Just say no to credit cards!!!!

[steph72276]

So another thread got me thinking about starting this one. I'm not sure if ATW is the right place to start this, but it seems appropriate given all the talk about the economy. My hubby and I have become huge fans of Dave Ramsey and have been following his plan for the past few years. Put simply, his plan is to pay off all debt except the house, save 3-6 months in an emergency fund, put 15% of your pay into investments, start college fund if applicable, then pay off remaining amount on mortgage, and lastly give to the causes of your choice.

Does anyone else live this way? Not necessarily on Dave's plan, but not using credit cards for anything or paying cash for cars? If so, do your friends/family think you are weird for living like this? I've gotta tell you, my friends and family probably thought I was a weirdo for doing a monthly budget and paying cash for cars instead of having a note, but right about now, that plan is looking pretty smart. We actually get to keep our paycheck rather than having to send it right back out to credit cards and car payments. Anyone else in this boat? Want to share any tips on what you did to make it work? Our biggest wasted expenses were on food every month. I totaled it up one time, and we were spending $2500 a month on dining out and going to Whole Foods

. That's more than some people bring home in a month! Now we spend about $500-600 on both. Being on a written budget every month has helped us see where the money is going every month. My fave quote on money is that if you don't tell your money what to do, it will go away. So true!

 

[tradergirl]

Yep. I worked at a large law firm doing bankruptcy/RTC work in the early 1990s. It made a huge impression on me. We live on cash and have for 20 years. Cash for cars, cash for houses. If I cant'' write a check, I don''t buy it. We are riding this down turn out just fine.

 

[DiamanteBlu]

Yup. Cash is good. No cash - no stuff.

 

[movie zombie]

basically, yes. we do use plastic but pay it off each and every month so no finance charges. its just easier than carrying cash all the time. we pay cash for our vehicles but buy used from private parties. we have 2 years of living expenses saved. we were approved for a much higher priced house but stuck to our desired price range. i buy furniture from a consignment store. i buy plants instead of cut flowers. i reuse deli containers.......you get the picture!

when i was single, other people always wondered how i could afford to go and do the things i did....bought a house, went to europe.....when they couldn''t. it was simple: i saved and they didn''t.

mz

 

[Beacon]

I love credit cards. Put everything on credit cards. But they are paid to zero each and every month.

We enjoy saving. Maybe it is puritanical but we enjoy doing stuff that saves money.

At this moment, the trunk of my husband''s car is filled with plastic bottles that he will return to get the redemption fee. We are rather past the point of needing to do this, but still we do it. Hardwired by now, I guess.

When I was 11 I found out that for each $20 I put in my savings account, the bank would give me one dollar per year. I simply could not believe that such a great thing was possible. After that I never looked back.

 

[steph72276]

I should have said we do use debit cards instead of real cash most of the time, but we input every purchase into a money program so it keeps up with categories so we can see where the money goes. I think it''s just fine to use a credit card as long as you pay the balance every month, but most people just don''t have the discipline to do this. I think something like 70% of people carry a balance every month. Something always comes up, and it is easy to say you''ll get to it the next month, but if you''ve already paid for it with cash/debit, it is already out of your account.

 

[miraclesrule]

Huge fan of cash here. Mainly because I abhor debt. The only thing I have on credit is my house.

I think it was despicable that credit card companies were allowed onto every college campus to entice students to sign up for them. It created an entire generation of credit card users who have had to stress over debt as a huge part of their existence. It has always troubled me.

 

[purrfectpear]

Dave Ramsey means well, but he''s really a tool

Credit is very important to the interest rates you will get on your home mortgage or car loans. Everyone should establish a credit history.

Why turn down the perks of credit cards (cash back, points, airline miles, etc.)? Let your money work for YOU. I charge everything (and I mean everything) and then pay in full each month.

I have no revolving charges whatsoever, but I do use the banks money for 30 days

Lord knows interest rates on savings are in the toilet, but still it''s my money and I''m going to milk every little bit of interest I can.

Dave Ramsey, Suze Orman, and Robert Kiyosaki provide financial advice at the most basic level. It''s fine to start there, but it''s only the tip of the iceburg.

