Not Ready for Life

[RNadine21]

So I've been thinking about this from watching the post about renting with bad credit.

I don't feel prepared to be a real adult in any sense - emotionally, but especially financially.

1. I don't have a credit card. I never wanted one when I was younger since I saw how my mom was irresponsible with them and ruined her credit (her credit is still shot for various other reasons). I eventually learned that I would need one, but no one has helped me with the process of getting one. So here I am, almost 22....and I've never had a credit card. Now I'm worried that I'm screwed because of it.

2. I don't have a savings account. My mom helped me open up my checking account and that's it. I do plan on opening one up before I graduate, but I still feel far behind.

3. I'm now also scared of renting now. I'm currently renting with my mom as a co-signer (our landlord had us all use our parents as co-signers since we're undergrads). Obviously, my mom's crap credit popped up and I ended up paying double the deposit. I really don't want to go through that again. Thankfully I'm the one who pays my rent or my landlord would have my head.

4. I'm already going through crap with financial things. I had to fight with my mom to help me fill out my FAFSA because she "didn't know" what to do (P.S. she's been filling it out for the past four years). We're still arguing about whether I have to file my own tax return or not. I've been asking her for at least a month to send me my W-2s so I can ask someone and she keeps "forgetting". I know she's been stressed but really? You can't put papers in the mail?

I just feel at a loss right now. No one has taught me how to handles my finances and now that I want to take the initiative to build a good financial foundation, no one wants to help me. Literally, the only advise I've gotten so far is to get a credit card through my bank, and that was from my friend. I'm just so frustrated that I don't feel....like I'm in control of my life. I'm about to start grad school - shouldn't I have control over my life by now?!

HELP!!

[mudgean]

I'm no Susy Orman, but I know a few things being somewhat older.

1) Separate out some of the issues here and tackle them one at a time. You are different from your mom and your frustrations with her don't have to affect your financial life.

2) Your friend's advice to go the bank and get a credit card is good. Even a secured credit card is a good starting point. You are young! People don't expect you to have much more than that. Get the card, start using it. After a few months of not EVER overdrawing on your account, ask them for a modest amount of credit, maybe 100 or 500 dollars. Use that credit, but only as much as you are responsibly able to. Pay every month ON TIME! This is so important. Credit is so sneaky and tricky these days. Pay on time. On time. Did I mention to pay on time?

3) From there you will be able to get other credit cards, but don't go crazy. Just because you have credit, don't start maxing out or even getting close to maxing out. Just use a small amount of credit available to you and PAY IT OFF each month. Don't get a huge revolving debt, which is the problem possibly your mom and so many other Americans have.

4) You are paying your rent on time. Excellent! You didn't use your mom or anyone else as an excuse, so you are in better shape than you think. You are taking personal responsibility and that's more than a lot of people. Keep paying your rent and utilities on time. That's keeping important dings off your credit history. Without a job, you may need to keep having co-signers but that's okay. Once you have an income, people will rent to you and can build up more credit that way.

5) Get a Susy Orman book. She has a lot of good sound advice that's easy to understand. If AIG and other banks followed her simple rules, this country wouldn't be in the mess it's in...but I digress.

6) Don't panic; you're doing many things right already. Pay your bills on time. Don't get into debt. The basics will get you a long way.

[anxiousapplicant]

I'm goin through the same thing, at least in terms of not feeling ready for "real life." Because of some anxiety issues I've been working on, I currently don't drive (although I do have a license, somehow), and I've never been away from home. My college is three minutes away from me, and now I'll be going somewhere in another state. I'll probably commute by train, which scares me because I've never been anywhere alone before. Sometimes I feel completely immature in comparison with people my own age and those even younger than me. I always wonder, why is it so easy for them to do the things that terrify the hell out of me? Or I wonder, where in the hell did I go so horribly, horribly wrong? But life forces you to do things sometimes, which is what I'm counting on to get me through this.

Edit: on a second read, that sounded really insane. It's one of those days, I guess! Look, don't worry about the whole credit card thing and savings and all that. It isn't as daunting as you fear. Even I, the frightened inept mouse, have a credit card I pay each month. If this is the least of your worries, you're going to be just fine. Just remember even stupid people do these things. Which is exactly the problem--how do stupid people easily do the things we obsess over our fears of not being able to do? It makes you wonder.

