The official Dave Ramsey thread

[nathan]

Doesn't make us crazy. Makes you normal.

Why do you not use credit cards? Are you afraid you'll buy stuff you don't need? If you can pay the balance every month, there's no reason not to use a rewards card. I also like being able to see what I spend on gas or groceries from month to month.

 

[kellthaqtpie]

Why do you not use credit cards? Are you afraid you'll buy stuff you don't need? If you can pay the balance every month, there's no reason not to use a rewards card. I also like being able to see what I spend on gas or groceries from month to month.

indeed....i use my American Airlines Mastercard like its my checking account. EVERYTHING goes on it and I just pay it off at the end of the month. And Ive got enough miles for 4 free airline tickets anywhere in the US already...keep in mind that i only got the card last october! haha. I say credit cards, when used wisely, have much benefit.

 

[Hollywood]

indeed....i use my American Airlines Mastercard like its my checking account. EVERYTHING goes on it and I just pay it off at the end of the month. And Ive got enough miles for 4 free airline tickets anywhere in the US already...keep in mind that i only got the card last october! haha. I say credit cards, when used wisely, have much benefit.

I agree. I use my AmEx Blue for everything and keep a balance sheet to keep track of the spending. So far I have earned $400 cash back this year. Thats money for nothing people.

 

[Brian in Mesa]

Why do you not use credit cards? Are you afraid you'll buy stuff you don't need? If you can pay the balance every month, there's no reason not to use a rewards card. I also like being able to see what I spend on gas or groceries from month to month.

I just don't buy anything I have to pay for later, whether I can "afford" to or not. It's just a money mentality. We don't do debt. The credit card companies are not there to help you. They are snakes who are hoping you'll screw up so they can make some money off of you.

We believe in using cash/debit and saving money for purchases as well as saving money for an emergency fund.

It's not for everyone, but there are many of us who are living and loving the debt-free lifestyle.

 

[Mike Olbinski]

Doesn't make us crazy. Makes you normal.

Actually doesn't make him normal, most people aren't that diligent with their credit cards enough to make money on them.

There are actually people I know who get high limit CC's, without interest being paid for 6 months or a year, or whatever, and then (if there is no fee), they put the entire balance into a savings account making 4% and then in 6 months, pay it all back minus the interest made on it.

The fact that you have a CC isn't evil, or wrong, and it doesn't mean you aren't debt free or not living the perfect debt-free lifestyle.

I have two, one a line of credit to help pay for school, and one for when I travel.

 

[Mike Olbinski]

I just don't buy anything I have to pay for later, whether I can "afford" to or not. It's just a money mentality. We don't do debt. The credit card companies are not there to help you. They are snakes who are hoping you'll screw up so they can make some money off of you.

We believe in using cash/debit and saving money for purchases as well as saving money for an emergency fund.

It's not for everyone, but there are many of us who are living and loving the debt-free lifestyle.

But Brian, other people can have CC's, pay them off every month, and be "loving the debt-free lifestyle" just as you are.

 

[Brian in Mesa]

But Brian, other people can have CC's, pay them off every month, and be "loving the debt-free lifestyle" just as you are.

Use of a credit card is use of debt, so it cannot be a debt-free lifestyle. When you purchase something with a credit card you are being loaned the money to cover the purchase regardless of whether you repay it at the end of the month or months or years later.

 

[Mike Olbinski]

Use of a credit card is use of debt, so it cannot be a debt-free lifestyle. When you purchase something with a credit card you are being loaned the money to cover the purchase regardless of whether you repay it at the end of the month or months or years later.

Well, that's a technicality, but I guess you're right.

Still, if you have no debt, and use CC's only to help with miles and whatnot, you aren't going into debt and there is nothing wrong with it.

 

[Mike Olbinski]

Use of a credit card is use of debt, so it cannot be a debt-free lifestyle. When you purchase something with a credit card you are being loaned the money to cover the purchase regardless of whether you repay it at the end of the month or months or years later.

I still don't think you are going into debt...I mean, when you use your credit checking card, it's not an actual debit from your account, it's a hold and will get charged to your account if you have the money or not. Only using a pin number/debit card is truly the right way.

Using your checking card enacts a transaction that is paid a few days later.

It's the same if I used a credit card, and then paid it off in a few days.

 

[Brian in Mesa]

Well, that's a technicality, but I guess you're right.

Still, if you have no debt, and use CC's only to help with miles and whatnot, you aren't going into debt and there is nothing wrong with it.

