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My bank offers full protection on it and it's a more convenient way to keep CC utilization low than making weekly payments.
I realize protections are often the same, but it's still the timing issue(CC you have 30-60 days before your cash is gone vs it's gone and you need to get it back).
Also, I find that generally banks seem to let you increase your credit limit more if you show consistent usage at a higher level. So the person charging $300/month over a year isn't as likely to get a credit line increase as the person charging $3000/month over a year.
For example, I had a capital one card I was rarely using. They never let me get above a $1k limit(which was part of why I never used it). All of a sudden when I apply for a new card and they ask how much I spend per month on a card, they're suddenly giving me a $30k limit(they already had my income on file and my credit score's been pretty stable).
Seems to just be another side effect of the "you need to use credit to get credit" aspect of the entire credit industry.
That said, I find getting higher credit limits to be an easy solution to the utilization problem.
Just had to chime in and say I don't agree with the bolded, that's not s budget. I agree with most of the rest of your points in the thread if that makes you feel better
Quote:
Originally Posted by mizzourah2006
Yeah,
that is most definitely not a budget. Living on less than you make, sure. But not a budget.
Quote:
Originally Posted by lieqiang
It isn't a written budget, it is simple math.....
Tucker99: Hey Merriam Webster, do tell me, what is a budget?
Webster: Well, Tucker99 you can find out the definition of a budget here. It's simply an amount of money available for spending that is based on a plan for how it will be spent. Or, you could say that a budget is a plan used to decide the amount of money that can be spent and how it will be spent.
Tucker99: I see, so a budget is basically a PLAN laid out for how an amount of available money will be spent. So you could make this plan more detailed (such as breaking it down by the penny on gas, food, entertainment, etc.) or you could have the plan just be where you make $6k a month, slap $3k in savings, and use the remaining $3k for needs/wants. Got it. But let's get a second opinion, hey Dictionary.com, do tell me...what is a budget?
Dictionary.com: Well, Tucker99 you can find out the definition of a budget here. You can define it a number of ways. You can define it as an estimate, often itemized, of expected income and expense for a given period in the future. Or, you could define it as the total sum of money set aside or needed for a purpose.
Tucker99: I see. So once again, it's a plan laid out for how an amount of money will be spent and it could be either itemized or it could just be categorized in lump sums. Pretty much the same as what Webster thought. But hey, let's get one more opinion, Investopedia, do tell me....what is a budget?
Investopedia: Well, Tucker99, you ask and you shall receive. We here at Investopedia define a budget as an estimation of the revenue and expenses over a specified future period of time. A budget can be made for a person, family, group of people, business, government, country, multinational organization or just about anything else that makes and spends money.
Tucker99: Ohhh, I see. So you guys say that a budget is when you estimate revenue (or income) and estimate expenses over a period of time. Basically, it's knowing how much is COMING IN, and how much is COMING OUT. Yep, I pretty much said that already as well.
(Tucker99 greets Webster, Dictionary.com, and Investopedia as they return to the Coffee Shop)
A credit card, unlike the other methods of payment on your list, makes it possible to spend money you don't have.
No, no, no, no. You can spend money you don't have with ANY payment option, as the determination of you having it is based on the budget you line out.
So if your budget is $3,000 a month on needs and wants, but you run across something that you "want" but it would run the budget over by $1,000 this month to $4,000.......either you have this amount in savings and taking it out won't cause any financial harm, or you don't.
A credit card isn't a grant line, it's a credit line. Sure, you can run a charge today and don't have to worry about paying it until tomorrow, but financially responsible people only run charges today that they currently have in bank deposits so they can pay off tomorrow before the 23-25 day grace period is up.
Quote:
Originally Posted by Aredhel
If someone is reckless with their cash, their spending spree stops when their money is gone.
No, no, no, no. If this were the case, no one would file bankruptcy man. When the cash runs out, when the money in the checking account runs out, they turn to the credit line next to slap dumb purchases on there. Then they turn to Lending Club to "consolidate" said credit card debt and get a "little bit extra" loan monies left over, to run up more dumb purchases. Then when they are done with that, they turn to their family and friends to "borrow" money from them to buy more dumb purchases.
Quote:
Originally Posted by Aredhel
Choosing not to have a credit card to reduce the temptation to overspend is no different than what people struggling with non-financial temptations often do. There are certain foods I won't keep in my house, because I know I'm prone to over eating them. And no one thinks it's dumb for an alcoholic to refuse to keep booze in the house just in case guests might come over who'd like to have a drink.
The temptation to overspend and the temptation to overeat never goes away. There's a McDonalds and Burger King on every corner. You develop financial and personal discipline to only SPEND what you can afford based on your budget, and only EAT the "bad foods" on your diet's cheat meal day.
