@@justinacase2623 dave is literally two times older than graham…in 30 more years when graham is daves age, im sure his net worth is gonna way way more than daves today and hes gonna be debt free by then
The credit card vs cash argument has always felt opposite for me. When I pay cash it doesn't leave my bank account but when I look at my statement and see that money was taken out.... that's what hurts me.
same for too. I think this is because my spending money is in my account. but what he's talking about is if you follow his plan your spending money for that week or month would be in cash
Oh man the credit card company that gives me 5% cash back just tricked me into buying gas for my car so I can get to work! No wonder they have nicer buildings than me. Darn it
Oh man, if only you had actual money instead of borrowing it from a corporation that charges you for doing so. No wonder they have nicer buildings than you. Here's your sign.
Listen, I get it, you like to use borrowed money to pay for an item/service that at the end of the month you will have to use your own money to pay for anyhow. You like to walk in circles, but for me I like to walk in a straight line and use my own money to pay for the item/service in the first place and be done with it. Simple and efficient. Have a great day.
WolfWood they are good for consolidating bills though. If you have a water bill at the start of the month, and electricity at the end, some other bills in the middle.. then a cc gives you one amount to pay at the end of the period.
Dave's logic is faulty. "You know how much you get back for $100k of expenditures? $1k. That's not wealth building" Of course it isn't, but it's $1k more purchasing ability than if you simply stuck with a debit card. Nobody is claiming to be able to get rich off of credit card awards, dude.
jhbigler it’s $1,000 more dollars you can throw into the stock market each year! And 1% isn’t even that good! There are cards with way more cash back that are free to use.
You're absolutely right. The question was about optimizing ordinary spend, not using a credit card as a wealth building tool. Gabe clearly understood the difference, yet Dave chose to conflate the two just so he could yell about credit cards. Granted, that's a key component of Dave's system, and given his average caller is up to their eyeballs in debt, it makes sense to tell that person to avoid credit cards. It's also very disingenuous of Dave to say that none of the millionaires surveyed cite credit cards as a wealth building tool, because they too would recognize the difference between optimizing ordinary spend and building wealth. A cash back card avoids the "cash tax" incurred by customers paying with cash as merchants inflate prices to cover the processing fees assessed by the credit card companies. A cash customer covers the cost him/herself whereas a customer paying with a credit card has the bank cover those costs and often times comes out ahead. I'm sure millionaires would liken using a cash back card to using a coupon - and we all know how much Dave likes to point out how many millionaires use coupons and the frequency with which they use them.
@@thehedgerow if you pay back the card on time, then there is no interest, so yes it's free money as long as you are using the card to pay for things you would have bought anyways, like food and bills. CC companies offset this by taking advantage of the people who are bad with credit card. They offer these perks knowing that for some people it will lose them money, but a majority of people will make them so much more
The reason he’s never met any millionaires who have said “Hey, I’ve made all my money with airline miles,” is because NO ONE IS SAYING THAT. Even people who can aggressively take advantage of those 5% or 6% categories aren’t building wealth that way. The points and cash back are the icing on the cake to money you’re already spending anyway, nothing more. I could stay warm for the next 17 years by fueling a fire with a straw man that big.
Yep. Gabe asked about credit cards to optimize ordinary spend and Dave distorted it into him asking if they are a good wealth building tool. Not sure how you can conflate the two. Well, willfully is how you conflate the two. Dave is always so quick to say that none of the millionaires surveyed cite credit cards as a wealth building tool, even though that is in no way indicative of whether they use them. I also find it interesting that Dave is so quick to point out how many millionaires use coupons and the frequency with which they use them. I bet if asked, those same millionaires wouldn't cite coupons as a wealth building tool either. Rather they would say coupons are a way of optimizing their ordinary spend.
@@khadijahjones2460 some people do. I dont. I just buy groceries and pay my water bill and internet bill with mine. No i dont take extra long showers or buy more food because its a credit card. In my head it money. I budget myself. I restrict my water use and buy the food i need to live. Thats just me though.
