Credit Cards and Personal Finance

[Ishmael]

Well I just can't stand it anymore. With these many people to nag at I just hand to start preaching about personal finances. Starting with credit cards and credit card debt is like going out in the back yard to weed and getting at the root right away. It's almost always the main problem for people who are struggling financially. That and the huge amount of money that we are wasting on car payments! Yuck!

So here I am, I have my giant scissors in hand, and I am ready to cut...
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Some Facts:

1. About 63% of bankruptcy filers blame credit card debt!
2. Credit Card Balances per household hit $4500 at the end of 1998.
3. The are over 50 million Discover Cards , 49 million Citibank Visas, and 48 million American Express Cards
4. Credit card issuers send out more than 4 billion pieces of mail to 93 million households
stats are from Dave Ramsey's Financial Peace (http://www.daveramsey.com)

And guys this is only a piece of what is really going on with these credit card companies. They aren't evil but they are doing an outstanding job of marketing their product, debt. The real problem is that we are buying it. And waiting in line to buy it. Most of us even believe the myth that debt is a natural part of life and even a "rite of passage" into adulthood.

I want to challenge this myth! I say that credit cards are NOT needed and are the best way for you to experience slavery! Proverbs 22:7 says, “The poor are ruled by the rich, and those who borrow are slaves of moneylenders.” And there are so many moneylenders in our culture. Money lending and borrowing money has become the norm in our culture. As a result, we have a society of slaves and masters. If you are ever going to be truly free then you will have to get rid of the debt. And getting rid of debt start (most of the time) with getting rid of these hellish, 1000% interest, credit cards.

Okay, here are my points: I don't believe that personal debt is necessary or needed to build a sound financial future. I believe that credit cards always hurt you more than they help you and should be gotten rid of. I also don't believe you should ever finance anything that goes down in value (like a car-- one should never finance a car). If you want to finance something, it makes sense to finance a house with 20% down and a 15-year, fixed rate, mortgage.

Questions? Comments?

[Bill the Cat]

I just got rid of my last credit card. it gets you to where you hate money and spending more than you have. it's good to have for dire emergencies (paying for a tow, a galon of gas if you run out) but for everyday life, it's a waste unless you can afford to pay it off every month

[Penguin]

0. Zero. None. Nada. Not a single credit card. I applied for one once, and didn't get one. So because of that insult, I will never bother applying again.

[bar Jonah]

Being as far behind as I am, I effectively have no credit cards at this point.

Additionally, I am about to file for bankruptcy as a result.

I am not legalistically against credit cards. Heck, using them to a limited degree will actually benefit you by creating a good credit rating. But I do highly recommend using them minimally. :no:

[luv1another]

I have none, Hubby won't let me get one ... but I can see one or two advantages in having one... but thousands for not ...for me anyway since I love to buy people things :lol:

[Rahab]

No credit cards. The principle of benefiting of material wealth when you actualy do not own it is quite deceptive. To add also how much more one has to pay to finaly own a product which continues to depreciate as we use it is even more deceptive.
CCs imply a debt status. The credit system also contributes to people not investing their savings. Because they do not save. They expand on funds they project to have instead on funds they have and intend to invest to see them proliferate.
In itself, the credit system is a symbol of deception.
Has anyone seen the most recent market the credit "industry" is targeting.... College students! there you have young adults already starting their lives in debts.
Credit also encourages the consumption of products we do not necessarly need. It is the ultimate materialistic tool. How many of us are still nurturing a ten year old car and thanking God for using it to get us to work each day?
Living without depending on credit necessitates sacrifices and a better perspective on what we do need to acquire to insure a decent quality of life. By decent I mean one which insures shelter, food, clothing, household bills, transportation and the leisures each family deserves to enjoy.(vacation for example). Add to those whichever financial contribution one wills to give to charities, humanitarian causes and places of worship.
We can all live without being addicted to credit to insure that decent quality of life.

[Ishmael]

You are absolutely right. Credit cards are not needed for emergencies. Instead of using a credit card simply use cash or a check card. Save up some money for emergencies in an account that has a visa debit card assigned to it and then you have your "emergency" money. Why not do this instead of spending everything you make and then using debt to fill in the gaps that "life" comes up with?

