Dave Ramsey says don't use credit cards, even if you pay them off

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hightower
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Dave Ramsey says don't use credit cards, even if you pay them off

Post by hightower » Sun Nov 19, 2017 5:35 pm

This is from a segment 1 year ago
https://www.youtube.com/watch?v=np5i5oWfqAo

Do you all agree with Dave on this? He says that it's stupid to use credit cards even in situations where you use credit cards for rewards points (credit card hacking) and pay them off each month without paying any interest. His argument is that there have been studies done that show people spend more when they use plastic then they would if they used only cash.
Do you buy it? Does this change your approach to using credit cards?

I personally use my credit card like a checking account and make sure the balance is paid in full each month. But, if these studies he refer to are correct and I'm actually spending 20% more than I would if I forced myself to use cash, then I'd be interested in trying a new approach. It seems to make sense to me when I envision myself being forced to take out cash every time I want to buy something. Especially when it comes to food and groceries. I think I'd spend less.

What does every else think?

lack_ey
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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by lack_ey » Sun Nov 19, 2017 5:36 pm

Nobody cares (should care, in the real world) what Dave Ramsey thinks because he's not an expert on anything relevant.

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randomizer
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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by randomizer » Sun Nov 19, 2017 5:38 pm

I'd spend much less if I couldn't use credit cards. How would I get anything online?
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petulant
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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by petulant » Sun Nov 19, 2017 5:42 pm

I have found that it is easier to enforce a budget if I am spending out of a checking account or cash than if I have credit cards. With credit cards, I can always tell myself that $10, or $50, or $200 won't matter coming out of my next paycheck.

I have also found it is difficult to do mental accounting when I spread my budget across credit cards, cash, and a checking account. I can see the math in my spreadsheet that says I have $500 of my budget still available, but it is hard not to also take into account that I've actually got $700 ready to go from my checking account.

That's why I eventually put one recurring bill, like my cellphone bill, on each credit card and then put the plastic in my safety deposit box. If for some reason I actually need the physical cards, I know where to get them, and I continue to benefit from the credit card companies reporting my usage. But all my spending is done from the checking account pool, and I pay off the credit cards like a bill each month.

That's just me, though. For people who care less about enforcing a budget or don't have the problems I discussed above, it's great. I suspect that Dave, or the empirical results to which he refers (if they really exist), are talking about people like me.

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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by Tycoon » Sun Nov 19, 2017 5:44 pm

I disagree with Mr. Ramsey. I use cash and credit cards. Using either has the same effect on me - I don't like it.
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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by Jags4186 » Sun Nov 19, 2017 5:45 pm

randomizer wrote:
Sun Nov 19, 2017 5:38 pm
I'd spend much less if I couldn't use credit cards. How would I get anything online?
Debit card? Paypal linked to checking account? Lots of ways, TBH.

Regarding DR and credits cards its important to note who his audience is. 95% of it is broke people with consumer debt up to their eyeballs. Of course it’s much easier for him to say “yea never use credit cards” than to say “if you can’t handle credit cards you shouldn’t use them, but if you can it’s a great way to save 2% on all your purchases.”

Dave Ramsey doesn’t give tailored advice to people. He has cookie cutter responses to almost every scenario and he shoe horns everyone’s questions into those answer templates. He’s not going to lead you into a really bad place, but he almost never gives the optimal answer.

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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by rocket354 » Sun Nov 19, 2017 5:51 pm

I use credit cards so much that I think I now have the opposite problem. Everything is tied to my checking account--direct deposit of paychecks and rental payments, bill pay of utilities and credit cards--and so my entire idea of how much money I have (and how I should budget) comes from that value.

Then, the very rare time I actually look at the cash in my wallet, I'm surprised because I had forgotten it was even there. It's like free money! It's completely off the grid! I can do whatever I want with it, and it doesn't impact my meticulous budgeting and planning one bit--that money was never even considered! And, thus, paying with cash at this point is what gets me into frivolous purchases that are rationalized away. Thankfully, I never have more than about $100 in cash, and it's typically under $30, so the damage is small and very, very spaced out.

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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by HIinvestor » Sun Nov 19, 2017 5:52 pm

When I was on a tight budget I used to only spend cash plus ocasional checks. I also wrote down every dime I spent. That was my method primarily until I was done with undergrad and grad school. Toward the end of grad school, I also acquired a CC or two which I paid off in full every month.