The problem is the credit is a huge deal in the United States. If you have poor or no credit you essential pay more for property, goods, and services that you need.
Exactly. Having a poor credit score will make life harder. Dave should advise people just to have one credit card with a low limit so people can't go mad with it. When the company tries to up your limit you phone them and refuse. By having a low limit you still get all the benefits of a good score.
I'm weird. I feel like I'm getting away with something when I use cash and throw away the receipt. No one will know I spent a whole $12 on M&Ms or a pair of shoes I may never wear. Heck, I'll even forget about it in a couple days. Debit card keeps a record of my financial wrongs. Credit card even more so because it's like paying for everything twice, once at the store, second though mobile banking. It's not more friction, but it is more guilt.
Brian Waller, You're making a completely separate argument that Ramsey doesn't make. He's talking about the lack of "friction" that occurs when you use plastic. What he means is that it feels more painful to part with cash than to swipe a card. So he's arguing that credit cards cause you to spend more than you normally would. That logic applies equally to debit cards, but he contradicts himself by encouraging debit card use.
Except, as has been documented, you don't tend to overspend as much with a debit card as with a credit card. So however similar credit cards and debit cards are in terms of friction, the studies show that debit cards are a better option. Ultimately, Dave is a pragmatist. Living a cash-only life for most people is impractical, at best. It's the same reason why he rails against the evils of debt, while basically being okay with borrowing to buy a house. It's not that he thinks mortgages are good wealth-building tools. He just realizes that, given what it costs to own a home, for lots of people, taking out a mortgage is likely the only way they'll ever be able to own their own home.
NOPE! Debit cards will allow you to overspend and then charge you an overdraft fee. With a debit card you get the item and you get the card back, just like a credit card
But that doesn't cancel out Dave's point. Studies HAVE shown that people ARE absolutely more conscious and careful of how much they are spending when physical paper CASH is leaving their hand verses swiping a plastic card. That's the most important point.
Lisa Muryn You guys just don’t get it. Dave has traveled the world and has met and spoken with billions and trillions of zillionaires. And guess what? None of those billionaires made their millions by relying on credit card rewards and airline miles. Ditch the credit cards and start your path to becoming a billionaire like the rest of us.
Dave often deflects with the claim that no millionaires made their money through credit card points. Nobody is making that argument. I’m sure plenty millionaires enjoy credit card perks and are interested in keeping their credit score high while being responsible with their lines of credit.
Yeah that's the part I do not understand either. If you are going to be traveling regardless and are able to stack rewards to reduce the cost of traveling (while not spending more than you normally would) why would that be a bad thing? Isn't part of being wealthy saving money and being frugal? Certain credit cards can save you hundreds to over a thousand dollars in value. The key is not to go over your means, but his show is always tailored to the least financially responsible I suppose. Also, why is he always so defensive when people ask him genuine questions that don't align with his values? He always makes it seem like "between the lines" they are calling him an idiot... when in reality they are just actually curious for his input. He's too offended sometimes.
Eric Panos While we keep that mindset of not going over our means, I feel that subconsciously, maybe even a little, we give in to that credit card and spend just a little more. The reason I believe Dave is only so against credit cards is due to the audience he has watching, people obviously trying to get out of debt. He has to put on a debt free mind to the viewer, with the exception of a home loan.
Yeah, my father-in-law is an actual millionaire who uses a credit card for almost everything and pays it off every month. I don't think he's ever claimed that using the credit card is what made him a millionaire. I have one credit card and I use pretty much exclusively for internet purchases. I really don't like using debit card over the internet since it's directly tied to a checking account. At least with the credit card I could dispute a fraudulent purchase and it wouldn't affect my bank account any.
The whole “cash triggers pain” thing is for old people accustomed to using cash. I didn’t grow up using cash so using plastic is the same thing for me. My pain censor is not my form of payment but rather the price or bill of the product or service.