 

[steph72276]

Date: 2/21/2009 2:04:46 PM
Author: purrfectpear
Dave Ramsey means well, but he''s really a tool

Credit is very important to the interest rates you will get on your home mortgage or car loans. Everyone should establish a credit history.


Why turn down the perks of credit cards (cash back, points, airline miles, etc.)? Let your money work for YOU. I charge everything (and I mean everything) and then pay in full each month.


I have no revolving charges whatsoever, but I do use the banks money for 30 days

Lord knows interest rates on savings are in the toilet, but still it''s my money and I''m going to milk every little bit of interest I can.


Dave Ramsey, Suze Orman, and Robert Kiyosaki provide financial advice at the most basic level. It''s fine to start there, but it''s only the tip of the iceburg.

Actually, Perfect Pear if you use a mortgage company that actually uses their brain and manually underwrites their mortgages, and you have a good chuck of money to put down, you can still get a good interest rate. I have a 5% interest rate on a 30 year mortgage

. And I don''t really care about my FICO score other than that because I pay cash for cars and everything else as well. Most people aren''t as responsible as you are with paying your card in full every month. If they were, we wouldn''t have such a problem with bankruptcy, as most bankruptcies are filed due to debt.

 

[TravelingGal]

Date: 2/21/2009 2:04:46 PM
Author: purrfectpear
Dave Ramsey means well, but he''s really a tool

Credit is very important to the interest rates you will get on your home mortgage or car loans. Everyone should establish a credit history.

Why turn down the perks of credit cards (cash back, points, airline miles, etc.)? Let your money work for YOU. I charge everything (and I mean everything) and then pay in full each month.

I have no revolving charges whatsoever, but I do use the banks money for 30 days

Lord knows interest rates on savings are in the toilet, but still it''s my money and I''m going to milk every little bit of interest I can.

Dave Ramsey, Suze Orman, and Robert Kiyosaki provide financial advice at the most basic level. It''s fine to start there, but it''s only the tip of the iceburg.

Totally agree.

Good for everyone else if they can push cash down to buy a house. We can''t. We live in LA and that''s our choice, but we don''t have 600K lying around so we need the good credit score. We will have 100K saved to put down, and in some parts of the country, that might be enough to pay cash for a home, but not here.

We do not buy something if we can''t afford it. Cards get paid off in full every month. We have cards with points programs and have gotten perks through them. It makes sense for us to use the bank''s money for 30 days, as PP says. Our car? We bought with 0% financing because our credit was so good.

I also refuse to use debit cards for online purchases...I much prefer to use a CC and the protection that it gives, especially since it does not come out of my account. I buy most everything we need online.

But I agree...most people in this country don''t know how to make credit work for them. I essentially pay cash for everything (meaning I have the cash in hand) but I use the bank''s money up front, does that make sense?

 

[Haven]

I'm with Tgal and Purrfectpear--We use a credit card with a cash back program to purchase everything, and we pay our balance in total every month, so we never carry any debt on our credit card. We actually get a lot of cash back from our card, so it works out really well for us.

We spend far less than we earn, we put a set percentage of our income into our savings every month, and another set percentage into investments. We do have a mortgage because we only put 20% down on our home, but we're okay with that and we pay more than our minimum mortgage payment each month.

We make it work by talking over every irregular purchase we make. We have a written timeline for all of our bills so we don't forget to pay them each month, but we don't have a written budget.

Nobody we know thinks were crazy, but we don't discuss finances with our friends and family. My friends do think I'm crazy that I don't like to go shopping, but that's just a personal preference, I don't like having a lot of stuff.

 

[steph72276]

That's awesome if you can pay off your cc and not incur any revolving debt this way. However, you guys are the exception to the rule. The statistics say that the average household in 2008 had over $9 in credit card debt alone. That's not including student loans, car loans, lines of credit, etc. I just think a huge amount of people out there are not responsible enough to have credit cards.

