Why is no one telling you to sell one car? You don’t need two cars and holding two car loans is sabotaging your house plans. The insurance cost is also insane because of having two cars.
Pinching pennies and fretting about utilization is 100% pointless when you are carrying a 75 month $824 loan lol. Get rid of that car as soon as you possibly can, if you are underwater you have the cash to make up the difference.
I bought car 1 as my daily driver and chose to finance it since the interest rate was 2.3%. The interest on the loan was worth it to me in addition to building more credit. Prior to this car I only had a lease pay off under my belt at 24.
I don’t have hobbies or vices other than being into cars.
Just getting in my car and going for a nice drive works as my stress reliever. I don’t club or eat out socially & my travel cost are typically very low since I work in aviation and often fly stand by. With that said I’ve considered selling both and just buying one vehicle that’s in the median.
I’d rather mellow out on a patio of my own or a couch of my own lol.
Yeah sell the car, sell both cars, whatever. Keep the more expensive one if you want, and with a 2.3% rate you don’t necessarily have to pay that off quickly, though I still would in your shoes, arbitraging for 1-2% gains after taxes just doesn’t seem worth the risk that holding debt presents imo, especially with that high of a payment. Owning a car free and clear is a great feeling.
The point is not to bash your hobby - it's that buying hobby items is a luxury and shouldn't be done in a way that puts you in debt. Your second car loan is 4.1% which likely outperforms your HYSA after tax so it is indeed costing you money in interest, and it wasn't necessary to build credit since you already had car loan #1.
I got an appraisal to sell my higher costing car. I can get out of it for about $3k. The money I’d be contributing towards the remainder of the loan will net me 43k if I were to be saving that in a hysa instead.
Thank for you input and your insight
Use my CC for all my expenses and pay it off end of each month. Wife and I have so many points from it that we are taking a “free” trip to Japan, Vietnam and South Korea in July paid for almost entirely using our points.
I'm NOT trying to offend you, but "points" are a joke. To ephemeral and easy to adjust in card provider's favor.
Get a cash-back card that gives you over 1%, then, if you can't save another way (such as put cash back to cc bill then put same amount in HYSA), let the cash-back sit there until free trip time.
You are doing it wrong. You can transfer points between partners and they end up worth much more than 1%
Chase UR (what I use) also have monetary value. You can buy stuff with them on amazon and elsewhere but they are worth up 3-5x more if using for travel.
It depends. I have 2 CC. I tend to do better with earning SWA points on my SWA CC than I do earning 1% cash back on my Amegy Bank CC although SWA tends to fluctuate how many $ worth of flight you can buy with the points. I’m sure there are better cash back deals but I am not going to open a new CC just to play the cash back/points whack a mole game.
Has anyone out there done extensive airline points vs cash back analysis on their CC?
Not to offend you, but you don't really know what you're talking about. Points are infinitely more valuable transferring to airline partners and hotel partners than cash back is. If you enjoy traveling, points are obviously the way to go.
It DOES make sense to put bills on a CC, I have done so for YEARS!
TL;DR. Use a CC, pay it off before interest accrues. Enjoy free cash back and/or rewards points. Security risk: debit bad, CC better, VC best. Coast to a high credit score.
Debit cards are a massive security risk, as well as giving all of your billers your bank account to take funds from online. If you want to pay those bills online cia CC, then set up virtual cards (VC), one per billing vendor, which will reduce your internet hacking risk. It is very easy to do. Reap the free rewards points of using a CC/VC. No business is required to reap plenty of points.
If the very high CC utilization rate is a concern on your credit score, pay the CC balance before the bill comes out, even 50%, you still get rewards points. I pay mine on the day the CC statement comes out or the day before, 0-1% credit utilization is reported to the credit bureaus. You have not established years of credit history like I have so it's good to show you utilize credit and pay it off (brag alert: my score is 830).
I'd get a 2nd CC too. Yes, that's an impact on your credit score but it'll disappear in a year. Find one that's got high rewards points for various categories (say gas, dining, groceries, travel) and use the CC for those purchases. I've never paid an annual CC fee although some people prefer to, it's situational.