Edited March 13, 2010 by anxiousapplicant

[ScreamingHairyArmadillo]

I'm not sure which credit cards to specifically recommend, but don't stress! My main advice is use your credit card as if it were a debit card. NEVER exceed what you could pay with cash, unless it is truly an emergency. Pay it off every month! Also, see if you can do online banking. It is so much more convenient than finding a bank when you need one (but make sure you know where one is just in case). I would also recommend only going for money back rewards, if you want to even bother with those.

Also, I have the same bank for my checkings/savings and credit cards. All of my info is accessible online, which makes payments easy. Also, savings accounts are low stress. If you can, set up direct deposit and ta da! your money goes into your account every pay day.

But probably more importantly, now seems to be the time to separate your finances from your mom's. Even if she can claim you as a dependent on taxes, you can fill out your own form. Try to find a free service that helps students/low income people figure out their taxes. Also, now that you're going to grad school you do NOT need to enter your parents information in the FAFSA.

Good luck! Disentangling yourself from your parents financially is a bit difficult, but very possible. If you can, try to find an apartment where your mom does not need to be a cosigner. If that can't happen, build your credit over the next year (meaning really just use your credit card and then always paying it off), and then renew your lease or find a new place under your name only. Unfortunately, your mom probably can't be very helpful in this situation (not because she doesn't want to, but apparently can't figure out her own money), and you should really work on setting yourself up independently.

[johndiligent]

1. Call a reputable bank (don't do the Capital One thing) and ask about getting a credit card. A student VISA or something comparable would be a good start. They usually have small credit limits (circa $1000) so you won't go crazy with it. And then just pay it off responsibly and regularly. You'll build up a good credit score, and at least you'll have one for things that can only be done with credit card, like booking a hotel room or ordering things online.

2. Chequing accounts and savings accounts are that pretty much only in name, nowadays, and there are many people who get by fine with one account, savings or chequing. We've long since passed the day where such distinctions have really mattered beyond which button you press when you're using debit. That said, it's not very problematic to open up a new account if you want to have a separate savings one to moderate your spending or get a higher interest rate. Just call your bank and make an appointment. You'll probably have to bring some ID, but they'll tell you over the phone.

3. Rent an apartment that doesn't require a credit check. Don't co-sign with your mom anymore.

4. Sometimes Moms like ours need an extra push. You've really got to get on top of her and make it clear about the consequences of not doing so. Tell her everyday if you have to until she does it. And you need to begin extricating yourself from your mom. Get and file your own tax information and other financial stuff when at all possible.

Edited March 13, 2010 by johndiligent

[Pamphilia]

To add to what the previous posters have said, try opening a savings account and credit card with a credit union, if you can. I've found that they generally take care of their own more than Bank of America-type empires do.

Edited March 13, 2010 by Pamphilia

[coyabean]

I just want to ditto and add that no one is ever really ready to be an adult, I think. Time has a way of forcing you to do adult things at some point, but I think the feeling of being an adult is hard for everyone to come by.

I second the secured cerdit card advice. But first I suggest you read, read, read. The fact that you are even concerned about these things suggest that you are ready to learn about them. I really like www.creditboards.com. Start with the newbie primer: http://creditboards.com/forums/index.php?showforum=15.

[Roll Right]

I just want to ditto and add that no one is ever really ready to be an adult, I think. Time has a way of forcing you to do adult things at some point, but I think the feeling of being an adult is hard for everyone to come by.

I second the secured cerdit card advice. But first I suggest you read, read, read. The fact that you are even concerned about these things suggest that you are ready to learn about them. I really like www.creditboards.com. Start with the newbie primer: http://creditboards....p?showforum=15.

MMM, definitely don't jump into a credit card unless you know how to handle them. I've had one for a while, but it's only for emergencies. I've never had to use it. Just have one for emergencies, and if you want to build credit go ahead and buy some things, then pay them off quickly (only do this if you have the cash on hand).

Adult life? Coya's right....it just kind of happens. One day you wake up and realize you can't drink like a fish and feel fine the next day. That's the first sign of adulthood....ugh....and to think I'll be 23 in 3 days. How did this happen?