And I agree about being mad about the credit card companies on college campuses. They usually have deals with the University that the school will get a cut of $ for every application they get filled out. So ridiculous to offer these cards to students who for the most part either have little or no income. Then they get to come out to the real world with credit card debt and lots of times, huge student loans. Not a great way to start off life. I am already teaching my child about money through doing chores, saving for things he wants, etc. and I hope my influence over him is greater than a free t-shirt offer

 

[steph72276]

Oh, TGal...not sure what kind of debit card you use, but if it''s Visa or Mastercard, you have the same protection (0 liability) as a credit card.

 

[TravelingGal]

Date: 2/21/2009 5:36:27 PM
Author: steph72276
Oh, TGal...not sure what kind of debit card you use, but if it''s Visa or Mastercard, you have the same protection (0 liability) as a credit card.

Except the money is already OUT. That is the difference. What if you need the money back asap and it takes more time than you''d want to resolve? Yes, most banks do put the money in as soon as they can, but I would way rather stress about funds being stolen that aren''t in my actual account.

And yes, mine is visa/mastercard.

 

[steph72276]

Date: 2/21/2009 6:06:18 PM
Author: TravelingGal

Date: 2/21/2009 5:36:27 PM

Author: steph72276

Oh, TGal...not sure what kind of debit card you use, but if it''s Visa or Mastercard, you have the same protection (0 liability) as a credit card.

Except the money is already OUT. That is the difference. What if you need the money back asap and it takes more time than you''d want to resolve? Yes, most banks do put the money in as soon as they can, but I would way rather stress about funds being stolen that aren''t in my actual account.


And yes, mine is visa/mastercard.

Well, my bank promises to have the cash back in my account by the next day. I have an emergency fund that I can access easily to tide me over if needed, so I''ve never stressed about it being an issue for me personally.

 

[MichelleCarmen]

Date: 2/21/2009 4:16:52 PM
Author: TravelingGal

Totally agree.

Good for everyone else if they can push cash down to buy a house. We can''t.

There is no way we could put cash down for a house, either. Not even a car! DH''s truck is paid off, but I still have payments on my car. . . just the way life is!

We don''t have any credit card debt and I only use my cards for small purchases that I can be sure to pay off at the end of the month. I keep my dept. store cards active by buying socks and little things.

Basically, our only debt is for necessities - mortgage and car.

It freaks me to think about saving for the boys'' college funds.

 

[steph72276]

Date: 2/21/2009 6:42:18 PM
Author: MC

Date: 2/21/2009 4:16:52 PM

Author: TravelingGal


Totally agree.


Good for everyone else if they can push cash down to buy a house. We can't.

There is no way we could put cash down for a house, either. Not even a car! DH's truck is paid off, but I still have payments on my car. . . just the way life is!


We don't have any credit card debt and I only use my cards for small purchases that I can be sure to pay off at the end of the month. I keep my dept. store cards active by buying socks and little things.


Basically, our only debt is for necessities - mortgage and car.


It freaks me to think about saving for the boys' college funds.

I agree with you that house payments are a way of life for most....but always having a car payment is a choice. I have never really been into driving ultra expensive cars, and our current vehicle is 7 years old and I'll drive it at least until it's 10 years old. We maintain it very well so it is very dependable. If you didn't have a car note, it would be easier to save for college.

 

[vespergirl]

We have recently done this - because my husband makes a good living, we weren''t spending more than he made, but we were just putting a lot of credit cards and occasionally letting interest accrue.

We recently paid off all the credit cards, and right now our only debt is on one car (the other is paid off), the mortgage on our house, and a little in student loans (my husband just got his MBA last year and he''s already paid off more than half the cost of the degree).

We stopped using credit cards, and have just started paying cash for everything - we''re deflnitely making less impulse purchases, and saving more.

We also haven''t been negatively hit by the economy, because we bought a house & car we could afford, and don''t live beyond our means.

 

[brooklyngirl]

DH and I charge everything to our AMEX, and pay the full amount every month. It''s quite useful for cash back, and other perks. We paid for our car in cash, but it was only because we couldn''t find a financing plan where the interest rate was lower than our savings rate.

We don''t not buy anything that we don''t have actual cash to pay for.

It''s important to have a credit history, and even moreso to use credit to your advantage.

