Tell my audience about yourself. What made you want to start your website whitecoatinvestor.com?
I’m a full-time practicing emergency physician. I started The White Coat Investor website two years ago in order to help highly-paid professionals avoid being taken advantage of by financial professionals.
Please name some quick and easy ways for a person to improve their credit even if they’ve recently been through a divorce or some type of financial calamity?
The best way to improve your credit is to simply pay your bills. Check your credit report and make sure it’s accurate of course, but mostly, lenders want to lend to people who pay their bills. If you pay your bills, you won’t have any trouble getting credit. Obviously, they might not want to lend to you if you don’t have any income either, but that’s less of an issue than just paying your bills. All the other things that improve your credit, like the right number of accounts and the right percentage of available credit being used etc are miniscule compared to whether or not you pay your bills and how long you’ve been doing so.
When a person walks into a car dealership what are some credit questions you recommend that consumer ask the salesman or finance manager?
I don’t recommend that a person buying a car ask ANY credit questions nor that they talk to a finance manager. Cars are a depreciating asset, and should be bought with cash only. I’ve owned 5 cars in my life and paid cash for all of them. I was doing that long before I had a “doctor’s income”. This idea that you have to have a $10,000 car or even a $30,000 car in order to have reliable transportation is stupid. A $2-5K car may last another $100,000 miles with an occasional repair. The best deal I ever had on a car was one I paid $1850 for, then sold 4 years later for $1500. It was almost free transportation.
How long does the credit restoration process take?
It can take up to 7 years since that’s how long a bankruptcy will stay on your credit report. But I suspect it would be a matter of just 2-3 years to get your credit to the point where you can buy a house, which is really all you should be using credit for anyway. It will likely take you that long to save up a down payment anyway if you’re recently out of a bankruptcy, foreclosure, or other financial calamity.
If a person can’t purchase a vehicle in cash, what’s the ideal down payment you recommend they have? Does a larger down payment mean a shorter loan and APR?
Ride the bus. Walk. Ride your bike. Move closer to work. Car pool. Ride with co-workers. Borrow your mom’s car. You get the picture. The ideal down payment is 100%. Buying a car on credit is a technique that will keep you in the poorhouse. If you have a car loan now, pay it off as soon as possible, then keep making those payments into your bank account. It won’t take long before you have enough to buy your next car with cash.
If you’re a first time car buyer and you’ve never shopped for insurance before, what are some tips to get the lowest rate possible? What are some questions you should ask your insurance agent to know your getting the best possible deal?
Call two or three places including Geico and USAA if you’re eligible and get quotes. Insurance isn’t just about low rates, it’s also about good service when you have a claim. If you wish to use an agent, use an independent one that can sell you a policy from any company. Then he can shop around for you and get you the best rate.
Besides whitecoatinvestor.com what are some of websites/blogs you would recommend our visitors visit while trying to improve their credit?
Bogleheads.org is full of millionaires and soon to be millionaires who got there by living frugally, boosting their incomes, and investing smartly. Fat Wallet Finance Forums are also a great resource for those who are looking for special deals to maximize their financial opportunities.
James M. Dahle, MD
The White Coat Investor
This is our sixth interview in our “1000 Interview Challenge” If your interested in an interview, please contact me.
This interview was conducted by Shane McC. Shane currently is attending RISD studying computer programming. He enjoys traveling and plays hockey. He played for the Boston Junior Bruins of the EJHL during the 01-02 season. You can follow him on Google+