Sounds like you've never used cash. Try it. Put your credit card(s) away for a month. Withdraw cash from your bank and only use that cash when you buy things. If you run out, go back to the bank and withdraw more cash. At the end of the month, reflect on what you did and whether it changed your mindset about spending.
Leland Johnson appreciate the advice but to me that’s like saying don’t use your smartphone for a month use your 10 year old flip phone and see how it feels. Plastic is extremely convenient, don’t waste time with banks, deal with dirty change and coins, quicker form of payment, etc. is cash supposed to make me eat half my lunch portion and fill up half my gas? I think it might help wild spenders but not people with routines who know what they spend going in.
@@user-vq6bl3ic5j I agree with you, I tried using cash and I noticed that I'M SPENDING MORE and I am less in control. I think that people forget the basic principle is that you do not spend more than you earn. It should matter less how it done.
Maybe ccs aren’t good for the folks that call into your show most of the time Dave but for the responsible adult credits are a massive tool useful for all sorts of things
I have a cash-back card, but I'm not using it to "create wealth". I use it for autopay on many of my monthly bills. Electric, phone, etc. gets paid this way. I then use the cash-back to pay towards the CC bill. It's a way for me to squeeze a bit more out of my money. I get what DR is saying, but he's awfully rude and judgmental when discussing this topic.
You're absolutely right. And if you'll notice, Gabe didn't ask about building wealth with a credit card, he asked about optimizing ordinary spend as you describe. I'm a big fan of Dave, but he definitely answered a question that wasn't asked on this occasion.
Ask any bankruptcy attorney about his clients. They think the same thing, it worked till it didn't. They all had a plan to pay it back. Being debt free, not trying to game 2%, will make you wealthy.
While I respect Dave's opinion, I find it hard to believe that any person who isn't already up to their eyeballs in debt has ever said they would get rich because of rewards.
YellowBrickExpat Using a credit card is the same as getting a discount pretty much. I know plenty of millionaires that take discounts all the time which is the entire point. Dave is bit hypocritical with this topic since a debit card is plastic as well.
@@blahhblah6635 he's not hypocritical. a credit card is debt, a debit card is not. Dave is 1000% anti debt. for more clarity watch his clip "how cash changes the way you look at money"
why you get rich when you use cash. Walking to a store, looking at a pair of shoes reg $99, now $49.99. Credit card spenders grab them quick thinking they scored big time; 50% off plus 5% cash back. Cash spenders look and think "should I buy them? I have $200 cash now, but I need $100 for my groceries tomorrow, my car oil change $50, fill my gas $40; my bank account's reserved for my mortgage and car payments only. Well, my shoes are still good," and walks out.
I don’t agree with Dave’s blanket generalization regarding credit cards. I only buy what I need, stick to my budget, pay it off every month and use the cash back for vacation
Well, he's an over generalization-ist. If you speak as much as Dave, and over generalize, eventually you wont be able to tie all of the loose strings together.
The thing I find funny is that they want people to drive beater cars and have emergency accounts. Well, I do have an emergency account. I also have a beater car. When I was a bit younger, my credit card was used to keep my older cars on the road. Sometimes, it's nice to have that extra purchasing power when a car repair costs $1,000+ and you're afraid to take that much out of the bank and choose to pay a third at a time.
I get 6% back at the grocery store and 3% back at the gas station, essentials I'm already buying. It's the exact same items each time regardless of payment type. Zero debt btw Dave!
Michael Stack Every time you pay with a credit card you are incurring debt because you are using money that is being credited to you. As soon as you pay that off, your debt is gone. The point is that technically, every purchase with a credit card is creating debt. You just reset that debt counter every time you pay the card off.
