10.2.19 Credit score drops; Investment cons are alive and well; When to ditch an old car?

The Clark Howard Podcast

Clark Howard

Business, Investing, Entrepreneurship

4.6 • 5.2K Ratings

🗓️ 2 October 2019

⏱️ 34 minutes

🔗️ Recording | iTunes | RSS

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Summary

We borrow principally for a home, vehicle, credit cards, student loans. A long-held frustration is how scoring models punish you for eliminating debt. Paying off a loan (other than credit cards) could drop your score 50 points. Don't worry about it. If your score is healthy enough, the payoff score pinch does not matter. You DO NOT raise your credit score by leaving a balance open on a credit card. That's a myth you pay interest on. With cards, using very little of your credit and paying on time boosts your score. The Securities and Exchange Commission ( the Federal agency overseeing the investment industry) reports that in recent years, 4.3 million Americans have been ripped off in investment schemes. The average loss: $150K. Historically the cons target small business owners, entrepreneurs, and senior citizens. The promise of non-traditional investments have of late touted 8-12% returns - which may appear initially, till the scheme collapses leaving its victims broke. Many times people dump their old car because it's no longer reliable. That's a good reason. But when it comes to the dollars and cents of this, Clark and Consumer Reports differ. Consumer Reports advises that when the cost of repair exceeds the remaining value, that's when it's time to let go. Clark recommends when the cost of a repair exceeds 50% of the remaining value - that's when to dump it. Ironically, you may need to pay for the repair anyway in order to trade/sell it. Otherwise, you get clobbered on value. Most people tire of and dump a vehicle prematurely and that is expensive. The longer you keep a car, the better for your wallet. The depreciation curve is a dive through the first 4 years, into gentle decline, as your money works for you. As the vehicle fleet steadily moves to electrics, they're more reliable. Today batteries are much more efficient. The cost of ownership on electrics is much less than gas engine cars. The best deal: Buy a used electric car and drive it for a long time. Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	I'm so glad you're with us here on the Clark Howard Show where it's about you and that
0:10.6	quality yours.
0:11.6	I want you to learn ideas from you so you ideas from you.
0:16.0	I do learn ideas from you each and every day.
0:19.3	You learn ideas from me that will help you save more and spend less and don't let you
0:23.5	ever rip you off and learn ideas from you too.
0:28.0	Coming up in just a few minutes, I want to tell you about the new trends with rip-offs,
0:35.2	financial cons, what you need to be aware of, what you need to look out for.
0:40.6	And coming up later, the average age of a vehicle in the United States is the oldest
0:46.2	it's ever been.
0:48.4	When's it time for you to give that vehicle a send-off?
0:53.1	I want to talk right now about you giving a loan a send-off.
0:58.3	So you think about the areas we borrow money in.
1:03.4	We borrow principally for a home, for a vehicle or on credit of some kind of credit card, personal
1:13.8	loan, home equity line of credit.
1:19.0	Those are, you know, you think about those are the main things and then for people
1:23.6	went to college student loans.
1:26.9	But something that has frustrated callers to my show for as far back as I can remember
1:34.5	when people first became aware of credit scoring is that you are punished not rewarded when
1:42.6	you become debt free.
1:45.8	When you no longer have a vehicle loan, when you no longer have a mortgage, that when
1:52.5	you start eliminating types of credit, the scoring models that the banks use punish you
	...

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