Poll: Are current credit card charges debt?

[sengsational]

Plus, when I do my end of month net-worth/investment calculation, I do a mid-cycle online payment to clear my all my credit card balances before tallying up investments.

Executing real-world transactions to get accuracy...now THAT is bowing to the GAAP gods!

 

[pb4uski]

How's this? When I pay off my card, I pay the total outstanding balance, not just what made it into that month's statement. So at least once a month I'm credit card debt free! HA!

Most people would pay the statement balance and people on autopay pay the statement balance so they'll likely have charges between the statement date and when their payment is posted.

If you get online and pay the total outstanding balance then you are debt free for an instant unless some charges sneak in between when you pay and when your payment is posted.

We use our card for just about everything so it could happen, but not likely. I don't at all mind being in debt.

 

[rodi]

Next Poll: At the breakfast table: Big-Endian or Small-Endian?

After decades of doing embedded programming - mostly on Motorola cores... Big Endian for sure.

 

[GTFan]

Definitely Big Endian, although with Java et al it really doesn't matter now.

 

[Nemo2]

Definitely Big Endian, although with Java et al it really doesn't matter now.

After decades of doing embedded programming - mostly on Motorola cores... Big Endian for sure.

Unless I'm totally missing the point, the clue "At the breakfast table" is a reference to Gulliver's Travels and the opening of boiled eggs, rather than computer memory.

 

[Sunset]

How's this? When I pay off my card, I pay the total outstanding balance, not just what made it into that month's statement. So at least once a month I'm credit card debt free! HA!

Just like I'm retired, except for those odd few days every couple of months or so that I work earning $$$.

Under GAAP rules, perhaps I'm not retired

 

[ERD50]

Unless I'm totally missing the point, the clue "At the breakfast table" is a reference to Gulliver's Travels and the opening of boiled eggs, rather than computer memory.

I never knew the term was derived from Gulliver's Travels. From wiki:

In the discipline of computer architecture, the terms big-endian and little-endian are used to describe two possible ways of laying out bytes in memory. The terms derive from one of the satirical conflicts in the book, in which two religious sects of Lilliputians are divided between those who crack open their soft-boiled eggs from the little end, and those who use the big end.

-ERD50

 

[Nemo2]

I never knew the term was derived from Gulliver's Travels.

Which is why, answering 2017ish's comment on 'breakfast', I responded as I did on post #111 of this thread.

 

[HFWR]

For practical purposes, CC charges, used for monthly bills, daily purchases, etc., then paid in full each month, are not debt. I get cash back, air miles, and convenience, plus some minuscule "float", so who is in debt to whom?

 

[scrabbler1]

That is indeed the problem with their argument - if you're not either prepaying or paying with cash the instant you buy or consume anything then you must have debt and so very few can be truly debt-free. Everyone here answered the debt to asset poll incorrectly if they said they had no debt, even if they don't use CCs.

Problem is few see it that way regardless of the accounting principles involved, and that's because we're not running households under GAAP.

Ergo, CC bills paid off every month are not debt under commonly accepted usage. They are debt under the strict definition of it. Reasonable people can and will disagree but note that this poll is in favor of the No's.

I agree. As long as I pay off the billed amount in full by its due date, whether it is a CC bill or a utility bill or something similar, I am debt-free. The billing entities choose to bill me when they do and set up the due dates to avoid any penalties or interest charges. I am just playing by their rules. I don't consider the short amount of time between the use of their money or services prior to paying them to be debt. Also, some monthly services bill me in advance of using them (i.e. phone company's monthly fee for basic service) , so is that "anti-debt?"

 

[2017ish]

...

I never knew the term was derived from Gulliver's Travels. From wiki:

...
-ERD50

To close the circle, I had no idea of the computer architecture borrowing of the term until the past year or so! Thought it might be reciprocal, hence the "at the breakfast table."

 

[haha]

Great way to spend time. Trying to classify an entry the classification of which clearly depends on what purpose you have in mind, and in any case has zero importance unless you are considering bankruptcy or perhaps becoming a factor.

 

[kcowan]

We are always in debt, all the time. It is just that the debt has not been billed yet.

 

[niven]

It's Schrodinger's cat! It's debt and not debt until we "observe" it - by paying the bill before any interest is due!

There, I'm glad I solved that for all time.

 

[Mulligan]

Just when I think Bogleheads has the most anal discussions, you people make me reconsider.



Here's a favorite saying - "A difference which makes no difference is no difference". Make of it what you will. I'm sure both sides can use it.