To each their own.

Plenty of people say they "use debt wisely" but stats do show people spend more when using plastic.

The credit card companies are hoping you'll screw up somewhere along the way so they can earn some interest and fees off of you. Until then they'll reward you with stuff financed from others who are in debt to them.

 

[Brian in Mesa]

I still don't think you are going into debt...I mean, when you use your credit checking card, it's not an actual debit from your account, it's a hold and will get charged to your account if you have the money or not. Only using a pin number/debit card is truly the right way.

Using your checking card enacts a transaction that is paid a few days later.

It's the same if I used a credit card, and then paid it off in a few days.

I debit most everything I can. It saves retailers the fees they get charged by the credit card companies (even a credit checking card - Visa symbol, etc). Having helped run a small business for many years I've seen how crappy the credit card companies are to businesses.

We also pay for a lot of stuff with cash.

 

[jw7]

Use of a credit card is use of debt, so it cannot be a debt-free lifestyle. When you purchase something with a credit card you are being loaned the money to cover the purchase regardless of whether you repay it at the end of the month or months or years later.

I completely disagree with this.

If you have a credit card and pay it off every month, in fact you are taking advantage of the CC company and getting a short-term interest-free loan. If you have a rewards card, you are also getting airline miles or cash-back or other benefits at no cost to you. Run your gas and groceries and cable tv bill thru your credit card and pay it off each month and it is a double bonus.

I agree that if you put a $2000 TV on a credit card and want to pay it over time on your CC, that is bad financing it at 14% or whatever.

I love Dave Ramsey's book. It makes sense. But you have to keep in mind it was written for a target audience that has been in debt trouble before and needs to be cured. In that case, yes, cut up all credit cards. But it is not always the most optimal financial solution.

 

[Brian in Mesa]

Like I've said and like Dave says - the choice to not use credit is not for everyone.

This is The official Dave Ramsey thread so of course there are some, like my wife and I, who have "shaved our heads and downed the Kool-Aid." It works for us and we're in a better financial position than we've ever been.

We are not in any way trying to convert anyone else. Do what you feel works for you. We're sharing a plan that worked and continues to work for us and many others, even some other posters on this board.

 

[FischerKing]

Like I've said and like Dave says - the choice to not use credit is not for everyone.

This is The official Dave Ramsey thread so of course there are some, like my wife and I, who have "shaved our heads and downed the Kool-Aid." It works for us and we're in a better financial position than we've ever been.

We are not in any way trying to convert anyone else. Do what you feel works for you. We're sharing a plan that worked and continues to work for us and many others, even some other posters on this board.

works for my wife and I as well.

shawn

 

[Folster]

What about for young guys like me who are trying to establish good credit so I can one day buy a house? I use a credit card for my gas only and pay it off at the end of the month. My CC company keeps raising my line of credit as well, hoping I'll make a big purchase.

I bought my first vehicle with an auto loan even though I had the cash because I had like no credit history. I promptly paid it off in a year. Since then I have had problems with apartments, cell phone providers, and qualifying for certain checking accounts because I do not have "enough" credit history, which means I have to put down a deposit. I bought my Jeep with cash because my credit union was giving me the business about not having "enough" credit history. I told them that I'll just pay cash and you won't get any of my interest. Dumb bastards. I was just going to pay it off after 6 months any way.

So if I don't establish credit somehow i.e. a credit card, buying a house will be extremely difficult. What is Dave's advice for me?

 

[Hollywood]

What about for young guys like me who are trying to establish good credit so I can one day buy a house? I use a credit card for my gas only and pay it off at the end of the month. My CC company keeps raising my line of credit as well, hoping I'll make a big purchase.

I bought my first vehicle with an auto loan even though I had the cash because I had like no credit history. I promptly paid it off in a year. Since then I have had problems with apartments, cell phone providers, and qualifying for certain checking accounts because I do not have "enough" credit history, which means I have to put down a deposit. I bought my Jeep with cash because my credit union was giving me the business about not having "enough" credit history. I told them that I'll just pay cash and you won't get any of my interest. Dumb bastards. I was just going to pay it off after 6 months any way.

So if I don't establish credit somehow i.e. a credit card, buying a house will be extremely difficult. What is Dave's advice for me?

I think Dave says to go live in a cave. Think of the money you will save by not getting into the mortgage trap.

