actually on my side here, but it's hard to explain why without putting forth the basics of FRB and talking about them in context. I'll leave that to the other thread.

 

Those who refuse to buy into the rotten RE market do...
unless they pay cash of course.

no reason to put anything else on credit.

 

Well that's the part of the problem. Many of these "requirements" are not really necessary. Honestly I have forgotten 99% of what I learnt in High School and I barely learn t much in TAFE.

I became the best in my class at web design, due to Self education, which is much more effective.


As far as your comment about 15 year olds not having a savings mindset, I agree of course, but I know that we could do a much better job than we do now, if kids were educated properly at a early age about finance, debt, savings, their future by both their parents and teachers.

 

The education system is controlled by the government. Govt is aligned with the big banks. Govt and big banks need to have ever increasing debt to sustain the current system.

Therefore, not a good idea to teach kids about debt and responsibility. It would conflict with government incentives to increase debt levels as much as possible.

 

Yes I know, I'm just letting some thoughts out. I know what I propose will never become a reality unfortunately.

 

I don't know if we are all about "sound money". I just see Silver as an investment plain and simple. Of course I have spend hundreds if not thousands of hours watching youtube videos on inflation, economic collapse etc, but meh that's just to do research and make a better educated guess as to where Silver price will go.

I don't really mind what peoples views are, or know what is going to ultimately happen.

I'm just here to make more $$$$ and get in a better position to afford a house.

 

Many people conflate the idea of sound money and credit/debt when they are in reality 2 different issues. Though obviously not unrelated.

 

I use my credit card wherever possible, for stuff I would have bought anyway for cash. Only if there is no CC surcharge for doing so.

My card is always paid off automatically by sweeping my savings account (so never pay interest), and I get free stuff using points.

If prudent with finances, credit cards can be a good tool. I am however yet to make the leap to applying this to "using credit as a tool to build wealth in property". To me that is a quantum leap in both mindset and risk.

 

Oh and on auspm's point on a debt jubilee, I am vehemently opposed to this too. I've heard this proposal creeping into online conversations lately, e.g. FSN podcast.

A debt jubilee rewards those who have bitten off more than they can chew. At the expense of those who have lived within their means.

 

Not just that. If the system stays fundamentally the same after the jubilee it will inevitably end up in the same spot again. Debt jubilee every few decades anyone?

 

Had a house, sold it at the top of the bubble, made a profit, part of it was renovation, part was capital gain, part was larger than nessesary repayments. Never came close to owning the whole thing. Saw what was happening and sold even though everybody said not to. Have a good credit rating. Will buy another property some day when the going is better.

Now am debt free, have the internet paid before it gets here (plan paid out), debit card, rent so no water bill, prepay phone. I Live well below my means, some would laugh but turtle the Joneses anyway.

As for tozaks example on page 1, if you had a credit card with an average of 2500 debt and a debit card with an average of 2500 savings. If the bank blew your savings on silly bets you would lose it. If they went bust in the same way somebody else would be there to pick up the tab and keep charging you interest, this I am sure.

Debt is a tool and a risk on both sides, at the end of the day it's up to you. I choose not...................at the moment.