Credit cards - do you have one?

[Lawdog]

[This came up on another board in a thread about shopping tomorrow (day after Thanksgiving).]

I prefer not to have a credit card. Consequently, I don't have credit card debt. I use a debit card.

Your thoughts on credit cards?

[WallyGoat]

[This came up on another board in a thread about shopping tomorrow (day after Thanksgiving).]

I prefer not to have a credit card. Consequently, I don't have credit card debt. I use a debit card.

Your thoughts on credit cards?

Don't have one either. Don't need one. :thumpsup:

[AUChamps]

I am a devout follower of Dave Ramsey. Debt is Dumb, Cash is King, Quit buying crap you don't need with money you don't have to impress ppl you don't like, and so on.

www.daveramsey.com and I highly recommend "The Total Money Makeover" as a great Christmas Gift.

[Lawdog]

I am a devout follower of Dave Ramsey. Debt is Dumb, Cash is King, Quit buying crap you don't need with money you don't have to impress ppl you don't like, and so on.

www.daveramsey.com and I highly recommend "The Total Money Makeover" as a great Christmas Gift.

I used to listen to him, too. He's pretty good. I don't really listen anymore, but I still keep that principle from his list.

[blues_cap]

they are good to go if you pay them off every month(you get cash back or airline miles) therefore you are charged $0 for using them. i rarely carry much cash and use mine for almost everything(cell phone bill, groceries, gas).....which equals more cash back.

[Lawdog]

they are good to go if you pay them off every month(you get cash back or airline miles) therefore you are charged $0 for using them. i rarely carry much cash and use mine for almost everything(cell phone bill, groceries, gas).....which equals more cash back.

IF you pay them off every month. Eventually, it is likely that you will incur some interest or other charge of some sort. If you can beat the system, though....more powe to you!!

[AUChamps]

they are good to go if you pay them off every month(you get cash back or airline miles) therefore you are charged $0 for using them. i rarely carry much cash and use mine for almost everything(cell phone bill, groceries, gas).....which equals more cash back.
Dave says that noone ever got rich with their FF Mile points or Discover Points. A Debit Card is all I need and I also believe in High Yield Savings Accounts, like from ING Direct. www.ingdirect.com

Dave also says that playing around with Credit Cards to try and get more points is like playing with snakes. Eventually you're gonna get bitten if you play enough.

[AUChamps]

Also, Rich ppl buy quality items Used. You'll do better in the long run doing so, for everything from Cars to Furniture.

[Lawdog]

I never buy a brand-new car. I always buy a car that is a year or two old.

[AUChamps]

I never buy a brand-new car. I always buy a car that is a year or two old.
Exactly. And NEVER Lease. It's one of the biggest scams out there. Right up there with PayDay Loansharks and "Debt Consolidation" Firms.

[WallyGoat]

I am a devout follower of Dave Ramsey. Debt is Dumb, Cash is King, Quit buying crap you don't need with money you don't have to impress ppl you don't like, and so on.

www.daveramsey.com and I highly recommend "The Total Money Makeover" as a great Christmas Gift.

My mother listened to him back in Indiana. She hated it when she would miss his show.

[Gamecocks4Ever]

Dave says that noone ever got rich with their FF Mile points or Discover Points. A Debit Card is all I need and I also believe in High Yield Savings Accounts, like from ING Direct. www.ingdirect.com

Dave also says that playing around with Credit Cards to try and get more points is like playing with snakes. Eventually you're gonna get bitten if you play enough.

Hmm, High Yield Savings Accounts are definitely better than low yielding ones, but they aren't gonna make you rich. The tax situation isn't good, cause it's taxed the same as income, so depending on your tax bracket, you aren't getting as much yield as you think.

Dave is getting rich from his royalties. How are you?

[AUChamps]

Hmm, High Yield Savings Accounts are definitely better than low yielding ones, but they aren't gonna make you rich. The tax situation isn't good, cause it's taxed the same as income, so depending on your tax bracket, you aren't getting as much yield as you think.

Dave is getting rich from his royalties. How are you?
Just think where you'd be if you didn't have a Car Payment, and instead put that amount of money into a good Mutual Fund every month. Where would you be in 10 Years? 20 Years?

[Gamecocks4Ever]

Just think where you'd be if you didn't have a Car Payment, and instead put that amount of money into a good Mutual Fund every month. Where would you be in 10 Years? 20 Years?

