I’m in the military. People around the office ask me for for financial advice. They know I’m a “money guy” and word gets around that I like talking investing and real estate.
I warn people they won’t like my advice. They usually don’t.
This guy didn’t.
Recently a co-worker told me he’s got $20,000 burning a hole in his pocket, and what I think about investing in the British Pound. With the Brexit, it seems like a sure thing!
I told him this kind of speculation in currency isn’t for everyone. Even those who devote their lives to studying this are wrong more often then right. I warned him this would be a fun way to lose money quickly on something he doesn’t understand. It seemed like he took that to heart.
Guy: “Ok, I got a better idea! What about gold!?!?!?”
Me: Shit. (silently in my head)
I told him I have a different approach to investing. With an extra $20k and with no debt (awesome), consider fully funding retirement accounts first.
Guy: “O no, I still have debt!”
Me: How much?
Guy: $20,000 in credit cards.
COME ON!!!!! (Loudly in my head)
Me: Pay off your credit cards. Then we’ll talk.
Guy: Won’t paying off my cards ruin my credit?
Me: WTF are you talking about?
Guy: A financial advisor told me to carry credit card debt to boost my credit score.
This is a high-ranking, intelligent military member.
Who spreads this crap around? The idea of taking out debt on purpose to raise your credit score so you can qualify for more debt sounds stupid if you say it out loud a few times.
I remember in college how I was targeted by credit card companies that told me their cards would help build my credit. They set up booths on campus with attractive woman giving out gifts for signups.
Yes, they gave me some free shit when I signed up (frisbee), but I didn’t read the fine print, and paid annual fees and high interest. I maxed them out and paid late fees a few times. CREDIT ROCKS!!!!!
Back to the point of this article. I will show you how get a PERFECT credit score. I’ll admit, I haven’t done it yet. As hard as I try, I can’t seem to get my credit score down to zero.
Rich, I think you’re confused! 850 is a perfect credit score!!
No, I’m pretty sure it’s zero.
It depends what you want. Do you want to be perfect at debt? Score an 850. It means you are perfect at borrowing money and paying it back. That will come in handy in life! (Insert sarcasm here)
Now you qualify for tons of cheap debt. You can officially buy a much bigger house than you actually need that you will regret buying later (me).
You don’t need that worthless credit score because you don’t need to buy a house. It’s another myth.
Buying a house is often a poor investment. It was in my case, even though I owned it for 13 years, and bought it well before the bubble!
If you haven’t heard the logic behind this before, read the articles by finance giants Paula Pant and Jim Collins I linked to at the end. I can’t explain it better than them!
A credit score of 850 means you are awesome at debt. A credit score of ZERO means you are awesome at MONEY!!
Look, if you’re in debt and are more concerned about raising your credit score than paying off your debt, you need to think about your priorities.
Why is there a myth out there that we should have enough debt to have an awesome credit score so we can get more debt as cheaply as possible?!?!?!?
Absurd. But some people LOVE that myth!!!
The banks, mortgage companies, credit card companies, and everybody but you makes money when you sign up for credit cards!!! (I thought it would be funny to have an affiliate link for a credit card at the bottom of this article, but I’m too lazy to set it up, plus no one reads this blog)
So what should you do?
Shoot for a credit score of ZERO.
If you stop using credit entirely, your score will eventually become zero, but I’m not sure we have to go that far!!!
What I really mean by shooting for zero is zero debt. Paying off your credit cards and your debt as quickly as you can, and not giving a $hit about how it affects credit scores.
You don’t need credit (debt) to become rich. You need to be debt-free, and then invest an save well.
Do you need multiple credit cards to charge a bunch of stuff to inflate a worthless credit score?
With this attitude towards debt and credit scores, it’s a good thing I’m not a real estate investor!!!!!!
O wait. I am!
And I used real estate to become financially independent WITHOUT USING DEBT.
Read my first blog post.
Like I said at the beginning, most people don’t like my advice.
Rich on Money