Twenty-ten Posted May 12, 2010 Posted May 12, 2010 I don't know about Ruby, but for me, it's to build credit history so if/when I need a loan/mortgage, I won't be denied and/or won't get screwed with insanely high interest rates. That's cool that's a good reason. Now what about after people buy their first home why do people continue to use credit cards then? I don't know anyone who is a homeowner who does not have some form of credit. It is unrealistic in this day in age to expect people to save up for all the things they want. It's nearly impossible and you can do so much more with your money if you can buy a month or two with credit rather than paying everything upfront. I make better use of my money in having 0% credit cards for five months an carrying a balance and paying them off right before the crazy interest kicks in than paying for things upfront. It makes more sense and I collect points while I am at it. It's free money virtually. And sure sometimes I treat myself to something I would need three or four cheques to pay for. Why not? If I had to save for everything I wanted I would look like 1995 called and it wants it get-up back! Anyway don't want to derail this thread topic, so I think I will reiterate to the OP, go for it but set a payment plan and stick to it. The OP sounded pretty responsible, so I don't think we need to coach him much on how to go about things. For the mere fact he is even contemplating if he should not go overboard spending a bit more money on a nice gift for his girl while already in debt for a vacation I can tell he is not throwing caution to the wind.
Ruby Slippers Posted May 12, 2010 Posted May 12, 2010 Ok so what are credit cards for then? I recently got rid of all but one credit card, and I never use it. Anything that requires credit card purchase (plane travel, for example), I pay for with my debit card, which functions like a credit card but withdraws the money immediately. This could turn into a huge discussion, but it's not the point of the thread, so I'll just point out a few facts: From the Federal Reserve: The size of the total consumer debt grew nearly five times in size from 1980 ($355 billion) to 2001 ($1.7 trillion). Consumer debt in 2009 stood at $2.5 trillion.The average household in 2009 carried nearly $5,100 in credit card debt.As of the twelve months ending June 2006, there were 1.5 million consumer bankruptcy filings, including 1.1 million Chapter 7 filings, 0.1 million filings for Chapter 11 and 0.3 million Chapter 13 bankruptcies. Contrast this with the steady decline of the savings rate for about the last 20 years: http://graphics8.nytimes.com/images/2009/06/26/business/economy/savings.jpg The spike in 2008-2009 followed the ginormous economic meltdown and bailout, which resulted from... people and nations spending money they didn't have. I think your credit card advice is irresponsible.
Ruby Slippers Posted May 12, 2010 Posted May 12, 2010 I don't know about Ruby, but for me, it's to build credit history so if/when I need a loan/mortgage, I won't be denied and/or won't get screwed with insanely high interest rates. This is a myth that lenders perpetuate to get more debtors to amass debt and pay their ridiculous interest rates and fees. Financial services is a freaking racket of an industry. Hasn't the financial meltdown taught us anything?
sweetjasmine Posted May 12, 2010 Posted May 12, 2010 This is a myth that lenders perpetuate to get more debtors to amass debt and pay their ridiculous interest rates and fees. How's it a myth? If you've never had a credit card or any form of credit, you're going to have a much harder time getting a loan or a mortgage. I always pay everything off in full every month and have zero debt.
Ruby Slippers Posted May 12, 2010 Posted May 12, 2010 If I had to save for everything I wanted I would look like 1995 called and it wants it get-up back! Maybe that wouldn't be such a bad thing. The upgrading frenzy that has seized the world is gross. And there's a huge difference between getting a mortgage and buying jewelry.
Rorschach Posted May 12, 2010 Posted May 12, 2010 *jumps up and down pointing to self* me me me financial expert, ITS MY JOB, it's what I do for a living, I'm a PROFESSIONAL. Would you look at a dentist who said 'you need a filling' and say 'no I don't!'? Of course you wouldn't because the dentist is a professional so let me just say this Ruby is completely right, there is no way that buying even more stuff while you have credit card debt is the right financial decision. DONT DO IT.
Bejita463 Posted May 12, 2010 Posted May 12, 2010 How does it even require an advisor to know spending money you don't have isn't the best plan you could ever devise? Come on! COME ON!
Rorschach Posted May 12, 2010 Posted May 12, 2010 How does it even require an advisor to know spending money you don't have isn't the best plan you could ever devise? Come on! COME ON! I'm so with you on this, and yet still i see it EVERYDAY. Its sickening
Lights Posted May 12, 2010 Posted May 12, 2010 I'm with the others regarding holding off on the purchase. You've already spent money you don't have. Pay off the credit card debt and other such high-interest debts before you become its slave. Later on, you can figure out matters of such discretionary purchases as jewelry.
Lights Posted May 12, 2010 Posted May 12, 2010 Credit cards are to spend money you don't have, why else do you use a credit card? Credit cards are a technological convenience, not a debt instrument.
