How can people afford such expensive stuff?

[LeeW]

The funny thing is those who have never had a CC are more of a risk in lenders eyes.

Certainly in the UK, it is good to have credit to demonstrate to lenders you can afford, repay and use it sensibly. I upgraded from the iPhone 11 to the 14 last year for my wife and me. Took it out using the Apple 2-year interest-free. Nothing at all to do with not being able to afford to buy them outright, it's just so that it shows up on the credit report.

I do some apparently silly things from time to time, like paying for a £60 dominos delivery using Paypal's pay in 3. No interest is paid, it's just simply for it to show in the credit report.

None of the above I would do if I couldn't afford to pay in full at the time. As I don't have a mortgage anymore I wouldn't have anything on the credit report if it was not for doing the above.

My Score is below. I was at 1,000 until my mortgage was repaid, that alone cost me 62 points, just because I repaid it! A recent missed payment will cost you 100 points. Multiple missed payments across multiple accounts and you will be down at the UK average where the deals are limited and the rates are much higher.

The credit rating thing comes up a lot. But if I never intend to borrow money it’s really not a risk.

Fair enough if that's your approach, the credit rating thing is real and only a risk if you never have to borrow. If the time ever comes it is better to have played the credit rating game than let your score drop. A low score does not mean you can't borrow but it will limit your options and increase the rates you will pay. That is going to be important if you are in a position where you need to borrow in the future. Especially if it's because your financial position has changed for the worse.

My position is that a little effort now saves a lot later.

 

[Apple fanboy]

Certainly in the UK, it is good to have credit to demonstrate to lenders you can afford, repay and use it sensibly. I upgraded from the iPhone 11 to the 14 last year for my wife and me. Took it out using the Apple 2-year interest-free. Nothing at all to do with not being able to afford to buy them outright, it's just so that it shows up on the credit report.

I do some apparently silly things from time to time, like paying for a £60 dominos delivery using Paypal's pay in 3. No interest is paid, it's just simply for it to show in the credit report.

None of the above I would do if I couldn't afford to pay in full at the time. As I don't have a mortgage anymore I wouldn't have anything on the credit report if it was not for doing the above.

My Score is below. I was at 1,000 until my mortgage was repaid, that alone cost me 62 points, just because I repaid it! A recent missed payment will cost you 100 points. Multiple missed payments across multiple accounts and you will be down at the UK average where the deals are limited and the rates are much higher.

View attachment 2183264




Fair enough if that's your approach, the credit rating thing is real and only a risk if you never have to borrow. If the time ever comes it is better to have played the credit rating game than let your score drop. A low score does not mean you can't borrow but it will limit your options and increase the rates you will pay. That is going to be important if you are in a position where you need to borrow in the future. Especially if it's because your financial position has changed for the worse.

My position is that a little effort now saves a lot later.

I’m closer to the end of my life than the start of it, so I think I’ll be alright.
I’ve no idea what my credit score is. I’ve never had to check.
When the mortgage is done I’ll be debt free until I’m worm food.
I have always made sure I live within my means. I sleep better at night knowing if I couldn’t work or whatever I don’t have to worry about debt.

 

[richard13]

Certainly in the UK, it is good to have credit to demonstrate to lenders you can afford, repay and use it sensibly. I upgraded from the iPhone 11 to the 14 last year for my wife and me. Took it out using the Apple 2-year interest-free. Nothing at all to do with not being able to afford to buy them outright, it's just so that it shows up on the credit report.

I do some apparently silly things from time to time, like paying for a £60 dominos delivery using Paypal's pay in 3. No interest is paid, it's just simply for it to show in the credit report.

None of the above I would do if I couldn't afford to pay in full at the time. As I don't have a mortgage anymore I wouldn't have anything on the credit report if it was not for doing the above.

My Score is below. I was at 1,000 until my mortgage was repaid, that alone cost me 62 points, just because I repaid it! A recent missed payment will cost you 100 points. Multiple missed payments across multiple accounts and you will be down at the UK average where the deals are limited and the rates are much higher.

View attachment 2183264




Fair enough if that's your approach, the credit rating thing is real and only a risk if you never have to borrow. If the time ever comes it is better to have played the credit rating game than let your score drop. A low score does not mean you can't borrow but it will limit your options and increase the rates you will pay. That is going to be important if you are in a position where you need to borrow in the future. Especially if it's because your financial position has changed for the worse.

