Matt, I have a question about credit card use. My son is in his 20’s and would like to build credit. He is thinking of purchasing a motorcyle, he has the cash to pay for it outright, but was wondering about taking out a loan to purchase it and paying it off early or having an account set up with the money in it so it will automatically be taken out and paid for each month. Is this a good idea? Or should he purchase it with a a credit card and pay it off that way?? Which will help him build credit? and is this important? Thanks, Helen
Greg – Your experiment validates what lots of research has shown — people tend to spend less when they use cash. I’m not saying everyone should use credit cards. I’m just saying that if people are using a detailed budget that tells them how much they can spend in each category, using credit cards only for those budgeted amounts, and tracking their use of their cards as they go, cards can be used responsibly. But wise money management is not “one size fits all.” People should know their tendencies and set up systems that help them win. It sounds like you’ve found the right system for you.
I did a 30 day experiment which was to put the credit cards in a drawer to see what it would be like to go a month without using credit cards. Keep in mind, I felt I was using them responsibilby as I had never carried a balance in over 20 years.
To my surprise, I had over $300 left over in my food, clothing, and misc. budget items. I carried the experiment for another 30 days with similar results. I was able to reduce my budget by $300 per month simply by switching from credit cards to cash. Why? becuse psycologically we spend less when when our brain registers pain from parting with cash.
That $300 is worth 10x more than any credit card perks and is $300 I can use towards the kingdom .. which is a lot more than the percentage a faith base group would get from using a credit card.
I now use a cash for most things and a debit card for online purchases and car rentals. Yes, you can rent a car with a debit card.
Matt, I have a question about credit card use. My son is in his 20’s and would like to build credit. He is thinking of purchasing a motorcyle, he has the cash to pay for it outright, but was wondering about taking out a loan to purchase it and paying it off early or having an account set up with the money in it so it will automatically be taken out and paid for each month. Is this a good idea? Or should he purchase it with a a credit card and pay it off that way?? Which will help him build credit? and is this important? Thanks, Helen
Greg – Your experiment validates what lots of research has shown — people tend to spend less when they use cash. I’m not saying everyone should use credit cards. I’m just saying that if people are using a detailed budget that tells them how much they can spend in each category, using credit cards only for those budgeted amounts, and tracking their use of their cards as they go, cards can be used responsibly. But wise money management is not “one size fits all.” People should know their tendencies and set up systems that help them win. It sounds like you’ve found the right system for you.
I did a 30 day experiment which was to put the credit cards in a drawer to see what it would be like to go a month without using credit cards. Keep in mind, I felt I was using them responsibilby as I had never carried a balance in over 20 years.
To my surprise, I had over $300 left over in my food, clothing, and misc. budget items. I carried the experiment for another 30 days with similar results. I was able to reduce my budget by $300 per month simply by switching from credit cards to cash. Why? becuse psycologically we spend less when when our brain registers pain from parting with cash.
That $300 is worth 10x more than any credit card perks and is $300 I can use towards the kingdom .. which is a lot more than the percentage a faith base group would get from using a credit card.
I now use a cash for most things and a debit card for online purchases and car rentals. Yes, you can rent a car with a debit card.