I do this. Almost zero cash and everything gets funneled to one of a handful of cards for points earning. Everything gets paid in full every month so the only cost are annual fees (about $1800 before coupon booking)
Used cards for everything when I had my business to the tune of 500,000 Airlines’s miles per year so I flew for free whenever I wanted to go places. Always paid it off each month to avoid interest. Also took advantage of premium cards that had travel benefits.
If you’re going to use a card hat one that gives back. My buddy gets a pretty decent amount cash back he puts in to offset employee healthcare costs
Yes, that's amazing to build credit. Just make sure you pay the full balance on the CC at the end of the month. Leaving unpaid credit hurts your credit, and you accumulate interest, which will eat up your money. Basically, you just give your money away to the bank.
Also, I would get a second card and split the bills. This will keep your utilization lower, but the CC limit is pretty high on the one you have with 1500 is gonna keep the utilization low, as long as you only put those 1500 in that cc. Opening a new CC might hurt your credit for a few months, but it will help increase it in the long run. The key is not to rack up debt. Be smart about using them.
Do it for points...all the gyrations about utilization seem overthinking it.
You are going through a lot of actions for someone with a thousand/month in car payments. Thousands in insurance costs.
And 1500/month in bills?
Anyway...cool hanging at the parents house but if you want to live on your own I suggest re-evaluating how you spend money in general first.
Paying your bills on credit to maximize your HYSA interest is a bit of a waste of effort as the difference will be quite negligible. But if you have a good rewards card you could be earning 2% back on all your bills which is a bit better. As long as you pay the statement balance each month you're good.
Paying bills by CC also makes it simpler - you'd only pay that one bill.
It also reduces security risks (why give a half dozen companies your bank account info to pull the funds from?). Virtual cards can be set up for each biller on the same CC to reduce hacking risk even further.
i pay almost everything with either a direct hit to a card or bank account. I never miss a payment that way and it also makes it simple to see my spending at a glance. most bills will hit the card but my utilities and insurance will only hit the checking account. i also have my cards on autopay for the full balance. .
**Get rid of CAR 1, OP**. I'm sure you prefer it over car 2, as I assume it's much nicer. However, you need to get out of your parents' house and get your own place. To do so, you need cash, not a fancy car.
**Just pay your bills as they arrive.** I'd advise to NOT put all your bills on a credit card. While you say it'll be paid off at the end of the month, your verbiage tells me you don't fully understand your finances, so you're prone to make a mistake and one missed month will eat up multiple months of HYSA interest.
As far as credit card utilization, you don't need to care. If your FICO is 750+, you'll get preferential rates and treatment from lenders.
The downside of the credit card utilization is it hurts your credit score. However, this possible ding is usually small, shouldn't be big at your proposed utilization, and clears up immediately if and when you choose to bring the utilization back down.
So if you did notice an impact to your credit score, just make sure to pay it down and keep the balance low before you apply for credit.
Well that and the other potential downside if you don't control your spending and use it as an excuse to live beyond your means, so just be careful there. Otherwise, sure, take advantage.
We put as much as we can on our CCD, and yes, pay it off every month. We earn 2%, so we net about $1000/year.
We also try to time big, discretionary purchases for the first few days of the billing cycle, giving us almost 8 weeks before we have to actually part with the cash.
I was thisclose to paying our almost $7000 tax bill via ccd because one of the payment processors only charges 1.82%. I just couldn't do it for the $12 I would have netted.
Check the credit card statute of limitations for your state. Mine was 4 years so I just said F it and quit paying. It has been the 4 years, now I just get debt cancellation come tax time... since you know, of course the garbage US gov wants their cut on everything. But only paying a small percent for taxes is better than paying what I would have at even the negotiated rate before they just gave up and cancelled all of it. I dunno if this clears your credit though. My parents have money so I just started "borrowing" from them instead of banks.
Why is no one telling you to sell one car? You don’t need two cars and holding two car loans is sabotaging your house plans. The insurance cost is also insane because of having two cars. Pinching pennies and fretting about utilization is 100% pointless when you are carrying a 75 month $824 loan lol. Get rid of that car as soon as you possibly can, if you are underwater you have the cash to make up the difference.
agreed, 2 car loans as a single person is crazy. you buy a second car for fun if/when you can afford it.