Once I graduated, my income greatly increased and was way above my expenses so living below my expenses was not a problem. I switched primarily to CCs and checks with a bit of cash.

I do not like writing tons of checks nor carrying large amounts of cash. Using CCs is a convenience and I don’t object to getting cash back. I still live well below my income so I’m not interested in going back to primarily cash and checks.

Dave Ramsey is not someone whose advise I have ever listened to, tho I understand he’s nade a pile of money and some have been helped by him. Whatever works for folks sounds good to me. I’ve never paid a finance or late fee on my CCs, as I pay them off in full every month.

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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by JDCarpenter » Sun Nov 19, 2017 6:03 pm

hightower wrote:
Sun Nov 19, 2017 5:35 pm
This is from a segment 1 year ago
https://www.youtube.com/watch?v=np5i5oWfqAo

Do you all agree with Dave on this? He says that it's stupid to use credit cards even in situations where you use credit cards for rewards points (credit card hacking) and pay them off each month without paying any interest. His argument is that there have been studies done that show people spend more when they use plastic then they would if they used only cash.
Do you buy it? Does this change your approach to using credit cards?

...
Agree with others that Ramsey is speaking to his audience and is likely appropriate for a lot of that audience. DW and I use credit cards for almost everything and that won't change. OTOH, the studies are pretty consistent on this: you do spend more when plastic is involved (with "you," of course meaning everyone else! :oops: ). Prior forum discussions here: https://www.google.com/search?sitesearc ... e+spending Lots of linked articles here: https://www.google.com/search?q=credit+ ... e&ie=UTF-8
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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by CppCoder » Sun Nov 19, 2017 6:05 pm

We don't make purchases based on the amount of money we have available--we make purchases based on what we need/want. I would lose money to not use my Citi double cash card, my Costco 3% back at restaurant card, and my AmEx Blue Cash preferred 6% at grocery stores card. That said, I don't think I'm Dave Ramsey's target audience.

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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by gvsucavie03 » Sun Nov 19, 2017 6:06 pm

randomizer wrote:
Sun Nov 19, 2017 5:38 pm
I'd spend much less if I couldn't use credit cards. How would I get anything online?
Debit card...

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blueblock
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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by blueblock » Sun Nov 19, 2017 6:07 pm

Isn't a spender going to run out of cash and think, "No problem, there's lots more of that at the ATM"?

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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by petulant » Sun Nov 19, 2017 6:08 pm

blueblock wrote:
Sun Nov 19, 2017 6:07 pm
Isn't a spender going to run out of cash and think, "No problem, there's lots more of that at the ATM"?
Yes, until there's no more money in the checking account.

And then next month, they'll think twice before they hit the ATM too fast.

I'm included in them.

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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by Mudpuppy » Sun Nov 19, 2017 6:09 pm

This advice is intended for Dave Ramsey's target audience: people who have trouble staying within their means for their spending. In that context, a credit card might be like having alcohol in the house of a recovering alcoholic... it could all turn out just fine, but why add the temptation? That doesn't mean credit cards are bad for everyone, just some people can't handle them responsibly and would be better off with cash or debit cards.

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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by gvsucavie03 » Sun Nov 19, 2017 6:09 pm

CppCoder wrote:
Sun Nov 19, 2017 6:05 pm
We don't make purchases based on the amount of money we have available--we make purchases based on what we need/want. I would lose money to not use my Citi double cash card, my Costco 3% back at restaurant card, and my AmEx Blue Cash preferred 6% at grocery stores card. That said, I don't think I'm Dave Ramsey's target audience.
Yup. And our cc's have a tab on the spreadsheet. When we buy with a cc, the $ is moved over so that exact amount is saved for when the balance gets paid in full. Categories still have a budgeted amount. It adds complexity, but we spend the same as we did 2 years ago with no cc's.

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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by gvsucavie03 » Sun Nov 19, 2017 6:17 pm

And we've gotten a couple thousand dollars this year in sign-up bonuses and rewards. It is a somewhat lucrative hobby (along with checking bonuses).

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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by JohnFiscal » Sun Nov 19, 2017 6:19 pm

gvsucavie03 wrote:
Sun Nov 19, 2017 6:09 pm
Yup. And our cc's have a tab on the spreadsheet. When we buy with a cc, the $ is moved over so that exact amount is saved for when the balance gets paid in full. Categories still have a budgeted amount. It adds complexity, but we spend the same as we did 2 years ago with no cc's.
I've been using the exact same method for 25 years and it works for me. In fact, in the past 5 years I've pretty much moved to using cc's exclusively, getting a few hundred in cash at the atm every other month or even longer. I don't buy much in the way of small purchases...fast food, coffee, etc.

