plastic money

[Uncljim]

I think one of the simple and easiest means of reducing your debts is by giving up your credit cards .

[2moretrees]

I really think it takes more than that. Spending is an attitude. Credit cards make it easier if you don't have control, but not using them won't reduce your debts. You have to make some changes to where you spend less than you make. Not using credit cards is one of those steps, but not a solution.

[PrincessPerky]

Not to mention it is often easier than it sounds. We had to use one this week to pay for our daughters perscription. Will need to use it again to pay for the termite inspection. We can't skip those expeditures, and we are not able to go from 60mph to 0mph (figurativly speaking of course) overnight, we are trying to put the breaks on as fast as possible but it isn't fast enough.

[PennyPincher]

I am a supporter of credit cards, although only when used with control. I think that running up credit card debt is part of a bigger problem. Unfortunately, the CC companies make it way too easy for us, and temporarily help us get through trying times, layoffs, medical bills, etc.

I use cards as a convenience because I don't like to carry cash, and I find it so much easier to track and check my spending. I certainly don't mind the little cash back perk from Discover card either.

My parents taught me long ago to only charge what I had the cash to pay for. It stuck with me, and I have been true to that. I'm one of those people that these companies don't make money on ~ which I love.

Plastic money can feel like free money to some though. There is a definite difference in experiences of swiping a credit card for a $100 purchase, and handing the clerk 100 dollar bills that you have worked hard for, and see them counted before you. We should feel some portion of the that pain during the swipe too. (Maybe a small electrical shock?)

[PrincessPerky]

Originally Posted by PennyPincher

We should feel some portion of the that pain during the swipe too. (Maybe a small electrical shock?)

Heh

[crosses]

Oh, much more than that. Maybe a small electric shock for every dollar. Then there is incentive not to spend as much

[terry1156]

Originally Posted by crosses

Oh, much more than that. Maybe a small electric shock for every dollar. Then there is incentive not to spend as much

lol. We'd have an energy crisis across the US!

[Tree0164]

Credit can be as good or as bad as you make it. If you use them and pay it off each month-heck that is fine. But most people don't. Most people charge and charge until their bills are in the thousands. Then they freak out.

I don't use them but I do have one in case we need it.

[jmjj215]

I've changed my tune somewhat about credit cards. Terry1156 and I had a few discussions on the topic and I'm starting to move more to the other side.
It mainly had to do with the fact that an insurance quote I got was 40% higher because I have never borrowed money - same as bad credit because the risk is unknown.

I thought a lot about credit cards - and why I despised them so much and it is mainly because I saw so many people's lives ruined by them. But the CC didn't ruin their life - they ruined it.

My wife and I went back and forth about getting a CC so we could establish some credit. We decided it would be okay in our circumstance for the following reasons:

1. We have six months of expenses in cash in our ING savings account.
2. We budget every dollar we spend.
3. We spend the previous month's income during the current month (w/ the credit card, the cash doesn't actually go out until the month following, so what we make in Dec. won't leave our checking until Feb. 1).
4. The credit card gives cashback.
5. The bank automatically pays our balance in full on the due date by withdrawing from our checking account. This basically means that we're making the same number of transactions and not having to worry about forgetting and getting slapped with fees.

If someone doesn't have an emergency fund I don't think it's wise to have credit cards - even if they have the cash in their checking account to pay off their day to day expenses. As soon as an emergency strikes, they've got to go to the CC - and it could take a long time to come back around from something like that. To carry a balance on a CC just doesn't feel right to me - even short term.

[Uncljim]

Interesting lines jmjj. Personally I suggest we dont have debts at all. Maybe it is better to use normal paper cash, it is easier to be in control.

[terry1156]

Originally Posted by Uncljim

Interesting lines jmjj. Personally I suggest we dont have debts at all. Maybe it is better to use normal paper cash, it is easier to be in control.

No debts at all? It's a nice thought, but how realistic is that? How many people have $100,000+ to hand over for a house? Or $20,000 for a car?

Credit cards aren't bad in themselves. And even with all the gloom, most people do use them correctly. Just because a minority doesn't shouldn't mean that they be banned. Education is a much better solution in my opinion.

[jmjj215]

Being "realistic" with my finances these days isn't something I particularly aspire to. I'd rather be out of the ordinary.

I don't plan on plopping down 100k cash for my first home. I will, however, never borrow money to purchase a depreciating asset (a car).

[Tree0164]

It's all about what is right for you. Some folks can handle the credit cards but realisitcally most folks don't. That is why we see credit card debt skyrockecting etc. I don't want to be normal. Reference to Dave Ramsey there.

