Over the past week, I’ve received a barrage of messages from people seeking specific personal finance advice. While I’m willing to offer help where I can, many times the questions lay outside my area of expertise. I’m just a regular guy who is learning about personal finance and sharing the information with the world. I’m not a trained financial advisor. I can offer generalities, but the specifics are sometimes beyond me.
Lifehacker has a feature called “Ask the Readers”. The editors put out certain questions for group discussion. I’m going to try that here at Get Rich Slowly. My hope is that your collective wisdom will be able to help people find direction. I’m constantly amazed at the stories and advice you people have to share — let’s see if we can put it to good use.
Some of the questions will prompt criticism, but my hope is that we’ll mostly be able to be constructive and to help the people who’ve written in. With that said, here’s the first question, which comes from Jason, a young man just starting out in life. The recent entry on young people in debt prompted Jason to write:
I’m looking into taking out a loan for a car that costs $2,500, but Capital One requires a $7,500 minimum at 8% APR. Would it be okay to take out that much and to just pay back $5,000 right away? Or would this get me into trouble?
My initial reply was:
Well, it’s hard to know without actually looking at the details of the loan. The best thing to do is to read all the fine print (or to have somebody you trust do so). In most cases, though, what you’re suggesting is a good idea. That is, if you take out a loan for $7500 and only need $2500, it should be fine to pay back $5000 right away. In fact, it’s a good idea! But, as I say, you want to check the fine print first. Is Capitol One your bank? Or are you doing a cash advance on a credit card? When I bought my first car in 1991, I did a cash advance on a credit card. Yikes, that was ugly.
To which Jason responded:
Capital One is just my credit card company, so I guess indeed it would be a cash advance. Wells Fargo is my current bank. But these days it’s so damn hard to get a loan at my age.
I am currently 19 and have been building credit since the day I turned 18. I still can’t get someone to accept me. My plan is to use the money I get to buy a vehicle, and then get a second job since I won’t be attending school until next year.
That said, my one and only job is Taco Time and it pays me very poorly. I only get 15-20 hours a week (soon to be about 25). My checks are puny at a measly $220 average. Most loan agencies, banks, etc. require that you make like $1,000/month or have held your job for two years or more. I’m in quite the pickle. Is the only chance I have just flat out saving while having no fun for months and months at my low paying job?
There is literally almost nowhere ever to work in this town. [Jason lives in a small town in rural Oregon.] All the kids hold their jobs because they don’t have vehicles, either. I could get a job in larger city nearby and take the bus, but that leaves me to work only between its operating hours, and may actually only allow me to work the same hours I currently do. If you have any advice whatsoever it would be greatly appreciated.
Here is my final response:
Unfortunately, you may be in a position where, as you say, you have to have no fun for a few months at a low-paying job. I went through this when I was young, as did most of my friends. It sucks, but doesn’t last that long. If you’d like, I can post your question at Get Rich Slowly to see if the readers have any advice.
And thus “Ask the Readers” was born. Typically, I will submit a question or two each week for group discussion. I have a backlog of reader questions right now, though, so the frequency may be greater for a while. (The increase in questions may be a sign that it’s time to resurrect the defunct Get Rich Slowly discussion forums.)