Interesting viewpoint on credit cards

[RobbieB]

Yup, cash back, a credit score so people you want to borrow money from know you exist. What was I taught at an early age?, yes, establish credit early. My first job (out of school) came with a credit card. You know, so you can rent cars and such.

And now we have this gas bag telling us to forgo all credit and strive for a zero score?

And live where? In an apartment or a house? Maybe a cave would be good? Or under a bridge in a refrigerator box? I know he gets paid 55 million to tell people this. Zero credit score. It could work if you have 55 million eh? Works for him.

Oh I know, residential hotel, pay by the week in cash up front.

Just listen to me and do what I say and you can have 55 million too. Gas Bag.

[Pilot2013]

Quote:

Originally Posted by RobbieB Yup, cash back, a credit score so people you want to borrow money from know you exist. What was I taught at an early age?, yes, establish credit early. My first job (out of school) came with a credit card. You know, so you can rent cars and such. And now we have this gas bag telling us to forgo all credit and strive for a zero score? And live where? In an apartment or a house? Maybe a cave would be good? Or under a bridge in a refrigerator box? I know he gets paid 55 million to tell people this. Zero credit score. It could work if you have 55 million eh? Works for him. Oh I know, residential hotel, pay by the week in cash up front. Just listen to me and do what I say and you can have 55 million too. Gas Bag.

On ignore now, see ya

[Sunset]

I used to use cash for Aldi, what a pain it was to make sure I had over $100 in my wallet. Now that they take CC shopping is easier as I buy what I want without worrying I won't have enough on me to pay.

We pay ours off every month, so a very rough estimate is the CC companies pay me an easy $500 /yr on average to use their cards.

However, I have a relative who will spend right to the limit on the CC, and then try to get the limit raised. She will forever pay the monthly interest cost of $100 as she keeps using the CC when possible, and only paying the minimum.
For her life would be cheaper without a CC.
No matter how much I talk to her about it, nothing changes, it's like a Crack Card addict.

[YVRRocketSurgery]

I think that was the first Dave Ramsay video I watch. It's likely my last. Man, he's annoying. I can't stand to listen to that kind of "I know it all" type delivery.

That said, I do agree with his point to a degree in that I don't think it "hurts" as much at a point of purchase when you pay with a credit card, room key, cruise card, etc vs cash. However, I don't find it practical spending cash and I find the benefits using a credit card far outweighs the psychological restraint using cash may provide. The core problem is that most people don't give enough thought to how much benefit they are going to get when spending their finite dollars.

Even though I may not feel the hurt as much during point of purchase using a credit card, I'm constantly (nearly daily) checking the status of my accounts because my banking (savings, chequing, credit card, investments) is integrated. I feel the pain when checking my accounts and seeing the value of our chequing account reduce in value after paying the credit card bills which I try to do throughout the month instead of waiting for the payment date.

[Perryinva]

+ 7 agreement to the others about his target audience (Suzi Ormann etc) and that for credit card problem people. Since We don’t buy what we don’t need, makes no difference. Rebate cash, points etc may be minor but also allow things I WOULD never spend the actual cost on, like Business or First Class to Europe. I could also save beaucoup bucks living in a cheap location 1000sqft house, but I don’t. Silly advice for people that can handle money and you have to assume DR knows that too.

[jollystomper]

Quote:

Originally Posted by athena53 The field of Behavioral Economics addresses why people make financial decisions that don't make sense if you look strictly at the numbers. Much of what Ramsey teaches recognizes this. One might even say (cough, cough) that people who insist on having a paid-off home in retirement even though their investments are yielding twice the mortgage interest rate they'd be paying are behaving irrationally.

I know of at least one well-known financial talk show host who agrees with this, saying you should maintain the largest mortgage payment you can afford, your money can be put to better uses than paying off the house.

[FANOFJESUS]

Dave said people using credit cards spend 12-18% more. Do I spend 12-18% more no but I see his point. I bet I do spend more. Maybe it is only 3% more but it is still more.

[Nemo2]

Quote:

Originally Posted by rec7 Dave said people using credit cards spend 12-18% more. Do I spend 12-18% more no but I see his point. I bet I do spend more. Maybe it is only 3% more but it is still more.