My position is that a little effort now saves a lot later.

It's important in the US as well. I too saw a drop in my credit score when I paid off my mortgage. In the US, lenders like to see credit use and of different types. Since I no longer had any regular debt payments they dinged me. It partially recovered since then but my rating was never far from the top anyway.

 

[BigMcGuire]

Certainly in the UK, it is good to have credit to demonstrate to lenders you can afford, repay and use it sensibly. I upgraded from the iPhone 11 to the 14 last year for my wife and me. Took it out using the Apple 2-year interest-free. Nothing at all to do with not being able to afford to buy them outright, it's just so that it shows up on the credit report.

I do some apparently silly things from time to time, like paying for a £60 dominos delivery using Paypal's pay in 3. No interest is paid, it's just simply for it to show in the credit report.

None of the above I would do if I couldn't afford to pay in full at the time. As I don't have a mortgage anymore I wouldn't have anything on the credit report if it was not for doing the above.

My Score is below. I was at 1,000 until my mortgage was repaid, that alone cost me 62 points, just because I repaid it! A recent missed payment will cost you 100 points. Multiple missed payments across multiple accounts and you will be down at the UK average where the deals are limited and the rates are much higher.

View attachment 2183264




Fair enough if that's your approach, the credit rating thing is real and only a risk if you never have to borrow. If the time ever comes it is better to have played the credit rating game than let your score drop. A low score does not mean you can't borrow but it will limit your options and increase the rates you will pay. That is going to be important if you are in a position where you need to borrow in the future. Especially if it's because your financial position has changed for the worse.

My position is that a little effort now saves a lot later.

There's also history too.

If you have a long history report with consistent payments, you're much more likely to be approved as well. I knew someone who had a much higher CC rating than me but needed a cosigner when getting a car, while I could get 2 car loans no problem (no cosigner needed). Course, they got a much lower APR.

It is super easy to get into debt these days, I think that's why so many companies offer the pay later options. Easy to get into a "before you know it" - loaded up with debt situation.

Edit: richard13 got it before me. lol

 

[Arran]

I've always had a credit card but rarely used it because I don't like debt.

Then a few years back my bank swapped my old classic visa card for a "cash rewards" visa card. I didn't use the new card either until I wanted a TV. So I put the TV on the card as a test. Minutes later I used the bank's app to pay off the anticipated bill in advance. At the end of the day everything was paid for and I owed nothing. Same as before.

Then a month later - out of the blue - $45 back in "free" cash. Just for a TV

Everything goes on the card now. I check the card's balance often on my phone. When it gets around $300 I transfer funds to zero it out. A few seconds "work" to get a no-haggle discount (1-3%) on everything.

 

[millerj123]

I'll only use debit in absolute duress. Credit means a loan in my name, but I'm not out anything in the case of fraud, if it's reported.

 

[rm5]

There's another guy I know who has all the "nice stuff"—a pretty specced-out Mac Studio, 14-inch MBP, SEVERAL high-end PCs, and probably hundreds of spare/test machines. But he literally lives out of his parents' garage, and always complains that he can't afford a house. Well he probably can't afford a house because he buys all that stuff. It seems like he has a decent-paying job working as an IT consultant. I would absolutely hate living in my parents' garage (well we don't have a garage—it's my studio, but you get my point).

 

[rm5]

There's also history too.

If you have a long history report with consistent payments, you're much more likely to be approved as well. I knew someone who had a much higher CC rating than me but needed a cosigner when getting a car, while I could get 2 car loans no problem (no cosigner needed). Course, they got a much lower APR.

It is super easy to get into debt these days, I think that's why so many companies offer the pay later options. Easy to get into a "before you know it" - loaded up with debt situation.

Edit: richard13 got it before me. lol

I'm barely an adult, and I am not financially independent, but here's my opinion on "buy now, pay later": either it's a good thing because if you can't afford the item at the time, you are able to pay it off over the course of, say, a year; or, it's a bad thing because if you don't have a "stable" job, that could become a VERY BIG issue, and then you do go into debt.

I don't know, I'm probably wrong about this, because I don't know anything, but there we go...

