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Just say no to credit cards!!!!

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Mara

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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?

_____

I am not surprised at all. PS'ers are a different 'breed' than the rest of people out there in my opinion.

I was one of those dumb college kids racking up debt. I had never been taught how to manage any money, I'd really not had much of my own. It took me a long time to pay it off, but I did. Now I love my credit cards and my credit score. I use my card for everything, I don't carry cash. I pay it off within $500 every month. I don't pay it off entirely because I had a planner tell me once that the way to get a score over 800 is to pay off 4/5, but leave a tiny balance to show you can 'use' credit correctly.

Who knows if that is true but my score is higher than my husband's, who has always been a very responsible card user and pays his AMEX monthly. Oh yeah, he's bitter!!!

I have online access to all my financials, so I monitor them throughout the month. I know a range on what my card should be, and I typically pay it 2x a month to make the total, it helps me keep a handle on spending as well.

Credit is great when one can use it wisely, but most people don't. I really believe also that kids should receive finance training in high school because if your parents don't teach you the right ways when growing up OR you just see your parents spending and not understanding their saving, etc, you won't understand the model to follow either. I knew a lot of kids like me who learned their lessons the hard way. (and of course some whose parents paid their debts and they learned nothing)
 

steph72276

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Mara, you bring up some good points. I do think Pricescope is a different breed for the most part. It obviously isn''t the norm for people to be so responsible with credit cards as the bankruptcy rate will show you.
I guess I just don''t worry too much about my FICO score. Although it is still pretty high due to paying off 2 houses and numerous cars (before we started paying cash for them). The only thing I will ever likely need credit for again is if we purchase another house. We got a 5% 30 year on this current house, so I''m not too worried about that and hopefully if we stay in this one for at least 6-7 years it will be paid off and we can just pay cash for our next house (wouldn''t be able to do that if we moved to Cal. though!).
I think you also make a good point about checking on your balance often, paying it down twice a month, etc to make sure you are not overspending. And I agree financial planning should be taught in high school....the only thing I remember learning is how to balance a checkbook
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chrono

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I''m late to the thread but I''m another one who uses CC and pay it in full at the end of the month. I don''t spend frivolously so I know how much my usual bill should be. I use it for gas, groceries, and maybe some odds and ends, that''s all. All our eating out is only on the weekend too so that''s also factored in.
 

Dancing Fire

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Date: 3/11/2009 6:54:03 PM
Author: Mara

Credit is great when one can use it wisely, but most people don''t. I really believe also that kids should receive finance training in high school because if your parents don''t teach you the right ways when growing up OR you just see your parents spending and not understanding their saving, etc, you won''t understand the model to follow either. I knew a lot of kids like me who learned their lessons the hard way. (and of course some whose parents paid their debts and they learned nothing)
i''am one of them.
littlebashfulguy.gif
 

movie zombie

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Date: 3/11/2009 8:40:03 PM
Author: Dancing Fire

Date: 3/11/2009 6:54:03 PM
Author: Mara

Credit is great when one can use it wisely, but most people don''t. I really believe also that kids should receive finance training in high school because if your parents don''t teach you the right ways when growing up OR you just see your parents spending and not understanding their saving, etc, you won''t understand the model to follow either. I knew a lot of kids like me who learned their lessons the hard way. (and of course some whose parents paid their debts and they learned nothing)
i''am one of them.
littlebashfulguy.gif
do the parents learn THEIR lesson and quit bailing the kids out?

mz
 

TravelingGal

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Mara, that makes sense about the credit score and leaving a balance, but my score is over 800 and I haven''t left a balance on my card in 10 years. Not once. However, my guess is that my score is up there because I''ve paid off one car loan and am responsibly now paying off a second?
 

TravelingGal

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Also, someone correct me if I am wrong...

If I have a 3000 bill and pay 2995 of it, do I pay the interest on the $5 I didn''t pay, or the entire bill for the month? I recall years ago that I made an error in payment (over 10 years ago) and they said I was to pay interest on the entire bill since I didn''t not pay off the whole thing. I think I called and they waived the fee, so I never left a balance again. But my memory may be faulty since it was so long ago.
 

Mara

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TG, I believe it has to do with how long the balance was accruing interest. aka if you get a bill at the end of the billing cycle for $2300 and you pay it off three weeks later near the due date, then you'll pay more interest than if you paid the bill when you got it or when your cycle closed. I seem to avoid this for the most part because I pay my bill 2x a month...so its like a continuously rolling mini balance.

I think you are right re: the car loan adding to your score. Greg hasn't had a car loan in 10+ years, but I have for the last 2 years. He also only uses his AMEX as pretty much his only card. I think my score is the 20pts higher, because of my little rolling balance and the car loan. But honestly, I have heard so many 'speculatations' on what makes a high credit score. It's just ironic that he has always had great credit, but now mine is better.

