Money Saving Habits

[Jluke]

I switched to credit card only purchasing 15 years ago for rewards. I haven't paid a penny in credit card interest. Rewards are always applied to the current month's statement and paid in full. I've saved $6000+ for just using a credit card.

I hate carrying cash; right now I have $20 in my wallet.

Once the money is taken out of my credit union account I can no longer save or invest it. I can only spend it. when I get a large amount of cash (birthday, holiday) I give it to someone else and have them write me a check so I can deposit it in my account (no local branch).

I don't have to worry about loose change, having an exact amount of cash on me at all times, frequenting the ATM, being a dollar short at the checkout, etc. Plus, with my savings I can never charge something to the card that I don't already have the cash to cover.

If you're afraid of credit cards or know you can't manage them, then stay away for sure.

Financially savvy users can and will use them to their advantage.

[rennigade]

Disneysteve,

But in case you are the 70% in SA forum, here’s my point to you:

Don’t believe that using CC points makes you wiser, feels good for saving $100a month, or maybe makes you feel sophisticated somehow (you can treat friends for dinner) and then fly your family to Hawaii for free. It’s a false thinking because this lifestyle is not sustainable without going into debt. The debt turns to a disease and evil as other points out. Debt makes you do dumb things (Dave Ramsey) All true!

Guess im in some sort of elite class then because I do the complete opposite of what you just described. As a matter of fact...since I started churning credit cards 6 years ago ive actually tightened up what I spend money on unless its with the rewards I get from the credit cards, flights, hotels, gift cards, cash, etc. Most of my "play" money...the money that I blow on stuff that isnt necessary but fun...almost all of that comes from cashing in on rewards.

There are certain things I have to pay each and every month. Phone, cable, food, gasoline, car insurance (well once every 6 months) etc etc. Instead of writing a check for those I use a credit card that gives me rewards. I actually pay for what I am going to get regardless...and I get a little bit of bonus "stuff" out of it.

I cant think of one single time in the last 6 years that I spent money just to get a reward or just for the sake of spending money. That thought process does not exist in my world.

I think there are those who were so bad with money at one point in their life and impulse bought things to the point where it controlled their life...those are the ones that think credit cards are dangerous. I dont see any other way around that. If you charge more to a credit card that you can pay off in a single month then thats a serious problem and yes...you should stick to cash.

Hers a breakdown of what we already got out of those dreaded credit card companies that are evil in just this year alone...minus the flights...I acquired those points last year and finally used them this year.

$1,375...amex platinum...$450 annual fee, received $200 in amazon gift cards, sold points for $1250..cancelled and received prorated annual fee back...only had to pay $75.

$625 in cash...united credit card...had to get rid of points or they were going to expire.

$600 in cash...amex premiere gold card...sold points for cash.

$525 in gift cards...southwest premiere...cashed in for gift cards.

booked flights for wife and myself to Hawaii in october...roundtrip...cost us $12.50/person from the east coast.

Also booked flights to denver for ski trip in feb...cost $12.50/person round trip from east coast.

Between my work trips that I booked hotels/flights/food...auto insurance, prepay cable bill for 5 months, phone bill for 5 months, hotels for hawaii and denver...yep...we didnt spend a single dime on stuff we werent going to buy in the first place. We take several trips every year...guess we could have stayed home or better yet...guess we could have skipped the trips and just work and not do anything.

I dont understand people that complain about credit cards being evil. If you suck with money then yes...credit cards will not help you in any way. If you have things under control and you sh*t together...you can capitalize on them!

[disneysteve]

Paying cash doesn’t make you do stupid dumb things. In fact, it you'll spend wiser, smarter

Sorry but here I have to firmly disagree with you.

Do you really believe that nobody does "stupid dumb things" with cash? Or checks? Or debit cards?

People overspend every single day regardless of how they pay. They buy crap they don't need. They overdraw their accounts. They bounce checks. They spend their last dollar on a lottery ticket and then moan that they can't make their rent payment on time.

Poor money management isn't caused by the form of payment you are using. Going into credit card debt is a manifestation of a problem, not the cause of the problem.

[tripods68]

People overspend every single day regardless of how they pay. They buy crap they don't need. They overdraw their accounts. They bounce checks. They spend their last dollar on a lottery ticket and then moan that they can't make their rent payment on time.

Poor money management isn't caused by the form of payment you are using. Going into credit card debt is a manifestation of a problem, not the cause of the problem.

Its obvious people do dumb things with cash all time.

People can choose to spend however they feel on coke versus cocaine. Getting drank versus buying groceries for family. That's a different argument altogether you are trying to make. Make that argument with someone else.


We are talking within the context of nurturing good habits in the context of family budgeting, the benefits of using a CC versus Cash.

Tomhole's story illustrated my point precisely why. And why I am a strong advocate against using credit card because his story is real often times hits close to home.

[disneysteve]

That's a different argument altogether you are trying to make.

I was just responding to what you said:

Paying cash doesn’t make you do stupid dumb things.