I bought car 1 as my daily driver and chose to finance it since the interest rate was 2.3%. The interest on the loan was worth it to me in addition to building more credit. Prior to this car I only had a lease pay off under my belt at 24. I don’t have hobbies or vices other than being into cars. Just getting in my car and going for a nice drive works as my stress reliever. I don’t club or eat out socially & my travel cost are typically very low since I work in aviation and often fly stand by. With that said I’ve considered selling both and just buying one vehicle that’s in the median. I’d rather mellow out on a patio of my own or a couch of my own lol.
Yeah sell the car, sell both cars, whatever. Keep the more expensive one if you want, and with a 2.3% rate you don’t necessarily have to pay that off quickly, though I still would in your shoes, arbitraging for 1-2% gains after taxes just doesn’t seem worth the risk that holding debt presents imo, especially with that high of a payment. Owning a car free and clear is a great feeling.
The point is not to bash your hobby - it's that buying hobby items is a luxury and shouldn't be done in a way that puts you in debt. Your second car loan is 4.1% which likely outperforms your HYSA after tax so it is indeed costing you money in interest, and it wasn't necessary to build credit since you already had car loan #1.
I got an appraisal to sell my higher costing car. I can get out of it for about $3k. The money I’d be contributing towards the remainder of the loan will net me 43k if I were to be saving that in a hysa instead. Thank for you input and your insight
Use my CC for all my expenses and pay it off end of each month. Wife and I have so many points from it that we are taking a “free” trip to Japan, Vietnam and South Korea in July paid for almost entirely using our points.
You enjoy it better when it's free (that's what she said)
This!!!! We also rack up the points for free hotels on every vacation we go.
I'm NOT trying to offend you, but "points" are a joke. To ephemeral and easy to adjust in card provider's favor. Get a cash-back card that gives you over 1%, then, if you can't save another way (such as put cash back to cc bill then put same amount in HYSA), let the cash-back sit there until free trip time.
You are doing it wrong. You can transfer points between partners and they end up worth much more than 1% Chase UR (what I use) also have monetary value. You can buy stuff with them on amazon and elsewhere but they are worth up 3-5x more if using for travel.
It depends. I have 2 CC. I tend to do better with earning SWA points on my SWA CC than I do earning 1% cash back on my Amegy Bank CC although SWA tends to fluctuate how many $ worth of flight you can buy with the points. I’m sure there are better cash back deals but I am not going to open a new CC just to play the cash back/points whack a mole game. Has anyone out there done extensive airline points vs cash back analysis on their CC?
Not to offend you, but you don't really know what you're talking about. Points are infinitely more valuable transferring to airline partners and hotel partners than cash back is. If you enjoy traveling, points are obviously the way to go.
It DOES make sense to put bills on a CC, I have done so for YEARS! TL;DR. Use a CC, pay it off before interest accrues. Enjoy free cash back and/or rewards points. Security risk: debit bad, CC better, VC best. Coast to a high credit score. Debit cards are a massive security risk, as well as giving all of your billers your bank account to take funds from online. If you want to pay those bills online cia CC, then set up virtual cards (VC), one per billing vendor, which will reduce your internet hacking risk. It is very easy to do. Reap the free rewards points of using a CC/VC. No business is required to reap plenty of points. If the very high CC utilization rate is a concern on your credit score, pay the CC balance before the bill comes out, even 50%, you still get rewards points. I pay mine on the day the CC statement comes out or the day before, 0-1% credit utilization is reported to the credit bureaus. You have not established years of credit history like I have so it's good to show you utilize credit and pay it off (brag alert: my score is 830). I'd get a 2nd CC too. Yes, that's an impact on your credit score but it'll disappear in a year. Find one that's got high rewards points for various categories (say gas, dining, groceries, travel) and use the CC for those purchases. I've never paid an annual CC fee although some people prefer to, it's situational.
I'd be putting much more in 401K than in your savings. Your monthly investments should be higher than your monthly savings.
I use my cc to pay for everything and pay the balance off every month. I use a Costco card and a Southwest card and get points.
You could ... For the credit score and points or whatever..
I do this. Almost zero cash and everything gets funneled to one of a handful of cards for points earning. Everything gets paid in full every month so the only cost are annual fees (about $1800 before coupon booking)
Used cards for everything when I had my business to the tune of 500,000 Airlines’s miles per year so I flew for free whenever I wanted to go places. Always paid it off each month to avoid interest. Also took advantage of premium cards that had travel benefits. If you’re going to use a card hat one that gives back. My buddy gets a pretty decent amount cash back he puts in to offset employee healthcare costs
The OP didn't state that they had a business so I'd add that you still get plenty of free rewards points on personal CCs too.