 

[rm5]

It's important in the US as well. I too saw a drop in my credit score when I paid off my mortgage. In the US, lenders like to see credit use and of different types. Since I no longer had any regular debt payments they dinged me. It partially recovered since then but my rating was never far from the top anyway.

So I suppose this is something I should research, but how do you achieve a "good credit rating?" I know it partially has to do with being able to pay your bills, rent, etc. on time, and of course paying off your credit card on time, but are there other aspects that play into it? And how long does it take to build up a good credit score?

See, I need to learn this stuff... I don't know why I haven't already (well I do know partially why—it's because I haven't needed to)

 

[KaliYoni]

So I suppose this is something I should research, but how do you achieve a "good credit rating?" I know it partially has to do with being able to pay your bills, rent, etc. on time, and of course paying off your credit card on time, but are there other aspects that play into it? And how long does it take to build up a good credit score?

See, I need to learn this stuff... I don't know why I haven't already (well I do know partially why—it's because I haven't needed to)

Here are two good places to begin learning about finance, personal finance, and investing:

What Is Personal Finance, and Why Is It Important?

Personal finance encompasses how you manage your budget and how to best put your money to work to achieve your financial independence and goals.

www.investopedia.com

How to Invest Money: Best Way to Get Good Returns | The Motley Fool

Start investing with a basic understanding of how it works -- and which rookie mistakes to avoid. Here are some of the most tried-and-true ways to put your money to work for you.

www.fool.com

I like the sites because neither engages in hype nor sells any kind of "wealth system" nor directly manages money for clients. As well, the advice they give is based on sound financial principles.

Another, old school, thing to do is go to your public library and ask a librarian for recommendations of books that cover the basics of finance, such as the time value of money, how financial markets work, and the core types of financial assets, and personal finance, including credit, budgeting, saving, and investing for individuals.

One of the most important things to remember is that you always need to do your own research and develop your own opinions. Nobody on an Internet message board will be available to answer to you if you follow bad advice or take an action that turns out it be ill-suited to your personal situation. The same goes for bloggers, websites, and social media. Only one person can decide what is truly best for you: YOU.

 

[HDFan]

One way to be able to buy what you want is to start saving money as soon as you can. Maximize any corporate 401K matches, utilize any stock purchase discounts. Think about how much money you need to live the life you want when you retire. If you need $50K a year (ignoring Social Security) that means you need to have to save 1 million, assuming a 5% withdrawal rate. The earlier you start the less painful it will be when you get close to your retirement date and realize you don't have enough savings.

Purchasing a home has historically also been a way to increase your equity. However there is a flip side to it - the money which you gain makes it even harder for people just entering the market to purchase a home.

 

[rm5]

One of the most important things to remember is that you always need to do your own research and develop your own opinions. Nobody on an Internet message board will be available to answer to you if you follow bad advice or take an action that turns out it be ill-suited to your personal situation. The same goes for bloggers, websites, and social media. Only one person can decide what is truly best for you: YOU.

Right—I've never relied 100% on other people and I never will, because it's a bad idea. I've certainly learned that the hard way.

 

[LeeW]

So I suppose this is something I should research, but how do you achieve a "good credit rating?"

It really is no more complex than having credit and paying it on time. Whether that is a mortgage, loan, credit card, or whatever. As long as it shows on your credit report it is adding up. The danger is having too much.

Not sure what you have in the US, but a decent credit service should guide you, give you tips on how to increase your score, how much is too much, and so on.

As I said earlier, don't fear it, manage it.

 

[Apple fanboy]

It really is no more complex than having credit and paying it on time. Whether that is a mortgage, loan, credit card, or whatever. As long as it shows on your credit report it is adding up. The danger is having too much.

Not sure what you have in the US, but a decent credit service should guide you, give you tips on how to increase your score, how much is too much, and so on.

As I said earlier, don't fear it, manage it.

I should image most people start down the credit route with those good intentions. But many don’t have that experience.
Personally I prefer to not get started on that road. It’s not done me any harm in the last few decades.

 

[LeeW]

It’s not done me any harm in the last few decades.

Times are changing, have changed in fact. In particular, it's so much harder to get a mortgage now after the collapse in 2008. Especially in the US and Europe. LTI's have been cut, affordability testing has become tighter and so much more.