They need to hang out with "Dumb people" more like I have to. That will change the discussions quickly. I actually heard a person say yesterday she was not voting for "Hillary" next year because of her health concerns. If she couldnt be president, Obama gets to serve another 4 years and that person did not want that to happen... What can you say....And so I didnt .....

 

[RobLJ]

The topic is reminiscent of medieval scholasticism and the debate the number of angels who can fit on a pin, although more entertaining.

This has essentially been our method of paying regular monthly expenses for years. For daily purchases, instead of using cash, a debit card, or writing checks, we generally use a credit card that is repaid monthly through bank payment out of checking, and at the same time returning 2% of charges which we use for travel. I'm flying to Dallas next month to check on the Aged Parent, using some of the the cc points. Almost every regular monthly expense, like utilities and the small mortgage, are paid by automatic bank payments. We probably write no more than 1-2 checks a month.
We have always paid the monthly "expenses" in this manner for more than a decade. In practice (the real world as opposed to the accounting terminology world), it is no different than using cash or a debit card or check to pay these expenses.
To call it a debt is correct, but in reality it is debt that I ignore. It is a convenience that AmEx electronically breaks down charges into categories, which is useful each month as a visual budget audit and that these charges go automatically into Quicken.

No need to break out the accounting textbooks. I think most would agree that any unpaid CC balance is technically a debt that must be repaid. But when it's paid off in full every month, with no interest charges, and usually a cash back credit or some other reward, this is hardly "debt" in the usual sense, or in context of the prior poll (at least that's my interpretation of the intent of the prior poll). More importantly, the lowest level answer for that poll was "<10%" of total assets. My average unpaid CC balance is 0.14%. I would think others who just use CCs for cash back rewards, would be similarly low. So answering "<10%" would be grossly misleading IMHO. I answered that poll, "no debt" and this one "no."

 

[pb4uski]

Scary that people who are so misinformed are allowed to vote.

 

[Totoro]

If a tree falls in the forest and nobody is around to hear it, does it make a sound?

If I eat in a restaurant and nobody has brought me the bill yet, am I in debt?

I shall meditate further on this ..

 

[Bestwifeever]

Unless I'm totally missing the point, the clue "At the breakfast table" is a reference to Gulliver's Travels and the opening of boiled eggs, rather than computer memory.

Did someone mention Gulliver's Travels?

https://youtu.be/qhPfmafo12A

 

[RobLJ]

You always open on the little end.

Did someone mention Gulliver's Travels?

https://youtu.be/qhPfmafo12A

 

[Nemo2]

Did someone mention Gulliver's Travels?

https://youtu.be/qhPfmafo12A

Now I hear there's talk of making it into a book.

 

[audreyh1]

Even if you pay your credit cards in full before your payment is due, your credit report will still show you have debt. The only way for your credit report to show you have no debt is to pay off your balance in full the day before your billing cycle ends. That way your bill will show a zero balance.

So, I vote that if your credit report shows you have no debt, then I will agree with you that you have no debt.

However, I think the way some people are arguing, "the moment you swipe a card, you owe a debt" then you would also have to all your bills as debt as well. The moment you turn on that light switch you owe the electric company, the moment you own a house (even if paid off) you owe real estate taxes, etc. Unless you are prepaying for all those services, then no one could could ever be debt free by some of your definitions.

Interesting - I always pay my credit cards off the day before they are due simply because when I first started with e-billpay I wouldn't get the payment acknowledged immediately and paying off a day ahead solved that problem.

Also give me a 1 day window if something goes wrong....

 

[kcowan]

Also give me a 1 day window if something goes wrong....

Right but does it hurt your credit score?

 

[exnavynuke]

By the strictest definition of debt, everything you buy puts you in debt, at least temporarily (until you've handed the money to cover the charge). So that lunch out put you in debt, the trip to the grocery store put you in debt.

From a personal finance perspective, I treat a credit card bill that is paid in full each month the same as I treat a grocery store bill that is paid in full before I walk out of the store... not as debt.

 

[Danmar]

Interesting - I always pay my credit cards off the day before they are due simply because when I first started with e-billpay I wouldn't get the payment acknowledged immediately and paying off a day ahead solved that problem.

Also give me a 1 day window if something goes wrong....

We pay our's off as soon as the statement is cutoff. Why wait? Interest is so low it really doesn't make any difference and I like to clear things up ASAP. I know some people who pay them every day. That seems a little excessive but would certainly keep things in control.