Four factors to weigh before going all cash

[webworm98]

bankrate

 

 

Dont kill the messenger, I just thought people would like to read the article.

 

I am surprised bankrate would promote this idea. Note, I am not promoting this idea either.

 

One thing they forgot to add no matter how they do it. They forgot to include an emergency fund.

[GEORGE]

I CAN'T AFFORD THE EXTRA COST OF ALL CASH

 

I love that there are ads for CREDIT CARDS all over the page

 

Edited August 31, 2009 by GEORGE

[GEORGE]

<---SNAKE OIL STAGE LEFT

[hegemony]

I wonder how much he paid bankrate to run that stupid story.

[Daddy]

Thanks for the thread OP. There are no one-size-fits-all solutions. It is good to have knowledge about everything. I like diversity, people using their brains to do what fits them. Some people figure it's their way or the highway.

 

Thanks again!

[hegemony]

DR is the least diverse of all snake oil salesmen. he does not want his lemmings to think for themselves; why else would he refuse to educate them about his expensive snowball scam.

[Daddy]

Snowball scam? I use his snowball method and I love it. I am paying off an $850 balance at 0% before I pay off my $13,000 at 4.99%. What's wrong with that? After our small debts are paid off in 4 months, it will free up $500 a month to knock down the larger debts. It works!

 

Plus, I didn't pay Dave a dime to use his snowball method.

 

Another thing, I am a "lemming" who thinks for myself. LMAO!

[GEORGE]

Thanks for the thread OP. There are no one-size-fits-all solutions. It is good to have knowledge about everything. I like diversity, people using their brains to do what fits them. Some people figure it's their way or the highway.

 

Thanks again!

DIVERSITY--->VISA/MC/AMEX/DISCOVER/STORE CARDS

[Daddy]

So they used a mostly cash system for the next few years and right away, they noticed a difference. "We spent $1,500 to $2,000 a month less when we started using cash," says Fernandez, a Certified Financial Planner and founder of Wealth Engineering LLC in Scottsdale, Ariz. Having to part with real money, he says, "just makes you think twice about it."

 

How can anyone with common sense argue against this? If it works for them, it works for them.

[GEORGE]

So they used a mostly cash system for the next few years and right away, they noticed a difference. "We spent $1,500 to $2,000 a month less when we started using cash," says Fernandez, a Certified Financial Planner and founder of Wealth Engineering LLC in Scottsdale, Ariz. Having to part with real money, he says, "just makes you think twice about it."

 

How can anyone with common sense argue against this? If it works for them, it works for them.

"IF" they CUT $1,500 to $2,000 a month they were pretty BIG SPENDERS to begin with

Edited September 1, 2009 by GEORGE

[webworm98]

I say use whatever methods works for yourself, do that. Whether it is Credit Cards, Debit Cards, Cash, or Checks

 

That is just my opinion.

 

 

 

 

 

George, would you still use a credit card if they took all the rewards away?

Edited September 1, 2009 by webworm98

[GEORGE]

I say use whatever methods works for yourself, do that. Whether it is Credit Cards, Debit Cards, Cash, or Checks

 

That is just my opinion.

 

 

 

 

 

George, would you still use a credit card if they took all the rewards away?

THE TIME BETWEEN A CHARGE and PIF DUE DATE IS A REWARD THAT CASH DOESN'T HAVE

 

PAYING 50 to 100 CHARGES WITH ONE SINGLE EFT PAYMNET IS ANOTHER REWARD

 

THEFT PROTECTION CASH DOESN'T HAVE IS ANOTHER REWARD

 

NOT HAVING TO WRITE 50 or 100 CHECKS IN ONE MONTH SAVES MONEY TOO (I think I am on box #3 of 4 boxes of checks I bought in the 1990's)

 

NOT HAVING TO GO OUT OF MY WAY TO GET EXPENSIVE CASH SAVES MONEY TOO

[Rorer_714]

Thanks for the thread OP. There are no one-size-fits-all solutions. It is good to have knowledge about everything. I like diversity, people using their brains to do what fits them. Some people figure it's their way or the highway.

 

Thanks again!

 

I feel sorry for someone who cannot grasp this simple concept.

[Rorer_714]

Thanks for the thread OP. There are no one-size-fits-all solutions. It is good to have knowledge about everything. I like diversity, people using their brains to do what fits them. Some people figure it's their way or the highway.

 

Thanks again!