Twenty-ten Posted May 12, 2010 Posted May 12, 2010 (edited) Credit cards are a technological convenience For what? Technically you should have the money to pay for things upfront so why have a credit card at all? Use a debit card. this argument has two sides and sure a lot of the stats that were sited earlier are significant but I can also site alcoholism stats and claim that all people should refrain from drinking any alcohol because they will end up flat on their faces passed out on the street with no life, no love, and no family. Realistically not all people who drink alcohol succumb to the depths of despair, and become alcoholics they can drink responsibly despite the big problem we have with alcoholism. A lot of people also use alcohol responsibly. Adding another charge for a special occasion to a credit card is hardly irresponsible it is using a tool that is there to give you instant cash when you don't have the disposable income at hand. Again, why have a credit card at all? No one other than sweetjasmine has given a valid reason to have them at all. Yet everyone who professes saving to acquire things all own credit cards, why? Edited May 12, 2010 by Twenty-ten
Rorschach Posted May 12, 2010 Posted May 12, 2010 why have a credit card at all? Use a debit card. Exactly I'm glad you understand haha People should NOT own credit cards, EVER. Its like buying meth and saying 'its okay I don't use it often'. Even if its true it doesn't matter, ITS METH! It's not a matter of opinion, it's not open for debate, it's the simple honest to god truth, people who never get credit cards live more financially stable lives, and since financial INstability leads to stress people without credit cards are on average HAPPIER.
Ruby Slippers Posted May 12, 2010 Posted May 12, 2010 People who purchase things with credit cards rather than cash spend 30% more, on average. And many of those people end up paying much more than that in interest charges. If you use credit cards responsibly and are not living beyond your means, great. But your "just this one time" argument is wrong. The European trip was "just this one time". Who knows what other expenses have been "just this one time"? That's all fine and dandy till one time turns into a dozen.
homersheineken Posted May 12, 2010 Posted May 12, 2010 Exactly I'm glad you understand haha People should NOT own credit cards, EVER. Its like buying meth and saying 'its okay I don't use it often'. Even if its true it doesn't matter, ITS METH! It's not a matter of opinion, it's not open for debate, it's the simple honest to god truth, people who never get credit cards live more financially stable lives, and since financial INstability leads to stress people without credit cards are on average HAPPIER. I don't know, they come in pretty handy in an emergency... I paid mine off a long time ago and it has come in handy a couple of times. Plus I got a free trip from the bonus points in a year (paid $0 in interest). I've since abandoned it for a better plan, but it's silly to say to never own a credit card - unless you have absolutely no fiscal discipline like 2010 (or gov't )
homersheineken Posted May 12, 2010 Posted May 12, 2010 People who purchase things with credit cards rather than cash spend 30% more, on average. And many of those people end up paying much more than that in interest charges. If you use credit cards responsibly and are not living beyond your means, great. But your "just this one time" argument is wrong. The European trip was "just this one time". Who knows what other expenses have been "just this one time"? That's all fine and dandy till one time turns into a dozen. Yep. That "one" time isn't the killer. It's the multiple and cumulative "one" times that are forgotten that are the killer. I just don't understand why you want to pay a surcharge on top of the price and then continue to pay it when you can actually have more if you had discipline. Do you really have to have it right now? Is your life that empty that you have to mortgage everything for immediate materialism?
Rorschach Posted May 12, 2010 Posted May 12, 2010 I don't know, they come in pretty handy in an emergency... I paid mine off a long time ago and it has come in handy a couple of times. Plus I got a free trip from the bonus points in a year (paid $0 in interest). I've since abandoned it for a better plan, but it's silly to say to never own a credit card - unless you have absolutely no fiscal discipline like 2010 (or gov't ) People can use credit cards for an emergency, but the correct way to deal with emergencies is to save a couple hundred a month(or however much, depends on the person) in an emergency fund which sits in a money market so that you have CASH for emergencies. It's not silly at all to say 'never own a credit card', sure they CAN be used responsibly (Personally I've never seen it), but it just works better when the temptation isn't there in the first place. It's sort of like fat people not having sweets in the house.
homersheineken Posted May 12, 2010 Posted May 12, 2010 People can use credit cards for an emergency, but the correct way to deal with emergencies is to save a couple hundred a month(or however much, depends on the person) in an emergency fund which sits in a money market so that you have CASH for emergencies. It's not silly at all to say 'never own a credit card', sure they CAN be used responsibly (Personally I've never seen it), but it just works better when the temptation isn't there in the first place. It's sort of like fat people not having sweets in the house. I do save, but what if the emergency is quite catastrophic and after being unemployed for a while (and your savings diminish) ... then what? And I can tell you I use a CC responsibly (paid off monthly only for rewards)- so there's one for ya
Twenty-ten Posted May 12, 2010 Posted May 12, 2010 Exactly I'm glad you understand haha I do understand that and I support people who say I don't own a credit card and I just don't spend on anything I cannot buy upfront. Respect to those who have the means or patience to save up years to do it. I support that 100% What I don't support is those who say well I have a credit card but I don't buy anything I can't afford. So answer why you even need a credit card then?
