Tuesday, March 11, 2014

Teachings of credit cards

I recently found out that several of my friends, who are in their early to mid 20s, do not have a credit card or credit history of any kind. Why? Their parents taught them that credit cards are evil (ok, not exactly but that seems to be the general idea of the reasons they gave me). I did not realize that this idea was as prevalent as it is. Naive, I know.
I wonder if these parents realize that they are just making things harder on their kids as they get older. Without a credit history, they will pay a higher interest rate when they have to take out a loan for things like a car or a house. I know that some landlords will run credit checks on prospective tenants as well, to check on their reliability to pay the rent on time. What if something major happens and they need to take out a credit card? Will they understand how it works? The interest rate they have to pay will probably be high as well.

My first loan payments were for a car purchase in 2007. At the time, I had pretty much no credit history. I had one credit card through my bank that I kept only in case of emergencies and was used very infrequently. The interest rate of my car loan was 12.99%. On a $5,000, 5 year loan, that was an extra $1,825 in just interest (if I did not pay it off early). Ouch. I tried to pay that off as quickly as I could.
At the end of 2013, I had to purchase a new(er) car since the car I purchased in 2007 had died. Since 2007, I have a better credit history. I purchased a house and I have several credit cards (only one of which ever has a balance). The interest rate they offered me for this car loan was 2.99%. Using the same terms as my last loan, that would be $390 in interest (if not paid off early). Amazing what a good credit history and credit score can do.

Credit cards are not evil. They are simply a tool. The problem is when people look at a credit card and think "free money". It is not free money, simply a short term loan. I track all of my purchases made on my credit card in my checkbook. The goal is to pay off the balance each month. If you see my post above, you will see that I carry a balance on it. I'm not perfect. I do fall into the mindset of "I want this now, but I don't have the money for another month. I'll put it on my credit card and pay it off when I get the money." I hate carrying a balance so I try to keep my outstanding balance from getting too high. The problem is not the credit card, it is my own mindset.

I will teach Rit about finance and responsibility of finance as he grows up. Teach him about the concept of money, that everything has a cost, how to save, how to budget, how to use a credit card, etc. I don't want finance to be a scary thing. It isn't supposed to be. Its a part of our everyday life.

Monday, March 3, 2014

Co-Parenting Challenge

Several weeks ago, a mutual friend of mine and ExH invited us to go to COSI with him and his family for his son's birthday. It was on a Sunday, our drop off day, so I discussed it with ExH and we agreed to meet up there and I would take Rit home with me. I had never been to COSI before, and I wanted to take Rit, as did ExH.
I admit that I was a bit worried as it was the first time I would spend an extended period of time with ExH and his girlfriend. It had been awhile since things were over, but when it comes to feelings it is always a toss up. Good news is, everything went great. ExH and I traded off being the parent in charge. There were a few things he wanted to do with his girlfriend that Rit couldn't do, so I was in charge of Rit. And there were times ExH took over so I could get a break and check something out. His girlfriend also backed off a bit, letting me and ExH be in charge (which was a worry, I admit). We made sure to get pictures for each other and emailed them afterwards. ExH even helped me find the elongated penny machines there, a long standing hobby of mine.
All in all, we had a great time and lots of great memories. I am really glad that ExH and I are able to co-parent that easily, and that I can get along with his girlfriend. Now, I'm a lot less worried about any future trips, as it sounds like there are several places we all want to take Rit.