topic Re: Cash is king! in General Credit Topics

Cash is king!

youdontkillmoney — Fri, 04 Apr 2014 14:23:36 GMT

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)

Re: Cash is king!

navigatethis12 — Fri, 04 Apr 2014 14:28:06 GMT

Maybe with loans you usually pay interest, but I don't pay interest with credit cards. When I purchase something, I have the cash to pay for it, but why do that when I can get a percentage of it back with a credit card? Yes, some people don't know how to use credit cards properly and end up in massive debt and can't pay it, but that's not everyone. I'm not sure where this rant came from, but you should read up aout credit card bonuses and learn that using your credit gets you money.

Re: Cash is king!

yudeology101 — Fri, 04 Apr 2014 14:29:14 GMT

This article just came out today:

http://www.frugaltravelguy.com/2014/04/5-reasons-credit-is-better-than-cash.html

Re: Cash is king!

youdontkillmoney — Fri, 04 Apr 2014 14:30:02 GMT

Yes, that is a good point I forgot about, reward points and cash back. I also benefit from those with AMEX and other cards. Thanks for reminding me. This is a reason to use credit, assuming the user has the fiscal discipline to not get into a "hole."

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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:

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)

Re: Cash is king!

youdontkillmoney — Fri, 04 Apr 2014 14:34:16 GMT

Thanks for the article, I am reminded of all the benefits of credit cards. I too use it for extra protection, insurance etc, not to mention rewards and cash back as another member reminded me. Thank you all for reminding me of all this.

But for those who don't have the fiscal disciplne to stay out of the "hole", these benefits probably won't make up for the extra interest payments over the years. Cash is still king for this group.

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youdontkillmoney financial stats:

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

Experian FICO score: 798

GARDENING SINCE 4/3/2014.

Total 17 credit cards: $210,110:

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)

Re: Cash is king!

Anonymous — Fri, 04 Apr 2014 14:43:55 GMT

Cash is king when you use it to PIF your cards every month and let your spending make you more cash. You also build beautiful relationships with financial lenders this way. I'm not sure I understand your rant/post. As you're likely aware, this is a credit board and, specifically, you're in a credit card forum. That said, we share stories of approvals, rewards, plans of action and answer each others' questions to make the most of our credit situation and money. I presume your point is that one shouldn't use credit unless they know how to properly use it. I do agree with that. However, there have been many who made mistakes in the past that use this forum to better themselves and their situations. Cash may be king in your eyes but your credit score controls most of your financial life. In that sense, cash is not necessairly king. Proper use of tradelines and maximum FICO scoring trumps "cash" any day in my book but they do run hand in hand with proper use and good financial knowledge. YMMV

Re: Cash is king!

youdontkillmoney — Fri, 04 Apr 2014 14:48:09 GMT

I do not disagree, especially the last part regarding proper use and financial knowledge, as credit has its proper use and place in financial planning; in the final analysis my point was that credit Must be repaid and to keep that in mind.

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youdontkillmoney Stats:

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

Experian FICO score: 798 (as of 2014)

Gardening since 04/03/2014.

Total 17 credit cards: $210,110:

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)

Re: Cash is king!

Stralem — Fri, 04 Apr 2014 15:00:28 GMT

I have nothing better to do here at work, so I guess I'll ask a couple of burning questions.

1.) What's with your hole obsession? It's as creepy as your signature is hueg.

2.) Why is interest, or debt rather, so fundamentally evil? Hasn't debt been one of the driving forces of commerce since forever ago? Of course too much of it is bad, but that could be said for just about anything.

Re: Cash is king!

Dw4250 — Fri, 04 Apr 2014 15:06:27 GMT

@youdontkillmoney wrote:

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).

Ummmm.....OK. Don't get all "holey" on us now, Holy man! LOL...J/K!

I agree with your general principle. I would only modify it slightly to say that PIF is king. Realistically, most people cannot function in our modern society without good credit. You need it to buy a house, a car, even in some cases get a job. If you are smart about it, you can actually 'make money' by using your credit cards.

The key is to manage credit responsibly. I want to throw up every time I think of the tens of thousands of dollars I flushed down the toilet over the years in interest, AF, late fees, penalties, collections, etc. Newsflash...bad credit sucks!

After being forced to wander the credit wilderness for years, I have learned how to play the "game". I now pay almost everything through my credit cards, and PIF every month. Actually I PIF once a week, pushing payments through my CU via bill pay. A little neurotic I admit; I think part of my brain is still in rebuilding mode and I'm parnoid of sliding back into debt. But hey it works for me...

**EDIT FOR SPELLING**

Re: Cash is king!

Involver — Fri, 04 Apr 2014 15:03:08 GMT

For someone with so much revolving credit, your initial post seems a bit misguided.

Re: Cash is king!

youdontkillmoney — Fri, 04 Apr 2014 15:05:42 GMT

1. No obsession with holes. It's just a metaphor. I am obsessed with paying my bills (including credit cards) on time and never missing a payment which I've succeeded for the past 23 years.

2. I never referred to interest as "evil"; I don't think it is, it has its proper place. IInterest at a basic level, by the way, is revenue to the lender and the price of money to the borrower, expressed as a percent.