AMERICAN PATRIOT My wife and I do the same thing. It’s still debt until it’s payed off, tho. That’s all I’m arguing. And well done managing that! The vast majority of people don’t have the self control to do that. You really have to train your brain to think of your credit card as a debt card or else you’ll fail to pay it off each month and it *could* get out of control.
I disagree here. I have to have a credit card because my employer requires I have one. All my business expenses I use it for get reimbursed. I get a statement each month with all the expenses and I submit to my work, you don't get a statement with cash. In the ten years I've had this credit card, I've never once spent it on personal items for myself. Self control is the issue here, not credit cards.
This is not the same thing. You are not responsible for paying that credit card back. The owner is. As a good employee, you are required to only put necessary business expenses on the card. You get fired if you went crazy on it.
So you are fronting money for a company you work for, but do not have ownership in? You do understand that if they fold you are on the hook for those charges.i would have a chat with the boss. Scary situation to be in.
@eatpigsnot I understand that, but Dave expressly said that is the physicality of cash that makes the transaction painful. Thus, a debit card would be the same because it is plastic.
Dave's logic is sound. From his perspective, if you're trying to help people get out of debt, you can't give them ANY wiggle room to come up with excuses as to why they can still have a credit card. If they're already in debt, its indicative of not being able to handle credit cards. So he can't say, "Well, if you're careful...." because they won't be and people will blow it. As for the people who ARE careful with their credit cards and debt, they have to understand that they're in the minority. Only 1/3 of people pay off their credit cards every month. And on average, Americans have $5,000 in credit card debt each. It can be a dangerous game. Someone could be responsible for years, and then suddenly, an "emergency" comes up and it can't be paid off in full.
1:20 I took the 5% cashback I was earning on a credit card, instead of using a debit card for stuff I would’ve purchased anyways. (Phone, utiIities, insurance policies) I always pay my balance in full every month. I earned $1000 in cash back and invested it into my Roth IRA. Is that not a good use of a cashback program?
No, it isn't. You're playing into the credit card companies' games, and all kinds of academic studies show that you spend more chasing those points & rewards than if you used cash.
@@TheRamseyShow All these "studies" you talk about, no one can find. They appear to be figments of your imagination. How about if you only used Credit Cards to pay for mandatory bills such as cell service, car payment, rent, etc. where there was no opportunity to overspend? Why in the world would it not make sense to use a credit card?
Dave says cut up all credit cards and don't worry about your credit score, but I still want to have good credit for many reasons. At the same time I agree that having a credit card around could make me spend more even if I pay the bill in full each month. To remedy this, I'm going to attach some of my fixed bills to the credit card and then cut up the card so it can't be used for anything else. then continue to make sure it's paid in full each month.
IMO, actually cutting up the physical card is an OK idea if you carry cash or debit. It certainly eliminates impulse buying except for online temptations like Amazon, Ebay, or streaming services. Mostly VISA spending doesn't use the physical card but is just for EFTs from the utilities/vendors that themselves initiate from the VISA account. I won't cut my card up but can take a picture of it, then put it in my safety deposit box. Wait! What about the gaspump, groceries, or emergencies? I had to buy a used tire from a junk yard in a pinch last month with VISA. Maybe place it somewhere it is inconvenient, but possible to get to like a locked glove box? You know, there are unforseen flaws in every plan.
1. Who, even in their squirrel-crossing-rush-hour-traffic-mind, would make an argument that rewards points make you rich? Who in the heck would even correlate the two?? 2. While you have to advocate against them, seeiny as how many of your viewers/listeners have self control issues, you can't lump everyone into the category that we'll spend more out of the budget. That's a heck of an assumption. Many many will only use it for items that already have cash for. In other words, if they can't *immediately* transfer the balance for the purchase, then they don't purchase it. 3. Obviously the points aren't a lot, but last time I checked, I have to pay my electric bill, cell phone, food, insurance, work expenses. Why not do it in a way that gives a little extra perk. Just because the amount is small doesn't mean it has no value. You'd still pick up $10 of the ground despite it only being $10.
