It's time for the b a q I don't know why always forget the cadence. It's time for the b a q A, the b a q A. This is brand a mission and you will be Did you hear it?
Question questions? Try answer?
I always forget to be the b a q A to b a q A from the b a q A. Okay, the b a q A. That's what I forgot. It's like the b a q a A the b a u a.
Okay.
Welcome back and welcome black.
It is Brad Ambition. Question and answer, and we love your qs. And although we don't have all the a's, we try our best.
We do. We give you the best aids lowercase a's. Is I ice to say, take it with a handful of assault. I don't think there's been a question in recent memory that has led me to cackle as hard as today. One of today's questions just did.
So.
I am excited to dive on into this this mailbox that we've got here once again. Though before we do, y'all can hit us up with your questions. We get most of ours through Instagram, where you can dm us at Brown Ambition Podcast and don't forget to follow and like some posts you know while you're there. But also you can DM us without following. That's fine. You can also hit us up directly email Brown Ambition Podcast at gmail dot com dot com.
All right, so question numero you now, hey, ladies, love the show, Love you back girl. My husband and I have four kids. The question is where does their credit score start? So they start with a perfect score or at zero brotus question, what advice would you give an eighteen year old as they begin building their credit? This
is a great question. Okay, So know this that legally, if your child is under the age of eighteen, they can't sign for Like most credit is built upon you've made some sort of relationship or promise to a lender that you are going to borrow and pay back based upon their terms. So if a child is under the
age of eighteen, they can't legally sign for that. But it is possible that you put them, like you know, when they're like sixteen, on your like you know, like you could be an authorized user, So meaning like you put them on your card, that means that they can use your card. They're not a joint you know, it's not a joint card, so they're not responsible for the debt, but they can use your card and therefore start to
build credit. So people start to do that. But and so I just want you to understand this that like, no, kids don't start with perfect scores. I want you to think about a credit score the way you would think about driving, like do kids. Like if you are driving, there's a reason why if you're going to get insurance for your teenager who's driving, that you get the highest rate because by default, because they don't have any driving experience, they are considered a bad driver out the gate. They
don't have to get into an accident. You're terrible driver, says you just got here. It's the same thing with credit, right, credit really is you have to think about it as a GPA is an average of your choices, and you haven't made any choices yet if you're still really young, so there's nothing they're like, you don't have any history, don't you can't prove that you can pay, you know, you can't prove that you can borrow responsibly.
So your kids kind of start off loan and then they build themselves up with with good behavior. So just keep that in mind. But you can kind of you can give them my dad did this for me.
You can give them that kind of like extra boost by adding them as an authorized user to a current card that you're paying off in full every month. So by the time that they're eighteen years old and they can get their own credit card, you know, they have a credit score that's decent in comparison to their friends. About some advice, Do you have some advice for eighteen year old building their credit manager?
Yeah, yeah, A couple of ideas. One, I think it's really important that they have they build their credit full stop. I didn't realize how many people graduate without having any credit at all, and I was trying to think back to you, how did I establish credit in college? One was I did get a credit card that, you know, I would max out all of the time because it was like three hundred dollars limit. So I didn't have great credit, but I've had a credit score.
You know.
Another way. Another way was well once I graduated. Anyway, when your student loan, if they have student loans, when you start making payments six months after graduation, that will start appearing on your credit And as long as you're making payments on time, that can help you build credit as well, Tiff, you said, becoming an authorized user on a parent's credit card is definitely one way. But the yeah, it's only a gift if you the parent are good
at paying your bill in full. And you know, because they don't, it's not it doesn't it's not good.
They inherit, they take it.
But I will say not all cards. Apparently not all cards report authorized user credit history to the bureaus, so it may not. So you have to just check. And there's actually a great article. I know because I used to create articles with a huge team of writers, and we did one on credit cards that report authorized user activity to credit bureaus. So before you do that, just double check that your issuer, that your bank actually sends
that information because you don't get you know who. It's like when you leave the house without your Apple Watch or your fitbit, like did you really walk today? No, it doesn't count unless it's counted, right. You didn't really call.
Them because when I add my added my sister, Lisa, the baby, the baby, the big baby, I was like, we called and I said, hey, I'd like to add Lisa to my Bank of America card. And I said, wait, does this report to credit bureaus, And they said, oh, it almost was something like we almost had to like opt into so it doesn't hurt to just yeah, just call and super easy. I had her on the phone so she can give them her social because they're going
to need to do that. Also, back in the day, they used to tell you to get a store card to get started, because most eighteen year olds won't qualify for a traditional unsecured.
Card, and so you don't have to do that anymore.
Go ahead and get yourself a secured have your eighteen year old get a secured credit card. You can get one for as low as for flows as three hundred dollars deposit.