I don't have a car payment. :thumpsup:

[OmahaBound]

they are good to go if you pay them off every month(you get cash back or airline miles) therefore you are charged $0 for using them. i rarely carry much cash and use mine for almost everything(cell phone bill, groceries, gas).....which equals more cash back.

Exactly. I've cashed in on 200 dollars in rewards gift cards from credit card companies the past couple years, and never paid any interest to them in the process. If you pay your full balance each month then it's a great way to avoid carrying cash and earn some free gift cards in the process. If you use them responsibly they can help your credit score too.

[AUChamps]

I don't have a car payment. :thumpsup:
So then you can take that money that Would have gone toward a Car Payment and turn around and invest it. Diversify between 4 types of Mutual Funds and max your 401K/Roth IRA. Pay down Student Debt if you have any, but always remember to pay your debts smallest to largest and setup an emergency fund that'll last you 3 to 6 months. Also, invest in Term Life Insurance.

[Gamecocks4Ever]

So then you can take that money that Would have gone toward a Car Payment and turn around and invest it. Diversify between 4 types of Mutual Funds and max your 401K/Roth IRA. Pay down Student Debt if you have any, but always remember to pay your debts smallest to largest and setup an emergency fund that'll last you 3 to 6 months. Also, invest in Term Life Insurance.

Yep, you been listening and reading very well. :laugh:

[AUChamps]

Yep, you been listening and reading very well. :laugh:
What can I say? It's important for everyone here to act your wage.

[Cianne]

Dave Ramsey = overrated

Marshall Ramsey = underrated.

[Gamecocks4Ever]

What can I say? It's important for everyone here to act your wage.

I'm just joking with ya man. You're giving pretty good advice. The way I look at it, people typically fall into two categories. You've got your people who fall for the consumerism and have credit card debt equal to a year's wage and own nothing worth a dime. Then you've got your people who live like a miser today to save everything for a future that may or may not exist. Frankly, I think both are silly.
With all the nutjobs getting nukes these days, it's quite possible none of us will be around in 20 years. However, if I am, I'd like to be in a position to enjoy myself. At the same time, I'm not going to make myself miserable today. If there's something I really want, then I get it. I usually make myself wait a month or so though. I find that if I do that, then typically if I only wanted something because I saw it on a commercial, then the desire goes away. I don't get it. If I still want it at that point, then it's something that I genuinely want, so I get it. I think you can play both ways, if you do it wisely.

[oldgrandpa]

[This came up on another board in a thread about shopping tomorrow (day after Thanksgiving).]

I prefer not to have a credit card. Consequently, I don't have credit card debt. I use a debit card.

Your thoughts on credit cards?
They are great if you pay them off each month, but very few people do this. It is too easy to buy somethine on the spur of the moment with them that you woundn't pay your cash for. The credit card co is betting you won't pay it off each month. They usually win.

[TaySC]

I think people need to realize what credit cards were created for when they first came about.

Credit cards are merely a way to stop someone from having to carry large amounts of cash on them.

Personally, as some others have mentioned, I use my credit card for almost EVERYTHING and I do in fact pay it off each month and avoid interest. Sure there have been times in my life when for whatever reason I was unable to do that and carried a balance, but if you have great credit, the interest is low and you pay it off ASAP and haven't paid much for the loan that you received.

For those that are listening to these talking heads and claiming credit cards are so bad, do you ever take any loan for anything? Mortgage???

A loan is a loan and a credit card is nothing more than a loan that most people allow to get out of hand because they aren't wise enough to keep them paid off or at least way down.

I also agree that not getting too far in debt is a great thing, but I know people that take this to the extreme and fail to live life. If you are so worried about money that you don't enjoy life or life's pleasures, then what do you have? A bunch of money available for when you get old (IF you live that long) when you may not have the health to enjoy it?

Don't get me wrong here.... I believe in savings, in avoiding paying high interest rates, in avoiding credit card debt, etc., but you have to enjoy life.

It's all about priorities and what is most important to each individual. I personally question what good it will do me if I am a millionaire when I get old, but laid up in a hospital unable to enjoy it.

[scfan5338]

If you are responsible Credit Cards are great. They help you build credit if you are young. But if you have a bad habit of spending and not thinking about what you can actually afford, then credit cards are bad for you.

Honestly I think it depends on the kind of person you are and your personality wheather or not credit cards are good for you or not.

[timNem]

I am a devout follower of Dave Ramsey. Debt is Dumb, Cash is King, Quit buying crap you don't need with money you don't have to impress ppl you don't like, and so on.

www.daveramsey.com and I highly recommend "The Total Money Makeover" as a great Christmas Gift.Second that. My wife's best friend works for Dave and she sent me a signed copy his latest book. If you buy anything from his website you have to use a debit card because he practices what he preaches. No credit cards accepted.