1. Some people like to brag about paying off their credit cards at the end of every month, and getting CASH BACK. These people claim that they are really ripping off those clueless banks, but they also tend to have a *lot* of credit cards. Dave is pointing out that rewards points are not a way to get ahead. 2. You say that "many of (his) viewers/listeners have self control issues." Ponder this for a moment. Does the *moral* problem lie with the people who get into debt, or with the predatory banks that purposefully market debt to people who cannot handle it? 3. If you *only* use your credit card to pay utility bills, then maybe the math is *slightly* in your favor. Not knowing you personally, just taking the average case, it's likely that you use the card for discretionary purchases as well, where you spend more with plastic than you would with cash, wiping out the small advantage from your utility bills.
Leland Johnson 1. Actually, I always say if you can't immediately pay off your balance right after the purchase, then you have no business using them (work expenses aside). End of the month is ridiculous, you should be able to pay it off right now (unless your bank makes you want until the transaction finished processing) Rewards points aren't a way to get ahead - the sky is blue. 2. Both. 3. Yes, I'm not the average case. I use it for other items, but only for things I've already budgeted or saved up for. So, when we went on vacation, I used the CC, but already had the money in the vacation fund. When we bought the car on CC, we had the 10K in the newer car fund. When said car, needed new tires, the CC was used, but that money was sitting in the vehicle maintenance/repair fund. Do we buy extra because if it, no. Do most people - absolutely. If we don't have the money in checking account or one of the savings funds, we don't use the the CC. Here's how my wife and I operate 1. Main checking account 2. My blow money checking account $50 monthly 3. Wife's blow money checking $50 monthly 4. Baby's day care checking 5. Emergency savings - 20k cap 6. Vehicle maintenance savings - 2k cap 7. General family savings - 3k cap 8. Daughter's general savings to invest account - 3rd party account needs $100 for each deposit 9. Daughter's education saving to 529 - 3rd party account needs $100 for each deposit 10. Newer car savings - (cap still in discussion) 11. House savings - 80k goal for the next two years for down pmt, halfway there 12. Fun savings - 1k cap 13. Vacation savings - 10k cap 14. Wife's master's degree savings - ?????
roxcyn Yes, for things you *want* in excess, but don't *need* that only involves you individually. We can put our wants in the budget, but within reason. If it's excessive, then blow money. Assuming you're debt free.
@@lelandjohnson1812 1. People who truly understand how to optimize ordinary spend with credit cards don't think they are getting "cash back", rather they see it as avoiding what I like to call the "cash tax". Since so many people pay with plastic these days, and all those companies charge processing fees per transaction to the merchant in order to allow customers to swipe their piece of plastic in that particular store, prices are inflated by the merchant to help cover those processing fees. Using a cash back card makes it so the bank, not the customer, is covering the processing, thereby enabling the customer paying with a credit card to avoid the cash tax. Conversely, people who pay with cash/debit (assuming the debit card doesn't have rewards) cover the cash tax themselves. 2. The whole morality issue you raise has absolutely nothing to do with one's ability to manage a credit card correctly. 3. The math is always in your favor if you never carry a balance and only use the card for ordinary spend (see #1).
Yes, because a credit card is forcing you to spend more. Sounds more like a lack of self discipline if you're spending more than you can afford. No one is trying to get rich by using credit cards. I never use cash because if I get robbed, that money is gone for good. If a card gets stolen, the bank doesn't fault me.
"Cigarettes don't kill everyone that smokes them, but the are good for no one that smokes them." Doesn't apply to credit cards. When I use mine in conjunction with a strict budget so I can pay them off every month the rewards basically amount to a 1-2% pay raise for me, free, in exchange for nothing other than spending the money I was going to have to anyway and then paying it off.
I was the same way. Great with my budget. But life happens and with not enough emergency fund I've had to pay interest for a couple months. Paying interest sucks!!
