Some Basic Thoughts on Credit

I am by no means a financial guru. In fact a quick look at my credit will verify that. So this post is all about how not to screw up your credit, and how to make it useful.

First, people get a bit confused about what lenders look at when they are considering offering you credit. There are several things, but the most common is your FICO score, more commonly referred to as credit score, or credit rating. Your FICO score is based on a variety of factors. The two biggest are whether or not you pay on time, and how much debt to credit you have. If you have $500 of available credit, and $499 of it is spent, that’s bad. $499 on $20,000 is probably not going to be damaging, on the other hand.

Some credit rules I’ve come to follow (please note that these are personal rules, and not necessarily recommended by experts):

1. With the exception of a car and house, always have enough money to cover your at least 1/2 of your total debt. My goal here is to make sure that if something goes south I don’t end up paying late or filing for bankruptcy or something.
2. Do not think about buying things in terms of payments. Stop thinking of that giant TV you’ve been eyeing as “$50 per month”. It’s not. If it’s a $1000 total, and you buy that whole thing on credit and make minimum payments, don’t be surprised if you end up paying much more than that $1000 over the life of the debt.
3. Generally, I pay off 75% or so of my credit card each month, at least. There is some argument over whether it is worth it to run a balance, or pay off in full, but I generally run a small balance.
4. I generally will only have one card. I don’t like the temptation of having thousands of dollars available to me.j
5. Leave the credit card at home. For most of your purchases, you should be using regular, good old fashioned money. The exception to this could possibly be if you have a card with a significant reward for using it. However, consider how much the reward would cost if you just paid cash vs. how much you are paying for interest on the card.

This is by no means a definitive list, but it is a good start. The key thing is making your credit work for you. Carrying a lot of debt, making minimum payments, or treating credit as “free money” is how most people get into trouble.

UPDATE

Just saw this article over at Get Rich Slowly. Lots of similar thoughts in there, I think.

Also, someone asked me where you could get a truly free credit report. You can find those at annualcreditreport.com. You can only do this once per year, but unless you are planning on making a big purchase (like a home or a car), that’s probably all you’ll need. Additionally, I believe you can get a free credit report any time you are denied credit for something.

Learn to Grill A Steak

This is by no means the definitive method, but it will keep you from serving those pieces of charcoal that some people call “barbecue.” I highly recommend that girls, boys and everyone in between learn how to do this. It’s not too tough (pun intended), and it can get you making a delicious meal quickly.

1. The best method to use to determine how the steak is cooked (rare, medium rare, medium, etc.) is to use a meat thermometer. They can be had pretty cheap, and I’d recommend this until you really know what you’re doing, which could be a while. In a pinch, you can use the “finger method.”

2. Grill your steak on medium heat. With charcoal, wait until the coals ash over, and if you can adjust the height sitting, hit the middle.

3. This is a key step. Do. Not. Touch. It. Wait 4 minutes until you even look at it again. If you are using a really thin piece, wait 3 minutes. If it’s really thick, wait about 5 minutes.

4. After 3-5 minutes have passed, you may turn it over. Generally, for a regular sirloin, another 4 minutes or so will get you a medium rare. Remember, use the meat thermometer, or the finger test to check it. 130 degrees for rare, 145 for medium rare, 160 for medium, 170 or so for well.

Tips:

• For an average size steak, you touch the steak twice – once to turn, and once to remove.  For a thicker steak, like a fillet Mignon, you shouldn’t touch it more than 4 times – turn 90 degrees, flip, turn 90 degress, remove. This will give you a nice “hatch”. Add a little color (like parsley) on the side and your date will think you are a pro. Can’t stress this point enough. The most sure sign that someone doesn’t know how to grill is when you see them messing with the meat all the time.
• In a pinch, my favorite seasonings for steak are: salt, pepper, garlic powder, cumin, and onion powder. Seasoning salt in place of regular salt is fine, too.
• Marinades are typically easily made, and can be store bought. It takes very little effort and just a little planning if you want to switch things from the regular old salt and pepper method.
• This method takes less than 10 minutes. If you can multitask a bit, you can grill or steam some veggies at the same time. Add a salad, and you’ve got a delicious, reasonably healthy meal in under 20 minutes.
• Every BBQ I’ve used is a bit different. It’s got a hot spot on one side, or some other little quirks. Watch out for those, and learn to work with them.

Get Your Rest, You’re Going to Need it.

I know that stories are a lot less glamorous when they end with “…and then I went to bed at a reasonable hour”, but sleep is important. Since you are my children, there is a good chance that you will not be able to function on less than 7-8 hours of sleep a day, since I obviously can’t. I’m not saying that you shouldn’t have a few crazy nights here and there, but you have got to make it a habit as much as possible to get some sleep.

Lack of sleep tends to cause a lot of things for me. Indigestion, general aches, headaches, crankiness, and plenty of other unpleasantness. I also find that my motivation to accomplish even the most trivial of tasks is severely lacking. You are probably going to lead busy lives, and we all have things throughout the day that we need to accomplish, and when it comes down to it, motivation is really the key to getting those things done. Motivated people are more successful, and generally happier in my experience. Being pretty or smart or funny are great qualities, but lacking motivation, they accomplish little. And how much sleep you had the night before is a big factor in how motivated you are for the day.