[AUChamps]

I think people need to realize what credit cards were created for when they first came about.

Credit cards are merely a way to stop someone from having to carry large amounts of cash on them.

Personally, as some others have mentioned, I use my credit card for almost EVERYTHING and I do in fact pay it off each month and avoid interest. Sure there have been times in my life when for whatever reason I was unable to do that and carried a balance, but if you have great credit, the interest is low and you pay it off ASAP and haven't paid much for the loan that you received.

For those that are listening to these talking heads and claiming credit cards are so bad, do you ever take any loan for anything? Mortgage???

A loan is a loan and a credit card is nothing more than a loan that most people allow to get out of hand because they aren't wise enough to keep them paid off or at least way down.

I also agree that not getting too far in debt is a great thing, but I know people that take this to the extreme and fail to live life. If you are so worried about money that you don't enjoy life or life's pleasures, then what do you have? A bunch of money available for when you get old (IF you live that long) when you may not have the health to enjoy it?

Don't get me wrong here.... I believe in savings, in avoiding paying high interest rates, in avoiding credit card debt, etc., but you have to enjoy life.

It's all about priorities and what is most important to each individual. I personally question what good it will do me if I am a millionaire when I get old, but laid up in a hospital unable to enjoy it.
1st off, with the advent of Debit/Check Cards, you don't need Credit Cards anymore. As for buying a house, you can get a mortgage as long as it's no longer then 15 year fixed rate and your payment does not exceed more then 25% of your takehome pay.

You can buy a house without a FICO/Credit Score by finding a Mortgage Company that does it the "old" way. I'm talking about Manual Underwriting and roughly 20% of Mortgage brokers still use this method where they'll look at everything you have and your credit score is meaningless if you're debt-free except for the house. To me, your credit/FICO score is nothing more then an "I Like Debt" score. Pointless for me to look at and hopefully I'll have no FICO score if I play my finances right.

[Lawdog]

If there's something I really want, then I get it. I usually make myself wait a month or so though. I find that if I do that, then typically if I only wanted something because I saw it on a commercial, then the desire goes away. I don't get it. If I still want it at that point, then it's something that I genuinely want, so I get it. I think you can play both ways, if you do it wisely.

I try to do the same thing, and it usually works well. I recently gave in to impulse, though, with a car (used car). I had been wanting an Expedition for a couple of years. I saw a 2003 model on the used lot with low mileage at a decent price one night, and I had bought the darn thing by lunch the next day. I did pay cash, so I didn't incur any debt for it, but I did regret buying it on impulse like that. Had I waited a week or so, it might have been gone. Even if it had still been on the lot, I also probably would have realized that my Explorer was just fine (and it is just fine - paid for as well), and I wouldn't have bought the Expedition.

Good rule to live by. I've learned my lesson, and I don't anticipate making that mistake again.

[timNem]

I think people need to realize what credit cards were created for when they first came about.

Credit cards are merely a way to stop someone from having to carry large amounts of cash on them.

Personally, as some others have mentioned, I use my credit card for almost EVERYTHING and I do in fact pay it off each month and avoid interest. Sure there have been times in my life when for whatever reason I was unable to do that and carried a balance, but if you have great credit, the interest is low and you pay it off ASAP and haven't paid much for the loan that you received.

For those that are listening to these talking heads and claiming credit cards are so bad, do you ever take any loan for anything? Mortgage???

A loan is a loan and a credit card is nothing more than a loan that most people allow to get out of hand because they aren't wise enough to keep them paid off or at least way down.

I also agree that not getting too far in debt is a great thing, but I know people that take this to the extreme and fail to live life. If you are so worried about money that you don't enjoy life or life's pleasures, then what do you have? A bunch of money available for when you get old (IF you live that long) when you may not have the health to enjoy it?

Don't get me wrong here.... I believe in savings, in avoiding paying high interest rates, in avoiding credit card debt, etc., but you have to enjoy life.

It's all about priorities and what is most important to each individual. I personally question what good it will do me if I am a millionaire when I get old, but laid up in a hospital unable to enjoy it.I disagree, credit cards were created for build ungodly profits for credit card companies, banks, etc. Credit cards don't build equity like a mortgage loan does.

[Lawdog]

I disagree, credit cards were created for build ungodly profits for credit card companies, banks, etc. Credit cards don't build equity like a mortgage loan does.

