Cash is king!

[09Lexie]

[longtimelurker]

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@Jasir wrote:

Wow. I don't think I've ever seen so many people pounce on a simple, clear and valid post before. The OP is right: most American's are swimming in debt and simply do not know how to handle fiscal responsibility. The lenders bank on this limited educated consumer to make money. If every card holder PIF the creditor would only make money by charging the merchant, and the merchant would in turn raise their prices to cover the costs (already widely in practice).

How people so the OP's post as a rant or his beautiful and applicable metaphors about holes creepy is beyond me. No, its not. I understand. People feel accosted because they are so gung-ho about credit and feel the post is an dirrect affront on them.

Cash is, even in this age, more revered than credit. Sure, the givernment and big business has tried to make it near impossible to do things without credit (much like an SSN), but I have yet to meet a person who would rather you pay with credit than cash.

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Yes, I too was surprised at the reaction.   My comment would be more that the post said little non-obvious, yes, it is bad to be overwhelmed in debt.

As OP later agreed, there are advantages to using cards, and PIF.  But there are still issues.  As in the comment with the linked article, credit cards, especially reward ccs, do some to encourage extra spending.   Not necessarily enough to prevent you PIF, but still potentially wasteful spending reducing savings.    I know most people here tend to deny this, they spend only what they would have spent anyway, but in a friendly, respectful and supportive way, I suggest that they are one of a) lying, b) deluding themselves or c) amazingly different from studied populations

[youdontkillmoney]

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@Jasir wrote:

Wow. I don't think I've ever seen so many people pounce on a simple, clear and valid post before. The OP is right: most American's are swimming in debt and simply do not know how to handle fiscal responsibility. The lenders bank on this limited educated consumer to make money. If every card holder PIF the creditor would only make money by charging the merchant, and the merchant would in turn raise their prices to cover the costs (already widely in practice).

How people so the OP's post as a rant or his beautiful and applicable metaphors about holes creepy is beyond me. No, its not. I understand. People feel accosted because they are so gung-ho about credit and feel the post is an dirrect affront on them.

Cash is, even in this age, more revered than credit. Sure, the givernment and big business has tried to make it near impossible to do things without credit (much like an SSN), but I have yet to meet a person who would rather you pay with credit than cash.

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*****

Thanks for the thoughts Jasir.

I remember during the 2008-2009 financial crisis / recession lenders cut or reduced credit lines. People who relied on that credit were in trouble, including small businesses who were mom and pops who relied on lines of credit to supply their products/services. I was simply arguing, in a situation like that, "cash is king" because if you have enough saved up, you will not be at the whim of the bank. My lines and limits were cut back then (and I had and still do have the same excellent credit back then without missing payments or being late even during the last recession, but if the banks can cut my credit, imagine those with lower FICO scores and what banks will do to them if they can cut my lines or close my accounts with a simple letter and I have "platinum" never missing or being late on any bill ). Just now, 5 years later, I am "gardening" again having regained the purchasing power I had back then. Credit is a good thing, and banks are not evil, you may hate paying them now for the credit balance you may have amassed, but they were there when you "needed" them to tap into your credit. But having your own cash is king without having to borrow especially when during hard times banks do not want to lend but save their cash too because who are they going to turn to when they need to borrow . . . banks understand, especially with stress tests imposed by governments, they need to hoard cash just in case too.

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youdontkillmoney Stats:

23 years (since 1991) of credit experience without EVER being late or missing a payment.

FICO (as of 04/04/2014): Experian: 798, Transunion: 786, Equifax: 783

Gardening since 04/03/2014.

Total 17 credit cards: $210,110:

AMEX Platinum ($85,000 with $450 annual fee plus an extra $175 for up to three additional member cards for $625 total each year);  Barclay's Black Card Stainless Steel Visa card ($10,000 with $495 annual fee and the last time I used this card the reaction is "wow, your card is heavy" and I just smile); Diners Club Carte Blanche ($15,000 with $300 annual fee); AMEX Business Platinum ($3,000); Bank of America Visa Signature ($5,000); Capital One ($2,000); Citibank MasterCard ($13,000); Discover ($3,000); Capital One Quicksilver (formerly HSBC) $20,000; JCB Card ($3,000); Juniper MasterCard ($5,000); Merrill Lynch Visa Signature ($5,000); US Bank Visa ($3,500); Wells Fargo Visa ($9,000); Credit Union Visa ($7,500); Chase Freedom Visa ($8,000); Citi Diamond Preferred ($13,200)

Total 4 Lines of Credit: $45,200

Wells Fargo Line of Credit: $11,200 ($25 annual fee with 13.75% APR)

Credit Union: $20,000 ($0 annual fee with 15% APR)

US Bank Premier Plus Line of Credit: $5,000 ($0 annual fee with 13% APR)

Citibank Custom Line of Credit: $9,000 ($50 annual fee waived first year, and if used once a year, annual fee waived with 12.99% APR)

[juggalo9er]

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@youdontkillmoney wrote:

One thing I learned in business schoool is Cash is King!