Make sure you get into bed at a reasonable time, and get out of it at a reasonable time. And try to stick to a schedule as much as possible. I know that you are going to have long work weeks, or tough weeks at school cramming, but try not to make that standard operating procedure.

Pay Yourself First

One of the habits that I am just now starting is to take money out of each of my paychecks and put it in savings. Until now, we have lived paycheck to paycheck, mainly due to our mismanagement of money. Budgeting is a difficult thing, but one of the simplest steps to being able to adequately manage your finances is just to save it. Set ten percent of your money in a savings account or high yield account. Don’t touch it. Save it for your children’s school, your retirement, or just simply so you can have some added freedom later.

Also very important – start early. The early you start saving, the less you need to save per month, since interest will accrue longer. It goes up significantly if you delay for even a few years.

Know When to Shut Up

I’ve occasionally found myself in the tail end of an argument, only extending everyone’s misery by trying to get the last word. Sometimes, it’s best just to let it go. Likewise, gossiping can get you in to trouble as well. Most of the time, that kind of thing is best kept to oneself. Finally, while I am sure your voice is lovely, no one needs to hear it all the time. Silence is, in fact, golden.

Know Who to Keep in Your Life

People are great, until they aren’t. You’ll have some great loves, wonderful friends, and caring family. And you’ll have some not-so-great versions of all of those. I am always amazed when people don’t know how to separate those great relationships from the terrible relationships. It’s difficult to identify which is which, but it is important. Those greats – cherish them. Build on them. Some of them will be there for your life. But the not-so-greats are the toughies, and the real trick to figure out.

You’ll have healthy relationships, you’ll have relationships with a cold, and then you have cancerous relationships. Like actual cancer, it’s important to identify the bad relationships early and remove them before it’s too late. I don’t mean that every time someone is late you need to find new friends, but that guy that keeps borrowing money from you, or the one that you spend most of your time arguing with – know when to end it.

Over the years (I might be too young to use that phrase), I have seen people do some silly things. If you are reading this in high school, you’ll have no doubt seen the kid that falls in with the bad crowd. They go from A’s to D’s, they start missing school, etc. That doesn’t stop with school. Even into adulthood, you’ll have people around you that will involve you in unnecessary problems if you let them. It might be general drama (that person that always has a world ending problem), it might be drugs, it could be just be that the relationship is a drain on you emotionally.

Know when to get out. When your friend gets you into trouble with the law, or if you actually have to worry about your physical well being, it’s time to find new friends. In fact, if you’ve gotten this far, you’ve probably waited too long. When you can’t remember what you liked about your significant other, leave. You aren’t doing yourself any favors staying. There is something to be said for loyalty, and there is also things to say about masochism.

But don’t forget – forgive the forgivable, and hold on to the people that are positive influences in your life.

People are great, until they aren’t. You’ll have some great loves, wonderful friends, and caring family. And you’ll have some not-so-great versions of all of those. I am always amazed when people don’t know how to separate those great relationships from the terrible relationships. It’s difficult to identify which is which, but it is important. Those greats – cherish them. Build on them. Some of them will be there for your life. But the not-so-greats are the toughies, and the real trick to figure out.

You’ll have healthy relationships, you’ll have relationships with a cold, and then you have cancerous relationships. Like actual cancer, it’s important to identify the bad relationships early and remove them before it’s too late. I don’t mean that every time someone is late you need to find new friends, but that guy that keeps borrowing money from you, or the one that you spend most of your time arguing with – know when to end it.

Over the years (I might be too young to use that phrase), I have seen people do some silly things. If you are reading this in high school, you’ll have no doubt seen the kid that falls in with the bad crowd. They go from A’s to D’s, they start missing school, etc. That doesn’t stop with school. Even into adulthood, you’ll have people around you that will involve you in unnecessary problems if you let them. It might be general drama (that person that always has a world ending problem), it might be drugs, it could be just be that the relationship is a drain on you emotionally.

Know when to get out. When your friend gets you into trouble with the law, or if you actually have to worry about your physical well being, it’s time to find new friends. In fact, if you’ve gotten this far, you’ve probably waited too long. When you can’t remember what you liked about your significant other, leave. You aren’t doing yourself any favors staying. There is something to be said for loyalty, and there is also things to say about masochism.

But don’t forget – forgive the forgivable, and hold on to the people that are positive influences in your life.

Hello, World.

Whilst wandering reddit yesterday, a poster brought up that he was considering putting together a notebook for his daughter. The idea was that it would contain advice that she might need when she grows up. Some advice would be practical; always keep rubbing alcohol in the house, if you open a banana from the bottom it’s easier to not make a mess, or that you should always have quick access to $200 cash. Of course, some advice would cover more general practices, philosophies and general life lessons.

And here we are, with me somewhat shamelessly stealing the idea and making it digital. My plan for the blog is to very loosely offer the same sorts of things. I’d especially like to take some time offering practical advice that I’ve figured out on my own. Of course, as time goes by, topics may expand to cover a broad range of things.

Another small quirk – this site is really for my kids. Posts will be written to them, so don’t be put off by me talking to “you” because I am really talking to “them.”

And finally, reader participation is encouraged. If you’ve got a piece of advice that you don’t think anyone should live without, please send it in. Links will be on the site for email.