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Old 01-13-2018, 09:05 PM   #41
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I'm skeptical about being able to spend less on average when paying with cash vs. using a credit card. Other than simply being unable to pay for things occasionally if you have an inadequate amount of cash. Almost all my purchases where I could pay cash are gas, or Walmart/grocery store, auto shop, or restaurants.

Auto shop and gas are 2 where I get what needs done done, and skip stuff that isn't necessary. A full tank is necessary (or wasteful of time if I only fill up $20 for example). Going inside the store to pay is a hassle and MORE likely to lead to impulse purchases ("yeah, haven't had a nice high velocity BM in a while - maybe I should get a couple day old 2/$1 hotdogs with some nacho cheez on top!").

Groceries - I have a list and buy stuff if it's on sale for a good price. Total is usually $25-100. Walmart is maybe one place I could see cash-only being handy, if I had $200 for example and had to put back some stuff that was marginally necessary or lower on my want list. Though I'd just start carrying $500 or so all the time to cover unexpectedly large expenses (life is too short to waste time with multiple trips to walmart to buy stuff I want/need and sometimes it's a must have for DW and I say "okay" because divorces are super expensive I hear).

Restaurants - rarely spend more than $50 and can't see caring whether it's $25 or $50 based on plastic vs cash.

Considering I get back 2% to 15% back on every purchase I make with a credit card, I feel like I'm coming out way ahead overall even if I might occasionally overspend a tad bit somewhere. With cash I would get so numb to laying out $20s and $100s on the counter after the first month or so that I don't think it would matter. Of course we've never paid carried a balance on a CC that led to interest (except that one time we missed a payment by accident and they waived the interest and fees!!).
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Old 01-13-2018, 09:36 PM   #42
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Strictly CASH! I do hold 2 CC that are in other peoples names that I use when travelling internationally.
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Old 01-13-2018, 09:37 PM   #43
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Originally Posted by cathy63 View Post
I am not a Dave Ramsey fan at all, but in this case, his contention is backed up by some solid research. For example: http://www.dffrntwrld.com/wp-content.../xap143213.pdf

Monopoly Money: The Effect of Payment Coupling and Form on
Spending Behavior
Priya Raghubir
New York University
Joydeep Srivastava
University of Maryland, College Park
+1

I can honestly say that I have never heard Dave Ramsey speak though I have certainly heard of him. This isn't a novel thought that he has had, the research in the area is pretty compelling. Even if it weren't true, even with a cash back credit card one is still paying more than what the cash price would be if credit cards did not exist. My understanding is that the credit card industry lobbied long and hard to prevent 'discount for cash' being promoted by merchants. They are definitely convenient and not particularly harmful in educated hands but the profits generated by the industry suggest that most are not well educated. What a surprise.
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Old 01-13-2018, 09:55 PM   #44
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Strictly CASH! I do hold 2 CC that are in other peoples names that I use when travelling internationally.
How do you use cc's that are in other people's names and not get arrested? (maybe I shouldn't ask?)
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Old 01-13-2018, 10:03 PM   #45
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There's also those who have a viewpoint that if you have cash in your pocket you are more likely to spend it on things you don't need as it's convenient. Conversely if you used your CC you'd probably consider it not worth using your CC for purchase. There's also a viewpoint that once you break a larger bill, e.g. $20, you become much more willing to just waste the smaller bills as you don't think about the cost.

I guess the answer is never use cash, credit card or check for purchases, you'll then amass much more in your savings and investments. However, not really practical.
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Old 01-13-2018, 10:21 PM   #46
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How do you use cc's that are in other people's names and not get arrested? (maybe I shouldn't ask?)
One of those names is: Jason Bourne.
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Old 01-13-2018, 10:46 PM   #47
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There's also those who have a viewpoint that if you have cash in your pocket you are more likely to spend it on things you don't need as it's convenient. Conversely if you used your CC you'd probably consider it not worth using your CC for purchase. There's also a viewpoint that once you break a larger bill, e.g. $20, you become much more willing to just waste the smaller bills as you don't think about the cost.

I guess the answer is never use cash, credit card or check for purchases, you'll then amass much more in your savings and investments. However, not really practical.
This is how I am with cash. For some reason I feel the need to spend it immediately just because its in my wallet.

But I am obsessed with paying off my credit cards as I use them and keeping a zero balance so I am very selective with CC usage.