Cutting up a credit card doesn't take away financial irresponsibility. What takes away financial irresponsibility is growing up, becoming an adult, forming a written budget, sticking to said budget, and having the discipline to not be ruled by EMOTION all of the time.
No, no, no, no. You can spend money you don't have with ANY payment option...
No, you can't.You can't spend cash you don't have in your wallet. If you swipe a debit card and there's not enough cash in the linked account to cover the purchase, the transaction is declined. You can write a few bad checks, but not for long because the bank will close the account if you persist and don't pay the overdraft fees. A credit card, on the other hand, is offering you CREDIT. Buy now, pay for it later (if you have the cash later, that is; the credit card company doesn't know or care so long as you're making the pitifully low minimum monthly payment). See the difference?
Quote:
A credit card isn't a grant line, it's a credit line. Sure, you can run a charge today and don't have to worry about paying it until tomorrow, but financially responsible people only run charges today that they currently have in bank deposits so they can pay off tomorrow before the 23-25 day grace period is up.
And some people know they're easily tempted into financial irresponsibility, so they avoid lines of credit (including credit cards). And that is exactly what they should do!
Quote:
No, no, no, no. If this were the case, no one would file bankruptcy man. When the cash runs out, when the money in the checking account runs out, they turn to the credit line...
You're really not getting it. No credit line means that option is closed to them, so they are FORCED to get a grip on their spending. That's the whole point! (And that's the point of any behavioral modification trick, really.)
Quote:
The temptation to overspend and the temptation to overeat never goes away.
The temptation can be GREATLY reduced, though, by avoiding certain situations that you've learned from past experience you're likely to succumb to. If you have a drinking problem, don't hang out in bars and don't keep any alcohol in the house. If you overeat, avoid keeping triggery foods in the house, and make your own lunch rather than going out to eat (where you might be tempted into eating fast food). If you overspend, stay away from the shopping mall and online stores, avoid lines of credit, and draw up a budget. It's all the same principle really: don't deliberately seek out temptation, and you're more likely to stick with your plan.
"Lead us not into temptation," is in the Lord's Prayer for a reason. A temptation avoided is a temptation you won't give in to.
Quote:
Cutting up a credit card doesn't take away financial irresponsibility.
But it sure as hell minimizes the damage, which is an essential first step. And a big part of growing up is realizing you're not a superhero and so avoiding temptations that can be easily avoided, lest you succumb.
No ? Read my post up there again and the three definitions one more time........
Go reread your original post that was commented on.
Quote:
Originally Posted by jotucker99
Dude......if they are making $6,000 a month and putting away/saving $3,000 of it, leaving $3,000 LEFT to spend on remaining needs/wants.....that's a damn BUDGET!
Someone could do that, but not actually know how much their cable bill is, how much they spend at restaurants, at the grocery store, at bars, etc. In fact that would define most of the population, but according to you they would be on a budget.
Dude......if they are making $6,000 a month and putting away/saving $3,000 of it, leaving $3,000 LEFT to spend on remaining needs/wants.....that's a damn BUDGET!
A budget is something that you use to TRACK cash coming in and cash going out. It's something that you have in place to ACCOUNT for where your money is going. This person in the example you provided, can ACCOUNT for where their money went.
Quote:
Originally Posted by jotucker99
Tucker99: Hey Merriam Webster, do tell me, what is a budget?
Webster: Well, Tucker99 you can find out the definition of a budget here. It's simply an amount of money available for spending that is based on a plan for how it will be spent. Or, you could say that a budget is a plan used to decide the amount of money that can be spent and how it will be spent.
Dictionary.com: Well, Tucker99 you can find out the definition of a budget here. You can define it a number of ways. You can define it as an estimate, often itemized, of expected income and expense for a given period in the future. Or, you could define it as the total sum of money set aside or needed for a purpose.
Investopedia: Well, Tucker99, you ask and you shall receive. We here at Investopedia define a budget as an estimation of the revenue and expenses over a specified future period of time. A budget can be made for a person, family, group of people, business, government, country, multinational organization or just about anything else that makes and spends money.
So based on the bold parts of each definition. The person in the first post does not have a budget since
Webster: They do not have a "plan for how it will be spent" rather they just have an excess of $3000.
Dictionary.com: They are not estimating(and definitely not itemizing) expected income/expense, rather they're just going through a month and having the results.
Investopedia: Here also, they're not estimating revenue/expense. They're just going through the month.
That's why the blue part is incorrect. A budget isn't about tracking expenses, it's about estimating them in the future(per the underlined parts of the definitions). You would track your expenses so you can see how close you are to staying on budget, but the tracking itself isn't the budget.
