Frustrated with people who think credit cards are evil

[Anonymous]

Actually, my post yesterday stems from a lady friend who worships Ramsey after suffering with cc debt. I don't believe in his negativity towards credit cards either. I have watched a few of his videos and geez... these people who call in are absolutely efffed lol

[HeavenOhio]

I'd submit that there are a lot of "right" approaches and only a few "wrong" ones. I use cards for everything I can, but that isn't for everyone. It's not a one size fits all thing.

In the case of the lady friend, I can certainly see where she's coming from. She doesn't want a repeat of what she went through, and an alternative approach in her case is definitely warranted.

If someone is really afraid of cards, it's probably appropriate to suggest that they use them only when it's a bad idea not to. They're far and away the best option for hotel reservations and car rentals, for instance. And they're much better than debit cards for gas, although cash for gas is fine, too.

[Anonymous]

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@sparklerd34 wrote:
My thing is help people but people have to help themselves I've learned from my mistakes and pitfalls. I'm still learning I just refuse to let my kids make the same mistakes. If you keep making the same mistakes over and over you haven't learned. But Everyone has their own path. Some of it was emotional some of it is impulse and some of it learned bahvior. I think I've been all of the above and the. I've also be at a point where I had no debt for 13 years and lived on cash but then I couldn't get any credit. Have to find your balance

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One of the classic, and only partly tongue-in-cheek, definitions of insanity is doing the same thing over and over again that didn't work on previous occasions and expecting it to work this time. Having gotten into serious credit/debt-related trouble twice, and having to resort to BK to extricate myself from it the second time around, I'm bound and determined not to prove myself a candidate for the proverbial loony bin and do it a third time.

+1 to all the posters who've reinforced the basic point that credit cards are financial tools and nothing else but. They can be used well or badly, wisely or foolishly, and people are right on both counts; you're responsible for your own actions, but in a lot of cases, you can get into debt trouble through no fault of your own whatsoever.

[jason0618]

I should do this YNAB thing.

[astronemma]

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@jason0618 wrote:
I should do this YNAB thing.

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You should. YNAB has completely changed how I look at my money, and I'm saving way more each month because of it. 

[jason0618]

I've always kinda just used the cards throughout the month for daily andbill paying, then when the bill comes, pay if off. I've only recently starting paying them the day before statement cuts so they report with low or no balance. Then on last day of month, whatever is left in my checking account from the months paychecks gets swept into savings. It works, but this is probably a better plan

[iced]

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@Anonymous wrote:

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@sarge12 wrote:

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@longtimelurker wrote:

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@Anonymous wrote:
I only buy what I afford to pay off right away. I see CC the same as cash meaning if I don't have it in cash, I can't buy it. It's just easier form of payment and that's why I use cards. Some people see cards as buy now, worry later. That's a dangerous mindset.

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Trouble is, "what I can afford to pay off" isn't quite black and white.  As mentioned earlier by someone, there is some research (with som detractors to be sure) that strongly suggest that credit cards, and particularly reward cards, tend to increase spending  (partly because the reward is a discount, so I'll get two instead of 1 as it's cheap, or to get closer to threshold goals, like 150K UR for that trip)

So while someone may PIF each month like cash or a debit card, the spending level might be higher than otherwise, i.e. they are saving a little less.   Now I'm sure we'll see some posts saying that their spending is EXACTLY the same as when they used cash.   Maybe, or maybe not!

But at least for some, using credit cards like cash isn't totally harmless.

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That may be the case for some people, but at least for me, I always know exactly to the penny where I stand. Using Quicken, with it being properly set up makes this easy enough to do. If at any time I ever get to where the outstanding balances on credit cards are even within 500 dollars of the balance in checking, I make no further charges. It is all a lot easier to keep up with when you pay bills the day the bills print, rather than waiting till the due date. If I pay any bill even close to the due date, it is because I slipped up because to me the due date is late. I know it is easier for me than many, because my income is not just a little over my expenses, my income is way over expenses. In fact, my actual necessities are less than a third of my income. So I can in fact say, I never ever pay for anything on a credit card that I do not have the funds sitting in my checking account to pay for...period! I have paid no interest on credit cards since 1996 at least, not 1 penny. I'll say again, if I can't drive it or live in it, I will not pay interest on a loan for it.

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That's the best advice I've seen on here yet!!!

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Better advice is don't finance cars unless the interest rate is 0.0% (i.e, you're not paying interest so does not apply to the above) or you're buying a cheap car and you're sufficiently low income that you can't come up with that much cash. A 10% loan beats 20% credit card interest. By cheap I mean you're getting a reliable but used beater to get to your job, not that new Lexus or Mercedes you think you just have to have.

