The average American household that isn't carrying credit card debt has a balance of $0.
exactly. i have never paid one dime of credit card interest in my life.
The average American household that isn't carrying credit card debt has a balance of $0.
exactly. i have never paid one dime of credit card interest in my life.
exactly. i have never paid one dime of credit card interest in my life.
I didn't bring up "getting more and more cards to chase various deals" though. Just a single, simple, no fee 2% cash back card, of which there are a variety available. You're constructing a boogieman of the worst way to use cards and then saying that is bad. Of course it is bad to spend more than you can afford to pay off, or to forget to make a payment, or whatever. My issue with this line of thinking is it takes "Credit card debt is bad" or "forgetting to pay your bills is bad" and takes that to mean "Using a credit card is bad".
I didn't bring up "getting more and more cards to chase various deals" though. Just a single, simple, no fee 2% cash back card, of which there are a variety available. You're constructing a boogieman of the worst way to use cards and then saying that is bad. Of course it is bad to spend more than you can afford to pay off, or to forget to make a payment, or whatever. My issue with this line of thinking is it takes "Credit card debt is bad" or "forgetting to pay your bills is bad" and takes that to mean "Using a credit card is bad".
If you want to very narrowly define the question to be "Is it good to have one credit card which you always use responsibly?" then the answer is yes.
Sure. There are a few risks I see with having credit cards. Just to be clear, I do have one, actually two now, so I'm not saying never have one. The first risk is that for the type of people Ramsey is aiming his program for (people with very little financial self control and/or knowledge) there is a good chance that they will carry a balance on that card. It may not be every month, but even one or two months of carrying a balance is going to eat up any gains really quickly. It is just keeping a temptation out there for them. The second risk is that as you get more and more cards trying to chase those various deals for cash back, points, etc the more likely it is that you'll lose track of a card or two and unintentionally carry a balance. This happens to my wife a few times a year. The last point (not really a risk) is that people can get so caught up in chasing credit card bonuses they waste more time than what it's worth. There is only a very minimal gain from those cash back cards when you add it all up. If you are someone who struggles with credit discipline, the few hundred dollars in possible gains outweigh the risks.
My personal stance on credit cards is to stick to one or two, don't go get every single store's card so you can make 1 or 2 % cash back or a one time savings on your first purchase.
The assertion made by Ramsey and people in the thread, that I was refuting, was that a credit card is never a good idea. So that was a simple, but very real, case where a credit card is a good idea.
A lot of good discussion here, I appreciate all the feedback! A couple more questions....
For those who recommended mutual funds, can you provide some further info/links on what I should look for with those? I assume I would start one and let it sit for next 30 yrs?
If/when we have kids, how do those 529 savings acts work? That might be next week in class...
I paid for my college thru a small savings acct that vanished quickly and primarily student loans. I've always had a thought that I want my kids to be motivated and learn to pay for college themselves and graduate with a job, then on the backend I would have an account setup to pay off those loans as their reward. I assume the 529 probably wouldn't work that way? Does the student have to be enrolled full time?
I personally am not a fan of 529s due to the fact that they are restricted to education only and I believe in state schools only as well. We were advised that a Roth is a better option as you can also use it for education as well as your own retirement. The 529 has a penalty for taking it out for non education expenses.
Consider this thread a textbook that you never sell back.Is it bad that this thread is making me glad I’m not married?![]()
Another thing Dave talks about is spending habits. People spend more with cards rather than using cash. So yeah you can pay off your balance each month but had you used cash for your purchases you might have spent $1,500 that month but with the card you spent $1,750. You feel more pain using cash, it is a psychological thing.
I think FPU is a great idea for those who desire to be self-reliant, responsible adults who contribute to society in a positive way and see value in accumulating some wealth, minimizing credit fees and interest and also funding your own retirement. You may not follow all of his ideas to a T, but it will give you a lot of good general principles for living. It's not for everyone, because the qualifications I just listed do not fit a lot of people. And that's fine, people are different and disagree on how one should live. But anyway, that's my take on the course, FWIW.