Oh and steph, in your first message I wanted to say...I relate to you guys noticing you used to overspend on food. We def do that. We have been eating out more due to the move, but we used to eat at home more during the week so I'd like to get back to that. Also, in the past we have done a wkd spending budget and I think we might reinstate that for a while. One funny thing, this new house is smaller, so we have WAY less space for storage. I told Greg that we'll save a lot of $$ because I won't be able to buy anything new!
 

TravelingGal

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Date: 3/12/2009 1:03:49 AM
Author: Mara
TG, I believe it has to do with how long the balance was accruing interest. aka if you get a bill at the end of the billing cycle for $2300 and you pay it off three weeks later near the due date, then you''ll pay more interest than if you paid the bill when you got it or when your cycle closed. I seem to avoid this for the most part because I pay my bill 2x a month...so its like a continuously rolling mini balance.

I think you are right re: the car loan adding to your score. Greg hasn''t had a car loan in 10+ years, but I have for the last 2 years. He also only uses his AMEX as pretty much his only card. I think my score is the 20pts higher, because of my little rolling balance and the car loan. But honestly, I have heard so many ''speculatations'' on what makes a high credit score. It''s just ironic that he has always had great credit, but now mine is better.

Oh and steph, in your first message I wanted to say...I relate to you guys noticing you used to overspend on food. We def do that. We have been eating out more due to the move, but we used to eat at home more during the week so I''d like to get back to that. Also, in the past we have done a wkd spending budget and I think we might reinstate that for a while. One funny thing, this new house is smaller, so we have WAY less space for storage. I told Greg that we''ll save a lot of $$ because I won''t be able to buy anything new!
Hm, that makes sense. I''ve never paid my bills twice a month.

And yeah, I can see why your score would be better. AMEX''s are supposed to be paid every month (the traditional AMEX''s, at least) so he doesn''t have much credit if he only uses one card and doesn''t have any other debt.
 

Phoenix

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Deegee, all yr bills only total 12% of your income? How in the world do you do that? You must have a very large income (not prying, I promise!
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) or are very good with yr spending or both! Oh wait, you said you were not frugal, so it must be more the former, he he!
1.gif


I find this whole thread very interesting. At one time, I didn't even have a credit card. I was so scared of overspending and even until recently I would leave my credit cards at home in case I got tempted, LOL! It's much better now though, I carry them around but am not tempted to use them, hardly ever. I prefer cash, 'cos as someone else has said, there's an emotional attachment to the cash and when you part with it, you really feel like you're spending, whereas with CC it's less painful (until the bill comes, that is!
4.gif
). I tend to take out a fixed amount of cash from the ATM every week, and kind of divide it roughly into two halves in two separate compartments in my purse, one for groceries and the other for "discretionary spending", for eg. mani/ pedi, taxi fares, lunches with the girls etc. It's so much harder to keep track of yr spending with CC and sooooo easy to overspend!
 

Phoenix

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Date: 3/12/2009 5:26:58 AM
Author: Phoenix

Deegee, all yr bills only total 12% of your income? How in the world do you do that? You must have a very large income (not prying, I promise!
2.gif
1.gif
) or are very good with yr spending or both! Oh wait, you said you were not frugal, so it must be more the former, he he!
1.gif


I find this whole thread very interesting. At one time, I didn''t even have a credit card. I was so scared of overspending and even until recently I would leave my credit cards at home in case I got tempted, LOL! It''s much better now though, I carry them around but am not tempted to use them, hardly ever. I prefer cash, ''cos as someone else has said, there''s an emotional attachment to the cash and when you part with it, you really feel like you''re spending, whereas with CC it''s less painful (until the bill comes, that is!
4.gif
). I tend to take out a fixed amount of cash from the ATM every week, and kind of divide it roughly into two halves in two separate compartments in my purse, one for groceries and the other for ''discretionary spending'', for eg. mani/ pedi, taxi fares, lunches with the girls etc. It''s so much harder to keep track of yr spending with CC and sooooo easy to overspend!
Oh, I also want to add something else:

I could be wrong here, but I am fairly sure that in Singapore, as is in most other Asian countries, CC''s really don''t have much to do with one''s credit rating. Sure, you can look up someone''s credit rating, but all that I think it says is whether or not a person has been a bankrupt and even so for only a certain number of years (the latter is similar to the US I think), or has constantly defaulted on their loan obligations.

The interest rate that a bank charges you has little to do with your credit rating. We also don''t have anything like a FICO score. The bank would charge you the same interest as everyone else, once they''ve approved you (meaning that they look at yr job, yr spending which is self-disclosure, yr assets etc), but no, just because you have a better credit than say yr friend it doesn''t mean you''d pay a lower interest rate on yr mortgage or yr CC. So, using CC''s to build up yr credit rating doesn''t really exist in this part of the world.
 

Lynny0780

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what is the point of paying with a credit card if you are going to pay for the whole thing at the end of the month. why dont you just buy whatever you are buying with cash?
 

