Money talk

[Naijagirl]

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Hey all,

Recently I have been "planning" financially for my 1st year in med school, and it looks like its going to be a bumpy one. All through college, I never worked since scholarship and grants paid my way through. I don't have a credit card,(I have a check card) I don't have a car, I am pretty stingy in the way I spend money. Anyways, I recently got a job for the summer, so it was pretty nice having a pocket money, the money I earn will help me with apartment renting and everything else that comes with renting. I want a car, b/c it will make my life a little easier in med sch, but then it will add to my spending.

Also anybody know how this whole credit card works, b/c I think I need one, but am not quite sure.

Anybody has any advice/suggestions/referrals?

~Thanks

 

[v j]

i would get a credit card just so you can start your credit history and (possibly) qualify for a home loan at some point after you finish med school. if you don't have a credit history most lenders will either ignore you or give you really high interest rates (i'm not sure if debit cards get reported on your credit report).

but be careful - credit card interest rates are high so i wouldn't recommend holding a balance. instead, pay your card off in full each month (otherwise interest starts piling up).

in order to pay off your cards in full you will have to take a lot of educational loans out (through your fin/aid office) but that's not as big a deal. the interest rates are significantly lower and some of them won't even accrue interest until you graduate.

in short - credit card debt equals bad debt. educational loan/home loan debt equals good debt. but you need a credit card to show future lenders that you are an o.k. risk. you're in good shape because your starting from scratch. alot of people ruin their score in college by going into massive credit card debt and then not paying it back. pay your payments on time and you'll be fine.

and finally - get a credit card without an annual fee and with some sort of rewards program. citibank has one that is 1% cashback on all purchases and 5% cashback on gas and food. there are a bunch out there.

as far as the car, it'll cost some money, like you said, but maybe it's worth it. you'll have to look at your financial situation and see how much your loans could cover.

 

[nutmegs]

I definitely second getting a credit card asap, even if you're just putting lunch once a month on it then paying it off that month. When you learn more about building a credit history one of the biggest things is not that you've made every payment well but the sheer amount of time you've had one. (And keep the same one- don't cancel them if you get a new one).

You will have money for living expenses and if you're stingy you'll get to keep that up. As for getting a car, I bought a used VW for $1500 a few years ago, it now has 243K miles on it and needs repairs and stuff replaced but overall runs well and all in all I've spent way less than my friends who got $11K used cars. Everybody does it differently, I can tell you I wouldn't want to have a new car payment to deal with with my loans!!