Posted on 12/20/2011 4:55:57 AM PST by Kaslin
Dear Dave,
I’ve heard you say that people spend more with plastic than with cash. Exactly what does that mean?
Edmund
Dear Edmund,
There have been several studies done in recent years that show people spend less money when buying with cash as opposed to swiping a credit card. One study in particular conducted by MIT and published in Carnegie Mellon magazine, indicated through the use of Magnetic Resonance Imaging (MRI) that the pain centers of the brain are activated when you spend cash. Of course, it depends on the item in question and individual spending patterns as to exactly how much less is spent, but the average is between 12 and 18 percent.
Want some more information? When McDonald’s first began accepting credit cards they conducted a focus group study in their restaurants on credit card users versus cash users. At that time, the difference was about 42 percent, meaning that a person using cash bought 42 percent less in a fast food setting than someone paying for their meal with a credit card. On other, more expensive items, the percentage generally drops. But these studies and others have proven that people spend more when using credit cards instead of cold, hard cash.
See what I mean when I say you can’t beat the credit shark at his own game? Even if you’re one of the few who pays their credit card bills on time every month, you’re still throwing your money away!
—Dave
Dear Dave,
My dad cosigned on a car loan for me a few years ago before I began working your plan to get control of my money. I missed some payments back then, and it has affected our relationship. I’ve since paid off the car, but how do I make things right with my dad?
Stephanie
Dear Stephanie,
I know you’re hurting, but a lot of this is up to him. The truth is he’s partially to blame for being dumb enough to cosign in the first place. And if this was just a mistake you made when you were a kid, then he should be mature enough to realize that and recognize the progress you’re making now with your finances.
If you haven’t yet apologized for messing up, I think it’s something you should do very soon. Let him know how much you hate that it harmed your relationship, and tell him you’re following a program that will help you make sure nothing like that ever happens again.
Then, if he can’t accept that and move on, it’s all on him. I know that’s not what you wanted to hear, but sometimes time is the only thing that heals those kinds of wounds.
—Dave
“....you’re still throwing your money away!”
Well, not really. While you may buy more food at MacDonald’s using a credit card, you still do get more food in exchange for the greater outlay.
alright Dave-fans, I’ve got a question for you:
My friend co-signed on an apartment lease for her friend. At the time, it was explained that it was a one-year lease and, when it expired, he’d have to get a new one. She stated very clearly to her friend, in front of the apartment manager, that she’d not be co-signing a second time. The apartment manager told them both that it wouldn’t be a problem because he’d not need a co-signer after a year of making rent payments on time.
So two years go by. The friend stopped paying his rent. Ended up getting evicted. He did eventually pay back the rent money owed, but it’s showing up as a ‘ding’ on my friend’s credit report.
Her first argument was that she didn’t sign the second year’s lease. The apt manager said that they ‘just roll over’ the original lease and that her name always stays on it.
Her second argument is that she was NEVER notified about the late bill. If they did still consider her to be a co-signer, she’d have the right to pay the bill and prevent it from going to collections.
Has anybody else dealt with something like this and won?
First, she needed to carefully read the lease terms
If the lease was provided by the apartment leasing office then it was all slanted in their favor
to end a lease she probably had to notify the lessor in writing that she was not renewing, 30 days in advance
Unless they received notification she was terminating, it rolled into a month-by month lease or an automatic renewal if all terms remained the same
Second, all notices regarding the lease go to the address specified on the lease. If her address and phone number were not listed in the appropriate place, then they had no responsibility to send her notice
As for “stating anything very clearly”, ah, good luck with that, in real estate everything has to be in writing. Apartment managers come and go, good luck with trying to get a witness to a “verbal understanding”
Unless she gets an attorney who can show that the apartment leasing firm violated the terms of the lease that she signed, she has just paid “stupid tax” for underwriting a deadbeat “friend's” lease
She’s lucky it was just a ‘ding.’ Tell her to look on the bright side: the worse your credit is, the less likely you are to be the victim of identity theft. ;^)
I have a little bit of a problem with Dave’s answer to the woman whose father cosigned for her. I suspect that she never actually apologized for violating the father’s trust and, perhaps, damaging his reputation. Most likely, once she has done this, he will come around.