Not caring about a good credit score these days is a mistake. It's key to getting access to the widest market and best rates. Look at mortgage rates at the moment, you don't want to be +2% on a rate someone else gets because of your risk.

My day job for 25 years now is in the mortgage industry. How easy it was when I took out my mortgage in the late 90's vs today is so different. Now if your credit score is under a certain value the answer is a straight no. Why? Because under a certain value, it means you can't prove your ability to repay debt.

I get it, your experiences are like mine, different, but the world today for young people especially is very different.

 

[Apple fanboy]

Times are changing, have changed in fact. In particular, it's so much harder to get a mortgage now after the collapse in 2008. Especially in the US and Europe. LTI's have been cut, affordability testing has become tighter and so much more.

Not caring about a good credit score these days is a mistake. It's key to getting access to the widest market and best rates. Look at mortgage rates at the moment, you don't want to be +2% on a rate someone else gets because of your risk.

My day job for 25 years now is in the mortgage industry. How easy it was when I took out my mortgage in the late 90's vs today is so different. Now if your credit score is under a certain value the answer is a straight no. Why? Because under a certain value, it means you can't prove your ability to repay debt.

I get it, your experiences are like mine, different, but the world today for young people especially is very different.

They may be different. But I have worked with a number of people who thought they were gaining credit score just to end up with CCJ and voluntary bankruptcy later on because their circumstances changed.

 

[LeeW]

They may be different. But I have worked with a number of people who thought they were gaining credit score just to end up with CCJ and voluntary bankruptcy later on because their circumstances changed.

Fair enough. You do you.

 

[rm5]

The other thing I should add is that I'm making roughly the same amount of money I was making in middle school. I am not kidding. That's the most frustrating part to me; and my needs are much greater, too, compared to back then. Anyway, like all of this, it's my problem, not yours. So hopefully soon I will make an attempt at solving it, whatever that might entail.

 

[Apple fanboy]

The other thing I should add is that I'm making roughly the same amount of money I was making in middle school. I am not kidding. That's the most frustrating part to me; and my needs are much greater, too, compared to back then. Anyway, like all of this, it's my problem, not yours. So hopefully soon I will make an attempt at solving it, whatever that might entail.

Then put your prices up. If you are to cheap people won’t think you are good enough.
Take wedding photography. There are plenty of people out there that will shoot a wedding for £200. But would you trust them to do the job? I certainly wouldn’t.

Pay people what they are worth.

 

[The-Real-Deal82]

Then put your prices up. If you are to cheap people won’t think you are good enough.
Take wedding photography. There are plenty of people out there that will shoot a wedding for £200. But would you trust them to do the job? I certainly wouldn’t.

Pay people what they are worth.

That’s a good example. I paid £1400 for the photographer at my wedding back in 2010 and some of our friends who got married in the same year scoffed at the price. The results were clear when compared to theirs when they paid a couple of hundred quid. People think anybody can take a good picture if they have a camera but you’re paying for their skill and vision first and foremost.

 

[Scepticalscribe]

There's another guy I know who has all the "nice stuff"—a pretty specced-out Mac Studio, 14-inch MBP, SEVERAL high-end PCs, and probably hundreds of spare/test machines. But he literally lives out of his parents' garage, and always complains that he can't afford a house. Well he probably can't afford a house because he buys all that stuff. It seems like he has a decent-paying job working as an IT consultant. I would absolutely hate living in my parents' garage (well we don't have a garage—it's my studio, but you get my point).

Forget about what others do, and what others buy.

This reminds me of the endless obsessions of adolescence (and not in a good way).

This is their choice, and - candidly - it is none of your business what choices they make about their lives, jobs, or what they choose to purchase, or forego.

Try to stop judging others, or being so influenced by choices others make. It is none of your business, and has nothing to do with you. Plough your own path, (well, find your own path, first, and navigate your way there).

Instead, what you can decide, what you do have a say on - and what you can have an influence on - is what you decide to do with your life, and your own life choices, what you study, and you can choose your own consumer preferences and purchases, and choose the criteria (ethical, cheap, fashionable, desirable, etc) you select when making those purchases.

It doesn't matter what others have; that doesn't define you, and it is not - and should not be - of relevance to you. Only you can decide what is of importance to you. Focus on that.