Money Saving Habits

[Nutria]

You're the good guy.

But just yesterday you were lambasting us for using credit cards and not paying interesting.

[tripods68]

But just yesterday you were lambasting us for using credit cards and not paying interesting.

Are you sure you are not paying interest...how much do you have in credit card, or auto loan pretty please...(outside mortgage)?

[DaveInPgh]

Are you sure you are not paying interest...how much do you have in credit card, or auto loan?

I am in pretty good shape on that one as well. My auto loan is at 1.9% and have enough in the EF to pay it off at anytime.

[tripods68]

I am in pretty good shape on that one as well. My auto loan is at 1.9% and have enough in the EF to pay it off at anytime.

We don't recommend paying off your car with EF. But if you have other cash available to pay it off. Go for it!

[Nutria]

We don't recommend paying off your car with EF. But if you have other cash available to pay it off. Go for it!

No. With inflation, 1.9% is free money.

[tripods68]

No. With inflation, 1.9% is free money.

You don't like to answer any of my questions but like to piggy back on other comments I make to other people. That's just weird...


BTW No such thing as free money. Do you work for a credit company its a great slogan to think its free?

Now if you give me your money, I'll take it. That's free money.


Any money you pay toward servicing a debt is still money you lose regardless of inflation. I could have donate that payment towards charity, or maybe increased my retirement contributions, or maybe save towards buying a car.

[Nutria]

You don't like to answer any of my questions

I don't?

but like to piggy back on other comments I make to other people. That's just weird...

It's a forum. That's how they work.

Any money you pay toward servicing a debt is still money you lose regardless of inflation. I could have donate that payment towards charity, or maybe increased my retirement contributions, or maybe save towards buying a car.

Liquidity is worth it for those of us who don't make $300K year.

[tripods68]

I don't?.

Yes. Read my earlier post.

Liquidity is worth it for those of us who don't make $300K year.

Please explain what you mean...?

Do you mean, I use credit card because I don't make $300K a year? Is that a reason why to use CC because I don't have a lot of money.


I just told you there is no such thing as "free money"

[Nutria]

Yes. Read my earlier post.

Which one? You've got 21 in this thread.

Please explain what you mean...?

Do you mean, I use credit card because I don't make $300K a year? Is that a reason why to use CC because I don't have a lot of money.

It means that when you're not rolling in cash that you shouldn't pay it out when you don't need to.

IMNSHO, more than 2% APR is "need to", and less is "don't need to".

I just told you there is no such thing as "free money"

Just telling me something doesn't make it true. Like that assertion about 70% of people carrying CC debt.

[FLA]

how is it that if you don't ever, even once pay interest on a CC and you are like Disneysteve and find you spend LESS when using CCs than you do with cash, how are the bonuses not free money? this conversation is devolving

[corn18]

Technically, tripods68 is correct about free money and credit cards. Because the transaction fees to the merchant add up to about 3%, the merchants add that to the cost of goods sold. So, you pay 3% more for everything because everyone uses credit cards. Now, I get 2% of that back, but I am still paying 1% more than I should. If we went to a cash only system, theoretically, the price of everything should drop about 3%. If you spend $100,000 / year on stuff, that would save you $3,000 / year. So, it isn't free.

Now, the folks that pay with cash get the worst of it. They pay the extra 3% AND don't get anything back. That seems silly to me unless you have a problem with debt.

[Nutria]

Technically, tripods68 is correct about free money and credit cards. Because the transaction fees to the merchant add up to about 3%, the merchants add that to the cost of goods sold. So, you pay 3% more for everything because everyone uses credit cards.

That sounds reasonable, but I'm not sure it's true. As an anecdote: for decades, my grandfather's business did not accept credit cards because he knew that they could not raise prices to offset the processing fees.

Finally my uncle persuaded him to allow cards because they were losing too many sales.

[corn18]

I can't speak for all stores, but we build the 3% into our price. Otherwise it comes off our margin and those are razor thin at it is. If we had to eat the 3%, we would lose a lot of money.

[disneysteve]

how is it that if you don't ever, even once pay interest on a CC and you are like Disneysteve and find you spend LESS when using CCs than you do with cash, how are the bonuses not free money?

I don't necessarily spend less with credit but I certainly don't spend more. I spend what I can afford and have planned to spend. How I pay is irrelevant. Many times, I haven't decided how I would pay for a purchase until I was standing at the register. If I happen to have a lot of cash on me, I might pay cash. If I'm making a purchase that qualifies for 5% cash back, I'll use that card. If I've got a prepaid Visa card on me from doing a survey, I might use that. The point is the decision isn't made when I choose what to buy. The decision is made at the time of payment. How I'm going to pay has absolutely no impact on how much I spend.

Because the transaction fees to the merchant add up to about 3%, the merchants add that to the cost of goods sold. So, you pay 3% more for everything because everyone uses credit cards. Now, I get 2% of that back, but I am still paying 1% more than I should. If we went to a cash only system, theoretically, the price of everything should drop about 3%.

You know perfectly well that if credit cards magically disappeared tomorrow, nobody is going to lower their prices 3%.

Since we don't live in that fantasy cash only society, you are correct that it is the cash paying customers who are getting the raw deal, but it's their choice to do so.

I mentioned in my other thread on this topic that I linked to earlier that the processing fee is why my boss resisted accepting cards for so many years. In our business, we have absolutely zero control over what we charge so if we lose 3%, we have to eat it. We can't raise our prices. He would much rather be cash only but was forced to give in and accept cards because so few people carry cash anymore.

[tripods68]

Go read it. ALL of it.



If you are not rolling in with Cash, so why charge it AT ALL that put in debt--if you don't pay on time interest charges starts accruing. Interest charge & Principal must be paid back eventually. So it's NOT free money at 2%, or 1.9% as you put it.

Credit Card companies relies on math-hoping that people don't pay their bill ON TIME. That's the rub. It's nothing but the exploitation of the masses.

But if you know how the game is played, it takes discipline to win OPM. You can be the few people that pays on time, charge it, win points, then fly free to Hawaii. But be discipline enough to keep paying the balance every month to avoid interest charges. That same effort takes as much discipline to pay cash for things you want versus charging CC and paying on time, all the time.

Life catches up to you. Eventually Credit Card companies know you will make mistakes (market crashes, unemployment, medical health, divorces, failed business venture, etc) that puts in bad financial shape if you don't have your finances in order. If you have a fully funded EF, Savings, Retirements with NO debt, the chances are you will be fine than most in similar situations.

A co-worker of mine for 7 years/friend became alcoholic, eventually loss his job and marriage. A very sad thing to ever happen to someone close to me. Eventually had to file bankruptcy in-out-of-rehab. Made good income and was good in finance, but he had the credit cards on him, swipe it day and night drinking away. He would come to work every morning as if he just came from the bar. Its a sad story all the way around.