I hope that by this thread some people will give up he credit cards.

"Building Credit" is a myth.
Needing a Credit Card to rent a car or motel roon is a myth (visa debit works just fine, I use it all the time).
Never borrow money for emergencies!

Credit Cards are just plain unwise and bad stewardship even if you are the person who "pays it off every month," and statically someone has to be lying about that.

[bar Jonah]

Building credit is not a myth, but an unfortunate practical reality of today. (Although it is not as pervasively necessary as some people think.) A person needs good credit to get approved for renting a home, for example.

But it doesn't take much to develop good credit. Just having a credit card and using it for nothing but gas for the car, and then paying it off on time -- thus incurring no fees -- makes a big difference.

[Ishmael]

Today @ 12:14 PM post located here (http://www.theologyweb.com/forum/showthread.php?s=&postid=321049#post321049)
RightIdea:

Building credit is not a myth, but an unfortunate practical reality of today. (Although it is not as pervasively necessary as some people think.) A person needs good credit to get approved for renting a home, for example.

But it doesn't take much to develop good credit. Just having a credit card and using it for nothing but gas for the car, and then paying it off on time -- thus incurring no fees -- makes a big difference.

Some people believe what you are saying but there are lots of people who don't. People who choose not to believe the junk that banks have marketed to our culture.

The fact is that you can rent or buy a home with a steady job and an average, stable income. I used have bad credit and had no problem renting once I understood what I am trying to teach here.

I had a good job and steady income. If someone won't rent to you, go somewhere else, and someone, somewhere will rent to you. And this problem will disappear once you increase your cashflow by not having the payments, believe me.
Hey! I am on the other side, come on over, it's nice, I promse !

As for buying a home. 20% down and one year history on a stable job and a good income buys a house everytime. Check it out for yourself if you think I am wrong. Even people with bankruptcies buy houses like this everyday. Heck, I know people who file bankrupt and then go finance a car.

"Building Credit" through debt is not necessary except to make banks richer.

[Ishmael]

"Open credit accounts with zero balances actually count against you as well as car payments when qualifying for a home loan."

And

"A Visa debit card will work at all the major rental car companies..."

www.daveramsey.com

[Jade]

I currently have one that I'm paying down, but it is closed.

I did have 3 open accounts, almost all of which were maxed. We'll not do that again! :doh: (at least not until we are more financially secure)

[mossrose]

I have a couple, but I only use one on a regular basis. When my husband and I married, many, many, many, many years ago, we decided that we would not carry any debt. We agreed to pay off all credit card debt every month. And have done so. If we do not have the cash to buy something, we do not buy it.

You might ask why we just don't buy the item with the cash. The credit card offers some protection if something goes wrong. And we pay it off every month.

We do not, nor have we ever, taken cash advances out with our credit cards. We taught our children these same things. And have watched our daughter deal with some frustration as she met, fell in love with, and married a man who was taught these things and thought he could spend as if there is no tomorrow. He went through a bankruptcy 2 years before they were married, at the tender age of 21, and they are still dealing with the implications of that.

My husband and I have purchased one new vehicle in 31 years, and paid it off within 2 years. We own our house, and everything in it is paid for.

It can be done. It takes committment, the right mindset, and, if need be, NO credit cards.

[Xavier]

VISA Debit card only for me... :smile:

[Jade]

mossrose:

I have a couple, but I only use one on a regular basis. When my husband and I married, many, many, many, many years ago, we decided that we would not carry any debt. We agreed to pay off all credit card debt every month. And have done so. If we do not have the cash to buy something, we do not buy it.

You might ask why we just don't buy the item with the cash. The credit card offers some protection if something goes wrong. And we pay it off every month.

We do not, nor have we ever, taken cash advances out with our credit cards. We taught our children these same things. And have watched our daughter deal with some frustration as she met, fell in love with, and married a man who was taught these things and thought he could spend as if there is no tomorrow. He went through a bankruptcy 2 years before they were married, at the tender age of 21, and they are still dealing with the implications of that.

