Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
if you took one year, and paid strictly in cash and debit, the overwhelming vast majority would see a savings greater than the rewards. By putting the "friction," back in the paying process it would be clear just how much you are truly spending under the disguise of "i was going to spend that anyway." trying this for one month would not work, consciously or subconsciously you would put off purchases to show you credit card usage is not different than cash, but stretch it out over a year and the numbers would be much clearer. At the end, the question is, is the ease of using a credit card worth the increased spending? A question you have to answer for yourself.
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.
It's really hard for anyone the basic idea of compounding to get on board with the snowball method. That sour taste of knowing you're needlessly throwing away money tends to sour the experience. Avalanche or highest interest rate first, with some regard to class of debt. Eg, federal student loans are easily deferred whereas your car is easily repossessed. On the other hand if you're planning on doing a Dave Ramsey and defaulting on your debts, student loans are very difficult to discharge.
Invest in the Mutual funds for retirement (401K/IRA, etc)
Own a home
Bad/Incorrect financial advice? To most here this is common sense but to label it wrong...nah.
I was focusing on the topic of this thread, credit cards. As long as you pay them off each month they are a free one month loan on purchases and you can earn thousands of dollars a year in points/rewards.
It's really hard for anyone the basic idea of compounding to get on board with the snowball method. That sour taste of knowing you're needlessly throwing away money tends to sour the experience. Avalanche or highest interest rate first, with some regard to class of debt. Eg, federal student loans are easily deferred whereas your car is easily repossessed. On the other hand if you're planning on doing a Dave Ramsey and defaulting on your debts, student loans are very difficult to discharge.
I agree. To you and me, it makes sense to pay off the highest interest rate debt first. I am assuming personal credit card debt at 13-25% APR to a school loan at 2-5%. Of course people are not always logical when it comes to money.
Well I certainly think only people who are financially responsible and can trust themselves to use credit cards. Anyone who knows they won't handle it well and rack up debt should never use them. Otherwise no, I absolutely disagree with him saying nobody should ever use them.
My husband and I have used credit cards longer then ever using cash debit system. I have always been a avid saver, never struggled with spending and never had debt(except mortgage, though paid off now). I am more likely to overspend with cash then credit because I am so trained to watch my credit card balance like you would a bank balance. I cringe with it going up, so I'm much more cautious to swipe my card then hand over cash. The cash I know won't add to my credit card balance so it doesn't bother me as much. I could not do well on a cash only system.
We do get great rewards for using our card and it's another huge benefit. We never make any purchase based off rewards, never even think about them until we decide to look and cash in. Not being connected to my bank account and being much easier to stop fraud makes me feel safer using it to.
For those saying you spend more with a credit card is full of it! I spend more when I have cash on me!! They want to assume everyone is the same, which isn't true.
I honestly didn't even know who Dave Ramsey was until I seen info on him from YouTube awhile back. We have always done financially well and never heard of him or followed him. Not saying he is wrong, I'm sure some things are sound advice he gives but he is not the holly grail of finance either. We will do what has worked best for us, we are financially and mentally capable to make proper sound decisions.
Last edited by Icemodeled; 11-15-2017 at 08:24 PM..
If you took one year, and paid strictly in cash and debit, the overwhelming vast majority would see a savings greater than the rewards. By putting the "friction," back in the paying process it would be clear just how much you are truly spending under the disguise of "I was going to spend that anyway." Trying this for one month would not work, consciously or subconsciously you would put off purchases to show you credit card usage is not different than cash, but stretch it out over a year and the numbers would be much clearer. At the end, the question is, is the ease of using a credit card worth the increased spending? A question you have to answer for yourself.
Just make a budget and stick to it, then there are no changes in monthly spending based on availability of credit.
Dave R. has pretty decent advice for blue collar guys and gals with little to no financial education, but for the rest of us, his advice is WRONG!
Actually, plenty of smart "white collar" folks can use his advice, too.
I know plenty of smart people who are stupid with money. Beyond a certain minimum IQ, those who do well with money tend to think in larger time horizons, are better able to defer gratification, have a propensity to plan, and tend to have a strong internal motivation to be financially successful (besides just wanting to see money piling up in the bank or wanting to have more, bigger, better stuff), and are good at not caring what other people think. All of those desires probably overlap a little bit with smarter people, but not by nearly as much as many people think.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