DIVERSITY--->VISA/MC/AMEX/DISCOVER/STORE CARDS

You forgot cash, debit, check, charge and maybe some others.

[radi8]

I say use whatever methods works for yourself, do that. Whether it is Credit Cards, Debit Cards, Cash, or Checks

 

That is just my opinion.

 

 

 

 

 

George, would you still use a credit card if they took all the rewards away?

THE TIME BETWEEN A CHARGE and PIF DUE DATE IS A REWARD THAT CASH DOESN'T HAVE

 

PAYING 50 to 100 CHARGES WITH ONE SINGLE EFT PAYMNET IS ANOTHER REWARD

 

THEFT PROTECTION CASH DOESN'T HAVE IS ANOTHER REWARD

 

NOT HAVING TO WRITE 50 or 100 CHECKS IN ONE MONTH SAVES MONEY TOO (I think I am on box #3 of 4 boxes of checks I bought in the 1990's)

 

NOT HAVING TO GO OUT OF MY WAY TO GET EXPENSIVE CASH SAVES MONEY TOO

 

 

So you're doing what works best for you, which is the whole idea.

[GEORGE]

Thanks for the thread OP. There are no one-size-fits-all solutions. It is good to have knowledge about everything. I like diversity, people using their brains to do what fits them. Some people figure it's their way or the highway.

 

Thanks again!

DIVERSITY--->VISA/MC/AMEX/DISCOVER/STORE CARDS

You forgot cash, debit, check, charge and maybe some others.

I DIDN'T FORGET

 

CASH = ONLY VENDING

 

Don't have a debit card

 

CHECK AT POS is fine for making a payment like at SEARS...WALMART...JC PENNEYS

 

But to pay for STUFF with a check is so WRONG when they take credit cards

 

Charge is not a logical choice for most people when they can get credit cards

[webworm98]

Thanks for the thread OP. There are no one-size-fits-all solutions. It is good to have knowledge about everything. I like diversity, people using their brains to do what fits them. Some people figure it's their way or the highway.

 

Thanks again!

DIVERSITY--->VISA/MC/AMEX/DISCOVER/STORE CARDS

You forgot cash, debit, check, charge and maybe some others.

I DIDN'T FORGET

 

CASH = ONLY VENDING

 

Don't have a debit card

 

CHECK AT POS is fine for making a payment like at SEARS...WALMART...JC PENNEYS

 

But to pay for STUFF with a check is so WRONG when they take credit cards

 

Charge is not a logical choice for most people when they can get credit cards

 

George what did you mean that statement? Thank you.

[jayrandom]

Snowball scam? I use his snowball method and I love it. I am paying off an $850 balance at 0% before I pay off my $13,000 at 4.99%. What's wrong with that? After our small debts are paid off in 4 months, it will free up $500 a month to knock down the larger debts. It works!

 

Plus, I didn't pay Dave a dime to use his snowball method.

 

Another thing, I am a "lemming" who thinks for myself. LMAO!

 

Do you really want to know what's wrong with that? $850 * (850/500) * 0.0499 /12 = $6.01 (rounding up). As long as you understand that your method costs you an extra $6 above the "ideal" method and find that the satisfaction of having one debt completely paid off is worth $6 to you then in my opinion there is nothing wrong with that. Unfortunately not everyone who is told to use the snowball method is aware of its deficiencies and make a choice to exchange lost money for peace of mind--and those people may lose considerably more than $6. The same can be said for eschewing credit in favor of an all-cash approach--there are definitely drawbacks to avoiding credit cards but if someone is aware of the drawbacks and accepts them because they are unable to control their spending then that can be an intelligent choice. Anyone who argues that the snowball method is somehow "optimal" or that credit is somehow "bad" without mentioning the implicit assumption in both of those statements (which is an assumption of no ability to stick to a planned budget) is misleading people.

[nothingtolose]

To each their own. I'll stick with my CCs.

[GEORGE]

Thanks for the thread OP. There are no one-size-fits-all solutions. It is good to have knowledge about everything. I like diversity, people using their brains to do what fits them. Some people figure it's their way or the highway.

 

Thanks again!

DIVERSITY--->VISA/MC/AMEX/DISCOVER/STORE CARDS

You forgot cash, debit, check, charge and maybe some others.