So what happens is they come up with a three hundred or you.
Do, mom, and they put that money in a money market slash savings account that's the limit, and it's secured with your own money, meaning that as your eighteen year old is swiping, if for whatever reason they don't pay, because they can swipe up only up to what's in the bank, which is three hundred, they will snatch that three hundred so fast from that savings account and say,
don't worry, says, we still got your money. So a secured card is like a credit card with training wheels because you're not actually borrowing your money from the bank. You're kind of borrowing against the money that you put up. So that's another way, another great way that anyone with bad credit or someone would This is what they call it. When you don't have much of a credit score or a credit report, they call it.
A thin file.
That's the official term, meaning like you don't have much here, so as a result of the file being thin, we just consider you a risk. That's why your credit score is not so great when you're young, because you're a thin file and you're at risk something else. And one last thing is have your eighteen year old put the cheapest bill they have that ten dollars Planet Fitness membership on that card, and have them paid off every month
in full. Paying off a credit card in full every single month puts like fairy dust on your credit score because credit bureaus love to see that you paid off a debt in full. They don't care the amount, they care about the habit. And you can automate that habit happening every single month. They're gonna see that thin file. Get a little thick you know, thick thh I sec that little cres card, get a little booty on us, thicker.
Than a snicker, that credit score, that credit file thicker than a snicker. I forgot about that phrase, and I try to find it an excuse to use it every day. So thank you for that.
So if you want that thick credit score, like pay off your credit you know, pay off your credit card bill every month in full, but make sure you paid off after the statement date.
The statement date is when.
They say, hey, credit Burias, my child used their card, because you want them to report it was used and then it was paid off, So after the credit date, the statement date, but definitely obviously by the due date.
I will just add I walked over your words, my bad, but I got excited because I'm like, have them pay it off, because I think the thing that about authorized being an authorized user is like they get the benefit,
but they don't have to do anything. And I think the real teaching moment is that more like get a secured card, to get your own credit card, because then they have even if they mess it up and they miss a payment and their credit score goes down, you can still they have time to bounce back from that. But it's a learning moment. And for me, I'm like obsessed with give kids hand on, hands on experience and don't just do it for them, because I have seen it go the wrong way and then they graduate and
they're like, how did this happen? And then they just screw it up after college when the stakes are higher. Yeah, so just adding that's the good. Shall we move on to the question that made me cackle? Yes? Can you read it? It's like a cackle again?
Sure me, me, me, me, Okay, I have a question regarding a student loan overpayment. I'm going to grad school to get my psych shert from a top school in the country, and I know I'm going to be able to earn an income to make the degree worth it. The program is thirty one thousand dollars and I've accepted sixty thousand in loans, so double your trouble. I want to invest a difference in bitcoin. Say that again, slower, I want to invest the difference in bitcoin. Ooh, we're
gonna add the laugh track right here. I'm like, laugh it's a laugh and a wins at the same times. But I just love the next few questions.
Right, is this a bad idea or am I onto something here?
I love you guys, You're like my two best friends as I drive to work.
I love you too, Sister.
Well, here's the thing. I'll say this and then you give your vice Mandy. So that's not the first time I've heard of someone doing something like this. I remember the first time I've heard of this is I was in college and a friend of mine, we'll call him Jose, he took out more money than he needed, you know,
and honestly he used it. He used it to buy a rental property, you know, that put a down payment on, and then like the money that he got from the rental property, he used it to pay back you know, the dead And so that's not the first time that I've heard of someone taking the over payment and investing it, you know, because typically I remember refund checks.
When I was in school undergrad. What your refund check you was like free money, free money, free money, even.
Though it wasn't, Yeah it wasn't. It was a little interest, but you know, it was surprise exactly. Although I'm like, who gets who gets twice as much as they need? What? What's going on with the math there invest in a bitcoin? I mean, listen, how many bitcoin could that even buy? You? Like half a bitcoin today? What is a bitcoin worth?
No?
For I honestly think bitcoins I think are worked like fifty or sixty?
Me? See what is it? You can't even you can't even can you buy a fractional bitcoin? I don't even know if you can? Now? I have some questions. First of all, I would like call the Burcher's office and be like, is this for real?
For real?
Because you don't want to like get rid of the money. Then maybe you have to pay some of it back, But I do know they give over payments and you can use that money for books or for rent, and especially if this is grad school you're talking about, it could very well be for your living expenses. I am not I'm all about you get a lut, you get a windfall, and you sync that into an investment and
then you let it grow. I think that is a great idea, especially if you have your living it you have a job, you can pay for your living expenses, you have an emergency fund, you don't have any debt, you have all of these you know, boxes ticked, and then this is literally just icing on the cake of your finances. Of course, I would say excess fund fun from a windfall, whether it's like a bonus at work, or it's a gift or something like that, or in this case, a refund check from your student loans.