 

[MissGotRocks]

We have never been credit card users. We use them now and pay off everything at the end of the month. If we wanted something, we saved for it. My biggest fear was the college educations we wanted for the kids. Once I get money in the savings account, I don''t want to take it out! We were able to pay for them too on a month by month basis - mostly because we didn''t have debt other than a house payment. It was a good feeling to see them graduate and know that we didn''t owe anything and neither did they.

Both of my kids were deluged with credit card offers in college and I said no way! However, when they graduated, they had no credit. Neither of them could get a car loan or a credit card of any kind because they had no credit rating. It became a huge problem - to even pay rent you need a credit history! No one wants to extend credit to establish credit - it was kind of crazy. My son eventually persuaded one company to give him a card with a $500 limit. He charged two tanks of gas a month and paid it off at the end of every month. After that, he was bombarded with offers. He didn''t want the cards but did want to buy a house and you need a FICO score to get a mortgage. Even in a short amount of time paying that card, he established an excellent credit rating.

My two rules were no drinking and driving and no credit card balances! Both are no brainer, dead ends. . . they both take pride in having no credit balances as they''ve seen many friends head over heels in debt. It piles up before you know it!

Just as banks and mortgage companies allowed and encouraged people to have outrageous mortgages, credit card companies make it so easy to get deeply in debt very quickly. There are alot of things that need to change. . . counting on people to discipline themselves obviously doesn''t work real well all the time. When someone has five credit cards with balances the last thing they need is an offer for another!

 

[TravelingGal]

Date: 2/21/2009 6:23:17 PM
Author: steph72276

Date: 2/21/2009 6:06:18 PM
Author: TravelingGal

Date: 2/21/2009 5:36:27 PM

Author: steph72276

Oh, TGal...not sure what kind of debit card you use, but if it''s Visa or Mastercard, you have the same protection (0 liability) as a credit card.

Except the money is already OUT. That is the difference. What if you need the money back asap and it takes more time than you''d want to resolve? Yes, most banks do put the money in as soon as they can, but I would way rather stress about funds being stolen that aren''t in my actual account.


And yes, mine is visa/mastercard.

Well, my bank promises to have the cash back in my account by the next day. I have an emergency fund that I can access easily to tide me over if needed, so I''ve never stressed about it being an issue for me personally.

No, it wouldn''t be an issue for me because of the same, but I will tell you, finding money gone out of your account, whether you have cushion or not, is more stressful and shocking than finding unauthorized credit card charges.

And don''t believe what your bank says. They''re full of sh*t.

 

[LAJennifer]

Date: 2/21/2009 10:01:08 PM
Author: TravelingGal

Date: 2/21/2009 6:23:17 PM

Author: steph72276

Date: 2/21/2009 6:06:18 PM

Author: TravelingGal

Date: 2/21/2009 5:36:27 PM


Author: steph72276


Oh, TGal...not sure what kind of debit card you use, but if it''s Visa or Mastercard, you have the same protection (0 liability) as a credit card.

Except the money is already OUT. That is the difference. What if you need the money back asap and it takes more time than you''d want to resolve? Yes, most banks do put the money in as soon as they can, but I would way rather stress about funds being stolen that aren''t in my actual account.



And yes, mine is visa/mastercard.

Well, my bank promises to have the cash back in my account by the next day. I have an emergency fund that I can access easily to tide me over if needed, so I''ve never stressed about it being an issue for me personally.

No, it wouldn''t be an issue for me because of the same, but I will tell you, finding money gone out of your account, whether you have cushion or not, is more stressful and shocking than finding unauthorized credit card charges.


And don''t believe what your bank says. They''re full of sh*t.

TGal - you''re right. This happened to hubby and me a few years ago. Our Washington Mutual account was hacked - copies of our checkcard were made and someone went on a one day shopping spree totaling over $7500. We check the account online everyday - so we notified the bank. Luckily, we had much more than that in the checking account - and had another account at a different bank - so cash flow was not a problem. However, it took a month for WAMU to put the money back in our account. We had to get a police report, and do a lot of paper work. Very stressful. We never use our checkcards for purchases anymore - only at bank specific ATMs.