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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by coincollector » Sun Nov 19, 2017 6:25 pm

Credit Cards were simply a money making invention of the financial industry that produce profits by encouraging irresponsible consumer habits and pushing asinine fees on them as a side dish. Even though that is true, the heart of the matter is that credit cards are just as antiquated as checks and cash. A debit card is a perfect one for one replacement but there are many modern replacements as well. From Paypal to Samsung/Android/Apple Pay to ACH or Wire. The list goes on and on. Credits Cards are unneeded in modern society and there is no reason to use one.

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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by chipperd » Sun Nov 19, 2017 6:27 pm

Jags4186 wrote:
Sun Nov 19, 2017 5:45 pm
randomizer wrote:
Sun Nov 19, 2017 5:38 pm
I'd spend much less if I couldn't use credit cards. How would I get anything online?
Debit card? Paypal linked to checking account? Lots of ways, TBH.

Regarding DR and credits cards its important to note who his audience is. 95% of it is broke people with consumer debt up to their eyeballs. Of course it’s much easier for him to say “yea never use credit cards” than to say “if you can’t handle credit cards you shouldn’t use them, but if you can it’s a great way to save 2% on all your purchases.”

Dave Ramsey doesn’t give tailored advice to people. He has cookie cutter responses to almost every scenario and he shoe horns everyone’s questions into those answer templates. He’s not going to lead you into a really bad place, but he almost never gives the optimal answer.
+1, here here

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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by hightower » Sun Nov 19, 2017 6:28 pm

Thanks for the great responses so far. I enjoy hearing everyone's take on this.

One thing I tell myself when trying to justify credit card use vs paying cash that goes above and beyond the rewards points argument is that since everyone is paying with credit cards these days, retailers are forced to jack up their prices slightly to cover the fees they pay to credit card companies for all of our credit card use. So if you don't use a rewards credit card for purchases, you're actually subsidizing everyone who does and getting nothing in return. Am I correct on this? You're paying slightly more for your purchase, whether or not you use a credit card, so that retailers can cover the fees associated with accepting credit cards.

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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by theplayer11 » Sun Nov 19, 2017 6:29 pm

playing the credit card point game has allowed free trips to Europe the past few years with many more points not used. Would I spend less without? Possibly, but the points value would outweigh by a mile.

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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by willthrill81 » Sun Nov 19, 2017 6:31 pm

Jags4186 wrote:
Sun Nov 19, 2017 5:45 pm
Regarding DR and credits cards its important to note who his audience is. 95% of it is broke people with consumer debt up to their eyeballs. Of course it’s much easier for him to say “yea never use credit cards” than to say “if you can’t handle credit cards you shouldn’t use them, but if you can it’s a great way to save 2% on all your purchases.”

Dave Ramsey doesn’t give tailored advice to people. He has cookie cutter responses to almost every scenario and he shoe horns everyone’s questions into those answer templates. He’s not going to lead you into a really bad place, but he almost never gives the optimal answer.
+1

This is key. DR's audience are middle class and working class Americans who have little to no financial literacy. Among much of this group, research has indeed shown that people will spend more if using a credit card instead of hard cash simply because it's easier for them to see how much money they have and are spending. Among the more financially literate, spending is the same regardless of the medium used.

Had we not used credit cards for the last 17 years of our marriage, we would have literally forfeited around $20k of cash rewards and close equivalents (e.g. airline miles used in travel). This year alone, when we started really churning credit cards, we earned $2,200 in cash and about $3,300 in airline miles. We only charged normal expenses to get these rewards and didn't pay anything other than necessary annual fees on some of the cards, which I've already factored in above.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by willthrill81 » Sun Nov 19, 2017 6:32 pm

hightower wrote:
Sun Nov 19, 2017 6:28 pm
Thanks for the great responses so far. I enjoy hearing everyone's take on this.