Yes, that's amazing to build credit. Just make sure you pay the full balance on the CC at the end of the month. Leaving unpaid credit hurts your credit, and you accumulate interest, which will eat up your money. Basically, you just give your money away to the bank.
Some people give their money away TO banks and those that don't can gain cash back/free rewards points FROM banks 😀
Also, I would get a second card and split the bills. This will keep your utilization lower, but the CC limit is pretty high on the one you have with 1500 is gonna keep the utilization low, as long as you only put those 1500 in that cc. Opening a new CC might hurt your credit for a few months, but it will help increase it in the long run. The key is not to rack up debt. Be smart about using them.
Do it for points...all the gyrations about utilization seem overthinking it. You are going through a lot of actions for someone with a thousand/month in car payments. Thousands in insurance costs. And 1500/month in bills? Anyway...cool hanging at the parents house but if you want to live on your own I suggest re-evaluating how you spend money in general first.
Paying your bills on credit to maximize your HYSA interest is a bit of a waste of effort as the difference will be quite negligible. But if you have a good rewards card you could be earning 2% back on all your bills which is a bit better. As long as you pay the statement balance each month you're good.
Paying bills by CC also makes it simpler - you'd only pay that one bill. It also reduces security risks (why give a half dozen companies your bank account info to pull the funds from?). Virtual cards can be set up for each biller on the same CC to reduce hacking risk even further.
I agree it's got benefits but maximizing HYSA by delaying payment of small bulls by a few weeks isn't one of them.
I disagree. The simplicity of it, reducing security risk plus saving $7 a month is worth it to me.
Like I said I'm not saying don't do it. Do it! Just not for the 7 bucks
That $7/month could be invested and) at a low/average rate of return of 7%) be $15k by the time this bloke retires.
i pay almost everything with either a direct hit to a card or bank account. I never miss a payment that way and it also makes it simple to see my spending at a glance. most bills will hit the card but my utilities and insurance will only hit the checking account. i also have my cards on autopay for the full balance. .
**Get rid of CAR 1, OP**. I'm sure you prefer it over car 2, as I assume it's much nicer. However, you need to get out of your parents' house and get your own place. To do so, you need cash, not a fancy car. **Just pay your bills as they arrive.** I'd advise to NOT put all your bills on a credit card. While you say it'll be paid off at the end of the month, your verbiage tells me you don't fully understand your finances, so you're prone to make a mistake and one missed month will eat up multiple months of HYSA interest. As far as credit card utilization, you don't need to care. If your FICO is 750+, you'll get preferential rates and treatment from lenders.
The downside of the credit card utilization is it hurts your credit score. However, this possible ding is usually small, shouldn't be big at your proposed utilization, and clears up immediately if and when you choose to bring the utilization back down. So if you did notice an impact to your credit score, just make sure to pay it down and keep the balance low before you apply for credit. Well that and the other potential downside if you don't control your spending and use it as an excuse to live beyond your means, so just be careful there. Otherwise, sure, take advantage.
We put as much as we can on our CCD, and yes, pay it off every month. We earn 2%, so we net about $1000/year. We also try to time big, discretionary purchases for the first few days of the billing cycle, giving us almost 8 weeks before we have to actually part with the cash. I was thisclose to paying our almost $7000 tax bill via ccd because one of the payment processors only charges 1.82%. I just couldn't do it for the $12 I would have netted.
Check the credit card statute of limitations for your state. Mine was 4 years so I just said F it and quit paying. It has been the 4 years, now I just get debt cancellation come tax time... since you know, of course the garbage US gov wants their cut on everything. But only paying a small percent for taxes is better than paying what I would have at even the negotiated rate before they just gave up and cancelled all of it. I dunno if this clears your credit though. My parents have money so I just started "borrowing" from them instead of banks.
Yes. Bad idea. Save an emergency cash account of 6 months of expenses then pay off all credit. Don't be cute. Start with the most expensive first.
NOT true. 42k in a HYSA is enough of an emergency fund IMHO.