Credit Cards and Financial Behavior- any correlation?

[UncleB]

---

@bada_bing wrote:

The influence that is a bit harder to quantify is the idea that credit card limits are a suitable

replacement for an emergency fund.

---

 +1

I agree with this completely.

Also hard to quantify is exactly what defines "emergency"?  In my own case I have some money in cash (in my home), some spread over a couple of modest savings accounts, and I have a collection of silver bullion (I consider it both a hobby and a way to invest). 

In my own case if an unplanned major expense were to come up I would probably go to my credit cards first, simply because it's relatively low-hassle and I prefer to keep my cash for situations that absolutely require it.  In this case I would use the credit card at the time of the need and after the event was over I would 'regroup' and determine the best plan for paying off the card.  Depending on the amount I might decide to pay it back over a few months, or I might determine it would be best to use cash, savings, or as a last resort I would sell some silver.

I'm not saying this is best for everybody, but for me this works.  It could also be said (at least in my own case) that using a credit card 'buys time', in that I'm not forced to decide which investment to tap or liquidate under duress.  I can take care of whatever situation has come up, and then a bit later I can thoughtfully determine the best way to move forward.

Just my 2¢. 

[Anonymous]

---

@UncleB wrote:

---

@bada_bing wrote:

The influence that is a bit harder to quantify is the idea that credit card limits are a suitable

replacement for an emergency fund.

---

 +1

I agree with this completely.

Also hard to quantify is exactly what defines "emergency"? 

---

Exactly!  We have friends that think car repairs or needing a new refrigerator are emergencies, but the fact is those are expenses that should be budgeted for.  For us we always budget for those types of things,  keep a seperate emergency fund, and an additional income replacement fund. We could probably go 3-4 months with no income before we would have to start using our credit cards.  I still might chose to use a credit card at 0% for a few months before draining my cash reserves. That is one of the reasons having good credit is so important...it gives you more options if you ever need them. 

I thank my dad for teaching me the importantance of saving and sticking to a budget. I never learned anything about personal finance in school.