Friday, February 25, 2011

A little PF talk

It's been a while since I blogged about personal finance/budgeting and such, and I've been thinking a bit about it lately, so here ya go.

Topic #1: Credit!  Hi.  My name is Kim, and I just got my first credit card.  Yes, my first.  Yes, I am almost 27 years old.  Yes, I have been living with just a debit card all this time.  I've been thinking about getting one for years, but the combination of not wanting to pay annual fees and wanting some sort of rewards system and not being able to make a decision meant I never had one.  And then along came Banana Republic.  I was already receiving some massive discounts on a recent trip to the flagship store, thanks to a big sale (oh so much pretty there), and the super-helpful salesgirl (no joke, she was great) convinced me to get one (further discounts! I shop here anyway!).  I am usually impervious to the siren song of the store credit why did I give in?

For one, there is actually a decent rewards program when using my card at Banana Republic, Gap, and Old Navy (including the outlet).  Those are the only places I actually shop for clothes anyway, so I might as well be earning rewards for doing it!  I can use the card for other purchases, too (it's a Visa), which I may do eventually, but for now, I'm using it as a clothing shopping card.  I figure this will keep me from spending too much each month, since I don't do much clothing shopping anyway.  I will pay the balance every month (the one downside is a high interest rate - but I don't plan on carrying a balance on any credit card I might ever have).  So yeah.  Now I have a credit card.  So far so good.

I am considering getting a bank credit card through Wells Fargo when I open a new checking account (something I'm planning on doing relatively soon), just to have one for emergencies that has a low interest rate.  Is this something that would be useful?  I hate the idea of spending money I don't have (hence my being ok with a high interest rate on the BR card - I pay it off right after I spend it), but would it be a good idea to have a card I can use in a real emergency?  Something with a low interest rate, in case I have to pay for something I don't have money for (I don't know what kind of emergency that would be...medical expenses? Isn't that what my emergency fund is for?)?  Thoughts?

Topic #2: Debts and Savings!  Exciting news (for me)! I am thisclose to paying off my car loan! I've been working hard to get this paid off, doubling my payments for the last few months.  I gave myself the arbitrary deadline of my birthday (May 10) to have paid off my car, and I am on track to come in ahead of schedule.  I owe just over $1,000 and plan to pay $500 in March and the remainder in April.  And I am stoked.  Woo hoo!  The plan was to then take the $500 I'm not spending on the car payment and put it into my "high interest" savings account, but since the interest on that account is pretty low right now, I have other plans.

See, I also have this student loan.  The loan was originally for about $18,000.  I decided to check up on my account this morning, just for fun (ha).  And according to the loan website, I have paid about $5,000 since I graduated in 2006 (minus about a year when I was on financial hardship deferment during an unpaid internship).  And somehow, I still owe about $16,000.  That's what we call stupidcrazyinterest. omg.  So.  Since the interest on my student loan is significantly higher than what I'd be earning in the savings account, I'm going to take that extra $500 a month and aggressively work on the student loan repayment instead.  It's still going to take me forever to pay off, but if I'm paying $700 a month instead of $200 a month on it, at least it'll take a little less time.   I'm still budgeting about $200 a month for savings (I like a steady contribution to my emergency fund), but I figure it's better to throw my "extra" money at the loan right now.

It feels good to make grown-up decisions about my finances.


  1. It's a REALLY good thing to have a credit card. Having no credit is almost as bad as "bad" credit - I speak from my husband's experience. I finally made him open a credit card account a few years ago and now his credit rating is 800+, but that is ONLY b/c he used the card every month and paid it off every month. It's really very important!

    In case you're interested, we use Capital One No Hassle Rewards cards - LOVE THEM. I've been a customer for 10+ years and they are great. My card has no annual fee, no international purchase fee (great for traveling), and pays 2 to 1 for rewards points.

    I see from this site that HSBC also has a great card with a low APR - you might want to look into that since you have a HSBC account already (as do I!).

    You might not quality for no annual fee until you've established some credit with this card you just opened, but when you do, check out those cards!

    I don't think you need a bank credit card - I had one for years and NEVER used it - ended up closing the account. For emergencies, you'll just use whatever card you have already and pay it off with the money in your emergency fund before the bill comes. If you don't have the money at that time, then depending on the amount, you can probably qualify to open a new card with 0% intro'll have to pay a percentage (usually 3-5%) to transfer the balance, but you'd most likely save a bunch of money anyway by giving yourself time at 0%APR to pay off the emergency bill.

    Way to focus on getting your debt load down - I can't wait to get our vehicles paid off!

  2. Hey Kim, FYI, comments are working fine at my home computer. Must be something at work. Lamesauce.

    Josey's comments are GREAT! I absolutely agree with her statement that "no credit can be as bad as low credit," and also got my credit card at my fiance's urging in order to establish more credit.

    I actually applied for a Capitol One card and was rejected due to lack of credit history (despite having a car loan) so at first this can somewhat narrow down the options of which cards and which rewards/APRs/fees you qualify for. Still think Capitol One offers awesome deals, though, so will probably go for it again when I have a little more credit history built up!

  3. Glad comments are working again :)

    I'll have to check out Capitol One...