Dave Say You're Looking for Trouble

Townhall.com ^ | March 28, 2012 | Dave Ramsey

[Kaslin]

Dear Dave,

I want to keep one of our credit cards open and use the bill-pay option for utilities and other monthly bills. I want to do this so we can continue earning rewards points, and the way I look at it, we’d just be re-routing the money and paying it off every month. My husband doesn’t like this idea and thinks we should get rid of them all. Am I just asking for trouble by wanting to keep the rewards card open?

Cheryl

Dear Cheryl,

Yes, you are. Life never works out exactly the way you think it will. You can make all the well-reasoned and best-intentioned plans you want, but sooner or later that snake is going to bite you.

The only thing I’d consider in a situation like this is a debit card that has a rewards system attached. Lots of debit card programs offer the same kinds of rewards programs offered by credit card companies, with one big exception—you don’t have to go into debt!

You need to stop chasing these stupid brownie points, Cheryl. According to Consumer Reports, 78 percent of credit card airline miles are never redeemed. Studies also show that people spend more when using credit cards as opposed to cash. That extra money you spend on things you don’t need is money you could have been saving and investing. So, where’s the reward?

Cut up the card and close the account, Cheryl. You don’t build wealth by using credit cards!

—Dave

Dear Dave,

My wife and I are both active duty Marines. She’s planning to get out in a few months, but I’m staying in for the long haul. You recommend saving 15 percent for retirement, but how does that apply in my case when I’ll be getting a good pension after 20 years?

James

Dear James,

I’d like to see you do both. Just imagine the money you guys would have for retirement with your military pension and a big pile of cash from having saved 15 percent of your income over the years.

Having options is a great thing. Think about all the things you could do down the road if you save for retirement and have your pension in place. You could pay cash for a home, or even open a business when you retire from the military. And these are things you probably wouldn’t be able to do working with just your service pension.

You’ve got a great future if you’ll just keep plugging along and saving, James. Let the military do its thing, and you guys keep pumping 15 percent of your income into Roth IRAs and other pre-tax retirement plans. It’s going to be pretty cool!

— Dave

[Attention Surplus Disorder]

I don’t like debit cards. The protections they offer are roughly equal to credit cards, but should a thief take big wad of money out of your account or if you suffer a fraud of some kind, even if you report it timely, that money is gone from your spending capacity while the dispute is open. A credit card, you can dispute the charge and until the dispute is resolved, you are not charged interest nor is your spending limit reduced by the disputed amount. Banks LOVE debit cards for this reason.

I’ve converted all my debit cards to “ATM only” cards and I have a few credit cards which I pay off monthly.

If you doubt my tale about debit cards vs ATM-only cards, go try changing a debit card to an ATM-only card. The gal at my bank begged me for half an hour not to do so before she relented. The protections are not the same. Fraudulently-obtained money comes out of YOUR hide first with a debit card.

[Rightly Biased]

Risk is risk

little or otherwise.

I didn’t say how much risk all I said is there is risk.

I for one don’t have a credit card and NEVER HAVE had one.

I’ve been able to travel the world rent cars and buy what ever I wanted.

and I don’t line the pockets of MC Visa or Discover.

[Altariel]

Dave Say You’re Looking for Trouble?

;-)

Think you meant, Dave Says You’re Looking for Trouble. :-)

Seriously, thanks for posting.

[Kaslin]

I'm not the editor