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People will over spend whether they have cash or credit card.
Actually, if people couldn't go into debt, they couldn't overspend. At the very least, I think we should make it harder for people to get into debt. Pre-1980, the laws made it much harder for people to get into as much debt as they have now.
That means a lot of people in big cities can't really afford to live in them. They either need to earn more or move somewhere cheaper. Either that or accept they're going to rent for the rest of their lives and will need to save a much higher % of their incomes for their retirement than Dave's 15% recommendation.
Peopel who want to be financially comfortable/wealthy accept hard truths and don't put off making hard decisions.
Agreed.
I accepted that truth 2 years ago and moved to Arizona. I was originally from LA. As much as I'd like to be there, the numbers do not work in my favor at all. Seems to me a lot of people are having the hardest time accepting the simple truth that they've been priced out of their own neighborhood and that it's time to find a new place to call home.
I personally think, the whole CC issue wouldn't be such a big financial pitfall if you live in a reasonably priced metro area such that your rent isn't eating up a majority of your income (<30% of take home). Then you don't have to be so anal and pick at every penny at everything else you spend. But too bad most people live in expensive cities and do not have such the wiggle room for life's little luxuries.
Credit cards are like gambling, alcohol, marihuana, sexual activity, firearms & other adult concerns: if one is responsible & has thought through how to deal with these maturely & within limits & for one's benefit & has learned about the danger signs of irresponsible behavior then I think using any of them is fine. The problem comes when someone gets using one of these with an attitude of "Yahoo!!! Go big or go home!!!" & digs a hole difficult to get out of that can have serious consequences in your life.
Dave Ramsey's advice is good for those people who have had financial problems in their life & need a way out of debt that is crippling them. I think folks with no notions about saving/investing/compound interest & staying out of too much debt need someone like Dave. Most people don't really have a clue about finances because for some reason schools think it's more important to teach kids about geometry or football instead.
People who have learned financial discipline & direction can graduate past Dave & learn to use debt sensibly.
I accepted that truth 2 years ago and moved to Arizona. I was originally from LA. As much as I'd like to be there, the numbers do not work in my favor at all. Seems to me a lot of people are having the hardest time accepting the simple truth that they've been priced out of their own neighborhood and that it's time to find a new place to call home.
Yep. Moving out of your comfort zone is required if you don't want to be in the 70% of the population that's broke or getting further in debt.
As I've said on these boards many times, it's totally unfair that NIMBYs and bureaucracy are allowed to curtail the building of new housing in many areas such that supply and demand are never able to reach an equilibrium. But it is what it is.
Quote:
Originally Posted by man4857
I personally think, the whole CC issue wouldn't be such a big financial pitfall if you live in a reasonably priced metro area such that your rent isn't eating up a majority of your income (<30% of take home). Then you don't have to be so anal and pick at every penny at everything else you spend. But too bad most people live in expensive cities and do not have such the wiggle room for life's little luxuries.
I would like to see if people really have less debt in metro areas with better wages to cost of living ratios. I suspect the debt numbers aren't as favorable as you might think. People just tend to spend up to the limits of their income, regardless of how good the wages/cost of living ratio is.
I use credit cards and debit cards, but I use credit cards seldom. If I use a credit card, I pay the balance in full immediately so I maintain a $0 balance. Better than that, I use cash for most purchases.
I use credit cards and debit cards, but I use credit cards seldom. If I use a credit card, I pay the balance in full immediately so I maintain a $0 balance. Better than that, I use cash for most purchases.
Actually, credit cards with rewards are better than cash unless there's an explicit cash discount(gas stations for example). If you're going to buy it either way, you might as well get 2% off. Paying cash is more expensive without a discount.
And it's unnecessary to pay your balance off immediately but it is important to set that card up to auto pay the statement balance every month. As long as you do that you should be fine unless your credit limit is so low that you max out mid month.
This all assumes you're only charging things you would have paid in cash anyway. If you're unsure if you're going to be able to manage that. Open a free checking account(Ally let's you do this constantly for example) and make that the account that the CC is linked to. Instead of using your debit card, use the credit card and at the same time transfer money from your main account to the CC paying account.
All the check and balances of using a debit card, but the rewards of using a credit card.
My wife and I spend about $2000 a month on our Cash Back Credit Card. We use the Fidelity Visa Card which puts two dollars in our Fidelity account for every hundred dollars we spend on the card. So at the end of a typical year we get about $480 to invest in the stock and bond market.
But if you listen to Dave Ramsey he thinks we are wasting our time and should only use cash and a debit card. He says the $480 cash back is a waste of our time and we will spend more because it is so easy to charge and likely pay interest.
I never pay interest and only spend money on things we would pay cash for. But he may have a point with many people who abuse their credit cards.
What are your thoughts? Do you agree with Dave Ramsey about credit cards being evil for most people, even if they pay 2% cash back?
Dave Ramsey is operating on the assumption that most people are too stupid to do the math. I have more faith in my fellow man than he does.
Credit cards are like anything else. They can be used properly or misused. Blaming an inanimate object for people's poor choices is irrational.
I use credit cards and debit cards, but I use credit cards seldom. If I use a credit card, I pay the balance in full immediately so I maintain a $0 balance. Better than that, I use cash for most purchases.
Debit cards are a very bad idea. Most don't offer the same protections as a credit card. I never, ever use my debit card.
Dave Ramsey is operating on the assumption that most people are too stupid to do the math. I have more faith in my fellow man than he does.
Credit cards are like anything else. They can be used properly or misused. Blaming an inanimate object for people's poor choices is irrational.
Judging by the number of calls Dave gets I'd say there is definitely a math deficiency these days. But I think Dave is definitely off in some things. Try getting an apartment these days without a credit score. Buying $1000 beater cars? They tend to have a lot of mechanical issues that can cost money to fix, not to mention the aggravation involved. Pay off debt smallest to largest? Not when my smallest isn't charging interest and another is.
Judging by the number of calls Dave gets I'd say there is definitely a math deficiency these days. But I think Dave is definitely off in some things. Try getting an apartment these days without a credit score. Buying $1000 beater cars? They tend to have a lot of mechanical issues that can cost money to fix, not to mention the aggravation involved. Pay off debt smallest to largest? Not when my smallest isn't charging interest and another is.
Dave is a big proponent of using the debt snowball to pay off loans/debts. I think there is a psychological arguement to be made for those small victories of paying off those smaller debts first. I use the debt avalanche method to pay off debt.
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