 

[TravelingGal]

Date: 2/21/2009 10:52:56 PM
Author: LAJennifer

Date: 2/21/2009 10:01:08 PM
Author: TravelingGal

Date: 2/21/2009 6:23:17 PM

Author: steph72276

Date: 2/21/2009 6:06:18 PM

Author: TravelingGal

Date: 2/21/2009 5:36:27 PM


Author: steph72276


Oh, TGal...not sure what kind of debit card you use, but if it''s Visa or Mastercard, you have the same protection (0 liability) as a credit card.

Except the money is already OUT. That is the difference. What if you need the money back asap and it takes more time than you''d want to resolve? Yes, most banks do put the money in as soon as they can, but I would way rather stress about funds being stolen that aren''t in my actual account.



And yes, mine is visa/mastercard.

Well, my bank promises to have the cash back in my account by the next day. I have an emergency fund that I can access easily to tide me over if needed, so I''ve never stressed about it being an issue for me personally.

No, it wouldn''t be an issue for me because of the same, but I will tell you, finding money gone out of your account, whether you have cushion or not, is more stressful and shocking than finding unauthorized credit card charges.


And don''t believe what your bank says. They''re full of sh*t.

TGal - you''re right. This happened to hubby and me a few years ago. Our Washington Mutual account was hacked - copies of our checkcard were made and someone went on a one day shopping spree totaling over $7500. We check the account online everyday - so we notified the bank. Luckily, we had much more than that in the checking account - and had another account at a different bank - so cash flow was not a problem. However, it took a month for WAMU to put the money back in our account. We had to get a police report, and do a lot of paper work. Very stressful. We never use our checkcards for purchases anymore - only at bank specific ATMs.

You''re not alone Jennifer...I believe msnbc (or might have been the LA times) ran a shocking story about WaMu and how they took forever to give the money back to a woman who was totally victimized. In this case, it was because her check routing number was lifted and used. And they kept penalizing her with overdraft fees on top of it! It was a crazy article and I actually felt pretty enraged for the woman.

Oh, and you''re lucky you check every day. If you don''t report within 60 days, tough luck. You''re out the money.

 

[LAJennifer]

Regarding the original topic - we use credit cards as cash and pay off in full every month. I hate debt. We paid cash for my car in 2007, and will likely pay cash for hubby''s next vehicle. We rent, in Los Angeles - still waiting for the market to drop enough for us to comfortably afford a nice home. I think we''ll be waiting a long time. We just bought an apartment building in another state (West Virginia - where my folks live). We put only 10% down - the building pays for itself - positive cash flow and very low maintenance.

 

[deegee]

We charge every single thing we purchase in a month, and then pay the balance when the bill comes. We absolutely do not carry forward a credit card balance. We have a pretty good card through Chase (I don''t know if they still offer it) where we get 1% back on all purchases and 3% back on gasoline purchases, and the cash back comes right off the bill. We have lived in our house for 11 years and now make more than double than when we bought it, but don''t want to move because we have a wonderfully low monthly payment. We have one car payment. We had the money to pay cash, but couldn''t part with that much money all at once for a car! Our rate is really low, and it will be paid off way ahead of time because I make double payments each time.

We never use the debit card anymore. At the same time we had our credit card number stolen and used for $24,000 in purchases in Panama, a co-worker had his debit card number compromised. He found out when he tried to get some cash and had a zero balance. Our problem was resolved much easier (for us) than what he went through trying to get his money back. Ours took only one phone call to the Chase fraud department.

LA Jennifer - did you buy an apartment building in Huntington? We ate at the Hall of Fame Cafe for dinner tonight!

 

[LAJennifer]

Date: 2/21/2009 11:18:46 PM
Author: deegee
We charge every single thing we purchase in a month, and then pay the balance when the bill comes. We absolutely do not carry forward a credit card balance. We have a pretty good card through Chase (I don''t know if they still offer it) where we get 1% back on all purchases and 3% back on gasoline purchases, and the cash back comes right off the bill. We have lived in our house for 11 years and now make more than double than when we bought it, but don''t want to move because we have a wonderfully low monthly payment. We have one car payment. We had the money to pay cash, but couldn''t part with that much money all at once for a car! Our rate is really low, and it will be paid off way ahead of time because I make double payments each time.