The co-signer is under no obligation to be held accountable. All contracts must have a date of beginning and a date of ending, and it mean just that, ENDED.
If it goes to court, your friend will win. How convenient that the apt manager said "they just roll it over", no notice to your friend and no opportunity for her to opt out???
I am a property manager, and have many roll overs, the lease is for one year ONLY, from then on it is simply a MONTH TO MONTH, tenants can move/break the lease anytime with only a 30 day notice after the first year.
Under extreme pressure from Mom, I leant my then teenage daughter about $120 bucks for Dave Mathews tickets at Foxboro for her and some friends, with the understanding that she would repay me when she collected from her friends. (I think they were about $30 a piece.)
You can bet I never saw the money, and she misplaced the tickets, though she eventually found them in time. She accused me of confiscating them (they were of no value to me) and it led to a lot rancor. Her attitude was such that I have never, ever, loaned her money again. If she needs something (she’s 28 and married with kids now) I’ll give it to her, but will NOT ever lend her a nickel. As Polonius warned, loan oft loses both itself and friend.
the worse your credit is, the less likely you are to be the victim of identity theft. ;^)
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
I once ‘bragged’ my credit was so bad that when someone stole my ID, it was returned with a letter of admonishment and $50.00 because the thief felt sorry for me.
Like saying in all my years I had never scored 100 until my last credit score.....<: <: <:
She is not your friend, she is your kid. Seriously? $120.00? If your daughter only cost you $120.00 that was not repaid, I'd say that you might be the luckiest Dad around. .
Darn, if my parents held a grudge for all the money I borrowed or cost them when I was a teenager, we would still not be on speaking terms.
Count your blessings, and let it go.
My kids are a different matter but with respect to friends and other family members, I have a strict policy of not lending them money. The old saying is true that when you lend money to friends, you lose both the money and the friend. It can be tough saying no but I’ve never lost a friend because I didn’t loan them money.
"That will be 21 dollars sir"
"Oh shit I only have a twenty....here use my credit card."
Of all the people I ever lent money to, only one ever paid me back. My brother (who never paid me back) with a wife and two kids hit a rough patch about twenty years ago and we “leant” them serious money and never worried about getting it back. I was surprised my wife agreed. We never really had any rancor with them, but we treated them well in other ways, we used to take them out to diner, when they couldn’t afford to eat out, that kind of thing. My wife liked his wife, which helped. It was a real sacrifice at the time, but I do not miss the money.
As to my daughter, we give her and her husband $750 dollars every December 1 for “Christmas” on top of whatever presents my wife buys. We also give them the same amount on June 30 for their anniversary to help with vacation. It wasn’t the $120 bucks, it was learning to keep your word and appreciate the (ever diminishing) value of a dollar.
Cost me $100 grand to put my kid through college.
120 bucks is a joke.
You’re doing her a favor. I wouldn’t want to owe someone like you money either...
It cost me about $40 grand to have her drop out of college and $20 Grand for a wedding that didn’t go off. The $120 wasn’t the issue, it was learning to keep your word and accept responsibility. I did not want to *lend* her the money, mainly because I *knew* she would never collect it from her friends.
You got me there - I am not into supporting my kids’ FRIENDS
I also object to dishonestly demanding gifts disguised as loans.
Yeah, that “loan” thing sets me off - I have this brother, see - I will lend him out to you...
Stupid twin of mine. Free to a good home. Useless, likes his belly scratched. Only been to jail ... er, a few times.
Really good at home defense, though. Sort of like a dog. A 240# dog.
Hey... I have a marketing idea...
OBTW, I will not pay a damn dime for my kids to get hitched. I will encourage them to do it the old-fashioned way - elope.
I will pay for the honymoon, however. “Here’s the keys to the cabin, kids - stay as long as you like! Don’t forget to empty out the poo bucket when you leave!”
Plumbing? Who needs Plumbing?
LOL.
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