What this means is that no matter how much leverage (credit) you have, the fact of the matter is it is NOT your money . . . you are borrowing it and must REPAY it (with interest). The sooner you realize this, the less likely you will get into the black hole of debt slaving away "working for the bank" to repay what you borrowed.

Life is about holes. When you're born, you come out of a hole, when you die, you are put in a hole. From cradle to grave, life is a struggle to stay out of holes, the debt hole or out of trouble in general; but holes also help us live, it gives us the leverage (credit) to enjoy/control something now (school loans, car loans, home loans, etc.) rather than later, not to mention we breathe out of a hole, eat out of a hole, excrete fluids/solids out of a hole, such as your skin pores (among other bodily orifices).

But back to cash, it is always better, if you are able, to use cash and not pay a dime of interest. It's better to have $50,000 in cash in your safe and know you don't need to borrow/use credit to buy something, or to use credit but to know you can pay it off. Cash is king because those who borrow, they are after what you already have . . . physical cash stashed away.

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youdontkillmoney financial stats:

22 years of credit experience without EVER being late or missing a payment.

Experian FICO score: 798

Total 17 credit cards: $210,110:

AMEX Platinum ($85,000 with $450 annual fee plus an extra $175 for up to three additional member cards for $625 total each year);  Barclay's Black Card Stainless Steel Visa card ($10,000 with $495 annual fee and the last time I use this card the reaction is "wow, your card is heavy" and I just smile); Diners Club Carte Blanche ($15,000 with $300 annual fee); AMEX Business Platinum ($3,000); Bank of America Visa Signature ($5,000); Capital One ($2,000); Citibank MasterCard ($13,000); Discover ($3,000); Capital One Quicksilver (formerly HSBC) $20,000; JCB Card ($3,000); Juniper MasterCard ($5,000); Merrill Lynch Visa Signature ($5,000); US Bank Visa ($3,500); Wells Fargo Visa ($9,000); Credit Union Visa ($7,500); Chase Freedom Visa ($8,000); Citi Diamond Preferred ($13,200) 

Total 4 Lines of Credit: $45,200

Wells Fargo Line of Credit: $11,200 ($25 annual fee with 13.75% APR)

Credit Union: $20,000 ($0 annual fee with 15% APR)

US Bank Premier Plus Line of Credit: $5,000 ($0 annual fee with 13% APR)

Citibank Custom Line of Credit: $9,000 ($50 annual fee waived first year, and if used once a year, annual fee waived with 12.99% APR)

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you sure your not overcompensating for something?

[Jasir]

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@longtimelurker wrote:

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But there are still issues.  As in the comment with the linked article, credit cards, especially reward ccs, do some to encourage extra spending.   Not necessarily enough to prevent you PIF, but still potentially wasteful spending reducing savings.    I know most people here tend to deny this, they spend only what they would have spent anyway, but in a friendly, respectful and supportive way, I suggest that they are one of a) lying, b) deluding themselves or c) amazingly different from studied populations

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I agree! Take myself for example: to make use of the 5% restaurant category on Discover, I dined out 19 times between Jan-March. That's more times than I dined out in 2013 total! The rationalization was that I was getting 5% back and didn't feel like cooking. The lenders are none too stupid: they know we are going to spend more to meet those bonuses and receive those perks, yert we delude ourselves into thinking we've actually saved or "made" money in the long run. I since literally took Discover out of my wallet and flung it into the back of the closet along with Freedom and BOA 123. The only cards in my wallet now are Amex and Barclays.

[youdontkillmoney]

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@juggalo9er wrote:

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@youdontkillmoney wrote:

One thing I learned in business schoool is Cash is King!

What this means is that no matter how much leverage (credit) you have, the fact of the matter is it is NOT your money . . . you are borrowing it and must REPAY it (with interest). The sooner you realize this, the less likely you will get into the black hole of debt slaving away "working for the bank" to repay what you borrowed.