I do have a mortgage and it may or may not be paid off earlier. It gets some extra money but not that much to make a crazy difference.

I will need to take out a car loan this year. Having a car loan I can afford is affordable. I know we can afford $200 a month in our budget.

[terry1156]

It is just untrue that most people can't handle credit cards. Most people can, and in fact do, handle credit cards just fine. That is not to say that credit cards don't cause trouble for some people, but to say that credit cards are bad is just plain wrong.

While some of the problems come from people spending over their limits, a lot of it comes from other factors. Medical expenses puts a lot of people into credit card debt due to no or lack of insurance. There is a growing trend of people getting into credit card debt no on extravegant purchases, but due to cost of living expenses and purchasing normal everyday items.

Granted there can be better education. But to say everyone is in credit card debt because they can't control themselves is perpetuating an urban legend.

[jmjj215]

Any time someone is using a credit card for every day living expenses and carrying a balance month to month is when I get a little nervous for them. To have to borrow money to live is to be living above your means - that can't happen too long before you reach a financial breaking point.

As far as medical expenses go, this is where I say that every family needs an emergency fund. If you have a cash reserve you shouldn't have to go into debt to handle life's unexpected events.

[jmjj215]

Originally Posted by Uncljim

Interesting lines jmjj. Personally I suggest we dont have debts at all. Maybe it is better to use normal paper cash, it is easier to be in control.

Money matters are about behavior. One person can have 10 credit cards and be totally in control - another can have none and still be out of control. I don't think having a CC means your in control or not - I think your mindset is what gives you the control. To assign control to a CC is to give it power it doesn't inherently have. We all have the power to control it, not the other way around.

[Uncljim]

Is all about effort and attention . yeah I agree attitude do matters a lot .

[terry1156]

Originally Posted by jmjj215

As far as medical expenses go, this is where I say that every family needs an emergency fund. If you have a cash reserve you shouldn't have to go into debt to handle life's unexpected events.

My apologies for not being more specific. I was not referring to everyday mediacal bills, but catastrophic medical bills. A long recovery from an illness or one that requires thousands of dollars in medication.

When the bankruptcy reports are released, there is a false assumption that all of them are caused by credit cards. A good portion are from medical expenses.

[jmjj215]

Medical expenses, and their fast-rising cost, are a whole other topic aren't they?

How does one prepare for catastrophic events (such as what terry mentioned) w/o having to go into debt?

[PrincessPerky]

Don't assume you're insured! 'Covered’ doesn't mean they pay it all! Covered just means they pay at least some of it, except for the deductible, oh and the lab fees those aren't actually 'covered' even when they say prenatal care is covered.

I have to thank God every day that I had a relatively uneventful pregnancy and am ‘only’ in debt about 5,000 for it. (The other 1.5 grand is my stupidity and slow adapting) but compared to my truly covered son who was a grand total of $270, it is really irritating. I am cringing at the thought of another hospital delivery (in fact I think I will rent a hotel room, it would be cheaper, and I still wont have to clean the sheets)

One of the most important things to do is not assume the doc gets to do every test they want, they are scientists and like to have their little checks, kind of like a mom checking on kids in the night. We prefer the high tech of a monitor (video of course) when listening at the door or leaving the door open works just as well. Dr’s are the same way; they want the highest tech method when often a cheaper older one will work just fine.

Also call the billing department, most are so grateful that you will pay they will let you do it $5 at a time if need be (I learned that one too late). Some states have laws against them turning the bills over to collection agencies. (Sorry my information is only pertinent to the USA, don’t know much about other countries medical laws) Make sure you get a signed written statement form whoever says the insurance will pay for the upcoming procedure, I got out of a second $200 ultrasound that way. I only have research and experience on pregnancy, And a couple minor issues from other extended family, but you do not need every standard test, I survived just fine with no ultrasound for my first I would have done it again for my second if I had not been led to believe it was 'covered'. My fathers inexplicable fever after his shattered knee cleared up with rest and time (and he can to walk just fine) In short if you don't think you need it and it isn't life or death don't trust the doc or the insurance company.

Ok so that isn't much on preparation just for if you already have the problem. Preparation wise an ounce of prevention beats a pound of cure, get the best possible insurance you can afford. Skip meat and hot showers before you skip good insurance. Unless you don't mind taking the govt money in America they would have gladly paid for all of my pregnancy care. But next year we were offered a choice of care with a difference in the long term care nad prenatal care being the only difference, we chose the more expensive coverage because 12 * $20 (12 months of premiums) is less than $5,000.