LAJennifer

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Date: 3/13/2009 1:49:37 AM
Author: Lynny0780
what is the point of paying with a credit card if you are going to pay for the whole thing at the end of the month. why dont you just buy whatever you are buying with cash?

Buyer protection and membership rewards.
 

zhuzhu

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Date: 3/13/2009 1:53:36 AM
Author: LAJennifer
Date: 3/13/2009 1:49:37 AM

Author: Lynny0780

what is the point of paying with a credit card if you are going to pay for the whole thing at the end of the month. why dont you just buy whatever you are buying with cash?


Buyer protection and membership rewards.

...and credit score building.

Personally, I hate carrying cash on me. I have no more than $50 in my wallet at any given time!
 

Lynny0780

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oh.. i dont carry cash, i just carry me debit card. and my bank is good at protection.
 

partgypsy

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Lynny re: credit cards: safety and convenience! I buy lots of stuff off the internet. Between the choice of putting my savings account info or a credit card on the web, rather put a credit card. Plus points. I can''t remember exactly but I think I get 3 or 5% for gas and groceries, and 1%? on rest). My cc has very good bonus points that can be redeemed for cash back (it''s so good they don''t offer this card anymore).
 

steph72276

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There have been numerous studies out that say people spend a significant amount more using credit cards, especially when chasing points or miles. I don''t have time right now, but will post links to the studies later.
 

partgypsy

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Yes, I''m one of the ones who posted that! I don''t carry debt so don''t pay late fees, plus get couple hundred dollars from cash back points. Regarding groceries my husband does the shopping (and the cooking). It''s either that or put it on the debit card, so it''s hard to turn down essentially free money. But it''s this insiduous doubt, would I spend less if I cut up my card? I feel that credit cards don''t necessarily make me spend more than using a debit, but think if I paid for everything in cash I probably would spend less. The downside unless we did the Dave Ramsey envelope system even if we spent less we would have no idea what we are spending it on, as my husband does not do receipts. That''s another reason it has to be debit/credit, so I can track where money is going.
 

zhuzhu

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I actually believe I spend less (or spend more wisely) by using credit card. If I use cash, I lose track of how much I spend on what after a few days, but using online credit statement I track how much myself and DH spend in real-time(off by 1-2 days at most). This way we are much more aware of our spending pattern and keep everything under control.
 

Aloros

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FI and I are very big on having at least 3 months' worth of savings. We have that amount right now in our joint savings.

For me, after I get my paycheck, I immediately put about 1/2 of it into our joint account (to pay for mortgage, joint bills, and our joint savings). I pay all my individual bills. Then I divide what's left by the number of days in the month for an approximate daily spending amount. I always try to spend less than this amount. I do a lot of mental calculations throughout the month, as well as checking my account to see how well I'm doing. At the end of the month, I usually have some extra, so that gets put into my individual savings account.

I keep a credit card and try to spend ~$200 on it per month, sometimes less, sometimes more (putting wedding stuff on it, just in case). I pay it off every month with my individual bills.

We got the $7000 credit for buying a home and put it into a savings account. It's essentially a no-interest loan, so we figured...might as well get the interest from it!

ETA: we both have cars, both paid for with cash. We plan to do the same for the next car we purchase. Wish we could have paid cash for the house, but since we live in N. CA...fat chance!
 

neatfreak

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Date: 3/11/2009 5:28:50 PM
Author: zhuzhu
No credit card company has ever received a penny of interest from us (and we charge for everything), however the new ones keep on coming into the mail! This is driving me crazy!


DH recently purchased a ATT phone and is expecting a rebate, guess how the rebate was delivered? on a ATT credit card!! We can not even use the rebate UNLESS we use this brand new ATT cc that was automatically opened on his behalf! That is just plain rude and tricky!

Just to clarify those rebates are debit cards not CC's. They didn't open up a CC account for you, it's just a pre-loaded debit card with the rebate amount on it. Spends just like cash. When you go to the grocery store or something just tell the clerk to put $50 (or whatever your rebate was) on that card then throw it away.
 

zhuzhu

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Date: 3/15/2009 4:43:59 PM
Author: neatfreak
Date: 3/11/2009 5:28:50 PM

Author: zhuzhu

No credit card company has ever received a penny of interest from us (and we charge for everything), however the new ones keep on coming into the mail! This is driving me crazy!



DH recently purchased a ATT phone and is expecting a rebate, guess how the rebate was delivered? on a ATT credit card!! We can not even use the rebate UNLESS we use this brand new ATT cc that was automatically opened on his behalf! That is just plain rude and tricky!


Just to clarify those rebates are debit cards not CC''s. They didn''t open up a CC account for you, it''s just a pre-loaded debit card with the rebate amount on it. Spends just like cash. When you go to the grocery store or something just tell the clerk to put $50 (or whatever your rebate was) on that card then throw it away.
We found it out over the weekend!
9.gif
$50 definitely was not enough dough for 2 dinners for us!
 
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