I think the answer is to be a max saver. If you max save your income it doesn't really matter what you do with the remaining income.
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Old 01-13-2018, 11:00 PM   #48
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Originally Posted by FUEGO View Post
I'm skeptical about being able to spend less on average when paying with cash vs. using a credit card. Other than simply being unable to pay for things occasionally if you have an inadequate amount of cash. Almost all my purchases where I could pay cash are gas, or Walmart/grocery store, auto shop, or restaurants.

Auto shop and gas are 2 where I get what needs done done, and skip stuff that isn't necessary. A full tank is necessary (or wasteful of time if I only fill up $20 for example). Going inside the store to pay is a hassle and MORE likely to lead to impulse purchases ("yeah, haven't had a nice high velocity BM in a while - maybe I should get a couple day old 2/$1 hotdogs with some nacho cheez on top!").

Groceries - I have a list and buy stuff if it's on sale for a good price. Total is usually $25-100. Walmart is maybe one place I could see cash-only being handy, if I had $200 for example and had to put back some stuff that was marginally necessary or lower on my want list. Though I'd just start carrying $500 or so all the time to cover unexpectedly large expenses (life is too short to waste time with multiple trips to walmart to buy stuff I want/need and sometimes it's a must have for DW and I say "okay" because divorces are super expensive I hear).

Restaurants - rarely spend more than $50 and can't see caring whether it's $25 or $50 based on plastic vs cash.

Considering I get back 2% to 15% back on every purchase I make with a credit card, I feel like I'm coming out way ahead overall even if I might occasionally overspend a tad bit somewhere. With cash I would get so numb to laying out $20s and $100s on the counter after the first month or so that I don't think it would matter. Of course we've never paid carried a balance on a CC that led to interest (except that one time we missed a payment by accident and they waived the interest and fees!!).


Where do I sign up for the 15% cash back card?
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Old 01-13-2018, 11:04 PM   #49
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+1

I can honestly say that I have never heard Dave Ramsey speak though I have certainly heard of him. This isn't a novel thought that he has had, the research in the area is pretty compelling. Even if it weren't true, even with a cash back credit card one is still paying more than what the cash price would be if credit cards did not exist. My understanding is that the credit card industry lobbied long and hard to prevent 'discount for cash' being promoted by merchants. They are definitely convenient and not particularly harmful in educated hands but the profits generated by the industry suggest that most are not well educated. What a surprise.
I guess the good news is that if you have a great credit score the banks are competing hard to get your CC business. So consumers have more power to save or actually get a rebate.



So goods are now less expensive if you use CCs wisely. But CCs are definitely a trap and thats the catch. Been there done that. Never again!

So the advantage clearly goes to the responsible credit card user. Dave Ramsey is wrong.
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Old 01-14-2018, 02:23 AM   #50
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Dave Ramsey always claims that debit cards offer the same theft protections as credit cards.
Clark Howard disagrees.

Dave Ramsey always tells people that they can rent a car with a debit card. Sure Dave. Good luck with that.

I think checks are processed now immediately at the purchase point just like a debit card transaction.
Which is nice if you write checks.

I really don't know why anyone would use a debit card for transactions in 2018 with so many banks offering cash back now on credit cards.
My debit card pays me 4% on my balance up to 10k if I use it 20 times a month. I use it for very small purchases and use the cash back card for everything else.
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Old 01-14-2018, 03:10 AM   #51
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"Dave Ramsey says that you can withdraw 8% per year from your portfolio in retirement based on a 12% rate of return and 4% inflation."


Might work using a more aggressive portfolio and a variable spending approach.

Helps to have 55 million as a buffer for the ups and downs.
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Old 01-14-2018, 04:59 AM   #52
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My debit card pays me 4% on my balance up to 10k if I use it 20 times a month. I use it for very small purchases and use the cash back card for everything else.
So your debit card requires 20 transactions per month to get cash back on purchases. 4% is a good deal so it sounds worth it.

I think my credit union offers a similar type debit card that requires certain usage to get cash back.

So I wonder if Dave Ramsey is against using debit cards that force customers to spend more money to qualify for cash back.

Im not even sure if I could come up with 20 transactions per month using a debit card.
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Old 01-14-2018, 05:06 AM   #53
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So your debit card requires 20 transactions per month to get cash back on purchases. 4% is a good deal so it sounds worth it.

