Hey, I was wondering if someone needs credit to buy things. People in my family have said I wouldn’t be able to buy a car or a house without credit. But if I’m saving up cash to pay for things outright, do I really need credit?

Note: I’m sorry if this is the wrong place to ask.

  • scoobford@lemmy.zipEnglish
    10·
    8 months ago

    Pretty much, yeah. You can probably save up to buy a cheap used car, and you may be able to save up to buy a new car, but you definitely won’t be able to just pay cash for a house unless you’ve got so much money the rules of personal finance are totally different.

    You also need good credit to rent most apartments and to get many kinds of jobs.

    Edit: I almost forgot, cashback is pretty cool too. 2% of your expenses for the year can be quite nice.

    • DaddysLittleSlut@lemmy.worldOPEnglish
      12·
      8 months ago

      I’ve created a plan to save $1,000-$2,000 every month for 25-30 years at a realistic interest rate of 2-3%. By the end of it, I’d have around $886,389.54.

      • inconspicuouscolonEnglish
        1·
        4 days ago

        If you intend to put this money away for a long time, and you won’t be tempted to take it out prematurely, it would be wise to invest in a low cost index fund (invest in stocks and bonds, basically). If you are in the U.S., you can invest in a Roth IRA and take the funds out prematurely ONLY if it is for purchasing a first time house. You earn far more interest that way.

      • scoobford@lemmy.zipEnglish
        10·
        8 months ago

        That’s great, but that entire time you’ve (assumably) been paying rent. You’ve saved up enough to buy a house for cash, but also spent enough to buy an entire second home.

        You’d stand to gain significantly if you bought the house earlier. Rent paid is burnt, but a mortgage paid is building equity in your hone.

        • DaddysLittleSlut@lemmy.worldOPEnglish
          1·
          8 months ago

          I might be renting a house soon, but my family has been making me really nervous about it, which is what they do. The rent is $2.4K per month, and it includes industrial equipment like sinks, and fiber optic internet. That $2.4K covers everything I need. The house itself is $1.3K. They say I should be making at least three times the $2.4K rent, but I’m making about $4K every month.

        • DaddysLittleSlut@lemmy.worldOPEnglish
          12·
          8 months ago

          It’s a really nice place, and I want it. It’s in a higher median economic class within my state, and I aim to succeed and elevate myself into Royal society, you know? It’s like a game to me: you work, earn enough money, and beat each economic level. Then, you move to another state, and even if you’ve conquered every level in one state, you might have to start at the bottom or middle in a more expensive state.

      • Twinklebreeze @lemmy.worldEnglish
        8·
        8 months ago

        And the cost of buying a house could continue to skyrocket the entire time. In 30 years that could be a nice down payment, but you’ll want good credit, too.