My husband and I have purchased one new vehicle in 31 years, and paid it off within 2 years. We own our house, and everything in it is paid for.

It can be done. It takes committment, the right mindset, and, if need be, NO credit cards.

That's a great state to be in and that kind of stability is our goal.
:thumb:

[Esther]

That's what we're striving for, Mossrose. We started out with some medical debts and a small balance on one of my credit cards when we first got married but paid that off really quickly with the intention of staying debt free.

My grandfather was a successful farmer for many, many years. He never owed anyone any money and he never took money from the gov't. There were times that were tough for him but he made it without incurring debt. He was not a rich man by any stretch of the imagination but he held his own. He was not going to throw his hard earned money away on interest so all large purchases, with the exception of his farm, were paid for with cash. That has been a personal goal of my own.

We've been putting a large percentage of money we were previously mismanaging toward debt and are about halfway to our debt free (except for the house payment) goal. We have very little "going out" fun but the satisfaction of seeing the balances go down on some things and getting all the bills paid is enough for now. I'm even learning to cook halfway decent stuff so the temptation to eat fast food isn't as great.

I find that my debit card with the Mastercard thing on it works just fine for what I need. It also keeps me from buying stuff on impulse.

[Ishmael]

Yesterday @ 09:48 PM post located here (http://www.theologyweb.com/forum/showthread.php?s=&postid=321451#post321451)
Esther:

We've been putting a large percentage of money we were previously mismanaging toward debt and are about halfway to our debt free (except for the house payment) goal. We have very little "going out" fun but the satisfaction of seeing the balances go down on some things and getting all the bills paid is enough for now. I'm even learning to cook halfway decent stuff so the temptation to eat fast food isn't as great.


What I have learned is that as the balances go down and you tell your money where to go with a written plan (budget) you begin to have lots more money for the fun stuff. More money, in fact, than you ever had when you just spent all your money by impulse all the time. When I go out these days it's planned well in advance and my wife and I always do it up real big, because we have financial peace and can afford. It's guilt-free fun too because we know that the money is not being taken from something else, like grocery or rent money, for instance.

[quot]
I find that my debit card with the Mastercard thing on it works just fine for what I need. It also keeps me from buying stuff on impulse. [/QUOTE]

You will spend even less money if you being to use cash and some kind of envelope system. I use envelopes marked with various categories like FOOD, ENTERTAINMENT, BLOW (yes, blow money for impulses). That way I am spending cash and it hurts more to see the cash go out of my hands. The envelopes help me to keep the money going to the right categories and once an envelope is empty (like ENTERTAINMENT) then no more spending on that category (No movie for me :( ). And it is a fact that you always spend less money when you are spending cash. Try it.

Of course you will still need the debit card for hotel room, cars, internet purchases and large purchases (over $300). But cash will work on most other things except for bill you pay by mail.

Imagine that! Cash, what a concept :smile:

[Patroclus]

I just have the visa on my versateller card. I like it that way. I am in plenty of debt with student loans.

[bar Jonah]

Ishmael:
As for buying a home. 20% down and one year history on a stable job and a good income buys a house everytime. Check it out for yourself if you think I am wrong. Even people with bankruptcies buy houses like this everyday. Heck, I know people who file bankrupt and then go finance a car.
20% down on a house? Hang on... I thought you were saying we shouldn't go into debt. Now you're telling us to get a mortgage that will take one or two decades to pay off? :huh:

That's a huge hunk of debt. :doh:

Either you pay for the house up front... or you go into a huge amount of debt. You tell me...

[Ishmael]

Today @ 01:01 AM post located here (http://www.theologyweb.com/forum/showthread.php?s=&postid=321560#post321560)
RightIdea:


20% down on a house? Hang on... I thought you were saying we shouldn't go into debt. Now you're telling us to get a mortgage that will take one or two decades to pay off? :huh:

That's a huge hunk of debt. :doh:

Either you pay for the house up front... or you go into a huge amount of debt. You tell me...


Personally I like the 100% plan and If I stay in the Army that is what I am going to do. Save up for the next 15 years and then buy cash when I get out... that said...

