After reading the last post, and watching In Debt We Trust, and reading all the horror stories of credit cards (talks about one) I just wanted to share.
I know a lot of people say there is nothing wrong with credit cards, and I USED to agree.
However, it is estimated that people spend 20-30% more when they use a credit card than they would have if they paid cash. Even Crystal, who is very frugal and good with finances, admitted that even she overspent when not using cash.
I know that I truly believed my monthly grocery budget was $500. That is about what I was spending a month for our family of 6. And I thought I was doing well. Once we switched to cash, I am spending $300-$350! I am saving almost $200 A MONTH by using cash instead of a credit card.
Not only that, but credit card companies can raise your interest rate for no reason at all. Even on good customers who pay it off every month. And then some emergency happens (like your son being in the hospital for a month) and you have no emergency fund because you have always relied on credit cards, and now you are in debt because of some bad mistakes you made and have to pay an extra $300 bucks a month because now you are tying to play catch up.
Playing with credit cards is a dangerous game. And for us, it is not worth it anymore.
We had been good customers. Paying off on time and every month. But every now and then we had to pull out of savings a little bit here and there to pay it off fully, until this past January arrived and we realized that we had no more to pull out of savings to pay of the credit card. It happened so slowly and yet so FAST at the same time.
I truly believe that had we been paying cash instead of using credit cards, we would have had more than enough money in savings to pay of the emergency medical expenses that we have incurred.
$500 x 2(do this biweekly) x 12months = $12000
$300 x 2(do this biweekly) x 12months = $7200
Difference of $4800 that could have been gaining it's OWN interest for US (to the sum of $576) leaving us with an extra total of $5376 (and that is just in one year and JUST on GROCERIES!).
UPDATED: Be sure to read through the comments. Some good thoughts by Rebecca. Feel free to join in, but remember nothing that is not edifying will be published. You can disagree AND edify at the same time. :) Rebecca is a wonderful example of that.
A "1 Corinthians 13" Christmas
1 day ago
3 comments:
HI Paula.
I just want to play devil's advocate for a moment and offer a different point of view. Take it or leave it. ;-)
It really wasn't the CREDIT CARDS fault that you spent $200.00 more on groceries...you were able to lessen your monthly grocery bill by being more aware of what you were spending and staying on task. If you were to give yourself a $300.00 limit and take a calculator with you to make sure you stayed diligent-you would get to the register with $300.00 worth of items: whether you paid in cash or not.
I think credit cards give a false sense of security because you can rationalize it out that you will pay it later-so you don't bedget wisely. That is the temptation anyway. So THAT can be the danger of creditcards. But credit cards, in and of themselves, aren't forcing you to not budget. They are just a piece of plastic.
The danger comes if a person isn't viewing them in the proper light, isn't spending wisely (buying ONLY what they need and NOT what they don't) and spending only that which they can pay for (that means AFTER setting aside money for emergency funds, savings account, retirement, yada yada yada.) The problem lies with THE PEOPLE not the CREDIT CARD.
That said, I will be the first to admit that using a credit card CAN be dangerous because OFTEN people don't have their ducks in a row for spending. It CAN be a real temptation. Spending in cash OFTEN is the best way to do things for many different reasons. I just wanted to clarify that, in MY opinion, credit cards are NOT sinful and don't COST you more money. PEOPLE cost themselves more money by buying things that they can't afford or shouldn't afford, that they can't pay off at the end of the month, not budgeting their finances well, and not being good stewards of their finances.
Okay. That is my soapbox. I will say, whether or not we disagree on the whole credit issue~it is a WONDERFUL accomplishment to have cut your grocery bill ALMOST in half! You should be VERY proud of yourself! Also-it is wonderful to be thinking about an emergency fund. This is something we really need to do. We have been socking money away for a house fund-but have no emergency fund...so once again, have to split up the money a bit to compensate.
Good job on the progress made!
I have heard a lot of negative about credit cards lately and I guess
I don't know why blogger cut off your comment. :( I am very interested in hearing what you have to say. :)
Also, Rebecca has a good post on her blog about this very subject. And on the finance blogs I like to read (click on the finance tab), they have also debated the good side and bad side of credit cards.
It is a good point that it is the person responsible for their own behavior, but even Crystal admitted (from biblicalwomanhood) that she (as good with finances as she is) was over spending with a credit card.
It is kind of like alcohol. There is just something about it that makes you do things you normally would not do, not matter how financially responsible you are. Credit cards are designed to make you spend more money.
I was reading (again on one of the finance blogs I read) about how a lot of people talk about credit cards and using them, and she brought up a good point. Dave Ramsey is always saying if you want to be rich, act like the rich. The rich are using cash. They are not borrowing on credit what they have the cash to pay for.
Credit card companies are in the business of making money.And the only way they can make money is by you spending money. The video In Debt We Trust is a very eye opening video on how credit cards are like lions waiting to devour you. We tripped up without an emergency fund and now we are paying for it. An extra $300 a month for it.
I guess I got too long-winded?! hehehe
I guess I was just saying...I have heard lots of negative credit card bashing lately, and, while I don't often bother commenting on them, I do think people should be careful not to put blame on things that can't take the blame.
When we are standing before the Lord and God says "All your life you pilfered your money away" you can't say "But God, it was the CREDIT CARDS!" Inanimate objects can't take the blame for what only people can do!
WE are better than credit cards. We are more POWERFUL than credit cards...and we have the power to use them wisely or abuse them.
Again, I should reiterate, it can be SAFER for you not to use them at all. If that is how you can save money, then THAT is precisely what you need to do. I just get my tail-feathers in a knot when I hear people placing blame on the credit cards themselves.
Example: just finished paying off the last of our credit card debt. Debt I thought we had been rid of until just this month. We took the money out of our home fund to do so (sob!) and now we have a zero balance. It feels good and I told Matt-DON'T use that anymore! Not because it is wrong to do so, but because I just want to have to pay it anymore! lol
So-it can be VERY wise not use credit. I am a big advocate for cash. But, not inherently sinful. That's all I am defending.
Paula~we just ordered a few months ago a CD set called Money and Finances from canonpress.org. It is EXCELLENT too. It is actually sermon series on the subject, covering laziness, sensual snares, honest hard work, savings, debt, ect. Really good. I would recommend it. One of the cd's spoke about debt and how as Christians the object is OWNERSHIP not enslavement. If we do not OWN, we are enslaved by the owner. We are forced to make payments of time and money. The object is to own. The speaker, D. Wilson, also said this: If you have the means to pay for something that you owe-you MUST do so" and he referred to the scripture passage where the rich man told the man whom he was indebted "Go and come again tomorrow and I will pay you then." I forget the reference and can't find the cd right now-but you hopefully get the drift. That is why Matt became convicted to pay off the last of the credit card debt using our hard-earned (and hard-saved) home fund. It broke my heart to do so...I NEVER wanted to TOUCH that money at all! But Matt spoke about being free from the burden of enslavement and so, it was really important to him.
Anyway. Just thought I would recommend that and share my opinions with a friend, who I know wouldn't fly off the deep end and a respectful discussion of the subject. ;-)
Hope this one doesn't get cut off...
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