Life is about holes. When you're born, you come out of a hole, when you die, you are put in a hole. From cradle to grave, life is a struggle to stay out of holes, the debt hole or out of trouble in general; but holes also help us live, it gives us the leverage (credit) to enjoy/control something now (school loans, car loans, home loans, etc.) rather than later, not to mention we breathe out of a hole, eat out of a hole, excrete fluids/solids out of a hole, such as your skin pores (among other bodily orifices).

But back to cash, it is always better, if you are able, to use cash and not pay a dime of interest. It's better to have $50,000 in cash in your safe and know you don't need to borrow/use credit to buy something, or to use credit but to know you can pay it off. Cash is king because those who borrow, they are after what you already have . . . physical cash stashed away.

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youdontkillmoney financial stats:

22 years of credit experience without EVER being late or missing a payment.

Experian FICO score: 798

Total 17 credit cards: $210,110:

AMEX Platinum ($85,000 with $450 annual fee plus an extra $175 for up to three additional member cards for $625 total each year);  Barclay's Black Card Stainless Steel Visa card ($10,000 with $495 annual fee and the last time I use this card the reaction is "wow, your card is heavy" and I just smile); Diners Club Carte Blanche ($15,000 with $300 annual fee); AMEX Business Platinum ($3,000); Bank of America Visa Signature ($5,000); Capital One ($2,000); Citibank MasterCard ($13,000); Discover ($3,000); Capital One Quicksilver (formerly HSBC) $20,000; JCB Card ($3,000); Juniper MasterCard ($5,000); Merrill Lynch Visa Signature ($5,000); US Bank Visa ($3,500); Wells Fargo Visa ($9,000); Credit Union Visa ($7,500); Chase Freedom Visa ($8,000); Citi Diamond Preferred ($13,200) 

Total 4 Lines of Credit: $45,200

Wells Fargo Line of Credit: $11,200 ($25 annual fee with 13.75% APR)

Credit Union: $20,000 ($0 annual fee with 15% APR)

US Bank Premier Plus Line of Credit: $5,000 ($0 annual fee with 13% APR)

Citibank Custom Line of Credit: $9,000 ($50 annual fee waived first year, and if used once a year, annual fee waived with 12.99% APR)

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you sure your not overcompensating for something?

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***

juggalo9er ,

No, not overcompensating. I am being strategic, part of the reason I have a 798 Experian FICO is because my strategy is to have a high credit lines ($255K total) and low utilization, I currently have $100 in credit card bills that I need to pay (I want to but my credit card won't let me because the balance is not due yet).

So no overcompensation, just playing the FICO game. At 798 I'm doing alright.

[juggalo9er]

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@youdontkillmoney wrote:

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@juggalo9er wrote:

---

@youdontkillmoney wrote:

One thing I learned in business schoool is Cash is King!

What this means is that no matter how much leverage (credit) you have, the fact of the matter is it is NOT your money . . . you are borrowing it and must REPAY it (with interest). The sooner you realize this, the less likely you will get into the black hole of debt slaving away "working for the bank" to repay what you borrowed.

Life is about holes. When you're born, you come out of a hole, when you die, you are put in a hole. From cradle to grave, life is a struggle to stay out of holes, the debt hole or out of trouble in general; but holes also help us live, it gives us the leverage (credit) to enjoy/control something now (school loans, car loans, home loans, etc.) rather than later, not to mention we breathe out of a hole, eat out of a hole, excrete fluids/solids out of a hole, such as your skin pores (among other bodily orifices).

But back to cash, it is always better, if you are able, to use cash and not pay a dime of interest. It's better to have $50,000 in cash in your safe and know you don't need to borrow/use credit to buy something, or to use credit but to know you can pay it off. Cash is king because those who borrow, they are after what you already have . . . physical cash stashed away.

-----

youdontkillmoney financial stats:

22 years of credit experience without EVER being late or missing a payment.

Experian FICO score: 798

Total 17 credit cards: $210,110:

AMEX Platinum ($85,000 with $450 annual fee plus an extra $175 for up to three additional member cards for $625 total each year);  Barclay's Black Card Stainless Steel Visa card ($10,000 with $495 annual fee and the last time I use this card the reaction is "wow, your card is heavy" and I just smile); Diners Club Carte Blanche ($15,000 with $300 annual fee); AMEX Business Platinum ($3,000); Bank of America Visa Signature ($5,000); Capital One ($2,000); Citibank MasterCard ($13,000); Discover ($3,000); Capital One Quicksilver (formerly HSBC) $20,000; JCB Card ($3,000); Juniper MasterCard ($5,000); Merrill Lynch Visa Signature ($5,000); US Bank Visa ($3,500); Wells Fargo Visa ($9,000); Credit Union Visa ($7,500); Chase Freedom Visa ($8,000); Citi Diamond Preferred ($13,200) 

