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View Poll Results: Are credit card charges the same as debt
Yes, current credit card charges are the same as debt 67 41.36%
No, current credit card charges are not the same 88 54.32%
Another poll? Really? Too busy to answer 7 4.32%
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Old 09-25-2016, 04:29 PM   #61
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Originally Posted by Texas Proud View Post
I would hate to be the one who looked at a checking account and did not consider any checks written against that account when deciding if you can write another....
When I worked in the Fraud Section those people were my bread and butter.

One of them actually said to me "How can I be out of money? I still have checks!" And these people are allowed to have children....
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Old 09-25-2016, 04:30 PM   #62
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When I worked in the Fraud Section those people were my bread and butter.

One of them actually said to me "How can I be out of money? I still have checks!" And these people are allowed to have children....
.... and vote!
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Old 09-25-2016, 04:37 PM   #63
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We need a splitting hair emoji for this thread.
Here's another hair to split. Be patient with me because I am a credit card newbie!

I figured that since my credit card bill was paid in full by automatic bank deduction on the 15th, and since I hadn't charged anything since that date, I most definitely had no debt!

BUT - - it just occurred to me that what the credit card company paid itself from my bank account on the 15th didn't include everything up to that very date; it is a month behind, because that's how they do it, and stuff that I charged shortly before September 15th will be paid on October 15th.

So, even though it is automatically paid in full, I would still have debt unless I had charged nothing since August 15th.

If that's not splitting hairs, I don't know what it is but there you go.
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Old 09-25-2016, 04:39 PM   #64
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If your doctor tells you you have a month to live....are you dead now, or when the month's grace period is up?
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Old 09-25-2016, 04:41 PM   #65
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If your doctor tells you you have a month to live....are you dead now, or when the month's grace period is up?
Statistics show that your doctor is probably wrong. So go ahead and get working on the bucket list.
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Old 09-25-2016, 04:52 PM   #66
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Yes *and* no. Yes it is debt strictly speaking. But when used responsibly by someone who has the means AND discipline to pay it off in full each month, it isn't toxic, wealth-destroying debt.

That said, I (and I suspect many here) know how much they are charging and at least mentally considering that money already spent. In other words, if I had $4,000 in checking and I charged $800 so far in the month, I think of myself as having $3,200 available in checking.
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Old 09-25-2016, 04:56 PM   #67
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Yes *and* no. Yes it is debt strictly speaking. But when used responsibly by someone who has the means AND discipline to pay it off in full each month, it isn't toxic, wealth-destroying debt.
I'm glad you agree that it is debt, strictly speaking. In accounting, strictly speaking is the way to go. No judgments on good or evil are required.
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Old 09-25-2016, 05:03 PM   #68
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No judgments on good or evil are required.
Unlike this thread.
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Old 09-25-2016, 05:05 PM   #69
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I guess what this thread has boiled down to, is it depends on how the person reports it

Personally I don't consider my impending credit card payment debt as I don't count my current checking account balance in my net worth, as it pays the current household bills (including CC bill). So it is a wash, now my Crapcast bill is paid ahead so I guess they owe me money. Even if it is my own
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Old 09-25-2016, 05:07 PM   #70
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I'm glad you agree that it is debt, strictly speaking. In accounting, strictly speaking is the way to go. No judgments on good or evil are required.
True. But personal finance, with the possible exception of tax preparation, doesn't require strict accounting or GAAP. If it were an accounting, yes, any debt, even that which is paid off in full each month and accuring no ancillary interest charges, is a liability on the balance sheet.
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Old 09-25-2016, 05:13 PM   #71
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Am I in debt to a store between the time I put the items in my basket in the aisles and the check-out register ??

I consider my cc statement the final check-out register.
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Old 09-25-2016, 05:33 PM   #72
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True. But personal finance, with the possible exception of tax preparation, doesn't require strict accounting or GAAP. If it were an accounting, yes, any debt, even that which is paid off in full each month and accuring no ancillary interest charges, is a liability on the balance sheet.
Let's say you go grocery shopping on Friday and and spend $200 on food for a party on Saturday night. By Sunday morning the groceries have been consumed. Are you liable for paying the grocery store bill? Do you owe the grocer money? Are you in debt to the grocer? You betcha!
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Old 09-25-2016, 05:44 PM   #73
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We all may be right to a certain degree. This what I remember from my working days. There are two accounting types - accrual basis and cash basis. Most businesses are accrual basis, one that recognizes expenses at the time of purchase. So any expenses not paid at the time of purchase are liabilities until they are paid.

Cash basis recognizes expenses at the time of payment. So I can see where one can consider credit card balances as not being debt if the total balance is paid by the due date.


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Old 09-25-2016, 05:50 PM   #74
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We all may be right to a certain degree. This what I remember from my working days. There are two accounting types - accrual basis and cash basis. Most businesses are accrual basis, one that recognizes expenses at the time of purchase. So any expenses not paid at the time of purchase are liabilities until they are paid.

Cash basis recognizes expenses at the time of payment. So I can see where one can consider credit card balances as not being debt if the total balance is paid by the due date.
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The main difference between accrual and cash basis accounting is the timing of when revenue and expenses are recognized. The cash method is most used by small businesses and for personal finances. The cash method accounts for revenue only when the money is received and for expenses only when the money is paid out.
How does accrual accounting differ from cash basis accounting? | Investopedia
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Old 09-25-2016, 05:52 PM   #75
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If I entered each credit card charge immediately into QuickBooks and then generated a personal balance sheet, the accumulated unpaid credit card balance would reduce net worth and appear as an unsecured debt. However, since I don't do this and pay off the card each month, I never generate a statement where credit card charges appear as a 'debt'.
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Old 09-25-2016, 05:55 PM   #76
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Let's say you go grocery shopping on Friday and and spend $200 on food for a party on Saturday night. By Sunday morning the groceries have been consumed. Are you liable for paying the grocery store bill? Do you owe the grocer money? Are you in debt to the grocer? You betcha!
Actually if you charges the groceries, the grocer doesn't care; he/she has been paid anyway. It's the credit card issuer that owns the debt. (Most grocers won't "put it on your tab" and as far as they are concerned using a credit card is payment in full at the time of the sale.)

Still, I see what you are saying. I just don't think that personal finance needs to follow the same stringent standards as businesses filing tax documents or preparing balance sheets for shareholders. In other words, I think there is more wiggle room in terms of how the accounting is done. There can be colossally bad accounting, such as ignoring that the debt is an unpaid liability in the future, but beyond that they aren't really the same IMO.
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Old 09-25-2016, 06:11 PM   #77
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Lemme get this straight.

I pay for your dinner and you promise to pay me back for it in 30 days. And you think you are not indebted to me?

It's debt.
This. I have to pay it, therefore it is a debt and this remains true even if I pay off the card balance in full each month.
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Old 09-25-2016, 06:14 PM   #78
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I treat credit cards as if they were cash. It's just that the cash gets spent a few weeks later and I get some benefits from delaying the payment. It is true that the credit industry considers any balance to be debt, as technically it is - you owe it to the credit card company - but from my perspective it's just shuffling cash from one bucket to another.
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Poll: Are current credit card charges debt?
Old 09-25-2016, 06:52 PM   #79
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Poll: Are current credit card charges debt?

It might be debt but it is not an expense so I do not account for it as anything but a cash flow tool.
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Old 09-25-2016, 07:00 PM   #80
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It's debt and effects net worth. But you need to look at the flip side. You have cash put aside to pay the debt. Assuming incoming cash comes in at the same rate debt is accumulated (or charged in this case), then the effect on net worth is zero.
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