 

[nathan]

1. How you pay your bills (35 percent of the score)
The most important factor is how you've paid your bills in the past, placing the most emphasis on recent activity. Paying all your bills on time is good. Paying them late on a consistent basis is bad. Having accounts that were sent to collections is worse. Declaring bankruptcy is worst.

2. Amount of money you owe and the amount of available credit (30 percent)
The second most important area is your outstanding debt -- how much money you owe on credit cards, car loans, mortgages, home equity lines, etc. Also considered is the total amount of credit you have available. If you have 10 credit cards that each have $10,000 credit limits, that's $100,000 of available credit. Statistically, people who have a lot of credit available tend to use it, which makes them a less attractive credit risk.


3. Length of credit history (15 percent)
The third factor is the length of your credit history. The longer you've had credit -- particularly if it's with the same credit issuers -- the more points you get.

4. Mix of credit (10 percent)
The best scores will have a mix of both revolving credit, such as credit cards, and installment credit, such as mortgages and car loans.

5. New credit applications (10 percent)
The final category is your interest in new credit -- how many credit applications you're filling out. The model compensates for people who are rate shopping for the best mortgage or car loan rates.

A human may look at you and tell easily that you're not a credit risk, however that's not the way it works. The formula can only judge what's in the credit report. Credit scores are a game. They don't look at your age, income, or length of employment. Mortgage lenders may consider those factors when deciding to give you a loan, but I know a lot of them have tiered interest rates based on credit scores.

 

[thirty-two]

my post from November 2004


I bought the book and really wanted to try it.

But I make very little money, and tuition/books/apartment/food/clothes etc just force me to use my credit cards.

Sigh.

Someday!!!

Well that SOMEDAY is now! I added up all my credit card debt/college loan debt, and I about vomited. The truth sucks.

I dug out my Dave Ramsey book yesterday, read through it all, and decided it is time.

I've already got my car paid off, and about 600 in savings (for the emergency fund), so I figure I'm starting off with a running start (which helps).

FOCUSED INTENSITY!

Maybe it's the start of the new year, or maybe I'm tired of watching 700 bucks a month go towards STUPID LOANS AND CREDIT CARD DEBT. I'm young and time is on my side. Let's do this!

 

[Mike Olbinski]

Well that SOMEDAY is now! I added up all my credit card debt/college loan debt, and I about vomited. The truth sucks.

I dug out my Dave Ramsey book yesterday, read through it all, and decided it is time.

I've already got my car paid off, and about 600 in savings (for the emergency fund), so I figure I'm starting off with a running start (which helps).

FOCUSED INTENSITY!

Maybe it's the start of the new year, or maybe I'm tired of watching 700 bucks a month go towards STUPID LOANS AND CREDIT CARD DEBT. I'm young and time is on my side. Let's do this!

So proud of you Kate!

We had most things paid off, no CC debt at all, just cars and the house. But with fertility stuff and school, I got a bit more debt now.

However, we're paying like 200-300 extra every month on my truck, building the 3-6 month fund, have the emergency fund already done and are looking good.

 

[Jersey Girl]

Good luck, Kate! Debt sucks.

 

[Brian in Mesa]

Well that SOMEDAY is now! I added up all my credit card debt/college loan debt, and I about vomited. The truth sucks.

I dug out my Dave Ramsey book yesterday, read through it all, and decided it is time.

I've already got my car paid off, and about 600 in savings (for the emergency fund), so I figure I'm starting off with a running start (which helps).

FOCUSED INTENSITY!

Maybe it's the start of the new year, or maybe I'm tired of watching 700 bucks a month go towards STUPID LOANS AND CREDIT CARD DEBT. I'm young and time is on my side. Let's do this!

Woohoo !!

 

[thirty-two]

Step 1: Completed!

On to Step 2, going to get that debt snowball ROLLING.

 

[Brian in Mesa]

Step 1: Completed!

On to Step 2, going to get that debt snowball ROLLING.

 

[dreamcastrocks]

I not necessarily an advocate of this book/thread/system or whatever, but I will be following A LOT of the practices here.

I am about 30k in debt between student loans, small credit cards, car payment, etc.

My goal is to be debt free by my 30th birthday. August 10th of next year.

I don't know if I can do it, but I sure as hell am going to try.

 

[Hollywood]

I still don't see the need for an "emergency fund" why can't you just have a low interest credit card set aside for emergencies and use the money you would have set aside to pay off debt insted of having it sitting and waiting for a bill that may never come?