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Originally Posted by schizophrenicroom
yeah, a friend of mine does payday loans all the time then wonders why she's fucking broke come payday
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that's right. but just because credit cards are a less extreme form of debt than payday or title loans it doesn't mean that they aren't harmful-- they fucking are.
if you carry a balance in your credit card you have compound interest working AGAINST you. if you have savings/investments you have compound interest working FOR you.
as einstein supposedly said, compound interest is the most powerful force in the universe. whether he actually said that or not, this is true. you want that force working FOR you.
but even if you have no debt, if you're just at 0 net worth, you are at risk of getting into debt if you dont have a cushion of savings and some kind of insurance (if you have enough savings, you can always self-insure).
first save up $1K for emergencies, then pay off your credit cards (but don't cut them up, you need them for things like car rentals, etc). start getting some control of your money right away.
don't start paying off the cards without having an e-fund first. because in case of a money gap you'll use the cards and slide that slippery slope again. get used to operate from cash-- i.e., money that is already yours.
credit cards can be useful IF you can pay them off every month-- but if you're carrying a balance, cards are digging a hole under your feet. cards are bad for people who are prone to impulse purchases.
when i buy something these days i don't put it on a payment plan or a 2-year contract, i don't put in on credit, or get a bank loan. i just save up for it and pay with cash. sweet sweet sweet cash. that way i don't have to suffer a financial hangover after i buy what i want-- it's completely mine and there are no obligations and nobody owns me nor can they take it back.
sure we can't control EVERYTHING, but a little financial stability goes a long way towards good sleep. i swear by this.
start saving right now. right-right-right-now. you can do it online (e.g., ally) or you can do it with a credit union or something like that. just make sure it's not the same bank that has your credit cards because if you fall behind the payments they can pay themselves from it without asking you. oh yeah.
ANYWAY once you have your e-fund and pay off your cards you can increase your e-fund to a 3-6 months living expenses. it's so sweet to be AHEAD of your bills.
then at that point and with your current income you can start a roth IRA which grows tax-free and since you're young compound interest will work FOR you and all you will need in it at that point is an index fund like vanguard which simply tracks the stock market and beats most investors. but you can worry about that later. start getting some control now!
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Originally Posted by SuchFriendsAreDangerous
Payday loans aren't typical borrowing, they are predatory.
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and yet they are legal. probably because they claim territory previously occupied by loan sharks. debtors will debt. a sucka with no cash will do anything to find it SOMEWHERE. might as well be from a legal outfit.
but regardless-- with ANY debt, your lender OWNS you. fuck debt!