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Old 05-10-2022, 09:36 PM
 
Location: In the Redwoods
30,311 posts, read 51,912,730 times
Reputation: 23696

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Read the book "Total Money Makeover" by Dave Ramsey, and follow the general advice (not everything will apply to you specifically) the best you can. He knows what he's talking about, and you can trust me on book recommendations - I'm a librarian.
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Old 05-11-2022, 03:15 AM
 
Location: Honolulu, HI
24,598 posts, read 9,437,319 times
Reputation: 22935
Quote:
Originally Posted by Freesponge View Post
We can’t cut out childcare, we aren’t going to ruin our family Memorial Day outing , we aren’t going to cut out child’s soccer practice it’s not the child’s fault …. We MUST make a birthday party for our 5yo or he will be the only one in his class without one how will he feel? Grocery Food was higher and it caught us off guard
Then you're not ready to be financially free. You know what my parents did for my childhood birthdays? We went to Chuckey Cheese and it was awesome.

You want to be a slave to debt, and the debt will gladly oblige.
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Old 05-11-2022, 07:53 AM
 
5,978 posts, read 2,232,627 times
Reputation: 4612
There is a spiral that people get into with banks these days and it is predatory as far as I am concerned.

Banks will allow for charges to go through for "customer convenience" but will charge a 30-40 dollar fee to the customer automatically, especially if they have a direct deposit paycheck coming in regularly. Even if you do not have "Overdraft protection" on your account, the bank will still take the liberty of paying recurring accounts like Netflix or Hulu and apply the overdraft charge of 30-40 bucks.

Now imagine you have 5-6 of these come out back to back which is where the predatory stuff happens. You may have 5-6 charges of $10.00 or less but for each one, you are charged 30-40 bucks by the bank so your overdraft is now over $150 and it's mostly all bank fees on very small charges. And since you receive your paycheck via Direct deposit, you have no choice but to pay those fees and argue with the bank to try and stop the practice.

I have seen the bank statements from quite a lot of people from all different banks and credit unions showing Overdraft fee after overdraft fee on accounts that do not have overdraft protection so the charges should have been denied. So the working poor get fleeced out of hundreds annually, perhaps thousands depending on how bad it gets, and it's all profit for the bank.

The only reason a bank would voluntarily cover a charge is to get that Over Draft fee from the customer, there is no other business reason to do so.

So I could see people turning to credit cards to reduce the number of potential issues with bank accounts being over-drafted and having their next paycheck absorbed by the bank. That brings its own issues but it does prevent the additional fees from banks

Last edited by Daryl_G; 05-11-2022 at 08:08 AM..
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Old 05-11-2022, 08:07 AM
 
Location: Oak Bowery
2,873 posts, read 2,059,052 times
Reputation: 9164
Quote:
Originally Posted by Daryl_G View Post
There is a spiral that people get into with banks these days and it is predatory as far as I am concerned.

Banks will allow for charges to go through for "customer convenience" but will charge a 30-40 dollar fee to the customer automatically, especially if they have a direct deposit paycheck coming in regularly. Even if you do not have "Overdraft protection" on your account, the bank will still take the liberty of paying recurring accounts like Netflix or Hulu and apply the overdraft charge of 30-40 bucks.

Now imagine you have 5-6 of these come out back to back which is where the predatory stuff happens. You may have 5-6 charges of $10.00 or less but for each one, you are charged 30-40 bucks by the bank so your overdraft is now over $150 and it's mostly all bank fees on very small charges. And since you receive your paycheck via Direct deposit, you have no choice but to pay those fees and argue with the bank to try and stop the practice.

I have seen the bank statements from quite a lot of people from all different banks and credit unions showing Overdraft fee after overdraft fee on accounts that do not have overdraft protection so the charges should have been denied. So the working poor get fleeced out of hundreds annually, perhaps thousands depending on how bad it gets, and it's all profit for the bank.

The only reason a bank would voluntarily cover a charge is to get that Over Draft fee from the customer, there is no other business reason to do so.

So I could see people turning to credit cards to reduce the number of potential issues with bank accounts being over-drafted and having their next paycheck absorbed by the bank. That brings its own issues but it does prevent the additional fees from banks

I call it a “stupid tax”, something one needs to avoid at all costs.
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Old 05-11-2022, 08:25 AM
 
Location: Vermont
9,435 posts, read 5,197,344 times
Reputation: 17884
It's a mistake to charge everyday expenses on a credit card unless you are absolutely going to pay it off 100% when the monthly bill comes.

Live within your means. That's the best advice out there.
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Old 05-11-2022, 08:41 AM
 
26,191 posts, read 21,568,036 times
Reputation: 22772
Quote:
Originally Posted by Teacher Terry View Post
Does anyone really charge their electric bill??? Make a budget that has more money coming in then going out. Keep your cars until they die, birthday parties are at home only, what’s a vacation?, put your kids in cheap sports with no travel, downsize your house to one much cheaper, etc. This is how my generation and the ones before us didn’t live beyond our means.
I charge everything I can so long as there isn’t a discount for cash payment
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Old 05-11-2022, 11:44 AM
 
13,011 posts, read 13,038,222 times
Reputation: 21914
Quote:
Originally Posted by Riley. View Post
It's a mistake to charge everyday expenses on a credit card unless you are absolutely going to pay it off 100% when the monthly bill comes.

