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Old 05-24-2011, 12:07 PM   #21
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I think further distinctions are appropriate, since I'm not quite an A or a B. .... Keeping money in a checking or savings account would mean not paying down our CC debt and paying high interest unnecessarily, so we never did that.
I was thinking in terms of building up the emergency fund after paying down any CC debt, but there may still be a case for building up some liquid funds first. If your credit line gets cut off, you're stuck in an emergency. So while it seems like a poor choice to have savings earning near zero with a high % CC loan, it still might save your rear sometime. A bit like insurance, a 'bad deal' on pure economic terms if you never use it, but it's there if/when you need it.

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Reading this thread, I'm surprised at how many here still handle their finances in what seems to me to be a rather old fashioned way.
What do you mean by that? Just curious, not agreeing or disagreeing.

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Old 05-24-2011, 12:34 PM   #22
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What do you mean by that ["old fashioned finances"]?
I mean keeping cash and budgeting. Saving up in advance for large expenses. That's how my parents handled their finances, and they taught me how to do that. But then I got my first credit card and discovered I didn't have to budget and save up cash anymore. I wouldn't want to go back to that.
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Old 05-24-2011, 12:51 PM   #23
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SteveR, Walt34, donheff ; looks like a club could be formed here of folks with spendthrift ex spouses. You can add me to the list! First marriage, my wife's solution to everything bad mood she ever had was spend more to feel better, and then nag me that I didn't make enough money.

Current wife is quite possibly more frugal than I am
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Old 05-24-2011, 01:04 PM   #24
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Sadly, we have gone from a land of equal opportunity to a land of equal outcome.
We have? The distribution of income and wealth in the country over the last couple decades is telling a different story. Not intended to be a political statement, just a data point that would seem to contradict this assertion.
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Old 05-24-2011, 01:38 PM   #25
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SteveR, Walt34, donheff ; looks like a club could be formed here of folks with spendthrift ex spouses.
No, my ex wasn't a spendthrift. She is actually pretty frugal to this day. But we both lived pretty close to the edge back then with no savings. I didn't start saving until I was 32. But from then on DW and I took the savings seriously which is why we were able to ER. As you might guess, I am blown away by some of the dreamers who post here with big nest eggs by their 30s. They are a different breed than I was.
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Old 05-24-2011, 01:48 PM   #26
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I mean keeping cash and budgeting. Saving up in advance for large expenses. That's how my parents handled their finances, and they taught me how to do that. But then I got my first credit card and discovered I didn't have to budget and save up cash anymore. I wouldn't want to go back to that.
The old fashioned way was the only way we could be retired so young. If you save up for things you often find you really don't need it (except mortgage debt, which we paid off years early). Also, nothing is better than going into a car dealer and buying a car for cash- you can really negotiate a low price if you visit a few dealers and let them know you are doing so.

Most of my family does the opposite and they have trouble when they have an unexpected emergency finding a way out without paying a lot of interest.
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Old 05-24-2011, 02:39 PM   #27
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The old fashioned way was the only way we could be retired so young. If you save up for things you often find you really don't need it (except mortgage debt, which we paid off years early). Also, nothing is better than going into a car dealer and buying a car for cash- you can really negotiate a low price if you visit a few dealers and let them know you are doing so.

Most of my family does the opposite and they have trouble when they have an unexpected emergency finding a way out without paying a lot of interest.
I'm happily old-fashioned, like countless others on the board. Budgeting is key to my planning to retire way before the typical 65+ year old!
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Old 05-24-2011, 02:42 PM   #28
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I mean keeping cash and budgeting. Saving up in advance for large expenses. That's how my parents handled their finances, and they taught me how to do that. But then I got my first credit card and discovered I didn't have to budget and save up cash anymore. I wouldn't want to go back to that.
We also call and yell at the credit card co any time they try and raise our limit... now that's probably a bad move but we really don't want a $50k limit on our card (and it's our only card)
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Old 05-24-2011, 02:47 PM   #29
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Webz, I love your sig line! And your sentiment!
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Old 05-24-2011, 04:07 PM   #30
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I mean keeping cash and budgeting. Saving up in advance for large expenses. That's how my parents handled their finances, and they taught me how to do that. But then I got my first credit card and discovered I didn't have to budget and save up cash anymore. I wouldn't want to go back to that.
That's how my parents had to manage as well, and that is how we have always managed. We do have credit cards for convenience and rewards, but never, ever, carry a balance.

Neither of our kids have credit cards (aged 28 & 30). I'm pleased that they do things "the old fashioned way".

My 2 sisters gave up their credit cards many years ago because they got into CC debt big time. They now pay as they go but keeping $2k in an emergency fund is too big a stretch for them. I've often seen them without a car while their own is off the road waiting for a repair they are saving for. Just as well there are good bus services where they live.
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Old 05-24-2011, 07:14 PM   #31
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For many people "saving" means saving for a 3d HDTV, not saving for decades later or even next year.
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Old 05-24-2011, 07:29 PM   #32
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We have a solution for these poor people. We can take money from pweople who retired early. Those early retire-people...