I DIDN'T FORGET

 

CASH = ONLY VENDING

 

Don't have a debit card

 

CHECK AT POS is fine for making a payment like at SEARS...WALMART...JC PENNEYS

 

But to pay for STUFF with a check is so WRONG when they take credit cards

 

Charge is not a logical choice for most people when they can get credit cards

 

George what did you mean that statement? Thank you.

A "CHARGE" CARD you don't have the OPTION to pay minimum payments if the NEED ever comes up

 

100% PIF~100% OF THE TIME

 

Also the major "CHARGE" CARDS are from AMEX (up to $450)

 

Pay $450 for the privelege of PIF that can be had with a NO ANNUAL FEE CREDIT CARD

 

I don't know too many people who CAN'T get a "CREDIT" CARD...but can get all the "CHARGE" CARDS they want

 

[Uncle Leo]

THE TIME BETWEEN A CHARGE and PIF DUE DATE IS A REWARD THAT CASH DOESN'T HAVE

You still have yet to articulate axactly *why* this is such a big benefit for you. (Specifically you, not others)

 

 

PAYING 50 to 100 CHARGES WITH ONE SINGLE EFT PAYMNET IS ANOTHER REWARD

Which effectively turns 50-100 transactions into 51-101 transactions.

 

NOT HAVING TO GO OUT OF MY WAY TO GET EXPENSIVE CASH SAVES MONEY TOO

How soon you forget. You get cash back at the W-M register... remember?

 

 

Snowball scam? I use his snowball method and I love it. I am paying off an $850 balance at 0% before I pay off my $13,000 at 4.99%. What's wrong with that? After our small debts are paid off in 4 months, it will free up $500 a month to knock down the larger debts. It works!

 

Plus, I didn't pay Dave a dime to use his snowball method.

 

Another thing, I am a "lemming" who thinks for myself. LMAO!

Do you really want to know what's wrong with that? $850 * (850/500) * 0.0499 /12 = $6.01 (rounding up). As long as you understand that your method costs you an extra $6 above the "ideal" method and find that the satisfaction of having one debt completely paid off is worth $6 to you then in my opinion there is nothing wrong with that. Unfortunately not everyone who is told to use the snowball method is aware of its deficiencies and make a choice to exchange lost money for peace of mind--and those people may lose considerably more than $6. The same can be said for eschewing credit in favor of an all-cash approach--there are definitely drawbacks to avoiding credit cards but if someone is aware of the drawbacks and accepts them because they are unable to control their spending then that can be an intelligent choice. Anyone who argues that the snowball method is somehow "optimal" or that credit is somehow "bad" without mentioning the implicit assumption in both of those statements (which is an assumption of no ability to stick to a planned budget) is misleading people.

Paying highest APR first is the logical choice. No doubt. No dispute. (Most) People are not logical beings. That's the rub. That's why so many are in the predicament to begin with.

 

Using DR as an example, I've listened to him several times over the last several months primarily because of threads like this, this question about which snowball method to use has been asked on his show a couple times. To his credit, he readily admits it's cheaper to pay highest APR first. Never once dodged the question. The difference is he clearly understands human nature and human behavior (as it applies to real people living in real-life) better than most.

Edited September 1, 2009 by Uncle Leo

[webworm98]

Thanks for the thread OP. There are no one-size-fits-all solutions. It is good to have knowledge about everything. I like diversity, people using their brains to do what fits them. Some people figure it's their way or the highway.

 

Thanks again!

DIVERSITY--->VISA/MC/AMEX/DISCOVER/STORE CARDS

You forgot cash, debit, check, charge and maybe some others.

I DIDN'T FORGET

 

CASH = ONLY VENDING

 

Don't have a debit card

 

CHECK AT POS is fine for making a payment like at SEARS...WALMART...JC PENNEYS

 

But to pay for STUFF with a check is so WRONG when they take credit cards

 

Charge is not a logical choice for most people when they can get credit cards

 

George what did you mean that statement? Thank you.

A "CHARGE" CARD you don't have the OPTION to pay minimum payments if the NEED ever comes up

 

100% PIF~100% OF THE TIME

 

Also the major "CHARGE" CARDS are from AMEX (up to $450)

 

Pay $450 for the privelege of PIF that can be had with a NO ANNUAL FEE CREDIT CARD

 

I don't know too many people who CAN'T get a "CREDIT" CARD...but can get all the "CHARGE" CARDS they want

 

 

You dont need to roll eyes at me, I was just asking you a question, so I can make a proper comment.

 

It seems to me that it would actually be the other way around. I never could get charge cards but I got credit cards. I wish it was the other way around for me.