Ramsey just quoted a statistic that shows people spend 12%-18% MORE when using a credit card. That wipes out your “5% savings”. You honestly think that credit cards companies lose money when they give back 5%? Like Gabe, you think you’re above the “permeative” teachings of Dave Ramsey. Hope your little financial plan works well for you 😘
@@nathanaelsmith1368 ok so there are multiple things wrong with what you just said. Let me break it down for you: “Ramsey just quoted a statistic that shows people spend 12%-18% MORE when using a credit card.” - What you are forgetting here is that you don’t have to be a statistic. You can willingly choose to be an exception and spend money on things that you would only be willing to spend cash on. The reason people spend more money on credit cards instead of cash is because credit cards are designed to prey on people who are irresponsible with money and have little to no financial literacy. So yeah, I do save 5% on my purchases because I mainly only buy essentials like gas and groceries that I would otherwise pay cash for. Any non-essential item I buy, I only purchase if I would pay cash for it after waiting at least 1 month to consider whether or not I still want it and I have a hard budget for non-essentials of 10% of my income a year that rolls over into the next year if unused. “You honestly think that credit card companies lose money when they give back 5%?” - From me, yes, they do. Overall however, they don’t lose money because they gouge interest from all the people who don’t pay off their balance in full each month and give me back a little from what they make off the people who are bad with credit cards. Dave Ramsey may know how to get people out of debt, but he bases all his strategies off “statistics”. He provides fail-safe strategies anyone with an IQ above 85 can follow to get out of debt by avoiding it at all cost but it is not an optimal one. Additionally, sometimes it makes more sense to take loans than pay outright in cash. For example I had the option to buy my car outright in cash or finance it. The finance rate on my car was 0.9% over a 4 year period. I chose to finance it because instead of giving that money to the dealership right away, I could put it in a savings account with a 5% APY and have more money at the end of that 4 year period than I would had I just given it all to the dealership right away. How did I get that amazing finance rate? HAVING AN EXCELLENT CREDIT SCORE!!! Get a credit card and pay it in full each month if you want to build wealth. Not to mention, the S&P 500 has a 10% APY on average so any long-term loan you can get instead of purchasing something outright that has an interest rate of less than 10%, you should get and invest the cash into something reliable and with an average greater annual yield than the loan rate. I make $75K a year and last year alone, I was able to save over half that, so yes, my “little financial plan” is working amazingly for me. Perhaps you should watch some channels on how to optimize your use of a credit card instead of Dave Ramsey. Knowing how to use a credit card is like knowing how to lift weights at the gym. If you know what you are doing, you benefit from it, if you don’t, you get hurt. It’s that simple.
@@nathanaelsmith1368 ok so there are multiple things wrong with what you just said. Let me break it down for you: “Ramsey just quoted a statistic that shows people spend 12%-18% MORE when using a credit card.” - What you are forgetting here is that you don’t have to be a statistic. You can willingly choose to be an exception and spend money on things that you would only be willing to spend cash on. The reason people spend more money on credit cards instead of cash is because credit cards are designed to prey on people who are irresponsible with money and have little to no financial literacy. So yeah, I do save 5% on my purchases because I mainly only buy essentials like gas and groceries that I would otherwise pay cash for. Any non-essential item I buy, I only purchase if I would pay cash for it after waiting at least 1 month to consider whether or not I still want it and I have a hard budget for non-essentials of 10% of my income a year that rolls over into the next year if unused. “You honestly think that credit card companies lose money when they give back 5%?” - From me, yes, they do. Overall however, they don’t lose money because they gouge interest from all the people who don’t pay off their balance in full each month and give me back a little from what they make off the people who are bad with credit cards. Dave Ramsey may know how to get people out of debt, but he bases all his strategies off “statistics”. He provides fail-safe strategies anyone can follow to get out of debt by avoiding it at all cost but it is not an optimal one. Additionally, sometimes it makes more sense to take loans than pay outright in cash. For example I had the option to buy my car outright in cash or finance it. The finance rate on my car was 0.9% over a 4 year period. I chose to finance it because instead of giving that money to the dealership right away, I could put it in a savings account with a 5% APY and have more money at the end of that 4 year period than I would had I just given it all to the dealership right away. How did I get that amazing finance rate? HAVING AN EXCELLENT CREDIT SCORE!!! Get a credit card and pay it in full each month if you want to build wealth. Not to mention, the S&P 500 has a 10% APY on average so any long-term loan you can get instead of purchasing something outright that has an interest rate of less than 10%, you should get and invest the cash into something reliable and with an average greater annual yield than the loan rate. I make $75K a year and last year alone, I was able to save over half that, so yes, my “little financial plan” is working amazingly for me. Perhaps you should watch some channels on how to optimize your use of a credit card instead of Dave Ramsey. Knowing how to use a credit card is like knowing how to lift weights at the gym. If you know what you are doing, you benefit from it, if you don’t, you get hurt. It’s that simple.