One thing I tell myself when trying to justify credit card use vs paying cash that goes above and beyond the rewards points argument is that since everyone is paying with credit cards these days, retailers are forced to jack up their prices slightly to cover the fees they pay to credit card companies for all of our credit card use. So if you don't use a rewards credit card for purchases, you're actually subsidizing everyone who does and getting nothing in return. Am I correct on this? You're paying slightly more for your purchase, whether or not you use a credit card, so that retailers can cover the fees associated with accepting credit cards.
Yes, those who don't use credit cards are subsidizing the benefits that card issues provide to those who do. Some retailers will give a cash discount though.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by willthrill81 » Sun Nov 19, 2017 6:33 pm

coincollector wrote:
Sun Nov 19, 2017 6:25 pm
Credits Cards are unneeded in modern society and there is no reason to use one.
Unneeded? Yes, we could survive without them.

No reason to own one? Demonstrably false.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by Maya1234 » Sun Nov 19, 2017 6:38 pm

Although I am at times personally uncomfortable with DR ( because he’s so religious and that is sometimes part of his message, while I’m an atheist ) I really do think that he gives very good advice on spending/debt and for many of his listeners, for whom debt and spending above their means has been a problem, this advice on credit cards makes a lot of sense. And it’s probably true that one spends more if they are paying with a CC but that is because the spending doesn’t feel as real. I solve that issue in part by monitoring my cc balance daily ( with daily e mail alerts) and transfering,that amount to a seperate “Bill paying” account. Paid in full of course. When you are reminded daily of your spending it feels more real at least to me. But I’m not going to miss out on rewards \money back. That’s a waste too

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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by alwayshedge » Sun Nov 19, 2017 6:41 pm

A few months ago, Dave called index investors dummies for falling for the passive strategy. He said that if you can't find someone that can beat the market, you're doing it wrong and it's your own fault. He then proceeded to recommend one of his preferred providers. I found this offensive. I stopped listening to him at that point and will recommend anyone else not to listen to him.

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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by JohnFiscal » Sun Nov 19, 2017 6:49 pm

Maya1234 wrote:
Sun Nov 19, 2017 6:38 pm
that is because the spending doesn’t feel as real.
I've actually gotten to this point, where "money" doesn't seem real to me anymore, it's all just numbers in Excel (or Google) spreadsheets. The inflow stream (payroll, etc) is totally divorced from the outflow stream, I don't even consider how major upcoming expenses impact incoming funds (or vice versa). But I suppose that many people get to this point at some time.

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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by willthrill81 » Sun Nov 19, 2017 6:58 pm

alwayshedge wrote:
Sun Nov 19, 2017 6:41 pm
A few months ago, Dave called index investors dummies for falling for the passive strategy. He said that if you can't find someone that can beat the market, you're doing it wrong and it's your own fault. He then proceeded to recommend one of his preferred providers. I found this offensive. I stopped listening to him at that point and will recommend anyone else not to listen to him.
It's issues like that that completely destroy DR's credibility among those that are financially literate. There is a running list of statements he has made which are demonstrably false, yet when he has been called out on them on his show, he has doubled down and got even more aggressive.

Most of his advice regarding getting out of debt is good, but almost everything else he advocates is greatly flawed, to put it lightly.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by Devil's Advocate » Sun Nov 19, 2017 7:05 pm

Dave's number one sin is claiming one can safely withdraw 12% per year of retirement funds. However as of late he stays that even if I'm half right you'll still have plenty of money. A 6% withdrawal rate is also not a safe withdrawal rate.

DA

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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by slayed » Sun Nov 19, 2017 7:07 pm

Dave Ramsey doesn't strike me as particularly intelligent so I tend to ignore his advice.

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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by Silk McCue » Sun Nov 19, 2017 7:09 pm

Devil's Advocate wrote:
Sun Nov 19, 2017 7:05 pm
Dave's number one sin is claiming one can safely withdraw 12% per year of retirement funds. However as of late he stays that even if I'm half right you'll still have plenty of money. A 6% withdrawal rate is also not a safe withdrawal rate.

DA
Dave Ramsey doesn't say this. Please google this and post what is accurate. I disagree with his investment advice BTW. He gives excellent advice to those that are in debt even if I don't agree with every piece of that side of the advice.

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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by gvsucavie03 » Sun Nov 19, 2017 7:16 pm

alwayshedge wrote:
Sun Nov 19, 2017 6:41 pm
A few months ago, Dave called index investors dummies for falling for the passive strategy. He said that if you can't find someone that can beat the market, you're doing it wrong and it's your own fault. He then proceeded to recommend one of his preferred providers. I found this offensive. I stopped listening to him at that point and will recommend anyone else not to listen to him.
Yup. I shut him off today...

