Life without credit

[jmac]

New increase today, i'm at 693.

[159515951]

FICO scores are a scam. Best I can tell, it's just a hamster wheel of debt that we're expected to be on so we can have a "higher score".

The only winning move is not to play.

[angel7821]

FICO scores are a scam. Best I can tell, it's just a hamster wheel of debt that we're expected to be on so we can have a "higher score".

The only winning move is not to play.

I so agree.

[avengers]

FICO scores are a scam. Best I can tell, it's just a hamster wheel of debt that we're expected to be on so we can have a "higher score".

The only winning move is not to play.

That's a very Dave Ramsey thing to say. Do people need credit? No. But if you ever want to buy a house, having a good credit score will be very helpful for getting a lower payment.

While you can go through your life using just a debit card instead of a credit card, a credit card is actually better than a debit card, especially when traveling (some hotels and car rental agencies will take extra money out of your bank account if you use a debit card that they won't return until you check out/return your car).

[May2014]

I work for a bank. We advise our customers to never use their debit card to hold a reservation. To begin with, hotels often hold an additional amount that may not be released for up to a week. So even after you've paid the bill, that extra amount is still in limbo, entirely unusable. Then there are times when a customer chooses to change their payment method (like using a credit card). So now they've paid using credit AND the total amount from their bill is missing from their account until it's released. The second example actually happened a couple of weeks ago to one of our customers, and he was stuck out of town with no money in his account. Luckily it was during business hours on a Tuesday and not 5pm on a Friday. We were able to get his funds released for him after a bit of work.

ANYWAY...there is something to be said for credit cards if they are used wisely.

[159515951]

That's a very Dave Ramsey thing to say.

You say that like it's a bad thing. If more of us (including me) listened to him a long time ago instead of being brainwashed into thinking debt is normal, this forum wouldn't even be necessary.

Just the fact that not having debt is correlated almost immediately to Dave Ramsey speaks volumes about how comfortable we've all become with being indentured servants. Just wander around this site and look for "how long until I can get another credit card" posts for evidence of the problem.

[AngelinaCat]

Hi Folks:

'Hub and I were Discharged Aug. 13. 2008. We have not used credit since then, other than for a truck in 2013. That item is too much for our current paychecks, and we are selling it to get rid of the payment and other responsibility for it.

[avengers]

You say that like it's a bad thing. If more of us (including me) listened to him a long time ago instead of being brainwashed into thinking debt is normal, this forum wouldn't even be necessary.

Just the fact that not having debt is correlated almost immediately to Dave Ramsey speaks volumes about how comfortable we've all become with being indentured servants. Just wander around this site and look for "how long until I can get another credit card" posts for evidence of the problem.

Because Ramsey's attitude is that credit is always bad. That's wrong. Debt is bad, not having available credit. I pointed out two simple situations where the availability of credit can come in very handy.

In case you've never rented a car, here's what happened. You rent a car and they'll tell you $40/day. You give them your debit card. What will the rental agency do? They will take $250 from your bank account immediately and freeze it for as long as you have the car. After you return it and they inspect it, they will give you $210 back. But that means the entire time you have the car, you're out $250. When you're traveling, you often rent longer than that, possibly adding to the amount they'll take out of the bank. And a hotel will do something very similar. So you're taking a little weekend getaway trip that will only cost you $250 total, but you need to have upwards of $750 in your bank account just so you have spending money on your vacation. Contrast that with a credit card. The car rental place will only charge you $40 when you return the car. No extra money taken out. No lost money for you.

Also, Ramsey hates bankruptcy (under pretty much any circumstance), so if you were a true follower of him, you wouldn't be on this site.

In case you misunderstand my distinction between debt and available credit, Ramsey thinks that you should never have a credit card. I think having a credit card that you pay in full every month is fine, in particular, when you're traveling. I am not encouraging anyone to go into debt (except to buy a house), merely saying that having a credit card is not a bad thing (in addition to being necessary to eventually buying a house.)

I agree with a lot of what Ramsey says about getting an emergency fund and avoiding debt. I just think his absolutes (in particular: never file BK, never get a credit card), are too extreme.

[jmac]

So many people use good credit to borrow money at almost nothing right now to invest money to make money, there is way more to credit then just having a huge credit card limit or using it and never being able to pay it off, the world revolves around credit and people and countries borrowing money.

[LadyInTheRed]

So many people use good credit to borrow money at almost nothing right now to invest money to make money,

That's how Dave Ramsey ended up in bankruptcy.

The problem with borrowoing money to make money is that there are things beyond your control that can go wrong. The bottom can fall out very quickly. The kind of investment you are talking about is risky. Taking a risk with borrowed money is asking for trouble.

I agree that there are good reasons to use credit cards. But, I think the only reason anybody should incur debt is to buy a car or home.

[TXskyblue]

That's how Dave Ramsey ended up in bankruptcy.

The problem with borrowoing money to make money is that there are things beyond your control that can go wrong. The bottom can fall out very quickly. The kind of investment you are talking about is risky. Taking a risk with borrowed money is asking for trouble.

I agree that there are good reasons to use credit cards. But, I think the only reason anybody should incur debt is to buy a car or home.

LitR, this is exactly why I am working to pay off my mortgage. I have friends who show me the math and say I should invest the money I am paying towards my house. It is true that the math supports an 8% return over paying off a 4% loan, but there are no guarantees in life and I do not want to gamble with my home.

[May2014]

Just bought a new washing machine, first big purchase using CASH. Feels good to buy it debt free, freaks me out because it's a large chunk of our meager savings. Time to rebuild!

[Drazil65]

May2014...good job on that...you will never regret paying cash and the more you do it the more you will save cuz it just feels so dang good!!!!

We are obsessed with having cash or savings somewhere (in savings acct, in a safe, in envelopes earmarked for something special, our safety deposit box, in our retirement accts at work, in our investments & CD's). We rent so we have a lot more "extra" cash without having to sink money into fixing things, a money pit situation or maintenance issues so that is huge for us. The more you save the more you want to save so keep at it as it just keeps getting better!!!!

[May2014]

Drazil, I am looking forward to the day I can buy a CD...just so I can be one of "those" people!

[AngelinaCat]

LitR, this is exactly why I am working to pay off my mortgage. I have friends who show me the math and say I should invest the money I am paying towards my house. It is true that the math supports an 8% return over paying off a 4% loan, but there are no guarantees in life and I do not want to gamble with my home.

There is nothing more satisfying and reassuring than having a peaceful mind. Follow your own instincts and ignore the so-called experts. They aren't living in your shoes.