Total 4 Lines of Credit: $45,200

Wells Fargo Line of Credit: $11,200 ($25 annual fee with 13.75% APR)

Credit Union: $20,000 ($0 annual fee with 15% APR)

US Bank Premier Plus Line of Credit: $5,000 ($0 annual fee with 13% APR)

Citibank Custom Line of Credit: $9,000 ($50 annual fee waived first year, and if used once a year, annual fee waived with 12.99% APR)

---

you sure your not overcompensating for something?

---

***

juggalo9er ,

No, not overcompensating. I am being strategic, part of the reason I have a 798 Experian FICO is because my strategy is to have a high credit lines ($255K total) and low utilization, I currently have $100 in credit card bills that I need to pay (I want to but my credit card won't let me because the balance is not due yet).

So no overcompensation, just playing the FICO game. At 798 I'm doing alright.

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just making  sure.....you do not drive a prius do you

[youdontkillmoney]

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@juggalo9er wrote:

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just making  sure.....you do not drive a prius do you

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*****

No, I drive a 2007 Yaris I paid for in cash. I learned from my parents to buy cars and drive them into the ground for at least ten years; in about 3-4 years it'll be ten years and it'll be time to buy a new car. I have cash to buy a new one now but I rather hoard it as my car still gets me to work, though for a 2007 it already has 127,000 miles on it (I drive 50 miles a day Round Trip to work and back home so it's a commuter car); I make 6 figures so I can get a nicer car but it's a waste considering all the miles I put on it.

-----

youdontkillmoney Stats:

23 years (since 1991) of credit experience without EVER being late or missing a payment.

FICO (as of 04/04/2014): Experian: 798, Transunion: 786, Equifax: 783

Gardening since 04/03/2014.

Total 17 credit cards: $210,110:

AMEX Platinum ($85,000 with $450 annual fee plus an extra $175 for up to three additional member cards for $625 total each year);  Barclay's Black Card Stainless Steel Visa card ($10,000 with $495 annual fee and the last time I used this card the reaction is "wow, your card is heavy" and I just smile); Diners Club Carte Blanche ($15,000 with $300 annual fee); AMEX Business Platinum ($3,000); Bank of America Visa Signature ($5,000); Capital One ($2,000); Citibank MasterCard ($13,000); Discover ($3,000); Capital One Quicksilver (formerly HSBC) $20,000; JCB Card ($3,000); Juniper MasterCard ($5,000); Merrill Lynch Visa Signature ($5,000); US Bank Visa ($3,500); Wells Fargo Visa ($9,000); Credit Union Visa ($7,500); Chase Freedom Visa ($8,000); Citi Diamond Preferred ($13,200)

Total 4 Lines of Credit: $45,200

Wells Fargo Line of Credit: $11,200 ($25 annual fee with 13.75% APR)

Credit Union: $20,000 ($0 annual fee with 15% APR)

US Bank Premier Plus Line of Credit: $5,000 ($0 annual fee with 13% APR)

Citibank Custom Line of Credit: $9,000 ($50 annual fee waived first year, and if used once a year, annual fee waived with 12.99% APR)

[Blackrv7]

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@youdontkillmoney wrote:

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No, not overcompensating. I am being strategic, part of the reason I have a 798 Experian FICO is because my strategy is to have a high credit lines ($255K total) and low utilization, I currently have $100 in credit card bills that I need to pay (I want to but my credit card won't let me because the balance is not due yet).

So no overcompensation, just playing the FICO game. At 798 I'm doing alright.

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Well sure you can, go ahead and push $100 buck from your bank to the card company. 

Another posted stated he has never met someone who would rather pay with credit than with cash......you just meet one...me!  Explained below. 

And as for the OP, I have never paid a penny in credit card interest since 1988.  I buy almost everything with a cc and pif.  If they are going to give me points, and I have the card to maximize those points, I'm using the card, simple as that.  From an economic viewpoint, this trumps paying with cash.  Having cash and available credit, earned from wize usage, makes for a great rainy day fund.

Some rather diverse viewpoints in this read.

[compassion101]

Cash is king when I use the float on my credit cards to have an extra 3k of it that I invest, add my rewards to the investment, and after 30 years have 150-200k of extra cash just for using credit cards as opposed to cash.

So I guess I agree.