Rorschach Posted May 12, 2010 Posted May 12, 2010 I do save, but what if the emergency is quite catastrophic and after being unemployed for a while (and your savings diminish) ... then what? Most of the people I sit down with after years of working with us have emergency funds of about 20,000 dollars. Thats kind of the goal number. If a emergency is THAT drastic, then no credit card is going to save you. When people lose their jobs we sit back down with them and show them what the new financial plan looks like, big life changes like that require new plans and new strategies. I'm not expecting people to somehow magically figure out all the complicated ins and outs of the financial world, after all I've studied hundreds of hours and taught families for hundreds more just to know what I do. I'm just saying that everything else being the same, if you took two families, one who had no credit cards ever, and the other who did, the one without credit cards is on average going to be in a better financial position. 1,000 dollars in your checking account (not accusing, just stating) does not qualify as an emergency fund, emergency funds are as serious a part of a financial plan as retirement savings.
Twenty-ten Posted May 12, 2010 Posted May 12, 2010 It's sort of like fat people not having sweets in the house. that's a great example and I do understand that problem with credit cards and debt, I really do but I think that example assumes everyone is fat and wants sweets. what if you are fit and can limit yourself to one sweet a week? What ever happened to believing in people's will to be responsible? So because there are fat people out there no one should have sweets at home? It seems to have gone completely out the window in this discussion and the overall assumption is that the OP is "fat" or a closet "alcoholic" (see my examples prior) At any rate the OP asked for opinions on whether he should get diamonds or Moissanite, I offered my opinions on both since I have experience with both. I don't recall seeing anywhere that he is reaching for financial advice and it seems a lot piped in to do exactly that.
homersheineken Posted May 12, 2010 Posted May 12, 2010 Most of the people I sit down with after years of working with us have emergency funds of about 20,000 dollars. Thats kind of the goal number. If a emergency is THAT drastic, then no credit card is going to save you. When people lose their jobs we sit back down with them and show them what the new financial plan looks like, big life changes like that require new plans and new strategies. I'm not expecting people to somehow magically figure out all the complicated ins and outs of the financial world, after all I've studied hundreds of hours and taught families for hundreds more just to know what I do. I'm just saying that everything else being the same, if you took two families, one who had no credit cards ever, and the other who did, the one without credit cards is on average going to be in a better financial position. 1,000 dollars in your checking account (not accusing, just stating) does not qualify as an emergency fund, emergency funds are as serious a part of a financial plan as retirement savings. Actually people do have credit cards that can save them at that level. And while it may be nice and even ideal to have $20k, that's not going to happen to many people, esp young ones.... I see what you saying and you're basing your opinion on broad generalizations (as you said "on average"). But a blanket statement that all CCs are evil all the time is wrong.
homersheineken Posted May 12, 2010 Posted May 12, 2010 that's a great example and I do understand that problem with credit cards and debt, I really do but I think that example assumes everyone is fat and wants sweets. what if you are fit and can limit yourself to one sweet a week? What ever happened to believing in people's will to be responsible? So because there are fat people out there no one should have sweets at home? It seems to have gone completely out the window in this discussion and the overall assumption is that the OP is "fat" or a closet "alcoholic" (see my examples prior) At any rate the OP asked for opinions on whether he should get diamonds or Moissanite, I offered my opinions on both since I have experience with both. I don't recall seeing anywhere that he is reaching for financial advice and it seems a lot piped in to do exactly that. Americans for the most part don't have will power (to be responsible) any more - that's the problem. Here we go again with that "just one time" mentality, when in reality it's many of those "one times" that accumulate and then forgotten that leads to problems.
Twenty-ten Posted May 12, 2010 Posted May 12, 2010 I see what you saying and you're basing your opinion on broad generalizations (as you said "on average"). But a blanket statement that all CCs are evil all the time is wrong. I'm sorry but the only one who contradicts themselves with the notion that cc's are useful is you, on the one hand you say people can't be trusted with them on the other you say they are not always evil so how do you draw the line and how do YOU determine when it's ok and when it's not? Why even have them?
norajane Posted May 12, 2010 Posted May 12, 2010 I like you too Ruby, it's cool we are disagreeing though. Ok so what are credit cards for then? Do you have credit cards? If so why do you use them if you save up to make all your purchases? I use mine purely for convenience. Pay them off every month and never carry a balance or pay interest. Credit cards carry huge interest rates. If you don't pay them off regularly, you are paying double and triple whatever it was you bought with them.
norajane Posted May 12, 2010 Posted May 12, 2010 I'm sorry but the only one who contradicts themselves with the notion that cc's are useful is you, on the one hand you say people can't be trusted with them on the other you say they are not always evil so how do you draw the line and how do YOU determine when it's ok and when it's not? Why even have them? Convenience. You can't rent a car or get a hotel room without a credit card. Online purchases. Business expenses.
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