Like ogmike said, if you ever fly somewhere on vacation you're inevitably going to need to rent a car............ buy airline tix...........reserve hotel rooms..........buy concert tix............there are plenty of instances where a cc is very convenient if not necessary. Much like guns don't kill people, cc's don't put people in debt. If one doesn't ever need to use one more power to 'em. But they come in very handy.
Can't answer your question about prepaids as I've never used one.
Again...fuck your credit score. It isn't needed when you pay cash.
And why can't you pay cash for a house? If you look at what you wind up paying back during the life of the loan, you actually pay many thousands more for the house. Same for anytime you buy something with credit....you don't actually pay what you think you are paying.
House with a sale price of 150,000:
With a 15 year loan at 6% and 20% down ($30,000 cash, financing $120,000) you wind up paying over $210,000 for the house,
with 50% down and same terms as above, you pay around $190,000 when all is said and done.
with $150,000 in cash...you pay $150,000. No payments, no worries about what happens if you lose your job, no PMI.
It is even cheaper to rent while you save up for that house. In the above example, if you pay $800/month in rent for 15 years while you save that $150,000, you pay around $15,000 for rent. Still less money than even 50% down and financing.
You mean $144,000 for rent, right?
Again...fuck your credit score. It isn't needed when you pay cash.
And why can't you pay cash for a house? If you look at what you wind up paying back during the life of the loan, you actually pay many thousands more for the house. Same for anytime you buy something with credit....you don't actually pay what you think you are paying.
House with a sale price of 150,000:
With a 15 year loan at 6% and 20% down ($30,000 cash, financing $120,000) you wind up paying over $210,000 for the house,
with 50% down and same terms as above, you pay around $190,000 when all is said and done.
with $150,000 in cash...you pay $150,000. No payments, no worries about what happens if you lose your job, no PMI.
It is even cheaper to rent while you save up for that house. In the above example, if you pay $800/month in rent for 15 years while you save that $150,000, you pay around $15,000 for rent. Still less money than even 50% down and financing.
Wow, I can't believe how ignorant some people are. 1. Who can buy a house for $150K any longer? 2. Most people don't have that kind of cash when they are considering buying a house (ie. after they get out of school and get a "real" job and work for a bit). 3. My interest rate is 5.5%. I did 23% in the market last year. I may not do 23% every year, but if I can do more then 5.5% on any given year INVESTING, you are an absolute FOOL if you use that money instead to pay cash for a house. 
Where do these people come from?
You mean $144,000 for rent, right?
Good catch! That was pretty stupid of me and obviously doesn't work out in our scenario. A house is a special circumstance and isn't a big of a deal to finance as say a new quad. The point being pay as much cash as you can...always.
Wow, I can't believe how ignorant some people are. 1. Who can buy a house for $150K any longer? 2. Most people don't have that kind of cash when they are considering buying a house (ie. after they get out of school and get a "real" job and work for a bit). 3. My interest rate is 5.5%. I did 23% in the market last year. I may not do 23% every year, but if I can do more then 5.5% on any given year INVESTING, you are an absolute FOOL if you use that money instead to pay cash for a house.
Where do these people come from?
The only thing weak about my analysis is my rent math. The scenario doesn't work out as well as I have it laid out. But your "interest is a tax write off" perplexes me. You are telling me that you would rather pay interest on a house just to be able to write off some of your taxes than pay no interest at all? I agree that the interest is a nice perk to be able to write off, but you have shit for brains if you would rather pay interest just for the sake of saving a fraction of said interest on tax savings.
The only thing weak about my analysis is my rent math. The scenario doesn't work out as well as I have it laid out. But your "interest is a tax write off" perplexes me. You are telling me that you would rather pay interest on a house just to be able to write off some of your taxes than pay no interest at all? I agree that the interest is a nice perk to be able to write off, but you have shit for brains if you would rather pay interest just for the sake of saving a fraction of said interest on tax savings.
Adam, where do you live? I'm in Dallas, and assuming that one day I have a child or two with my future wife, seriously doubt I'm going to find a big enough house for us in a good neighborhood for 150k. Between the both of us, we could afford 150k as we speak, but we would be moving into a shit area with more crime and weaker schools. But lets say we wanted to move into 250-300k home right now, it doesn't hurt to have good credit and finance it.
Don't get me wrong, I agree that cash is king. Nothing wrong with trying to pay most everything off with cash. But what if he, like myself, wants to start his own business one day. Where is he going to have any capital if he drops all his money on a home? Or if he comes across any other investment vehicle that can bring him some good returns that exceed his mortgage interest? He would be wishing that he had that cash on hand, wouldn't he.
How big of a house do you need? You are already buying a $300,000 house and you aren't even married yet! I'm not saying that you shouldn't have nice things and live in a nice area, but you couldn't "rough it" in a 2 bedroom house until the kids are a few years old? By then your house (if you bought wisely) should have appreciated and you could have saved some cash in the meantime. There is your $300,000 house of which you financed only a small portion.
And starting the business....save up for it. I read that a majority of small businesses fail within the first few years. I guess because the owner cannot pay his business loan. If you have no business loan, you are in a much better position to weather any storm.
How big of a house do you need? You are already buying a $300,000 house and you aren't even married yet! I'm not saying that you shouldn't have nice things and live in a nice area, but you couldn't "rough it" in a 2 bedroom house until the kids are a few years old? By then your house (if you bought wisely) should have appreciated and you could have saved some cash in the meantime. There is your $300,000 house of which you financed only a small portion.
And starting the business....save up for it. I read that a majority of small businesses fail within the first few years. I guess because the owner cannot pay his business loan. If you have no business loan, you are in a much better position to weather any storm.
Valid point... I don't necessarily need a nice home in a nice area immediately. I grew up with a lot less. But at the same time, I don't want my fiance to be nervous anytime she comes home at night. Nor do I want to live in a 30 year old home that is going to require a lot of maintenance.
As for startup businesses, I heard the same stat. I think it's in the 90s percentage wise of small businesses that fail. And I think you validated my point a little. Of course I would save up for it. But how long before can I start my business if I paid cash for my home, saving for a new home, and maxing out my 401k. Will have to start borrowing at some point. Why not borrow for the home and put my cash into the business or other investment vehicle?
Is that cap on grocery stores correct? My brother uses his Discover at Sam's Club for his business, and I think he told me they gave him over $2000 one year. Or is Sam's Club not considered a grocery store?
Valid point... I don't necessarily need a nice home in a nice area immediately. I grew up with a lot less. But at the same time, I don't want my fiance to be nervous anytime she comes home at night. Nor do I want to live in a 30 year old home that is going to require a lot of maintenance.
As for startup businesses, I heard the same stat. I think it's in the 90s percentage wise of small businesses that fail. And I think you validated my point a little. Of course I would save up for it. But how long before can I start my business if I paid cash for my home, saving for a new home, and maxing out my 401k. Will have to start borrowing at some point. Why not borrow for the home and put my cash into the business or other investment vehicle?
No matter how old the home is, it will ALWAYS require some kind of maintentance. Grass, shoveling the drive, painting. Plus a 30 year old house isn't old. The real question is if i was constructed well with good materials.
I know what youare saying about having the cash on hand. It is always nice to have that security blanket of a big sum in the bank. But saying that you will have to borrow at some point is crazy. You never have to borrow. Just have to be diligent, patient, and save. We are too caught up in wanting things right now and used to having whatever we want right now. We forgot to sacrifice and save.
I know it is tough, but it is the best way to do things. IMHO
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