It's comparable to how Mint will track your spending, but has a separate section for setting up your budget. The two aren't the same.
Someone could do that, but not actually know how much their cable bill is, how much they spend at restaurants, at the grocery store, at bars, etc. In fact that would define most of the population, but according to you they would be on a budget.
I would not say most of the population does this, but that's another debate for another time.
I provided you three definitions explaining a budget, which is where my definition of a budget comes from. If you have an issue with my definition of a budget, then you also have an issue with Webster, Dictionary.com and Investopedia.
A budget is knowing how much is coming in, how much is coming out, and where it's going out to. Some people do this in CHUNKS, some do this in a more itemized fashion.
Quote:
Originally Posted by Aredhel
No, you can't.You can't spend cash you don't have in your wallet. If you swipe a debit card and there's not enough cash in the linked account to cover the purchase, the transaction is declined. You can write a few bad checks, but not for long because the bank will close the account if you persist and don't pay the overdraft fees. A credit card, on the other hand, is offering you CREDIT. Buy now, pay for it later (if you have the cash later, that is; the credit card company doesn't know or care so long as you're making the pitifully low minimum monthly payment). See the difference? And some people know they're easily tempted into financial irresponsibility, so they avoid lines of credit (including credit cards). And that is exactly what they should do!
OMG. I literally drew the entire situation out to you. Every form of payment has a LIMIT to it, unless you have the AMX Black Card or something. Spending money that you don't have within a budget, is the definition of financial irresponsibility. Cutting up a credit card does not solve that problem, if you cut up their credit card (or don't even issue them a credit card) they will still use their cash and debit cards stupidly.
Quote:
Originally Posted by Aredhel
No credit line means that option is closed to them, so they are FORCED to get a grip on their spending.
They are not forced to, that's what you don't get. There are a lot of people out there who are broke without knowing where in the hell the money went, who make a decent income and who don't even have a decent sized credit limit.
You, like Dave Ramsey, want to blame every thing on a credit card as if the credit card swipes itself. Let you guys tell it, the credit card walks into Best Buy and says, "Hey, Cashier Lady, put that Big Screen TV in the basket and swipe me. Don't worry, Terry Williams, my owner, will either pay me off sometime in the future or he will just file bankruptcy! Hahaha!"
Quote:
Originally Posted by Aredhel
The temptation can be GREATLY reduced, though, by avoiding certain situations that you've learned from past experience you're likely to succumb to.
Succumb? Ohhh, the pressure!
Sure, put a celery stick on the table and a Snickers bar on it. A CHILD picks the Snickers bar 7 days a week and 365 days a year. A responsible adult picks the celery stick because they know better and should have grown up to the point of having some type of discipline.
So based on the bold parts of each definition. The person in the first post does not have a budget since
Webster: They do not have a "plan for how it will be spent" rather they just have an excess of $3000.
But do they have a plan outlined for how it's spent. They bring in $6k a month after taxes, $3k they send to Vanguard and $3k they leave in their checking account to go out for housing, insurance, repairs, strippers, UFC pay-per-views, their girlfriend's beauty costs, and other needs/wants that are to be spent.
Just because they don't itemize how much the UFC pay-per-view was, or how much their girlfriend's weave cost, doesn't mean they did not budget the money that came in.
Quote:
Originally Posted by Jeo123
Dictionary.com: They are not estimating(and definitely not itemizing) expected income/expense, rather they're just going through a month and having the results.
Investopedia: Here also, they're not estimating revenue/expense. They're just going through the month.
They are not just going through the month. The $6k came in and they assigned a role for every penny of that $6k. They told $3k of it to go to Vanguard in a Balanced Fund, and they told the remaining $3k to sit here in the checking account as you will be spent throughout the month on housing, insurance, gas, utilities, UFC fights, drinks, my girlfriend's Gucci addiction, and other needs/wants/recreation.
Quote:
Originally Posted by Jeo123
A budget isn't about tracking expenses, it's about estimating them in the future(per the underlined parts of the definitions). You would track your expenses so you can see how close you are to staying on budget, but the tracking itself isn't the budget.
It's comparable to how Mint will track your spending, but has a separate section for setting up your budget. The two aren't the same.
Yes, a budget is about estimating expenses, which you would usually have to write down in order to TRACK throughout the month to determine if you are staying within the budget.
The guy that determines he only needs $3k of the $6k he brings in for needs/wants, he can make plans early in the month to send the remaining $3k to Vanguard because he doesn't need it for any needs/wants that are upcoming for that month in particular.
He can't do that unless he has already created a plan based on projections of how much is going to come in (inflow) and how much is going to come out (outflow).
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? Read my post up there again and the three definitions one more time........
