Giving up credit cards, returning to cashSubscribe
Just read this article in the NYTimes: Economy Fitful, Americans Start to Pay as they Go. The URL is:
http://www.nytimes.com/2008/02/05/business/05spend .html?em&ex=1202360400&en=88ddcd6543c43e40&ei=5087 %0A
Do you relate? I certainly do - my husband and I have pretty much given up using our cards. It's just too easy to exceed our budget each month otherwise. Anyone else read this article? Do you also see yourself as part of a national trend?
I have given over my credit cards to my husband. Yes, I felt like I was participating in an episode straight out of " I Love Lucy," but it has really made the difference. If there is a real emergency, I do have my ATM and can charge it, then we move money around. But while we are paying off SICK amounts of debt, this is our severe, but needed course of action.
I still feel like Lucille Ball.Flag as inappropriate Posted by on Tuesday
We have completely stopped using our credit cards. If we don't have cash to pay for it, we'll have to budget for it and just not get it. It makes me sick to pay the credit card bill every month when we can't even remember what we bought. The instant gratification was nice but that feeling is completely gone when the bill comes.
I know giving up credit cards helps with the budget, but we pay ours off in full each month (knock on wood) and so, even though we're paying of huge non-credit-card debts, the perks from using the card work for us. For example, everything -- gas, household expenses, groceries, reoccuring charges like the cell phone bill, daycare fees -- goes on this one card that gives us frequent flyer miles, which we then use regularly to visit family, which saves us a bundle in the long run... though I do have a heart attack when I open that particular bill each month. OMG. Daycare fees.
I can't give the cards to my husband. He gave his cards to me to try to limit his spending!
LOL, Lylah, I'd have to take away DH's too because he's the shopper in this family.
We've tried it both ways and, in the end, paying them off each month works for us. I used to use a frequent flier card, too, but the fees where outrageous after a while and I couldn't get them to drop them so I changed cards. Yeah, the Target card? Not so good! I kept getting those 10% off coupons then going and spending even more at Target. That was so wrong! Now I'm down to the LL Bean card for several reasons. We do get credit toward Bean purchases, which is always good, but there aren't a ton of things I need from there on a regular basis so no reason to spend the coupons. Plus I get free shipping all year and free monogramming. This gal can't pass up monogramming!
I must say, though, if I can just pay for it outright with cash or debit then I prefer to do that but it doesn't always work that way since we've got several bank accounts and I'm not always sure what is where. So out comes the card and I pay it off when the bill comes in.
I've always been scared to death of credit cards. My mom raised 2 kids on her own. Right after her and my dad got divorced, her credit was in shambles, and it was because of all the credit cards they had together. I just got my first credit card last year and it was an old navy card. I think I use it once every 2-3 months just to catch up with kiddo's growth spurts (old navy is the BEST place for little boy clothes by the way). Other than that we use our checking/ATM card and if we don't have the money in the account, we just go without.
I talk about this issue a lot on my personal finance blog ( http://timetobudget.com ). Using cash for daily purchases can keep you from overspending if you have a good budget in place. I recently wrote about how I use the cash envelope system on my blog. The Cash Envelope System.
My husband and I have not used credit cards for 2 years and it's amazing how you can make your money stretch when you don't have the option of using credit cards for "emergencies". I encourage everyone to get rid of the credit cards because they will only hold you back. Anyway, that's my two cents
It's amazing how much you realize that you can do without when you stop using credit cards. Cards make it so easy to buy.Flag as inappropriate Posted by on Wednesday
I've been thinking about this since the link was posted. Both my husband and I have a cc that is used for almost everything: groceries, clothes, etc. We never carry a balance. Bills are paid electronically through the checking account and we each get a monthly infusion of cash for personal expenses: lunches out, entertainment, lattes, etc.
And while I'm sure that using a cc does encourage us to spend more, I'm not sure how that's different from using a debit card, or even checks. Yes, the debit/check comes out of your account right away, but if you're flush, you're not going to give it much thought. If you have to watch every penny, you'll be doing it with a cc as well. Cash definitely has that when it's gone, it's gone effect, but but the logistics of the envelope system as applied to our life and spending patterns escapes me.
And the cc is just soooooo easy! Esp with a preschooler in tow. Although, as the CFO of a household with 3 cc, checking, savings, and various retirement accounts, I could use a little simplification on the record keeping end.
Definitely something to think about.