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.