@@nathanaelsmith1368 I spent about an hour writing a detailed comment completely obliterating your argument but your cult leader Dave Ramsey shadow-deleted it. Just know that you are entirely wrong and I hope you can educate yourself on credit cards and “healthy debt”, a term that Dave hates, so you can optimize your wealth building strategy instead of just fail-safe idiot-proof brute forcing it like Dave suggests.
@@nathanaelsmith1368 I spent about an hour writing a detailed comment completely obliterating your argument but daddy Dave shadow-deleted it. Just know that you are entirely wrong and I hope you can educate yourself on credit cards and “healthy debt”, a term that Dave hates, so you can optimize your wealth building strategy instead of just fail-safe idiot-proof brute forcing it like Dave suggests.
I had this attitude for all my life. I am 45 and I would like to buy a house. I am responsible, I don't keep a balance and live within my means. I keep my utilization between 2-9 perfect. To each his/her own.
I think credit cards are a wonderful thing, ---IF--- you use them right. I use my CC as if it was a debit. Put funds in to have a negative balance before I pay on it. Reap the benefits. Spend it exclusively on 3 things. 1) bills 2) groceries and 3) gas. No consumer discretion. Used that way it is not a trap. Never paid a dime of interest on my card and collect free groceries like nobody's business!
No one every got rich off of _______, so you don't need them. That equation can't only be true for credit cards, but whoever else you put in it's place. Coupons, Loyalty Programs, Bogo sales, change in the couch, having a yard sale, selling recyclables, or cashing a birthday check.
coupons, loyalty programs, bogo sales, change in couch and having yard sales haven't destroyed hundreds of thousands of people lives aswell. hence the smoking analogy there's no good reason to be using credit cards, just like there's no good reason to smoke but people still do and that's the risk they choose to keep in their lives
Matthew, then you would agree that Dave Ramsey's equation isn't quite accurate? Having a retail business myself, I am earning $800 in cash back a month with Capital One, nearly enough to fund both of our Roth IRAs. It is technically possible to get rich off credit card rewards, but it is impossible to pass a physical BECAUSE a disciplined cigarettes technique, pushed your health over the edge.
Dave has met with billions and billions of millionaires. None of them, I repeat, NONE of them, made their billions off of credit card rewards. You think you are beating the credit card companies but they are beating you. They got you right where they want you.
ACR, true. My $800 cashback, I've never thought about the 40K I'm handing over to them each month, ouch! A little truth in advertising would force these credit cards to stop pushing, "Get filthy rich off our cashback, starting with our minimal sign up bonus."
If a millionaire made $10k off credit card rewards over a lifetime, it's a tiny fraction of his net worth. But even for a millionaire, having $1,010,000 (using cash back cards) is better than having $1,000,000 (using wads of paper bills). That extra $10k, while only a tiny percentage of net worth, will still buy a lot of pizzas.