Debt is debt, that is true. However, as timnem says, a mortgage is a different type of debt. There is actually some rhyme or reason to it.

However, I am a real estate attorney, and I close loans for a living. In my experience, I will say that there are a ton of people out there that borrow all they can, with interest-only mortgages, so they can have as big a house as possible. They end up stretching themselves and make themselves house poor (paying everything they make toward the house payment). Often they interest-only loans are adjustable and, once the rate adjusts, they end up with a payment they really can't afford.

This has happened alot lately. When rates were so low over the past few years, people decided they could make X house payment with Y loan. Then rates started creeping up, then the loan interest rate on these loans adjusted a couple of years later. Then...oops....how do we make this payment??? That's why there have been so many foreclosures lately.

[Lawdog]

Quick story to illustrate my point above:

I got a call from a mortgage broker a year or so ago. He had a customer that was selling his house for about $250,000. He was going to buy a house for.....get this.....$1.2 million. His income had not experienced some incredible increase. The guy was going to borrow....get this....95% of the $1.2 million on two different interest only loans. I about fell on the floor. I thought this guy must have been insane.

That is the type of person that would quite possibly have ended up in foreclosure within 2 years.

Luckily for him, I don't think he went through with it. At least, I never closed the loans for him.

[timNem]

Quick story to illustrate my point above:

I got a call from a mortgage broker a year or so ago. He had a customer that was selling his house for about $250,000. He was going to buy a house for.....get this.....$1.2 million. His income had not experienced some incredible increase. The guy was going to borrow....get this....95% of the $1.2 million on two different interest only loans. I about fell on the floor. I thought this guy must have been insane.

That is the type of person that would quite possibly have ended up in foreclosure within 2 years.

Luckily for him, I don't think he went through with it. At least, I never closed the loans for him.The Interest-Only mortgage loans have become big lately, why is that? I just cannot fathom why anyone would take that route.

[Gamecocks4Ever]

Quick story to illustrate my point above:

I got a call from a mortgage broker a year or so ago. He had a customer that was selling his house for about $250,000. He was going to buy a house for.....get this.....$1.2 million. His income had not experienced some incredible increase. The guy was going to borrow....get this....95% of the $1.2 million on two different interest only loans. I about fell on the floor. I thought this guy must have been insane.

That is the type of person that would quite possibly have ended up in foreclosure within 2 years.

Luckily for him, I don't think he went through with it. At least, I never closed the loans for him.

I think that illustrates a point also. These talking heads that preach so much about credit card debt being so bad, are usually the ones hyping home ownership, even if it's a home you can't afford. Putting yourself in a situation where 50%+ of your takehome is going towards a mortgage payment just because a home as a "good" investment, is no better than racking up a bunch of credit card debt.

[GeauxTo]

I've learned my lesson.
No, you haven't learned your lesson yet.
You're still buying Fords! jkng.
:biggrin:

[blues_cap]

The Interest-Only mortgage loans have become big lately, why is that? I just cannot fathom why anyone would take that route.

i have had 2 in the pas 3 years. first of all, if you arent planning on staying in a place at least 5 years, you are gaining very little equity through paying principle and interest....what is the point in paying the principle when it doesnt do that much. the better option is doing an interest only 80/10/10 loan, where you have 10% down and you can pay the difference b/w the p&i payment and the int only payment towards your line of credit.....which directly reduces your monthly payment(unlike paying p&i and paying more each month). this also gives you a line of credit that you can use to buy cars, pools, etc all the while being tax deductible b/c they are tied to your house.

int only gets you in trouble b/c many people doo 100% loans and then their house doesnt appreciate at all....therefore, you are stuck paying to move out of a house. if you put money down or live in a place that will appreciate you will leave just fine.

[AFWarrior83]

I have 1 but hardly use it.

[blues_cap]

1st off, with the advent of Debit/Check Cards, you don't need Credit Cards anymore. As for buying a house, you can get a mortgage as long as it's no longer then 15 year fixed rate and your payment does not exceed more then 25% of your takehome pay.

You can buy a house without a FICO/Credit Score by finding a Mortgage Company that does it the "old" way. I'm talking about Manual Underwriting and roughly 20% of Mortgage brokers still use this method where they'll look at everything you have and your credit score is meaningless if you're debt-free except for the house. To me, your credit/FICO score is nothing more then an "I Like Debt" score. Pointless for me to look at and hopefully I'll have no FICO score if I play my finances right.

this is not the way 98% of america lives. 15 year mortgages are very rare b/c of how expensive they are per month. besides, most people in the real estate/finance business can tell you that paing 2.5 extra payments a year turns a 30 year into a 15 year(where is dave?) and you get to keep your money in the bank making money instead of giving it to the bank on a monthly schedule.

btw, you can buy a house w/o a fico but it is usually limited in loan amount b/c of your lack of proof of ability to pay back debt. on top of that, if you buy a house through fha or va, you will get a fico, like it or not.

dave is ok, but many of his theories are extreme and quite ridiculous.

