The best advice I will ever give on the subject of credit is: “Do not be afraid of it!” Your first credit card could possibly be the most important step you take in your financial lifetime. On one hand: the rumors, myths, and scary stories told across campfires. On the other: Financial freedom, security, and limitless power!! Ok, maybe not the limitless power, but a credit card can really help you in a lot of ways. Let’s get into a bit of how…
The obvious, boring, and mundane credit stuff…
Ok, so yes, of course a credit card can:
- Improve your credit score
- Allow purchases you otherwise couldn’t afford
- Help in emergencies (Like Zombie apocalypse?)
- Prepare you to live all responsible and stuff
Of course you can (and should) be at least somewhat focused on this stuff as they make up a good part of your life and your family’s lives as well. This, I suppose is my disclaimer so that you don’t go blow your life savings on credit cards and beer. Be responsible, do your homework, stay away from strangers with candy, the whole nine yards. Ok, now down to it.
First Credit Card Means Freedom AND Servitude
I said, that was all the boring stuff. Your credit card can also be used in more creative ways! And no, I’m not referring to cutting it up and using it as confetti. Your first credit card especially, will no doubt open you up to a garden variety of different options in cars, clothes, food, friends, and sparkly things. The trick is not to bite. This would be the servitude/bondage part of the credit world. People let themselves get tricked into hosing themselves royally by maxing out their credit limit with “stuff.”
“Stuff” does you no good, so how can credit be freedom when all that ever happens is people blowing their hard-earned cash on interest payments? As I said, don’t give in to buying what you want right now. There is really more to this idea than I can get into right now, but essentially it comes down to the idea of investment. If you “invest” in clothes, you get a pile of rags 2 years from now that sat in the back of your closet and were worn several times if ever. If that same 50-60 dollar investment were put somewhere strategic how much better would it serve you if it came back in that same 2 year period having doubled?
Need a bit more generic help on credit cards? Check out these resources here.
I’m Not Selling Anything
Just to make it clear, I’m not selling any hair-brained product or get-rich scheme. In fact, I could care less about what exactly you spend that money on. The fact of the matter is that if you take out some credit, whether that’s a line of credit, credit card, or student loan, and put it somewhere that will benefit you permanently, you will be grateful.
Here is a brief list of the types of “places” I am talking about:
- Education (Those student loans)
- Sure, let’s say stocks (Never been a fan, but can be great)
- Building on Education: Technical Courses and Similar things
- Starting Your Own Business (Even Small)
- Items to sell (Online, yard sales, at school, on the street, etc…)
As you can see, I could exhaust pages and pages of ideas of where you can put your money. The idea is simple. Take borrowed money and make it work for you. Don’t be stupid, don’t take unnecessary risk. The best way to start is to get a job (even if you don’t like it) and put away little by little to these investments that you are working on. As you do this try and make sure your return is higher than the interest you are paying on the borrowed money. Student loans are great because they often have no interest while you are in school, but as long as you make more money than you pay in interest you are in the golden area. (No interest credit cards are similar in this situation to student loans, just be careful and read the fine print.)
In all, I want to again let out that disclaimer: I am no expert. Do with your money what you want to do and do not be foolishly risky. There is a lot to be gained through the wise use of credit, but there are many people out there in terrible situations because of poor use of credit. Just be careful and consult with a professional if you have any important questions.
Other than that, I wish you the best of luck and happy hunting in your financial endeavors from here on out.