We never use the debit card anymore. At the same time we had our credit card number stolen and used for $24,000 in purchases in Panama, a co-worker had his debit card number compromised. He found out when he tried to get some cash and had a zero balance. Our problem was resolved much easier (for us) than what he went through trying to get his money back. Ours took only one phone call to the Chase fraud department.


LA Jennifer - did you buy an apartment building in Huntington? We ate at the Hall of Fame Cafe for dinner tonight!

Yes, we bought a 4 unit on 12th street right on the corner of Ritter Park. We love the building. I''ve never been to the Hall of Fame Cafe. How was it?

 

[LAJennifer]

Date: 2/21/2009 11:18:46 PM
Author: deegee
We charge every single thing we purchase in a month, and then pay the balance when the bill comes. We absolutely do not carry forward a credit card balance. We have a pretty good card through Chase (I don''t know if they still offer it) where we get 1% back on all purchases and 3% back on gasoline purchases, and the cash back comes right off the bill. We have lived in our house for 11 years and now make more than double than when we bought it, but don''t want to move because we have a wonderfully low monthly payment. We have one car payment. We had the money to pay cash, but couldn''t part with that much money all at once for a car! Our rate is really low, and it will be paid off way ahead of time because I make double payments each time.


We never use the debit card anymore. At the same time we had our credit card number stolen and used for $24,000 in purchases in Panama, a co-worker had his debit card number compromised. He found out when he tried to get some cash and had a zero balance. Our problem was resolved much easier (for us) than what he went through trying to get his money back. Ours took only one phone call to the Chase fraud department.


LA Jennifer - did you buy an apartment building in Huntington? We ate at the Hall of Fame Cafe for dinner tonight!

Yes, we bought a 4 unit on 12th street right on the corner of Ritter Park in Huntington. We love the building. I''ve never been to the Hall of Fame Cafe. How was it?

 

[steph72276]

I''m really surprised at all the people on here that pay everything using credit cards and then pay it off in full every month. Since so many people aren''t disciplined enough to do this and carry a balance, what is your secret to paying them off every month? Do you write everything down so you know how much of a check you will have to write at the end of the month? Do you do a monthly budget or just have a big surplus if you spend lots more that month? With my debit purchases, I go online everyday and then enter them into a money account so everything is balanced out everyday and I know what we have in our account. Do you do something similar?

 

[steph72276]

In my 10+ years of using a check card, I''ve only had 1 issue. I was at a hotel coffee shop and tipped the guy $2 for my coffee and it got entered in as $200. I check our account everyday, so as soon as I caught the error, I just made one phone call and it was put right back into our account (I believe it showed up the next day). They asked if I incurred any overdraft fees, which I didn''t, but they said they would remove those too if I had any. Also, here in Florida, when you pay at the pump, it asks you for your zip code. My hubby typed it in the wrong way one time, and we got a phone call from their fraud dept. to check and see if we had the card. So, I feel confidant about my bank taking care of things if something were to happen. Granted, it was only $200 and not thousands, but I feel pretty secure with my bank.

 

[neatfreak]

Date: 2/22/2009 9:18:47 AM
Author: steph72276
I'm really surprised at all the people on here that pay everything using credit cards and then pay it off in full every month. Since so many people aren't disciplined enough to do this and carry a balance, what is your secret to paying them off every month? Do you write everything down so you know how much of a check you will have to write at the end of the month? Do you do a monthly budget or just have a big surplus if you spend lots more that month? With my debit purchases, I go online everyday and then enter them into a money account so everything is balanced out everyday and I know what we have in our account. Do you do something similar?

I just keep a mental tally of how much I have spent. I round every purchase up to the nearest dollar or five dollars. It's not very hard to keep track of this way for me. And DH hardly ever spends $ out of our joint account because I do all the bill paying and most of the shopping. We each have small personal accounts for "fun" money, so he keeps track of his own for that.