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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by gvsucavie03 » Sun Nov 19, 2017 7:18 pm

hightower wrote:
Sun Nov 19, 2017 6:28 pm
Thanks for the great responses so far. I enjoy hearing everyone's take on this.

One thing I tell myself when trying to justify credit card use vs paying cash that goes above and beyond the rewards points argument is that since everyone is paying with credit cards these days, retailers are forced to jack up their prices slightly to cover the fees they pay to credit card companies for all of our credit card use. So if you don't use a rewards credit card for purchases, you're actually subsidizing everyone who does and getting nothing in return. Am I correct on this? You're paying slightly more for your purchase, whether or not you use a credit card, so that retailers can cover the fees associated with accepting credit cards.
Transaction fees (not rewards) are definitely built into retail prices.

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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by willthrill81 » Sun Nov 19, 2017 7:18 pm

Silk McCue wrote:
Sun Nov 19, 2017 7:09 pm
Devil's Advocate wrote:
Sun Nov 19, 2017 7:05 pm
Dave's number one sin is claiming one can safely withdraw 12% per year of retirement funds. However as of late he stays that even if I'm half right you'll still have plenty of money. A 6% withdrawal rate is also not a safe withdrawal rate.

DA
Dave Ramsey doesn't say this. Please google this and post what is accurate. I disagree with his investment advice BTW. He gives excellent advice to those that are in debt even if I don't agree with every piece of that side of the advice.
DR claims that since you can earn 12% annually with an all stock portfolio (wrong), you can subtract 4% inflation (not very accurate) from that and withdraw 8% of your portfolio every year (dead wrong). This is very dangerous advice because those heeding it would a portfolio literally twice as large as what they think they will need to retire safely over a 30 year period.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by LEB1230 » Sun Nov 19, 2017 7:27 pm

Devil's Advocate wrote:
Sun Nov 19, 2017 7:05 pm
Dave's number one sin is claiming one can safely withdraw 12% per year of retirement funds. However as of late he stays that even if I'm half right you'll still have plenty of money. A 6% withdrawal rate is also not a safe withdrawal rate.

DA
I've never heard him say that. He claims you can get an annual return of 12% on mutual funds. Not that you can safely withdraw 12% in retirement.

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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by Silk McCue » Sun Nov 19, 2017 7:30 pm

willthrill81 wrote:
Sun Nov 19, 2017 7:18 pm
Silk McCue wrote:
Sun Nov 19, 2017 7:09 pm
Devil's Advocate wrote:
Sun Nov 19, 2017 7:05 pm
Dave's number one sin is claiming one can safely withdraw 12% per year of retirement funds. However as of late he stays that even if I'm half right you'll still have plenty of money. A 6% withdrawal rate is also not a safe withdrawal rate.

DA
Dave Ramsey doesn't say this. Please google this and post what is accurate. I disagree with his investment advice BTW. He gives excellent advice to those that are in debt even if I don't agree with every piece of that side of the advice.

DR claims that since you can earn 12% annually with an all stock portfolio (wrong), you can subtract 4% inflation (not very accurate) from that and withdraw 8% of your portfolio every year (dead wrong). This is very dangerous advice because those heeding it would a portfolio literally twice as large as what they think they will need to retire safely over a 30 year period.
And that is the correction I was hoping Devils Advocate would post.

Dave has his issues primarily with his investing advice which I would never follow. For getting out of debt and staying out of debt he is doing a great work. If his recommendations on that topic isn't someone's cup of tea they shouldn't follow it.Paying cash is an excellent way to bring out of control spending under control after you have established a budget.

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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by Dottie57 » Sun Nov 19, 2017 7:31 pm

gvsucavie03 wrote:
Sun Nov 19, 2017 6:06 pm
randomizer wrote:
Sun Nov 19, 2017 5:38 pm
I'd spend much less if I couldn't use credit cards. How would I get anything online?
Debit card...
I used my debit card until it was used fraudulently. It was always in my possession. Don't know how fraudster was ableto use. My bank caught it before money came out of account. Now it is only used at bank

Credit cards have better protection.

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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by Slacker » Sun Nov 19, 2017 7:37 pm

One credit card (American Express Preferred Cash Rewards) is only for groceries and gasoline. I can't see how we would possibly buy more with this credit card just because we aren't using cash.

