Originally posted by @Scott Trench:
Originally posted by @Lynn McGeein:
@Scott Trench , think your statement about keeping your credit score up being as important as your reputation is spot on, but also wanted to add that you do need to be careful with considering credit cards as emergency funds. Just know that many cards will charge a fee, 2-3% for any cash advances, plus a higher interest rate than regular purchases. Oh, and they can arbitrarily decide to drop your limit and/or cancel the card. Thinking they won't is naive. I've also had issues where all of the sudden they freeze charges, then say it's because they thought it was fraud. Usually very bad timing is involved, like right when you need it most. You need a cash reserve, even with a 401K or a nice credit card balance.
Also, as you add more loans for more properties, be aware that your credit score drops just because ... no idea exactly why as our properties cash flow and we've never been late on any payment, ever, but our 800+ days seem long gone and we're happy now when we see 720, even though the only difference is more installment loans for investment property.
Lynn,
Thanks for the feedback. I've gotten quite a few questioning remarks about the wisdom of allowing credit cards to be a source of emergency funds. I'm looking into that - perhaps there are some uncomfortable risks with that strategy. Perhaps its just because I'm still young single, and healthy, that I think that makes sense. I've never really had an emergency that would have devastated me financially or put me in a very bad position.
I think that I will take your advice and that of @Jeff Rabinowitz and make sure that I have a nice cash fund to supplement my credit lines!
Whoa, whoa, whoa!!!!! Please hear me out on this! You're young, single, and healthy at this very moment, but that can change in an instant! Even if you don't get hit by a bus standing innocently on a street corner, trust me, in five minutes you will turn around and be *gasp!* 45 years old, married, and with a couple kids!
My family taught me to pay cash for everything. Would you walk into a store and see signs on the top of a rack saying, "17.5% MORE!" and buy it? No, of course not! But if you don't pay your balance off each month, that is exactly what you are doing! Trust me, I had to learn that lesson the hard way. I stopped buying things on credit 8 years ago. If I don't have cash, I don't buy. Credit cards are no safety net!