Live within your means. That's the best advice out there.
Generally good advice. Credit is not inherently bad, but using credit for monthly expenses like food and utilities is a bad idea. As a rough rule of thumb, if the thing you are purchasing on credit going to be gone before you finish paying for it, you should not finance it with credit.

Buy a house, car, computer or major appliance, consider credit. Cash is better, but credit is reasonable. Credit cards are not necessarily the best type of credit, but sometimes things happen. Purchase a cheeseburger, tank of gas, or your electric bill, that needs to be paid promptly out of your monthly cash flow.

If you do charge consumable things to your credit card for convenience or rewards, that is fine if it is paid off without incurring interest charges. Once you start paying interest, you will be paying for that cheeseburger several times over.

Out of curiosity, I looked at my most recent credit card statement. I owed $590, and my bank helpfully informed me that if I only paid the minimum $40, it would take me 17 months to pay off, and cost an additional $660 in total. The reality would be much worse of course. If I did not pay off monthly but carried a balance, most likely I add to the balance rather than reducing it, and it never actually gets paid off.

I have had credit card debt in the past, and working to eliminate it has been one of the easiest ways to ultimately improve my standard of living. Much better than charging gas and paying the minimum, effectively changing the cost per gallon from $5 to $11.
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Old 05-11-2022, 03:34 PM
 
Location: on the wind
23,255 posts, read 18,764,714 times
Reputation: 75145
Quote:
Originally Posted by fishbrains View Post
Generally good advice. Credit is not inherently bad, but using credit for monthly expenses like food and utilities is a bad idea. As a rough rule of thumb, if the thing you are purchasing on credit going to be gone before you finish paying for it, you should not finance it with credit.

Buy a house, car, computer or major appliance, consider credit. Cash is better, but credit is reasonable. Credit cards are not necessarily the best type of credit, but sometimes things happen. Purchase a cheeseburger, tank of gas, or your electric bill, that needs to be paid promptly out of your monthly cash flow.

If you do charge consumable things to your credit card for convenience or rewards, that is fine if it is paid off without incurring interest charges.
Yes. Its one thing to use a credit card as a method of initial payment, but quite another to rely on the card's credit to put off the day you actually need to come up with the money. Don't carry balances on cards. All you're doing is kicking that can down the road and it gets heavier every time you kick it. Ouch! As the old mapmakers wrote, Beyond here there be monsters.

Last edited by Parnassia; 05-11-2022 at 03:58 PM..
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Old 05-11-2022, 04:35 PM
 
2,578 posts, read 2,067,004 times
Reputation: 5678
Quote:
Originally Posted by fishbrains View Post
Generally good advice. Credit is not inherently bad, but using credit for monthly expenses like food and utilities is a bad idea. As a rough rule of thumb, if the thing you are purchasing on credit going to be gone before you finish paying for it, you should not finance it with credit.

Buy a house, car, computer or major appliance, consider credit. Cash is better, but credit is reasonable. Credit cards are not necessarily the best type of credit, but sometimes things happen. Purchase a cheeseburger, tank of gas, or your electric bill, that needs to be paid promptly out of your monthly cash flow.

If you do charge consumable things to your credit card for convenience or rewards, that is fine if it is paid off without incurring interest charges. Once you start paying interest, you will be paying for that cheeseburger several times over.

Out of curiosity, I looked at my most recent credit card statement. I owed $590, and my bank helpfully informed me that if I only paid the minimum $40, it would take me 17 months to pay off, and cost an additional $660 in total. The reality would be much worse of course. If I did not pay off monthly but carried a balance, most likely I add to the balance rather than reducing it, and it never actually gets paid off.

I have had credit card debt in the past, and working to eliminate it has been one of the easiest ways to ultimately improve my standard of living. Much better than charging gas and paying the minimum, effectively changing the cost per gallon from $5 to $11.
Debt is simply a tool.

It is all in how one uses debt.

We charge everything we can to credit cards where it makes sense to do so and pay off the bill each month, because we are buying within our means and the credit card is simply a tool. We also only have no annual fee cards (credit unions are wonderful).

Our mortgage lender will not take credit cards. Our electrical utility will, but at a fee that would exceed the cash-back bonus. At some point, we may have an emergency which exceeds our funds and may need to carry part of the balance to the next month - it is good to have a card with a high limit and a low rate if we need that. It is also good for our credit histories because at some point, we will likely buy another house and need a home loan again. According to our insurance agent, our great credit histories give us a discount on home and auto rates. There is credit card protection on purchases. And, more and more, employers are pulling credit histories on potential employees as part of the hiring process.

And, long ago we set up our minor child as an authorized used on a couple of credit cards so that she will have a good credit history when she hits adulthood. She doesn't even have the cards.
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Old 05-11-2022, 05:50 PM
 
24,478 posts, read 10,804,014 times
Reputation: 46766
Quote:
Originally Posted by Parnassia View Post
Yes. Its one thing to use a credit card as a method of initial payment, but quite another to rely on the card's credit to put off the day you actually need to come up with the money. Don't carry balances on cards. All you're doing is kicking that can down the road and it gets heavier every time you kick it. Ouch! As the old mapmakers wrote, Beyond here there be monsters.
Absolutely. We have charge everything possible for a long time. Easy paper trail, easy contesting charges. OP has no intentions of doing anything but whine.
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