How many extra gallons of milk will I drink when using my American Express? None. Will I suddenly think I can now buy the expensive local farm $8/gallon milk - hell no, $1.89 a gallon on sale for me everytime.

Do I suddenly find myself driving more because I paid for gas with a card? Not at all. Maybe I use super unleaded instead of regular? Nope, my car is designed for regular and super unleaded (high octane) fuel actually has a lower energy content.

With this particular card, I cannot see how we would spend anything more than what we would using cash. Furthermore, our cash cost would be higher due to the 6% cash back on groceries and 3% cash back on gasoline. (the numbers work out great even though there is a $95 annual fee).

Maybe our other card - 2.5% cash back. We use this mostly for paying the bills and we don't really rack up extra water, electricity, cell phone usage, internet charges, etc just because it is on a card. We also stick to a budget limit for going out to eat each month - use it or lose it style so if we did spend more at one location it just means we'll go to fewer locations that month. Movies? All included one price $10/month with moviepass.

Maybe on travel - but it isn't very easy, afaik, to make all my travel reservations with cash or check.

S&L1940
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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by S&L1940 » Sun Nov 19, 2017 7:45 pm

willthrill81 wrote:
Sun Nov 19, 2017 6:33 pm
coincollector wrote:
Sun Nov 19, 2017 6:25 pm
Credits Cards are unneeded in modern society and there is no reason to use one.
Unneeded? Yes, we could survive without them. No reason to own one? Demonstrably false.
Rarely carry cash, always pay by credit card or electronic bank checks. Sometimes a restaurant discounts 15% to 20% for cash; helps cover the tip...
I keep a rolling checking balance on a spreadsheet and enter scheduled payments. This controls our spend pattern and ensures that the checking account covers the tabs.
Don't it always seem to go * That you don't know what you've got * Till it's gone

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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by harrychan » Sun Nov 19, 2017 8:05 pm

if you have the discipline to regulate your spending then I think you are fine with using credit cards. With that said, I tend to agree with DR as many Americans, who are in debt, use credit card as overflow or buy things they can't afford. If you look around, credit card companies make it easy for you to buy and think you are getting value through points or rebates. But in reality, I think it is an extremely small number of people who takes comes out of the winning side of the 'churning' game.
This is not legal or certified financial advice but you know that already.

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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by ChrisC » Sun Nov 19, 2017 8:17 pm

hightower wrote:
Sun Nov 19, 2017 5:35 pm
He says that it's stupid to use credit cards even in situations where you use credit cards for rewards points (credit card hacking) and pay them off each month without paying any interest. His argument is that there have been studies done that show people spend more when they use plastic then they would if they used only cash.
Do you buy it?
So, I think many people here in this forum use their credit card as a "charge card," namely, a card that permits the holder to charge the purchase of items and to delay payment of the purchases for a specified period of time -- it used to be 30 days for the old Diner's Club or American Express Charge Cards. Credit cards, as now structured, have this charge card aspect to them in that if you pay off the card balance of purchases within 21-25 days, one does not incur finance charges and thus the account holder is essentially using the credit card as a charge card. When credit cards operate as charge cards, especially when the credit cards are automatically tied to checking accounts for paying off the balance -- I can't see how use of the plastic in this manner would increase consumption. Do these studies actually show this or do they lump everyone's use of credit cards in one monolithic manner?

I can see how the availability and use of "credit" could increase consumption for those who are financially unsophisticated, which might include disproportionately low income folks, to their financial detriment. And the poor generally pay more for everything! DR's target audience covers people who buy stuff on layaway or who would generally incur finance charges on credit card because of low financial literacy levels. As others say, DR's advice is generally not suitable for people at higher financial literacy levels. Moreover, taken literally, DR's advice would cause one to avoid the use of checking accounts (because they could advance short term charges/credit as well, especially when tied to overdraft checking account features) and pay cash for everything!

I think DR and others, like Suzie Orman, provide sound advice for their targeted audiences. Most of us here are not in that targeted group.

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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by ASpenderInRecovery » Sun Nov 19, 2017 8:24 pm

You should read, "Why Smart People Make Big Money Mistakes" as it explains the behavioral economics behind excessive spending habits. You can chalk alot of credit card over spending into what they refer to as the "bigness bias" where folks tend to pay more attention to big numbers than small ones. Or in terms of spending they continually make small purchases ex. $4 Starbucks multiple times a week but fail to see how big the cost adds up over time.