Automobiles are horrible, horrible money pits, especially new ones. The thought that it's a good idea to finance a car has put far too many people behind the wheel of a car they don't need and/or can't afford. At least when people sink every penny they have to spare into a home, there's a reasonable chance of some long-term equity gain (or at least not much equity loss barring another housing implosion). With cars, the losses are pretty much guaranteed.

In 2016, the average income in the US was just under $60,000 and the average auto loan was just over $30,000 - that's HALF of the average annual gross income. That's not even factoring in insurance, gas, parking, and other auto-related incidentals. That's not a statistic to be proud of.

[jason0618]

Agree. I work at a car dealership. I make comfortably into 6 figures. I financed a 3 year old Ford Fusion, and it'll be paid off by Christmas. I leased a new SUV for my wife, but as as employee of the dealership, I got a ridiculous deal on it, and once the lease is up, or she hits the mileage limit, she will be getting a 2-4 year old Nissan NV, and I'll do the same thing I'm doing with the Fusion.

[Kforce]

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@beautifulblaquepearl wrote:

Life has taught me to insulate myself against foolishness. (1)   Not everyone that says they want help really wants it. (2)  Especially if it means they have to change anything about themselves (ie - the way they think/spend/lifestyle). 

Up until about a year ago, I was willing to help/discuss with anyone the benefits of credit or how to get out of/stay out of debt and still use credit cards successfully. Now, I restrict it to people in my circle and even then I'm limited. 

I totally understand your need to vent OP and you've come to the right place to do it. See you all around the forum!

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(1) - I need to enhance this skill, I am a sucker more than I should be.

(2) - Extremely true

[sarge12]

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@iced wrote:

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@Anonymous wrote:

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@sarge12 wrote:

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@longtimelurker wrote:

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@Anonymous wrote:
I only buy what I afford to pay off right away. I see CC the same as cash meaning if I don't have it in cash, I can't buy it. It's just easier form of payment and that's why I use cards. Some people see cards as buy now, worry later. That's a dangerous mindset.

---

Trouble is, "what I can afford to pay off" isn't quite black and white.  As mentioned earlier by someone, there is some research (with som detractors to be sure) that strongly suggest that credit cards, and particularly reward cards, tend to increase spending  (partly because the reward is a discount, so I'll get two instead of 1 as it's cheap, or to get closer to threshold goals, like 150K UR for that trip)

So while someone may PIF each month like cash or a debit card, the spending level might be higher than otherwise, i.e. they are saving a little less.   Now I'm sure we'll see some posts saying that their spending is EXACTLY the same as when they used cash.   Maybe, or maybe not!

But at least for some, using credit cards like cash isn't totally harmless.

---

That may be the case for some people, but at least for me, I always know exactly to the penny where I stand. Using Quicken, with it being properly set up makes this easy enough to do. If at any time I ever get to where the outstanding balances on credit cards are even within 500 dollars of the balance in checking, I make no further charges. It is all a lot easier to keep up with when you pay bills the day the bills print, rather than waiting till the due date. If I pay any bill even close to the due date, it is because I slipped up because to me the due date is late. I know it is easier for me than many, because my income is not just a little over my expenses, my income is way over expenses. In fact, my actual necessities are less than a third of my income. So I can in fact say, I never ever pay for anything on a credit card that I do not have the funds sitting in my checking account to pay for...period! I have paid no interest on credit cards since 1996 at least, not 1 penny. I'll say again, if I can't drive it or live in it, I will not pay interest on a loan for it.

---

That's the best advice I've seen on here yet!!!

---

Better advice is don't finance cars unless the interest rate is 0.0% (i.e, you're not paying interest so does not apply to the above) or you're buying a cheap car and you're sufficiently low income that you can't come up with that much cash. A 10% loan beats 20% credit card interest. By cheap I mean you're getting a reliable but used beater to get to your job, not that new Lexus or Mercedes you think you just have to have.

Automobiles are horrible, horrible money pits, especially new ones. The thought that it's a good idea to finance a car has put far too many people behind the wheel of a car they don't need and/or can't afford. At least when people sink every penny they have to spare into a home, there's a reasonable chance of some long-term equity gain (or at least not much equity loss barring another housing implosion). With cars, the losses are pretty much guaranteed.

In 2016, the average income in the US was just under $60,000 and the average auto loan was just over $30,000 - that's HALF of the average annual gross income. That's not even factoring in insurance, gas, parking, and other auto-related incidentals. That's not a statistic to be proud of.

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My advice on car purchases is to search for a car that is a few years old and has already greatly depreciated. This past July we found a 2015 chrysler Town and Country Touring for my Niece for 20k, that the credit union would loan up to 22k on, at 1.75% interest. Of her 355 dollar payments, about 325 is principal...bottom line..they will never be under water on this vehicle. There are good deals to be had if you look long enough. Debt on that vehicle is now about 17k after 10 payments.