If you think my signature was "huge" before, I added a few more lines:

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youdontkillmoney Stats:

Degrees in economics (B.A. and M.A.), and MBA

Occupation: Financial Manager and adjunct college professor of economics/statistics

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

Experian FICO score: 798 (as of 2014)

Gardening since 04/03/2014.

Total 17 credit cards: $210,110:

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)

Re: Cash is king!

youdontkillmoney — Fri, 04 Apr 2014 15:08:15 GMT

Dw4250,

I agree with you, thanks for sharing. I too in fact, do not hardly carry any cash, just two credit cards. Right now I just have $1.29 in loose change and an AMEX and Visa.

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youdontkillmoney Stats:

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

Experian FICO score: 798 (as of 2014)

Gardening since 04/03/2014.

Total 17 credit cards: $210,110:

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)

Re: Cash is king!

Stralem — Fri, 04 Apr 2014 15:26:39 GMT

@youdontkillmoney wrote:
1. No obsession with holes. It's just a metaphor. I am obsessed with paying my bills (including credit cards) on time and never missing a payment which I've succeeded for the past 23 years.

That's OK. I don't see a need to be obsessive about paying your bills on time, though. That should come as naturally as breathing.

Well... For most responsible adults, anyway.

@youdontkillmoney wrote:
2. I never referred to interest as "evil"; I don't think it is, it has its proper place. IInterest at a basic level, by the way, is revenue to the lender and the price of money to the borrower, expressed as a percent.

That was my point. Interest is simply payment for using someone else's cash and absolutely has its place. I've just always been confused by the visceral loathing that people have for it. Likewise with debt in general: too much of it is obviously bad, but it too has its place. And the whole damn global economy of which we are all a part of runs on it.

@youdontkillmoney wrote:
If you think my signature was "huge" before, I added a few more lines:

Stahp iiiiit...

Re: Cash is king!

Anonymous — Fri, 04 Apr 2014 15:30:21 GMT

With utmost respect OP, there's such thing called credibility. When I create a post, it's for one of three reasons. One is to share information that may help others. The second, to ask a question or questions to rely on the wealth of information and professionalism here to help me. Lastly, it's to congratulate someone on a job well done be it an approval for a card they've always wanted or for simply bettering their financial situation to set them up for success in the future. To be perfectly blunt, I see none of that here. In fact, I think the way your post was worded and the terminology therein may have reduced if not altogether devoured your credibility out of the gate. No offense, OP, but my guess is you may have had an old username that got called out in the recent past and based on your 'registration' date, you're at it again. I could be wrong and, if so, I apologize in advance. But if that is the case, nice try.

Friendly - I tried to be as friendly as possible but wanted to be blunt

Supportive - there's nothing here to support

Respectful - I was as respectful as I could possibly be to get my point across

Good day.

Re: Cash is king!

Stralem — Fri, 04 Apr 2014 15:33:33 GMT

There's like a 7 in 4 chance that this guy is a troll, granted, but at least he's got people talking.

Re: Cash is king!

youdontkillmoney — Fri, 04 Apr 2014 15:38:52 GMT

Hi all, if you're referring to me, youdontkillmoney, I am new. Just learning from everyone else as well. I also think I have some knowledge/experience to share based on my credit performance.

Anyway, under a different link:

http://ficoforums.myfico.com/t5/SmorgasBoard/What-software-do-you-use-to-track-your-credit-cards-and-other/td-p/2981152

I’m looking for better ways of tracking bills such as credit card bills so as to pay on time, etc. which is important for maintainig good FICOs. Chime in when you all get a chance.

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youdontkillmoney Stats:

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

Experian FICO score: 798 (as of 2014)

Gardening since 04/03/2014.

Total 17 credit cards: $210,110:

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)

Re: Cash is king!

kroberts67 — Fri, 04 Apr 2014 15:39:23 GMT

I work for a premium finance company and so financing/interest keeps my job secure! There are those who cannot afford to pay things in full up front (I'm talking biz insurance) and must finance. Financing cars, homes, etc. If you can manage to pay cash for everything that is wonderful for you, but remember there are jobs out there, mom & pop businesses, college grads etc etc etc that wouldn't exist without financing.

Re: Cash is king!

Anonymous — Fri, 04 Apr 2014 16:24:49 GMT

@Stralem wrote:
There's like a 7 in 4 chance that this guy is a troll, granted, but at least he's got people talking.

My favorite part is the Barclay's Black Card in the [humongous] sig. Good on ya!

Re: Cash is king!

Anonymous — Fri, 04 Apr 2014 16:28:47 GMT

I don't know reasons for OP's initial post...

I'll bring this discussion to a broader stand point. OP, since you are (were) in business school you must know that these gigantic interpricese are built based on finance... The entire POINT of stocks and bonds and whatnot is pretty much leverage for investment (i.e. borrowed money)... without these the only mega coporation we'll have is probably the government.

Now, I am not dissagreeing with being responsible with credit (PIF avoding interest), I am dissagreeing with the blanket statement your title made.

Let's sum it up by saying credit is a tool, a tool is not necessary evil or good; a gun is a tool, the man using it determine it is used for good or evil

Re: Cash is king!

Jasir — Fri, 04 Apr 2014 18:21:15 GMT

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.