Funny, I was having this discussion with the boys at the bar on Monday. I pay cash for everything except gasoline and online purchases. I hate prepay gasoline and spend enough regularly that the little discounts adds up, so I find that card useful. Otherwise, I am a firm believer in using greenbacks and keeping debts to zero unless they are interest free time paybacks.

I maintain a running organized annual budget, so I can tell you in a second where my money is spent in annual terms. I don't have to study credit card records. If one is financially responsible probably either method works, however, for millions of American's credit cards do not work.

I just found out two weeks ago that my son's family is one of them. He and his wife have managed to run up a year's annual salary in credit card debt! And the only reason I know this is my digging into his situation when he wanted advise on pulling money out of his 401k. I can't tell you how disappointed and angry I was to learn this.

 

^I agree Dave. You have to be responsible and stay away from impulse buying. Never pay interest on a credit card. It took some time, but now I have finally gotten through to my daughter. She never had large debt, but she would sometimes take 3 or 4 months to pay off her bill. She now pays them off every month.

 

[QUOTE=Jet sitter,Jan 6 2010, 06:05 AM] I'm like conedodger, I use credit cards most of the time and pay in full each month.

 

I use my debit card for gas. Tempted to get one of those gas company cards that provide a discount. Not sure I spend enough on gas to make it worth it. I only drive maybe 9k miles a year or so.

 

^^ I have over $200 in cashback bonuses for gas on my Discover which I haven't yet collected. I'm waiting for it to get bigger. For the next few months the bonuses rack up on groceries. I always register for the bonuses, but only kept up with the $$ amount in the past few months. +1 tells me which card to use for what items. I rack up a lot of points with AmEx that I use for gifts at Christmas or birthdays. It is the only card I use with any regularity and it gets paid off monthly. I have two Visas, one of which is dedicated for only Amazon purchases and I get some freebies with that one. I do not carry that card and keep it locked up. It is used solely for Amazon. The other Visa is the family card that we use for travel, etc. when we need it (motels, hotels, etc.) I only carry two cards and keep the rest of them in a safe.

 

Sorry to hear this, Dave. Not uncommon with the younger crowd.

There are a lot of folks in credit card hell who simply overspend every month, it's easy to spend with plastic. It's hard to change some of those habits when the reality of the debt surfaces.

In this economy, there are many folks out there without a safety net and an unexpected expense such as a major car repair can set them back. Something else comes up and the credit card starts accumulating a balance. Through no fault of their own, some are living paycheck to paycheck or barely scraping by on unemployment. It's easier to justify use of the credit card at times, where perhaps they would not have done so before. Some tough choices for some people.

I'm with you on the mostly cash purchases. If the purchase/expense is not coming out of the wallet or checking account, one might think twice before deciding if you absolutely NEED something.

 

Being that we are on the move a lot, a credit card is a major convenience. I do like the CC rewards and the free airplane tiickets. I am aware of the vulnerabilities, but going back to mostly cash would be a hassle. I try to be careful away from home, where the exposure is meals, motels/hotels/ and fuel. I generally only use chain truckstop pumps for fueling, when we are out of the home area. Then there is internet shopping.
I would be content to purchase a universal cash card at the beginning of each month for all our anticipated monthly requirements, rather than hauling cash around. That would limit risks to what's on the card. Kind of like a telephone calling card. However, the universal access is not there. That awaits the next billionaire - listening Maury?
My best friend who died last Spring, spent his entire adult life on a cash basis only and made it work for him. His only contact with anything remotely resembling banks, investment funds, credit/debit cards, or financial life as we know it was ONE solitary checking account. But then, he did not believe in money either.

 

[QUOTE=Kyras,Jan 6 2010, 07:40 AM] Me too, but my Costco American Express only pays up to 3% cash back on gasoline, and less on everything else.

 

^^ I'm with you Dave on that family matter. I gave each of my kids a credit card - with me backing the 1000 dollar limit - when they reached age 18. I wanted them to get into good habits and to be able to then qualify for their own CCs. They made it work. I don't inquire into their finances, though they all ask me for advice now and then. Even though they are all near 40 years old, I still to this day remind them about CC discipline and how disappointed I would be if they strayed. They all laugh at me every time, especially when they are together. Then, I remind them that "disappointment is anger for whimps."

 

Thanks for the link, Val. I might just start keeping more cash around.