[RNadine21]

Thank you so much everyone! I think I just felt like I was way behind somehow and right now I'm trying to focus on establishing myself as a separate person from the rest of my family (love my family to pieces but...I'd rather not repeat their mistakes). I definitely feel a lot better though

[TMP]

As long you're still in school.... does it have some kind of course on personal finance? Usually career services or senior class will host something like that. Go to your Career Services office... yes, it seems unlikely that they would actually do something like this... but they DO have resources and books on personal finance. Go and ask! You should also ask to see someone who can help you in this kind of situation even if it's not on the list of services. They specialize in helping you jumpstart your life after college.

And... read the fine print for fees should you open a new account... banks will come up with all kinds of stupid things to earn revenue. For example, Bank of America requires $350 in savings account or monthly transfers of $25 from your checking in order to avoid a "maintenance fee" of $5. Yeah! They'll take away $5 from your SAVINGS account... I've yelled at them enough about leaving my savings account alone!

You can have a few credit cards but the more you have, the worse your credit rating will be.

[joro]

1. I signed up for a student credit card with Citi online for my first card. I was lucky that they didn't deny me considering that I had never worked in my life during that time so I had no financial income besides what I had in my savings account. My advice with credit cards is don't spend more than you have in your savings/checking account and don't even try to look ahead to see if you'll have enough to pay off the card when the time comes. I also wouldn't worry too much about APR if you plan on paying everything off each billing statement. Be mindful of what you spend your money on and don't fall into new spending habits. And always make sure you pay on time!

[asha]

Getting a credit card doesn't make you more adult. Be very careful what you sign up for.

[fadeindreams]

I wholly recommend Credit Karma to see where you stand currently. The site is ad-based and free to you, the user.

After you see where you currently stand, I would recommend using a credit card comparison tool such as Bank Rate. Look for a credit card with no annual fee. Best would be a fixed rate but those are always hard to obtain with no/bad credit. They're even harder to obtain considering the current state of the credit associated industries. So you're probably looking at a variable rate. Try to obtain one with as low of a rate as possible. Obviously.

The rate won't matter one bit if you pay the WHOLE thing off EVERY month. Activity + low credit utilization (the amount currently held in debt on your revolving line of credit) is great for building your score. Don't expect miracles. Be patient and prudent!

As for renting your next place, don't worry about getting a co-signer. Instead, find a place that either A) doesn't check credit or will accept a note of good standing from your current landlord in lieu of non-existent credit. One or the other should be easy to find. Start with a broker or real-estate agent. Most are free for you to use. They are paid by the landlord after you sign a lease.

I wouldn't worry too much about your lack of a savings account at this time. High interest debt is worse. When you get a stable job look into their retirement plans and try to max out whatever they will match.

Edited March 15, 2010 by fadeindreams

[mudlark]

Big changes are always scary, but you'll feel a lot more in control, adult, etc if you take personal responsibility for figuring out how to make them. Your original post has a lot of blaming in it: nobody taught you how to do this, your mother only helped you do your paperwork after a fight... Not a helpful mindset, IMO. If you have the tools to do grad level research, then you have the tools to go and read up about credit, renting, and student aid. This isn't something that other people have failed to teach you, it's something that you now get to teach yourself. Want to feel like an adult? Fake it til you make it, starting with shouldering responsibility for major financial decisions.

[RNadine21]

Big changes are always scary, but you'll feel a lot more in control, adult, etc if you take personal responsibility for figuring out how to make them. Your original post has a lot of blaming in it: nobody taught you how to do this, your mother only helped you do your paperwork after a fight... Not a helpful mindset, IMO. If you have the tools to do grad level research, then you have the tools to go and read up about credit, renting, and student aid. This isn't something that other people have failed to teach you, it's something that you now get to teach yourself. Want to feel like an adult? Fake it til you make it, starting with shouldering responsibility for major financial decisions.

Too true. I think a lot of my stress that I was expressing was from things that I can get people's help with and am not getting. But you're right, it's up to me now to get all of this under control. Truly, thanks for the honest truth; sometimes I need it.

[kent shakespeare]

re: credit cards:

Avoid Capital One at all costs.

Ditto Providian or any of the spam you get in the mail.

Try to deal with a local bank rather than a big one.