1) Have too much money
2) Are just a bunch of fat-cats - we should take their money cause we need it and they don't.
3) Got lucky somehow and need to share it with those with little
4) They should go back to work like those poor people - Just who do they think they are not working and helping ?
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Old 05-24-2011, 08:40 PM   #33
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We do have credit cards for convenience and rewards, but never, ever, carry a balance.
My CC balances were pushing $20k, at one point. I don't carry any month-to-month balance now, but when I needed (maybe I should say "wanted") to borrow to get by, my CCs sure were convenient. I can see that it's safe to never spend beyond your means, and in fact rather charming to hold to the old ways, but here in this thread we're commenting on how well contemporary Americans in general are managing their financial lives, and I just don't think it's plausible to apply a model from an age that is past.
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Old 05-24-2011, 10:24 PM   #34
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charming to hold to the old ways, but here in this thread we're commenting on how well contemporary Americans in general are managing their financial lives, and I just don't think it's plausible to apply a model from an age that is past.
I don't think the age is past. It's hard for me to understand why LBYM isn't more popular.
I can't imagine borrowing money ever again.
The things you can do and choices you can make when you have the improved cash flow of no payments and a net worth to smooth out bumps in the road feels so much better than living like the 75%. Certainly a lot of reasons why the 75% are living as they do. Using the outdated model is the surest way to
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Old 05-24-2011, 11:00 PM   #35
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I thank God that DW and I always made a decent enough living that we had no excuse to be without some emergency funds. Unfortunately, for the first couple of years, we didn't take advantage of that ability. We spent to the limits of our income - and borrowed some more. A couple of times, that got very uncomfortable for us. Neither of our sets of parents had ever lived the way we were trying to live (no, the parents never offered advice) so we were taking our cue from the folks we worked with. After a couple of close calls, financially, we changed our ways and have never looked back. I could not imagine living paycheck to paycheck ever again. My heart goes out to those who do (even the ones who could break the debt cycle if they tried hard enough). In other words, I know how easy it is to get sucked into the "American lifestyle" and how difficult it can be to get out. Still, the rewards of living debt free (with savings) are worth whatever temporary sacrifice one has to make.

I have a dear friend who has spent an entire life on the edge, even though he and his wife have made as much money as I have. I tried to council him that he could actually have MORE if he could ever just take a pause and get out from under his cc debt. ("Think how much interest you are paying, good buddy. Think how much fun you could have with that money if you didn't have to give it to the cc company.") He could see the logic, but he could never break free. Now, he has finally retired, defaulted on credit cards and has NOTHING. He is able to live on his small pension and SS, but can never travel, never have any more "toys", never own new cars, etc. etc. He is philosophical about it. "I had fun while it lasted. If I had died, I would have 'won'". God bless him. God bless America!!
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Old 05-25-2011, 01:13 AM   #36
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What's even more scary is that ONLY 25% said they could definitely get the money. That leaves 75% in some degree of stress.
Haves vs have nots or spenders vs spend nots? I was surrounded by yuppies in the early to mid 80s at w*rk and play. Money was one of the things most yuppies wouldn't stop talking about. My conclusion was that financial security had nothing to do with income. The single guys with the Porsches and 3 piece suits were as likely to be living paycheck to paycheck as the beach bums I played volleyball with.

From the linked article
>The survey asked a simple question, “If you were to face a $2,000 unexpected expense in the next month, how would you get the funds you need?”
That question wouldn't pass muster at any of the consumer research places I worked for 7 years. In a credit society one doesn't need to get the funds, what matters is what and how would one juggle expenses and debt to handle the additional 2k.
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Old 05-25-2011, 02:49 AM   #37
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My CC balances were pushing $20k, at one point. I don't carry any month-to-month balance now, but when I needed (maybe I should say "wanted") to borrow to get by, my CCs sure were convenient. I can see that it's safe to never spend beyond your means, and in fact rather charming to hold to the old ways, but here in this thread we're commenting on how well contemporary Americans in general are managing their financial lives, and I just don't think it's plausible to apply a model from an age that is past.
Credit Cards are a bit like alcohol in that many folks, like yourself, can use them sensibly, but an awful lot of folks get drunk on them and many get addicted and end up in a downward spiral of increasing debt.

I just think saving up to buy something and keeping a "rainy day" savings account is a better model than using credit cards for unexpected expenses or buying something before you have the funds to buy it.
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Old 05-25-2011, 05:53 AM   #38
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They just started voluntary lay-offs at work. You can sign up for 1 week at a time. Almost everyone else I talked to said they couldn't afford to take even 1 week off unpaid. I'll take as much as they'll give me although if I take too much time off then it'll be too hard to go back so maybe i'll just take 1 week each month over the summer. Hard to believe most 40 or 50-somethings at work can't even afford 1 week unpaid
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Old 05-25-2011, 06:55 AM   #39
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I can see that it's safe to never spend beyond your means, and in fact rather charming to hold to the old ways, but here in this thread we're commenting on how well contemporary Americans in general are managing their financial lives, and I just don't think it's plausible to apply a model from an age that is past.
I'm not sure it's quite that simple. We keep a large amount in readily-accessible savings (probably more that most FA's would say we "should") but we like having the ability to not have to give up anything else when the inevitable unexpected and unplanned-for events happen.

Example: Yesterday DW was involved in a relatively minor car accident but her car may be totaled, if there is significant damage to the front-wheel-drive drivetrain. If it becomes necessary we are in a financial position to write a check for a new car without impacting our day-to-day lifestyle one bit.

In contrast, one BIL & SIL wrecked a 7-year-old pickup truck in last winter's snow. They now have to give up other planned activities because they have payments on replacement vehicle to make.

We much prefer the former position to the latter.
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Old 05-25-2011, 07:22 AM   #40
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Call it "old fashioned" if you like. Like many others here, we are happy to be with this group.(25%) By paying off cc balances each month, and saving to pay cash for cars etc. we have been able to save thousands in interest charges alone.

The look on the car dealers face when I offered 20k cash (wrote a check) for a used tundra was worth more than the "sacrifice" to save....

...getting him to finance it just wouldn't have been as much fun.

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