I agree. Paying cash doesn't make you do stupid things, but neither does paying with a credit card. The form of payment is irrelevant to whether or not you are being responsible with your money.

We are talking within the context of nurturing good habits in the context of family budgeting, the benefits of using a CC versus Cash.

I find it far easier to maintain good habits and budgeting using a credit card. I can easily go online anytime and track every purchase. I get a paper statement each month that lists them all. At the end of the year, I get an annual statement that even breaks down all of my transactions by category: auto, grocery, travel, etc.

Cash, on the other hand, is not as "real" to me. I know that sounds strange but in my mind, once the cash is out of my account, it's as good as spent. I'm not as careful spending actual cash as I am using my credit card because with the card, I'm always cognizant of the fact that there will be a bill to pay later. Does that make sense? I know I'm weird in that sense. It's just how my mind has always worked.

As for what we've taught our daughter, we have absolutely taught her to use credit cards. Before she left for college, we took her to get her first card. She qualified on her own (we didn't have to co-sign) and got a cash-back rewards card. She gets $30 every quarter as long as she uses her card at least once per month. It doesn't matter how much she charges. All that matters is that she uses the card. So she makes sure to charge something each month and it's generally just a few dollars because she doesn't spend that much money. She may spend $5-10 each month, pay it off in full, and then get a $30 bonus every 3 months. It's totally free money. Tough to beat that.

[FLA]

All of these are great suggestions, but here are some of mine:


Do things yourself. You don't need a house cleaner, a gardener, a plumber, an electrician, etc. to fix every problem that comes along, or to keep up with weekly maintenance. If you do, you are living in too large a house, or you're too lazy.
)

when I got separated and eventually divorced, I had two small kids, I worked as a hospice nurse, a job I loved but you needed a way to decompress from all the sadness and that required time. I bought a townhouse and prided myself on doing everything, until I realized by the end of the week, I was exhausted from the work/kid needs and I still had a weekend full of chores. Someone mentioned a cleaning lady and I scoffed at that, I wasn't raised "that" way. But then I tried it and for 60 bucks a month she came twice and did everything. Cheaper than cable and I had weekends back with my kids. Sometimes your time is more valuable than your money.

[FLA]

As for what we've taught our daughter, we have absolutely taught her to use credit cards. Before she left for college, we took her to get her first card. She qualified on her own (we didn't have to co-sign) and got a cash-back rewards card. She gets $30 every quarter as long as she uses her card at least once per month. It doesn't matter how much she charges. All that matters is that she uses the card. So she makes sure to charge something each month and it's generally just a few dollars because she doesn't spend that much money. She may spend $5-10 each month, pay it off in full, and then get a $30 bonus every 3 months. It's totally free money. Tough to beat that.

this is what I'm teaching my kids, too. My son has a debit card, this is good for him, he's 19 but occasionally impulsive so we'll watch for a year and then broach a credit card. DD is going to be a senior and has a job. I didn't realize a kid going off to college could qualify on their own. She should since she is working. Her I trust with a credit card.

[Nutria]

Paying cash doesn't make you do stupid things, but neither does paying with a credit card.

It very well can be more tempting, though.

Of course, with cash or a DC there's nothing to stop you from frittering away the "rent money" before the rent money is due... After all, the money's in the bank so obviously you can afford it, right??

Cash, on the other hand, is not as "real" to me. I know that sounds strange but in my mind, once the cash is out of my account, it's as good as spent. I'm not as careful spending actual cash as I am using my credit card because with the card, I'm always cognizant of the fact that there will be a bill to pay later.

[disneysteve]

DD is going to be a senior and has a job. I didn't realize a kid going off to college could qualify on their own. She should since she is working.

She got the card with a $900 limit which was later increased to $1,400 after about a year.

[ESMonitor]

Here's my take on rewards credit cards -

I think they have a universal law about them like a hot stove. You can use the hot stove to cook your food, and you can also touch the hot stove with your had and get burned. Generally, you only have to get burned once to learn to never do that again.

Another angle - I may spend more money with my rewards credit card than I would if I didn't have one. I can't say for sure, but I think there is a margin of motivation about it to spend more than I normally would if I just use a debit card or pay with cash, but fortunately I have my budget/spreadsheet in place to keep it all in check.

That's another good point about rewards credit card, is they are very budget friendly. Transactions generally show pending in real time, so you can populate your monthly budget sheet daily with assurance you are accounting for 100% of your transactions. If you try to do that with cash, better get good at holding on to 100% of all your receipts.

Lastly, although I'm a champion for using rewards cards as a way to save money (spending the rewards money on purchases) I'm not certain how well I would have fared with a rewards credit card during my broke college years. I think there would have been some casualties at some point.