I would also agree that most of Dave Ramsey's audience is in need of debt relief advice and most folks on here are looking for smarter ways to invest or save. So if you have a boatload of credit card debt and aren't disciplined enough to use a credit card responsibly then eliminating it is a great strategy.

In my opinion, if you are disciplined, put together a monthly budget/zero balance budget, pay off the balance in full each month, and avoid the pitfall of making many small purchases credit cards are better way to go. You build credit, get cash back or rewards, can optimize cash flow, and have $0 liability if stolen. If I hadn't built up excellent credit via responsible credit card usage I'd be paying a ton more for my mortgage interest.
Last edited by ASpenderInRecovery on Sun Nov 19, 2017 8:30 pm, edited 2 times in total.

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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by reisner » Sun Nov 19, 2017 8:28 pm

I am the child of a child of the Great Depression. I only buy what I need or really, really want. Credit cards save me money with rebates and are there for emergencies. I use them most of the time instead of cash because I hate getting coins in change. Real men don't carry change.
Last edited by reisner on Sun Nov 19, 2017 11:25 pm, edited 1 time in total.

cashisking500
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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by cashisking500 » Sun Nov 19, 2017 8:34 pm

If you use your credit card responsibly, then there’s not any reason to stop. The problem (and this is why Dave Ramsey is right), is because 90% of people can’t use them responsibly and it ends up ruining them. Massive debt, etc.

I’m a Dave Ramsey fan, but that doesn’t mean I agree with everything he has to say.

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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by Ruger » Sun Nov 19, 2017 8:39 pm

My first year of retirement I paid cash for everything. I thought it would help keep my spending down and I didn't want a large credit card bill at the end of the month. My second year I switched over to using a credit card to pay for everything to get the rewards. I keep track of everything I spend every month and there was no difference whether I paid cash of used the credit card, so I'm sticking with the card for the cash back reward.

Laren
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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by Laren » Sun Nov 19, 2017 8:40 pm

The real test is determining what is true for you personally. If you're intrigued by the idea, go cash only for 3-6 months, track it, and see if there's a meaningful difference in your spending.

FWIW, I find it much easier to track my spending when I use credit cards because I balance my statements every month. With cash, I'm pretty sure I'd lose a certain number of receipts each month and it would be a little harder to see where my money is going. I pay my credit cards off in full every month, and I like the rewards!

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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by UpperNwGuy » Sun Nov 19, 2017 8:44 pm

I love credit cards, and I hate cash. I use credit cards for nearly all my expenses. I operate under a very strict personal budget, and I pay off my credit cards each month. Dave Ramsey is not for me. I don't like his envelope system, or his credit card advice, or his investing advice. Ramsey is probably a good influence on those who are deep in debt and need to find a way out, but I doubt there are many such folk on this board. I don't think he is relevant here.

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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by Wakefield1 » Sun Nov 19, 2017 8:49 pm

I certainly spend more having my two credit cards than I would not having them. Carrying around wads of cash,running back and forth to the credit union to get more cash, is so dangerous and inconvenient,and lots of places don't take checks,without the credit card I would wait to buy shoes until the sole is falling off and my toe is showing through the hole in the upper.
But that is not a bad thing. :mrgreen:

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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by Sandtrap » Sun Nov 19, 2017 8:50 pm

I am both equally cheap and sometimes frivolous with both cash or credit card (balance paid monthly).
Cash doesn't get points on Amazon.com :D .
Credit cards don't smell like someone's stinky cologne like cash does. Phew! :shock:
Last edited by Sandtrap on Sun Nov 19, 2017 8:52 pm, edited 2 times in total.

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Re: Dave Ramsey says don't use credit cards, even if you pay them off

Post by smitcat » Sun Nov 19, 2017 8:50 pm

We use credit cards for just about everything we purchase lately as the cards we have almost all have good 1.5-4 points dependent upon the card and the purchase. Between the points and the bonus offers this represents a pretty good benefit that can pay for 1 to 1-1/2 one week vacations for my wife and I. And the other surprising things is that many of our vendors actually give us a discount for a credit card payment so that our bill is lower while we make points at the same time.
I had posted in another thread that we had "charged" about $150,000 this past year but my wife just said that it was closer to $175,000.
Getting a 2% discount on maybe 1/2 of those charges as well as maybe an average of 2% back on all of the charges adds up quickly.
FWIW - in all cases when we get a discount for cash we use cash but not too many folks are doing that right now.

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