[AUChamps]

this is not the way 98% of america lives. 15 year mortgages are very rare b/c of how expensive they are per month. besides, most people in the real estate/finance business can tell you that paing 2.5 extra payments a year turns a 30 year into a 15 year(where is dave?) and you get to keep your money in the bank making money instead of giving it to the bank on a monthly schedule.

btw, you can buy a house w/o a fico but it is usually limited in loan amount b/c of your lack of proof of ability to pay back debt. on top of that, if you buy a house through fha or va, you will get a fico, like it or not.

dave is ok, but many of his theories are extreme and quite ridiculous.
It's ok to be weird then. Why would I want to be normal if that includes some sort of debt? Besides, I said 15 year fixed rate where your payments are no more then 25% of your takehome pay. It's called making sure you live within a means and who cares how the Joneses are living, because they're broke too.

[timNem]

It's ok to be weird then. Why would I want to be normal if that includes some sort of debt? Besides, I said 15 year fixed rate where your payments are no more then 25% of your takehome pay. It's called making sure you live within a means and who cares how the Joneses are living, because they're broke too.You obviously have been studying Ramsey alot, Good for you. Now, if we can just get you off of Finebaum.... :laugh: :joke:

[Lawdog]

dave is ok, but many of his theories are extreme and quite ridiculous.

I agree. I agree with Dave Ramsey's general principles, but I do NOT agree with some of his more extreme views. You have to weed out the extreme stuff in his guidelines.

For example, I own a beach house that I have as an investment. I rent it out alot, which covers alot of the costs, but not all of the costs. The rate of appreciation far exceeds what I'm putting into it. Therefore, it's a good investment. Dave Ramsey would tell me, instead of spending money on that beach house, put that extra money towards my mortgage on my primary residence. He thinks second homes are bad, unless you pay cash for them. I understand what he's trying to say, but in this scenario, I just can't agree with him. Had I not bought that house, I would be without about $250,000 in additional equity in that beach house, due to the increase in value since I bought it 2 and a half years ago. I assure you that I have not put more than $25,000 of my own money into it over the course of the past 2 and a half years. I'd say that is a pretty good investment. Dave would have told me not to do it.

Had I done as Dave says, I'd have maybe $25,000 more equity in my primary residence. Would you trade $25,000 equity in your house for $250,000 equity in another house? I think so.

Again, I do agree with Dave in general. You just have to take his teachings on a case-by-case basis.

[Lawdog]

I think that illustrates a point also. These talking heads that preach so much about credit card debt being so bad, are usually the ones hyping home ownership, even if it's a home you can't afford. Putting yourself in a situation where 50%+ of your takehome is going towards a mortgage payment just because a home as a "good" investment, is no better than racking up a bunch of credit card debt.

I can't really disagree with that much at all. :thumpsup:

Two differences: (1) you can sell the house to eliminate the debt; and (2) if you borrowed 100% of your purchase price when you bought the house, you can hope that the house goes up in value, which can help you get out of the house without having to pay out of pocket at closing to cover realtor commissions and other closing costs.

With credit cards, that's not an option. There's nothing to sell to pay off the credit card debt. It's just an unsecured loan out there that you have to come completely out of pocket to pay off.

But I definitely agree with your point that getting into a mortgage that you really can't afford is unwise.

[Lawdog]

It's ok to be weird then. Why would I want to be normal if that includes some sort of debt? Besides, I said 15 year fixed rate where your payments are no more then 25% of your takehome pay. It's called making sure you live within a means and who cares how the Joneses are living, because they're broke too.

That is straight from Dave's mouth. You have really bought into Ramsey 100%. If you can do it, more power to you.

[AUChamps]

You obviously have been studying Ramsey alot, Good for you. Now, if we can just get you off of Finebaum.... :laugh: :joke:
HAHA, I've seriously switched to a reutine on my radio.

Glenn Beck in the Mornings
Dave Ramsey at Lunchtime
Paul Finebaum in the Afternoon/Evening

Been doing it for 4 years now and why change up a great lineup? ;)