Other savings habits to note -

cable - I prefer to pay for cable to follow sports I like, but I know I'm getting ripped. Good point to go without, wish I could.

savings - save money on front end of pay check. Agree

phone - Need to investigate plans with my carrier

electric bill - I have smart phone monthly notification to change air filter so I hope that keeps my bill down.

dishes - I prefer dishwasher, I may have to pay up for it as I have been using it more frequently with lesser loads.

lunch - can't bring in lunch every day. Have to get out of office. Have to. It's often like halftime for a football game.

haircut - just once a month; I go to barber. I have been considering ordering a straight razor to see if I can start shaving my neck as I can't stand neck hair or neck stubble of any length.

clothes - not the best at this either. I'm big and tall so I often go to Dillards and pay Dillards prices, although I will make a move during their clearance sales at end of season, but most of the good stuff they had on their racks during early season is long gone by then.

trips - I would love to know ways (besides using rewards cards) to keep a trip from rocking the budget, please share.

food - I don't eat out a lot these days aside from lunch. If there is a go to cost efficient recipe you make that has meat in it and lasts for several days and is easy to prepare, please share.

[Nutria]

Another angle - I may spend more money with my rewards credit card than I would if I didn't have one. I can't say for sure, but I think there is a margin of motivation about it to spend more than I normally would if I just use a debit card or pay with cash, but fortunately I have my budget/spreadsheet in place to keep it all in check.

That's another good point about rewards credit card, is they are very budget friendly. Transactions generally show pending in real time, so you can populate your monthly budget sheet daily with assurance you are accounting for 100% of your transactions.

Non-rewards cards don't do that? (We only use rewards cards, and didn't manage/have a budget when we didn't.)

If you try to do that with cash, better get good at holding on to 100% of all your receipts.

Very true.

[tripods68]

but neither does paying with a credit card. The form of payment is irrelevant to whether or not you are being responsible with your money.

It turns out that multiple behavioral economics studies back up these assertions. One of the most often cited studies is one conducted by Dun & Bradstreet, where the company found that people spend 12-18% more when using credit cards instead of cash. McDonald’s reports its average ticket is $7 when people use credit cards versus $4.50 for cash.

I find it far easier to maintain good habits and budgeting using a credit card. I can easily go online anytime and track every purchase. I get a paper statement each month that lists them all. At the end of the year, I get an annual statement that even breaks down all of my transactions by category: auto, grocery, travel, etc.

I am against credit cards period not because of the convenience. That's exactly the problem, people get into trouble easily and why people overspend using CC by keep swiping away. It's a just bad habit.

I use MINT to track every cash/split transactions on every category in our budget. I don't have to use a CC to validate or help categorized how much I'm spending on the monthly basis. We track weekly.

Cash, on the other hand, is not as "real" to me. I know that sounds strange but in my mind, once the cash is out of my account, it's as good as spent.

This is strange...most people are just the opposite.

As for what we've taught our daughter, we have absolutely taught her to use credit cards.

I would never recommend our daughter the use of cc not ever if i can help it. She is now learning 3 things at 10 years old.

1) Don't Ever use CC
2) Pay what you can afford
3) What she earn on doing chores; half goes to savings and other half goes to her spending.

[Nutria]

It turns out that multiple behavioral economics studies back up these assertions. One of the most often cited studies is one conducted by Dun & Bradstreet, where the company found that people spend 12-18% more when using credit cards instead of cash. McDonald’s reports its average ticket is $7 when people use credit cards versus $4.50 for cash.

Now that you mention it, I do remember that.

Anyway, your 30%/70% figure is wrong.
Only 38% of households carry CC debt, not 70%.

Thus, since less than 2/5 carry CC debt, the 60% that pay their CC bill every month mathematically must be using it less often.

For example, with a Restaurant budget of $150, does in matter if we go 5x and spend $30, or 3x and spend $50? No, both are $150. But McDonalds and D&B see us spending 67% more on our credit card.

Yet another example of statistics being at best incomplete truths.

[Claudia Bob]

Money Saving Habits

I am reading a book by Brian Tracy titled Million Dollar Habits. It's been a good read so far and has made think about some new habits I could implement to save money.

What are some habits you are working on that are saving you money?

I can share three (3) money saving habits I began this year that have been profitable for me:

1. I know longer take my work clothes to cleaners; I iron them myself instead. I don't like doing that, but I like the money it saves me more. I estimate over $300 saved since Jan 1.

2. I cancelled my gym membership. I'm just doing cardio this year. I use multi-purpose trail in my community to run. I think my gym membership was around $50 so that's $300 saved this year.

3. I gave up drinking alcohol this year. This one has certainly been the most challenging, because I really miss drinking beer and red wine, especially at social settings, but this one has also been the most rewarding. I use a smart phone app to track my progress. I estimate I have saved over $630 since Jan 1, and we're not even a half year in yet. Can't even think about next year. I just have to make this happen for another half year.

I do like your tips. Likewise, I also do some household chores so I could save for paying house helpers. I noticed too that I could save a lot from that.

[prateek]

First this is not necessary to quiet needy things, today world when we focus the needy things only then we can save money obviously. So first I need to introspect and find which is not necessary in my life.

Thank you kidda