I was listening to Dave Ramsey on the radio at lunch today and he had a good perspective about credit cards for a viewer who was very good about paying off the card each month and earned a couple hundred bucks each year on incentives.
After restating his stance on credit cards (which is "don't use them"), Dave shared results from a study that showed when people use credit cards they are much more likely to spend more money. I think if we were honest, we could all say that's probably a pretty accurate study (grocery shopping and WalMart trips are the worst!)
His point was this: If you earn a couple hundred "free" dollars in incentives, so what... You'll carelessly spend a lot more than that simply because you're using plastic.
I'd have to say that I'd be guilty of that myself. It's a lot easier to spend more than your budgeted $20 when you've got a credit line of $10,000. If you've only got $20 cash then it's pretty hard to get out of the store with $25-50 worth of merchandise.
A few weeks ago my wife and I decided to start using cash for everything but gas. That meant that we wouldn't be earning or investing with our UPromise College Savings card we had attached to our 529 Plan for our kids.
This segment of his radio broadcast was some great affirmation for our decision. In the long run, I believe making small, regular deposits into the investment accounts equal to those we were getting from the credit card will help us come out on top without the worry of a big credit card bill each month even though we regularly pay it off each month.
Think about this.... What if our government paid for everything up front without making more money each time they made a purchase??? What kind of debt would we be in then???
No comments:
Post a Comment