Hey, I was wondering if someone needs credit to buy things. People in my family have said I wouldn’t be able to buy a car or a house without credit. But if I’m saving up cash to pay for things outright, do I really need credit?
Note: I’m sorry if this is the wrong place to ask.
Pretty much, yeah. You can probably save up to buy a cheap used car, and you may be able to save up to buy a new car, but you definitely won’t be able to just pay cash for a house unless you’ve got so much money the rules of personal finance are totally different.
You also need good credit to rent most apartments and to get many kinds of jobs.
I’ve created a plan to save $1,000-$2,000 every month for 25-30 years at a realistic interest rate of 2-3%. By the end of it, I’d have around $886,389.54.
And the cost of buying a house could continue to skyrocket the entire time. In 30 years that could be a nice down payment, but you’ll want good credit, too.
That’s great, but that entire time you’ve (assumably) been paying rent. You’ve saved up enough to buy a house for cash, but also spent enough to buy an entire second home.
You’d stand to gain significantly if you bought the house earlier. Rent paid is burnt, but a mortgage paid is building equity in your hone.