The house purchase is the only exception for debt. Why?

1. Most people won't be able to pay cash for it.
2. Saving money for 15 years AND paying rent doesn't make sense.

So, for most people this is going to be their biggest asset, though it's not really an asset in the technical sense because it is costing more money than it is making, typically. But the house does go up in value, that's the key difference between debt on it and debt on say, a car.

Okay so the way you take on this debt is also important.

1. Save up a 20% down payment. This saves you lots of money.

2. Get a conventional, fixed rate, 15 year mortgage. This saves you TONS of money over a 30 year.

3. Buy when you have your downpayment AND you have 2 years on the job and a history of paying your rent on time or early every month.

4. Buy when you have no other debt and a fully funded emergency fund.

[bar Jonah]

Okay, so some debts are fine and some are not. Gotcha.

[Patroclus]

Okay, so some debts are fine and some are not.

Where is :alden:? We need an econ lesson over here.

[Socrates]

Some credit cards have an interest-free period. So if you're disciplined, you need not pay any interest.

Not all debt is bad -- most people have to go into debt to buy their house, and this might mean the ability to buy at today's prices than tomorrow's inflated prices.

But remember:
Proverbs 22:7 the borrower is servant to the lender.

[Ishmael]

I want to recomend three books:

Financial Peace Revisited, Dave Ramsey
Rich Dad, Poor Dad, Robert Kiyosaki
Cashflow Quadrant, Robert Kiyosaki

Ramsey is very conservative on debt. Kiyosaki teaches how to leverage debt. His guiding principle about debt is, "If you take the risk (debt) make sure you get paid for it. I learned quite a bit from Kiyosaki and still love to read him, even though I have read many personal finance books.

[Ben Franklin]

Yesterday @ 06:14 PM post located here (http://www.theologyweb.com/forum/showthread.php?s=&postid=321049#post321049)
RightIdea:

Building credit is not a myth, but an unfortunate practical reality of today. (Although it is not as pervasively necessary as some people think.) A person needs good credit to get approved for renting a home, for example.

But it doesn't take much to develop good credit. Just having a credit card and using it for nothing but gas for the car, and then paying it off on time -- thus incurring no fees -- makes a big difference.

The point of credit cards is to make big money for the issuers... Man ! Just look at those APR's ! I don't have any compassion for the banks complaining to Congress about the growing personal bankruptcy filings... it's because of them ! They give cards to people EXACTLY because they know these people'll fall behind in payments, so the banks can keep compounding that interest until a $1000 principle grows into $35,000 over the years ! I got two, and I use 'em for convenience. One is a store card, and the other is through my bank. I use the bank card for Internet purchases, because it's safer: I can dispute bogus charges easily ! But you are all correct about the dangers of credit cards... Watch out !

[Sher]

Visa check card ... that's all. It comes directly from my checking account, so if the money isn't there, I don't buy it. However, I still get the benefit of having a Visa ... useful for online purchases, more easily disputed, etc.

[Tfbandie]

I carry a check card and a discover card. But I pay almost everything in cash, the check card is the next line of defense. The only thing I've ever used the credit card for was and is gas, I drive an old big car, and I don't like the idea of carrying around all that cash at once, and sometimes. But I agree Cash is definately the best way to go, followed by the debit card, and far away there is the credit card which has some beneifts when used intentioanlly and thoughtfully.

[mossrose]

We are blessed with my husband's age. Our bank waived all fees and charges when he turned 55 a couple of years ago. I use debit from our chequing account for most things, from the savings account for big ticket items, and the credit card for those things that I think there could, possibly, maybe, perhaps, be a dispute over. The credit card still gets paid off every month, but sometimes these last couple of years, we have no balance to pay.

IF you are paying a lot of fees for debit cards, and IF you have the cash to pay for items, it is better to pay cash, or the credit card, but only if you pay it all off every month.

I abhor paying any more fees than I have to. Every dollar (worth about 75 cents American these days) is one that my husband has worked hard for, and I refuse to give a penny up without a fight!!!

:hobbyhorse: