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Dave Say You're Looking for Trouble
Townhall.com ^ | March 28, 2012 | Dave Ramsey

Posted on 03/28/2012 7:20:25 AM PDT by Kaslin

Dear Dave,

I want to keep one of our credit cards open and use the bill-pay option for utilities and other monthly bills. I want to do this so we can continue earning rewards points, and the way I look at it, we’d just be re-routing the money and paying it off every month. My husband doesn’t like this idea and thinks we should get rid of them all. Am I just asking for trouble by wanting to keep the rewards card open?

Cheryl

Dear Cheryl,

Yes, you are. Life never works out exactly the way you think it will. You can make all the well-reasoned and best-intentioned plans you want, but sooner or later that snake is going to bite you.

The only thing I’d consider in a situation like this is a debit card that has a rewards system attached. Lots of debit card programs offer the same kinds of rewards programs offered by credit card companies, with one big exception—you don’t have to go into debt!

You need to stop chasing these stupid brownie points, Cheryl. According to Consumer Reports, 78 percent of credit card airline miles are never redeemed. Studies also show that people spend more when using credit cards as opposed to cash. That extra money you spend on things you don’t need is money you could have been saving and investing. So, where’s the reward?

Cut up the card and close the account, Cheryl. You don’t build wealth by using credit cards!

—Dave

Dear Dave,

My wife and I are both active duty Marines. She’s planning to get out in a few months, but I’m staying in for the long haul. You recommend saving 15 percent for retirement, but how does that apply in my case when I’ll be getting a good pension after 20 years?

James

Dear James,

I’d like to see you do both. Just imagine the money you guys would have for retirement with your military pension and a big pile of cash from having saved 15 percent of your income over the years.

Having options is a great thing. Think about all the things you could do down the road if you save for retirement and have your pension in place. You could pay cash for a home, or even open a business when you retire from the military. And these are things you probably wouldn’t be able to do working with just your service pension.

You’ve got a great future if you’ll just keep plugging along and saving, James. Let the military do its thing, and you guys keep pumping 15 percent of your income into Roth IRAs and other pre-tax retirement plans. It’s going to be pretty cool!

— Dave


TOPICS: Business/Economy; Editorial
KEYWORDS: creditcards; daveramsey; money; ramsey

1 posted on 03/28/2012 7:20:30 AM PDT by Kaslin
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To: Kaslin

I don’t agree with this. My brother charges everything he buys on a 2% Amex card, about $40K a year, and gets back $800 every year in cash

My expenses are much lower, but I still charge about $8K a year. I got a free TV this way.

If you have sufficient cash reserves and self-discipline, it is foolish not to do this. I only charge $500-1500 a month, and keep at least $10K in my checking account at all times.


2 posted on 03/28/2012 8:10:06 AM PDT by proxy_user
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To: Kaslin
There is no reason one can't budget a credit card like a debit card. I make a budget for what we are allowed to spend every week, then pay off the credit card in full at the end of the month. No interest, no fees, and I earn Costco dollars. Last year I earned enough to pay for half of my new 60 inch samsung led TV. Sweet.

Dave says that 75 percent of airline miles go unused. It is hard to use airline miles. You need a minimum of 25K or more for one ticket, usually much more. What good is one ticket? At one dollar per mile, you have to charge about 2000 per month to 'earn' one ticket per year. Miles expire, plus most airline credit cards have annual fees. Solution: get cash or merchant money that you know you will spend, (like Costco dollars).

3 posted on 03/28/2012 8:20:19 AM PDT by sportutegrl
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To: proxy_user
If you have sufficient cash reserves and self-discipline, it is foolish not to do this.

Agreed. I've been using cash reward credit cards for 20+ years. Pay them off every month, no cost whatsoever.

Credit cards also have safety and security advantages over debit cards. For example, when someone steals your credit card information—as happened to me twice on two different cards last year (I never let a card out of my sight anymore)—chances are the card issuer will detect and prevent fraudulent charges from going through. (Given your $50 liability limit, it's in their best interest.) BUT, if someone steals your debit card info, you're probably on your own. Good luck with that.

4 posted on 03/28/2012 8:47:57 AM PDT by newgeezer (It is [the people's] right and duty to be at all times armed. --Thomas Jefferson)
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To: Kaslin

I’m not sure how the credit cards can make any money at all, or can manage to stay in business. Everytime I see Ramsey discussed, everyone pays their balances every month in full.

heh


5 posted on 03/28/2012 8:51:49 AM PDT by SoDak
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To: Kaslin

I’m not sure how the credit cards can make any money at all, or can manage to stay in business. Everytime I see Ramsey discussed, everyone pays their balances every month in full.

heh


6 posted on 03/28/2012 8:52:09 AM PDT by SoDak
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To: Kaslin

“Dave’s not here, man.”


7 posted on 03/28/2012 8:54:15 AM PDT by techcor (I hope Obama succeeds, in being a one term president.)
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To: newgeezer

If your debit card has the Visa logo on it, that is just not true.


8 posted on 03/28/2012 8:55:07 AM PDT by SoDak
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To: proxy_user
"I don’t agree with this. My brother charges everything he buys on a 2% Amex card, about $40K a year, and gets back $800 every year in cash."

ALL my normal day to day transactions are paid for with my Paypal Debit card. I get 1.5% Cash Back on every purchase. ( I am grandfathered in on that rate now I believe you can only get 1% cash back on new accounts) That adds up because it is put right back into my account so then I get 1.5% again when I use the cash back money.

I don't keep large sums in the Paypal account. But I am always transferring cash over to replenish it. Seems dumb to me NOT to take a 1.5% discount on every purchase I make.

9 posted on 03/28/2012 8:59:38 AM PDT by Mad Dawgg (If you're going to deny my 1st Amendment rights then I must proceed to the 2nd one...)
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To: SoDak
I’m not sure how the credit cards can make any money at all

Seriously? Transaction fees.

But, when our beloved Nanny State Congress gets around to dictating what size of fee is "fair" ...

10 posted on 03/28/2012 9:07:47 AM PDT by newgeezer (It is [the people's] right and duty to be at all times armed. --Thomas Jefferson)
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To: proxy_user

“I don’t agree with this.”

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

I also don’t agree. But if someone is so financially ignorant that they have to ask Dear Dave fundamental and basic questions like these, then yes... the best answer is to cut up your credit cards.

Most people, howerver, have (or should have) sense enough to know how to manage money.


11 posted on 03/28/2012 9:10:38 AM PDT by Responsibility2nd (NO LIBS. This Means Liberals and (L)libertarians! Same Thing. NO LIBS!!)
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To: proxy_user
If you have sufficient cash reserves and self-discipline, it is foolish not to do this.

Spot on. But too many people have neither sufficient cash reserves nor self-discipline.

Personally, I use this rewards debit card which offers a minimum of 1% back on everything you buy. That's as good as or better than most credit cards.

12 posted on 03/28/2012 9:37:28 AM PDT by Vigilanteman (Obama: Fake black man. Fake Messiah. Fake American. How many fakes can you fit in one Zer0?)
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To: Kaslin

Dave Ramsey’s great (for people who are financially retarded).


13 posted on 03/28/2012 9:48:08 AM PDT by Niteranger68 (Quit poking holes in the life raft!)
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To: Kaslin

I don’t agree with Dave, either. I use credit cards that give us cash back, prefer the cash to the miles and we’ve gotten quite a bit of cash back from Discover and Chase. Yes, I do pay off the balances every month.


14 posted on 03/28/2012 10:04:47 AM PDT by psjones (u)
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To: Responsibility2nd

No most people do NOT have that snese is why Dave advises against it. If you have the good sense to do so, it is your choice to make. My father also charges everything to a crdit card and pays it off each month.

I, on the other hand, having failed in the past, do not. I have no credit cards, nor a desire to have one. Been down that road and am never going back. I now have no debt and paln to keep it that way.


15 posted on 03/28/2012 1:11:34 PM PDT by packrat35 (When will we admit we are now almost a police state?)
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To: proxy_user

Its about risk...

if you wanna risk the stumble use a credit card.

if you don’t wanna risk don’t use the credit card.


16 posted on 03/28/2012 1:17:50 PM PDT by Rightly Biased (How do you say Arkanicide in Kenyan?)
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To: packrat35

Being in debt has little to nothing to do with a credit card.

I don’t have a credit card, yet I am in debt. Having said this, I’ll admit my debt to income ratio is less than 30 percent and my home will be mortgage free in 8 months, and I’m only 53.

In other words - contrary to what Dave Ramsey preaches - being in debt is no great sin.


17 posted on 03/28/2012 1:21:45 PM PDT by Responsibility2nd (NO LIBS. This Means Liberals and (L)libertarians! Same Thing. NO LIBS!!)
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To: Rightly Biased

There’s very little risk if you have large savings and no debt. If you’ve been living way below your income for decades, there’s no way you’re going on a spending spree.


18 posted on 03/28/2012 1:50:04 PM PDT by proxy_user
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To: proxy_user

Yah... I run all of my expenditures through my Mastercard, and I pay it off every couple of weeks. I’m totally debt free.


19 posted on 03/28/2012 2:06:50 PM PDT by Ramius (Personally, I give us one chance in three. More tea anyone?)
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To: Responsibility2nd

Well, I am 50 and I have no credit card debt, no mortgage, and no car note. Sorry to say, I have rarely met anyone who pays off their credit card debt each month. Most let it ride and then add more. Been down that road myself once.

If a person can handle their debt, then it is no problem for them, but most who call Dave Ramsey have screwed up and need to be told that “you can’t spend your way out of debt”. Something the democrat party and obama don’t seem to understand either.


20 posted on 03/28/2012 8:16:43 PM PDT by packrat35 (When will we admit we are now almost a police state?)
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To: Kaslin

I don’t like debit cards. The protections they offer are roughly equal to credit cards, but should a thief take big wad of money out of your account or if you suffer a fraud of some kind, even if you report it timely, that money is gone from your spending capacity while the dispute is open. A credit card, you can dispute the charge and until the dispute is resolved, you are not charged interest nor is your spending limit reduced by the disputed amount. Banks LOVE debit cards for this reason.

I’ve converted all my debit cards to “ATM only” cards and I have a few credit cards which I pay off monthly.

If you doubt my tale about debit cards vs ATM-only cards, go try changing a debit card to an ATM-only card. The gal at my bank begged me for half an hour not to do so before she relented. The protections are not the same. Fraudulently-obtained money comes out of YOUR hide first with a debit card.


21 posted on 03/28/2012 11:42:56 PM PDT by Attention Surplus Disorder (The only economic certainty: When it all blows up, Krugman will say we didn't spend enough.)
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To: proxy_user

Risk is risk

little or otherwise.

I didn’t say how much risk all I said is there is risk.

I for one don’t have a credit card and NEVER HAVE had one.

I’ve been able to travel the world rent cars and buy what ever I wanted.

and I don’t line the pockets of MC Visa or Discover.


22 posted on 03/29/2012 5:45:38 AM PDT by Rightly Biased (How do you say Arkanicide in Kenyan?)
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To: Kaslin

Dave Say You’re Looking for Trouble?

;-)

Think you meant, Dave Says You’re Looking for Trouble. :-)

Seriously, thanks for posting.


23 posted on 03/30/2012 7:32:17 AM PDT by Altariel ("Curse your sudden but inevitable betrayal!")
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To: Altariel
I'm not the editor
24 posted on 03/30/2012 7:58:44 AM PDT by Kaslin (Acronym for OBAMA: One Big Ass Mistake America)
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