Is it more on every purchase, or do you, (as we often do), add items that we will need, in order to reach an imaginary & flexible minimum?

(If we paid cash, (which we don't), we'd likely have more individual transactions but the total spent would be the same.)

[athena53]

Quote:

Originally Posted by jollystomper I know of at least one well-known financial talk show host who agrees with this, saying you should maintain the largest mortgage payment you can afford, your money can be put to better uses than paying off the house.

I wouldn't go that far! I WAS locked into a big mortgage during the years that I lived in NJ- HCOL area and that's what you had to do if you wanted a decent house in a good school district. I'm happy to say that I made a lot of money when my first husband and I sold the marital home when we divorced and also when I sold the house I bought after the divorce. It could easily have gone the other way, especially if I'd sold at the worst point in the financial crisis. DH and I moved to the KC area in 2003 and bought about half the house we could afford. We downsized 2 years ago and barely got out what we put into it. I'm very glad we didn't mortgage ourselves to the hilt. My current monthly mortgage payment before taxes and insurance is only $700.

Quote:

Originally Posted by Sunset However, I have a relative who will spend right to the limit on the CC, and then try to get the limit raised. She will forever pay the monthly interest cost of $100 as she keeps using the CC when possible, and only paying the minimum.

Yeah, that was my Ex. Any limits left on the credit card was money he could spend.

[LaurenLuna]

Credit is a great tool for me, allows me to earn hundreds of dollars per year I would otherwise not have earned.

[Zathras]

Quote:

Originally Posted by ERD50 That may be, but my beef with Ramsey is, rather than explaining this to his audience, and explaining that if you learn to overcome this, you will be helping yourself, he just tells them "Don't use CCs!". If you learn, then instead of spending more, you'll spend just what you decided to, and you will get 2%-4% rewards. ...

Exactly!
People get so wrapped up in that this is supposed to apply to every individual in every situation.
It doesn't, and in general, it is good advice.

In general, people spend more money if using a credit card, than if using cash. There have been many studies on this and it works out that way to an amazing level. Does it apply to every individual? No, but it works quite often.
It works that way in games too. Charge up front for an App and it brings in some money. Take the same App, make it free, but with 'in-app' purchases of things and more money flows in.

When you see this, from ANY media, don't criticize it on the basis of the advice not being applicable to you as an individual. They are talking in generalities.

[Danmar]

I don’t think there is much doubt that most people would spend less if they paid cash for everything. But the idea of walking around with thousands of dollars in my wallet just seems ridiculous. I would have to get the ATM cash dispersing limit raised big time. Granted, obviously I’m not the prime audience for that guy, what’s his name again?

[Amethyst]

These salespeople's [and they are salespeople; they're selling their approach] target audience consists of people who are not inclined to think for themselves, and therefore are very impressed by an air of great confidence. Anything less than great confidence might put them off. You probably are a skeptical, independent thinker, so you find the confidence thing annoying. You are too busy thinking of all the ways each over-confident statement might have a bug in it.

Quote:

Originally Posted by YVRRocketSurgery I think that was the first Dave Ramsay video I watch. It's likely my last. Man, he's annoying. I can't stand to listen to that kind of "I know it all" type delivery. .

[Rianne]

The best takeaway from Dave Ramsey is avoid interest and learn to budget. My CC organizes my spending, shows me a pie chart of how much I spend and where, gives me a year end summary of every single penny I've spent and where.

Just pay it off every month and it's a great way to see spending and budget. And if I feel I've been unfairly charged, I dispute it. They stand behind my disputes, especially when I accidentally signed up for a service I do not need. I've tried to cancel service and get a refund and the run a round is ridiculous. My CC handles all that. Plus they let me know when a charge is weird. Someone opened an account in DH name in FL. Had his SS and birthday. It was a business account, we had no clue. CC caught it, informed us, told us the names of the people who opened it and cancelled the account before it caused any problem.

[Pilot2013]

Quote:

Originally Posted by Rianne The best takeaway from Dave Ramsey is avoid interest and learn to budget. My CC organizes my spending, shows me a pie chart of how much I spend and where, gives me a year end summary of every single penny I've spent and where. Just pay it off every month and it's a great way to see spending and budget.