I think my credit union offers a similar type debit card that requires certain usage to get cash back.

So I wonder if Dave Ramsey is against using debit cards that force customers to spend more money to qualify for cash back.

Im not even sure if I could come up with 20 transactions per month using a debit card.
I get 4% on my account balance not my purchase. 20 transaction are easy for me as I am still working and have daily expenses.
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Old 01-14-2018, 05:28 AM   #54
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Exactly! When people say things like: If you have to lay down $100 bills at the grocery store .....

I ask: Who's "you"? Not me, that's for sure. And on a practical note, if you start flinging Benjamin's at a supermarket they might call the police.
Lol. See that's me. I don't say ouch whenI use cash. I go to the grocery store with a list. I may pick up a few extra things if the sale is good but if I use my credit card its not like all of a sudden I walking out with an extra 200 bucks of food.
Im not a big fan of TV guru's and I definitely hate his investment advice
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Old 01-14-2018, 05:34 AM   #55
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I've listened to Dave Ramsey many times and I think he gives sound advice to his target audience. That is not me nor this ER audience.

Listening to his call in fans will help you understand why he uses these tactics. His audience, for the most part, has had no personal financial education during their formative years. They are in "emergency" mode and for them, I believe DR's techniques do work.

Since I don't own a debit card, I exclusively use two credit cards for almost every purchase. They are paid off in full every month and I use the credit card statements as my form of DR's "envelope" system.

If I used cash exclusively, I would be depriving myself of many economical purchases/opportunities that reside online. I believe this technique provides me better financial "throughput".
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Old 01-14-2018, 08:33 AM   #56
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But CCs are definitely a trap and thats the catch. Been there done that. Never again!
You are pretty militant about your disgust for Dave Ramsey, yet apparently at one time you needed to heed at least some of his advice.

As many have said on here, this audience, for the most part, is not his audience. But them again I think this audience is a rather small one. There are a LOT more people out there that can get benefit from listening to what Dave Ramsey says, even if it may not be the best or most sophisticated financial planning advice. But for HIS audience, if he can get them to stop the cycle of debt, and start making some plans for their future, well, more power to him.
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Old 01-14-2018, 08:37 AM   #57
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This is from Nerd Wallet for 2017:

"Americans’ total credit card debt continues to climb in 2017, reaching an estimated $905 billion — a nearly 8% increase from the previous year — according to a NerdWallet analysis. [1]

And the average household that’s carrying credit card debt has a balance of $15,654. Households with any kind of debt owe $131,431 (including mortgages), on average, the data analysis found."

I would say the larger audience could benefit from Dave Ramsey's plan.
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Old 01-14-2018, 08:59 AM   #58
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Since I don't own a debit card, I exclusively use two credit cards for almost every purchase. They are paid off in full every month
DW & I didn't think we had one....turns out our TD bank card has that facility.....(not that we've ever, or would ever, use it as such...just can't see the benefit).

(Not being a TV watcher I'd never heard of Dave Ramsey.....kinda thought he was a cook...but, different guy, different spelling...never seen the other one either.)
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Old 01-14-2018, 09:07 AM   #59
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If I used cash for everything, my wallet would be way too thick. Would probably throw my back out. Seems like a pretty impractical idea for dubious benefit. Besides I wouldn’t get all those airline points.

Obviously there are many people who might benefit from not having CC’s. But surely not on this site.
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Old 01-14-2018, 09:10 AM   #60
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There are a LOT more people out there that can get benefit from listening to what Dave Ramsey says, even if it may not be the best or most sophisticated financial planning advice. But for HIS audience, if he can get them to stop the cycle of debt, and start making some plans for their future, well, more power to him.
I agree- he's helped a lot of people. In one of his books, he told of a couple who REALLY wanted to meet with him ASAP because they were in a big financial mess and wanted his help. He suggested a date the following week, but they couldn't make it- were leaving on a cruise.

For that audience, keeping them away from credit cards is a very good idea. Using Nerdwallet's average of $15,654 balance for households carrying a balance, even at 18% that's $200/month in interest alone.

I can ignore his advice about credit cards- haven't paid a dime of finance charges in decades, and $200/month is about what I receive in cash-back rebates. I'm also not enthusiastic about generating income through real estate investment, even though it's worked very well for some people. I still think Ramsey has some good points.
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