Yeah.
Like sinking that all in one time into investments, I think can be smart. Caviat. I am not an investment advisor.
Or Tiffany, but go see your grandma.
Yes, this is so, this is my new advance. I don't think Mandy from six years ago would have been like, yeah, yeah, yeah, I don't know if I would choose bitcoin. First of all, it's hella expensive.
Girl, I just looked it up.
Eight is forty four point four nine to nine American forty four thousand dot almost forty five thousand American dollars. So says you're not getting a piece of bitcoin, Well you're not. You know, you can't afford bitcoin. Isn't that so crazy?
So that's no, that is insane. Do you still have your little bitcoin? Girl? Didn't you have bitcoin for a while? I do.
I have like a little piece of bitcoin. Anyway, we're not gonna talk about my big coins.
Okay, I'm sorry.
I could be on the island. It's like, no, I didn't have that much.
I don't.
Know, but I'll say this.
I want you, because you're in grad school, I suspect that you have a private student loan. Private student loans interest rates tend to be a little higher than you know, federal student loans. So I want you to make sure that whatever that student loan interest rate is, you're likely to recoup that in an investment, meaning you know, because there I mean, I mean, I'm just making a number. Like if you told me that you know you borrowed it's like fifteen percent, I might be like, ooh, sis,
let them keep their money. Because we know that the market on average US is yields on the low end seven percent back annually, on the high end ten percent back annually. So I would want to make sure that because I had a friend who had a student loan, and her interest rate, because it was private and she wasn't really paying attention, was higher than what you would suspect like a student loan interest rate to be. So just check on that, making sure that it's not double
digit that interest rate on that student loan. If it's not, then you are likely to make that back, you know, through investments, you know, so you know, I probably wouldn't consider a big coin to Mandy's point, but certainly I would ask myself, what are some other ways that you know, you might just choose? Honestly, an index fund. I know they're so boring, but.
Like that, it's an amazing option. Funds just get you a total stock market index fund. You have Vanguard Fidelity. They all have their own versions of it.
Or ideally a ETF, so you could keep the fees low because you put in a mutual fund and that's somebody sitting there picking it, and that person wants to get paid. We don't like her, but instead of us the ETF, it's the algorithm.
The algorithm doesn't ne much and so.
The fees are lower.
So you use it like a like, like Mandy said, a total market index fund ETF. If this was me and her, because we're talking to each other, we're not giving you, you know, advisor advice, but.
Right many, that's what I would do if I was you.
Yeah, absolutely, And I think that you're and with your with the fact that you have you know, you think you're gonna have gainful employment after you graduate once that thirty K loan comes due, you'll be able to pay it back, and you can also be investing for wealth now you're in your program. I think that is that is a savvy, rational way of doing it. But also the second part of this is can you sleep at night with this money in the market? Are you a
savvy investor? Have you been investing already? Maybe you are because you're interested in bitcoin, or maybe you're not because you're interested in bitcoin. It can go either way. But I do think that you have to like factor and you know that bill will come do and do you feel confident you can pay it down? And are you can? You? Can you stomach the potential to see that investment go up and down with the market, and just keep your eyes on that that long term goal of what you're I.
Would not invest in it in individual stock. That's just just like really risque, you know. So that's to your point.
I would not, like That's why we like it. Than you could like you could you could buy a bunch of whatever you could. I mean, you can't buy any bitcoin. I don't know if you can buy a piece of bitcoin, but you could buy like you know, however, many shares of Tesla or whatever company you like. That's the thing that you. I said could, I didn't say shape, I said you can. It is possible, Yeah, it is possible, but it's not what I personally would do. I'm a
kind of gal. Yes, hi, So if you thanks for the chuckle, Yes that was si bitcoin A.
You're onto something. Yeah, you are onto something. No, for all, it's not in general, you're all that.
The idea of investing excess money is a says, I see why you're getting your masters because you're smart.
Smart. We're just like redirecting it towards you know, something else.
So imagine what could have happened if I took that two thousand dollars refund check and invested it in an index fund fifteen years ago and had not just taking it to the gap.
Where would I be?
I don't even want to think about it. Like, yes, yes, you're very wise.
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I know, look at that, it's going to first grade.
We'll see all or wait, seventy two in dog years or no, how many years is a dog seven times six? Forty two in dog years? Oh?
Almost as all as me.
We're gen xers as a podcast yes okay, but in the podcast game, we've grown grown in the podcast game. We'll see you guys next Wednesday for the full BA show and then next Friday for the B, a Q and A right