Great idea for you, but not for Dave Ramsey's audience. As has been stated by many here, his TOTAL approach is not for everyone. I think he makes it very rigid because people that tend to abuse CC's, much like drugs, have little self control, and often use MANY different reasons/justifications.

[purplesky]

Quote:

Originally Posted by swaneesr My wife and I have listened to Dave Ramsey on and off for many years typically by putting on the podcast while on a long drive. Both my wife and I enjoy many of the absurd calls. We always pretty much know what Dave’s response will be. As many have already stated he is motivational speaker and entertainer on the subject of finance. Much of his advice is sound. Self control, financial discipline, taking action to form a budget, working with your partner to both engage financialy. These are all good things. I use credit cards and collect cash back. I read lots of financial books and information online. I use the advice that makes sense and ignore the rest. What confuses me is the reaction to attack Dave Ramsey. I see his religion, politics, or net worth irrelavent to the OP. Dave Ramsey freely admits his techniques are not about the most efficient way to get out of debt based on math. It is not a math problem for most people, but one of self control and motivation. Ditto - just turn the channel already.... Respectfully, SwaneeSR

Dave Ramsey attacks CNN money, CNBC, Millennial bloggers, Harvard studies,Motley fool, etc, all the time on his show.

Dave Ramsey has some very radical ideas about personal finance and Dave Ramsey gives bad investment advice that many people in the financial advisor space question often.

In the past several years Dave Ramsey has decided to be completely divisive every chance he gets. Dave made the choice.

The whole Dave Ramsey experience is church based and he is a evangelical christian.
So the religious community started to question the size of Dave Ramseys mega mansion in Nashville and question his vast wealth as a christian and what he is doing with it. Its funny. (GOOGLE DAVE RAMSEYS HOUSE)

So Dave Ramsey gets into a war of words with the christian community and gets super defensive about his wealth and being a christian.

I have been listening to Dave Ramsey on and off for about 13 years so I know his routine.

Yes overall Financial Peace University has helped many people in churches all around the country to get out of debt.

But Dave Ramsey has no business pretending he is a financial advisor.

[joeea]

Quote:

Originally Posted by rec7 Dave said people using credit cards spend 12-18% more. Do I spend 12-18% more no but I see his point. I bet I do spend more. Maybe it is only 3% more but it is still more.

You should decide to pay for everything using only pennies.
I guarantee you'll spend less.

[joeea]

Quote:

Originally Posted by athena53 We downsized 2 years ago and barely got out what we put into it. I'm very glad we didn't mortgage ourselves to the hilt.

I don't understand what having a mortgage has to do with this?

If you barely got out what you put in - that would be equally true if you paid cash or mortgaged it, right? Having a mortgage doesn't change the value of the house.

Perhaps you meant you are "very glad we didn't buy more house than we actually did"?

[Pilot2013]

Quote:

Originally Posted by purplesky Dave Ramsey attacks CNN money, CNBC, Millennial bloggers, Harvard studies,Motley fool, etc, all the time on his show. Dave Ramsey has some very radical ideas about personal finance and Dave Ramsey gives bad investment advice that many people in the financial advisor space question often. In the past several years Dave Ramsey has decided to be completely divisive every chance he gets. Dave made the choice. The whole Dave Ramsey experience is church based and he is a evangelical christian. So the religious community started to question the size of Dave Ramseys mega mansion in Nashville and question his vast wealth as a christian and what he is doing with it. Its funny. (GOOGLE DAVE RAMSEYS HOUSE) So Dave Ramsey gets into a war of words with the christian community and gets super defensive about his wealth and being a christian. I have been listening to Dave Ramsey on and off for about 13 years so I know his routine. Yes overall Financial Peace University has helped many people in churches all around the country to get out of debt. But Dave Ramsey has no business pretending he is a financial advisor.

Whatever....

[ncbill]

Today it is much easier to track spending with cards (credit or debit) vs cash.

My credit card expenditures are automatically categorized in Mint, and their algorithm is reasonably accurate.

So if I exceed a budget category I'll know in short order, well before I go 20-30% over.