Edited September 1, 2009 by webworm98

[GEORGE]

Thanks for the thread OP. There are no one-size-fits-all solutions. It is good to have knowledge about everything. I like diversity, people using their brains to do what fits them. Some people figure it's their way or the highway.

 

Thanks again!

DIVERSITY--->VISA/MC/AMEX/DISCOVER/STORE CARDS

You forgot cash, debit, check, charge and maybe some others.

I DIDN'T FORGET

 

CASH = ONLY VENDING

 

Don't have a debit card

 

CHECK AT POS is fine for making a payment like at SEARS...WALMART...JC PENNEYS

 

But to pay for STUFF with a check is so WRONG when they take credit cards

 

Charge is not a logical choice for most people when they can get credit cards

 

George what did you mean that statement? Thank you.

A "CHARGE" CARD you don't have the OPTION to pay minimum payments if the NEED ever comes up

 

100% PIF~100% OF THE TIME

 

Also the major "CHARGE" CARDS are from AMEX (up to $450)

 

Pay $450 for the privelege of PIF that can be had with a NO ANNUAL FEE CREDIT CARD

 

I don't know too many people who CAN'T get a "CREDIT" CARD...but can get all the "CHARGE" CARDS they want

 

 

You dont need to roll eyes at me, I was just asking you a question, so I can make a proper comment.

 

It seems to me that it would actually be the other way around. I never could get charge cards but I got credit cards. I wish it was the other way around for me.

I don't get paid for 10 or 20 word answers...why would I want to type 3 page answers

 

(explain down to a minute detail)

Edited September 2, 2009 by GEORGE

[webworm98]

Thanks for the thread OP. There are no one-size-fits-all solutions. It is good to have knowledge about everything. I like diversity, people using their brains to do what fits them. Some people figure it's their way or the highway.

 

Thanks again!

DIVERSITY--->VISA/MC/AMEX/DISCOVER/STORE CARDS

You forgot cash, debit, check, charge and maybe some others.

I DIDN'T FORGET

 

CASH = ONLY VENDING

 

Don't have a debit card

 

CHECK AT POS is fine for making a payment like at SEARS...WALMART...JC PENNEYS

 

But to pay for STUFF with a check is so WRONG when they take credit cards

 

Charge is not a logical choice for most people when they can get credit cards

 

George what did you mean that statement? Thank you.

A "CHARGE" CARD you don't have the OPTION to pay minimum payments if the NEED ever comes up

 

100% PIF~100% OF THE TIME

 

Also the major "CHARGE" CARDS are from AMEX (up to $450)

 

Pay $450 for the privelege of PIF that can be had with a NO ANNUAL FEE CREDIT CARD

 

I don't know too many people who CAN'T get a "CREDIT" CARD...but can get all the "CHARGE" CARDS they want

 

 

You dont need to roll eyes at me, I was just asking you a question, so I can make a proper comment.

 

It seems to me that it would actually be the other way around. I never could get charge cards but I got credit cards. I wish it was the other way around for me.

I don't get paid for 10 or 20 word answers...why would I want to type 3 page answers

 

(explain down to a minute detail)

 

 

I know what you mean by a charge card now. You can see how the two statements made is confusing. (I increased the font)

Edited September 2, 2009 by webworm98

[TroyP]

I'm not much of an advocate of using cash. I'm perfectly content using my credit cards, earning rewards, and having superior protection. There are many purchases that I would never make with cash (my cards offer buyer protection, extended warranties, etc.).

 

That said, credit isn't for everyone. Ramsey's method works for a lot of people for the same reason that many people shouldn't have credit cards. People aren't perfectly rational, they respond emotionally to life. Many people, if given the opportunity, will overextend themselves if they have access to credit (I know... I did it). Many people will have more success paying off their debts if they use the snowball method and get the sense of accomplishment that comes with having a card paid off.

 

I've never used Ramsey's method personally, but it makes sense to me that a certain cross section of the people that will get in trouble with cards, would get out of trouble well by using the snowball method. The people that get buried in debt buying stupid things for the instant gratification, will get a similar sense of accomplishment more quickly by using the snowball method. If that gets them out of debt, even if they pay an extra $3,000 during the process, its better then still being up to your ears in debt 2 years down the road (and paying interest along the way).

 

So cash, like DR's methods isn't for me, but I understand why they work for many people. If it works for you, stick with it.