Building Credit Alternative Advice & 3 Tips
Building credit is essential to our personal finances.
So, how do we go about building our credit without going into debt or more debt through the use of credit cards. Or trying to obtain credit through banks with their fine print and legal jargon that leads us to having other issues, which can easily lead us into several other pitfalls.
Bankers, money lenders (usually not their money), will tell you that it is easy to ruin your credit if you don't pay your bills on time, yet it doesn't matter to building your good credit.
Think about that???
- Cash only
- No frill living
- Owe no one anything
All their lives i have stressed to my children that debt, any kind of debt is the equivalent to slavery. Bondage that ties ones hands and subjects them to having their free choice or decisions based on what someone else can and cannot do to them if they do not re pay the money, usually at an interest that they have used or borrowed.
The debtor is subject to the lender.
Tell the truth, when you borrow something from someone, especially money don't we tend to either avoid them until we manage to pay them back or feel a sense of guilt which usually ruins our relationship.
The borrower doesn't want to see them and the lender feels that they have been taking advantage of until the money is repaid.
Which is why if you are personally going to finance someone, tell yourself it is not a loan, but a gift. So if you get it back that is great and if you don't get it back it is not a problem.
So what is your reaction when someone asks you for money? How do you react?
Personal loans to friends and family can always be tricky, which is why I will always suggest going to a neutral institution, if money will strain your relationship.
The bible actually encourages us to be a lender, not a borrower, but being in debt really does tie ones hands, doesn't it?
When borrowing from an institution, remember to always do your research. Researching anything is always beneficial to making any decision, large or small. It gives you the ammunition to make a choice that benefits you and causes less regret, if something starts causing it to be challenging.
Doing your homework when it comes to building credit is vitally important. Ask people who should know but never take one person's word for what is the best way until you have asked several people and asked several questions.
It's different for us all.
Who to ask:
- Credit Unions
- Personal financial advisers
- Tax lawyers
- Insurance advisors
- Credit card company
- People you admire
Where to look:
- Credit card terms
- Gurus blogs
- TV personalities
All you need to know, is what do you want for your life?
Having goals, dreams and things you want to do and experience, it will be the best way to narrow down what you would like to have money to do with your present and future.
Cash is King
Always remember this when doing anything in life. That phrase is still true in all the areas of one's life.
Money is still the most important way to build credit, buy things and live without too much stress and aggravation.
Having cash on hand whether it is dollars, gold, bonds, or anything else, makes all the difference no matter what anyone says.
Borrowing in any form is a strain, one misstep or life situation can make those house of cards fall. That's the problem with living with or on credit cards or any type of debt.
Saving for something makes a heck of a difference.
Even living from pay check to pay check, gives you some opportunity to put some money aside. Why because most of us spend money on things that we cannot eat, has nothing to do with a roof over our heads and what we should wear.
What is you reaction to someone asking to borrow?
Teaching the difference between borrowing, lending and giving at an early age makes all the difference to a person who gets to their spending years and knows what to do with money.
Things to teach.
How to save for what they want.
- piggy bank
- work for it,
- trade for it
To question if they really need / want it.
- discuss why they want or need it, concentrating on why it's worth their money
- teach them to wait, at least 3 - 5 days
- give them a budget based on cash in hand (available to them)
Emphasize to them understanding and knowing how to respect money and the freedoms it can bring, and the challenges it can present if it is not handled with wisdom.
Wondering when to teach a child the value of money? As soon as a child can through a tantrum about something they may want (need), that would be the best time to start to teach them the value of money and the best way to manage their income versus their out going cash.
Children are brilliant, and can grasp concepts when explained and demonstrated visually, show and tell.
Google Household Debts
The average American household is in debt to the tune of...
- $15,000 to $20,000, credit card debt
- $100,000 to 130,000, overall debt
These debts can be broken down even further into categories.
- student loans
- auto loans
Good debt vs bad debt is always the question?
Credit vs Debit cards
- someone else's money
- interest rate
- credit limit
- your money
- no interest rate
- limited to what you have available
- over draft fees
Note they can both be too too easy to use, swiping the cards make them too too easy to use. The only exception is you have limits on both, one imposed on you by the person who issued the card, with a credit limit and the other based according to how much money you have at your discretion.
The concept of doing something bit by bit aids in doing something permanently because you learn the skills to maintain the discipline and resolve.
Getting out of debt is of high importance... Although, it can be a challenge.
We know the cost of living, inflation now, far surpasses the average income growth for American households.
Yet, discipline, resolve and the goal to live the best life are key, when it comes to getting out of debt, especially credit card debt, throwing as much money at it, is the best advice.
Work to pay it off.
- Cut expenses, what is unnecessary or redundant
- Budget, know what is coming in and what is going out
- Increase your income, part time / second job, side hustle
- Reduce your out going expenditures
- Get rid of cards
Find ways to use money to pay off what you already owe...sometimes preparing for the future isn't a priority if living a miserable present.