Its good advice to not use credit if you have no control but there are plenty of uber rich people who use credit cards for the convenience of carrying plastic...They have cards like the American Express Centurion Credit Card (Black Card) these people use and pay off upwards of a quarter million a year or more...There are plenty of credit cards and lines for the rich...Being rich doesn't mean your responsible or even good with money, it just means your rich...Id love to see the statistics of people, who had a million dollars and how many went broke afterwards compared to how many turned that million into 10 million?
cutlerylover Ive talked with trillions and billions of zillionaires and none of those zillionaires told me they got their zillions off of credit card rewards. Ditch the credit cards immediately.
Well I rent and my credit gets pulled when I need to rent a new place so I care about my credit score Im not a millionaire yet so I dont have the luxery of not caring about my score I cant just go buy a home in cash yet...I dont care about the rewards and I dont pay fees, I just want that number to get a place to live when I need it...I also live out in the woods of PA so my options to just get a rental where the landlord doesnt consider your score is limited as well so everyone situation is different...
I know the top cards can be anywhere from $500-$1500 annual fees...but that has nothing to do with my point at all...my point is the super rich have credit cards too maybe not Daves friends because Dave makes them feel stupid, lol...But out of the 11 million millionaires how many do you think have credit cards?
Also I never said they got anything from their credit cards other than convenience...Go to a Porche dealership and see how many people buy their cars on credit cards, versus checks, versus cash you may be surprised...How much cash do you think most millionaires carry with them?
... says the no name listener that has likely not accomplished much, has built no significant wealth, and hasn't helped anyone out of financial hardship...
I earn several thousand dollars each year from my credit cards, and not once have I ever paid a single annual fee, misc fee, or drop of interest. I get a minimum of 5% cashback on most anything that I buy, I get signup bonuses for spending what I would spend regardless if I put it on my CC or not, and I get thousands worth of free travel each year from premium credit cards that have their annual fees permanently waived. Heck, I have cards that I've never even used and yet I have earned thousands of dollars from that card over time. With the new changes I also have my telephone plan, and netflix/amazon prime paid for completely and 100% free through my credit cards. Two years ago my home was broken into and my laptop was stolen, which the CC company replaced at their own expense. The difference is knowing what you are doing and using cards responsibly instead of being an idiot with your money, but that goes for anything and not just CC's.
Until debit cards are 100% accepted I'll keep one credit card. Just for those times where some counter jockey says they don't take debit cards. I'm too tired to argue with these people. But I've been at baby step seven for at least 15 years now. I don't play rewards games and I don't get on a plane but maybe once every 5-10 years so I could give a rip about airline miles. But 9/10 people (probably more) who do use them are like Dave says. So unless you've really got your act together you should really steer clear.
Sly Foxx a counter jockey at enterprise wouldnt let me use my debit card to rent a car, though it was in good standing and i havecrented a car before from them, unless they had two utility bills that matched my adress on my card. I guess my dl wwsnt good enough. So yeah always good to have one just in case.
I have had fraud in the past and both debit and credit cards, dealing with fraud on a credit card is a simple and easy process to dispute the charge. On a debit card it is a nerve racking time consuming hassle. Your account gets shut down and I remember it took close to 1 month before my funds were credit back to my checking account. I travel to a foreign country on vacation once per year and a credit card is must have incase of an emergency and the fraud protection. Using a debit card overseas could get you in trouble if fraud happens and your card is shut down, you could be stranded without access to funds.
I don’t care what the studies say, I know for myself personally, I definitely spend a lot less when I use plastic vs cash. Now the plastic can be debit. I feel like I have more control of my money when it is plastic. I can more easily look back to see where it went, which makes me want to spend less of it in a stupid manner, I also don’t need to worry about losing it or the change that comes with was hard transaction. I also find it weird that Dave is attacking this guy when he is not there to defend himself. Saying it once is fine, but he is making cracks against him the entire video. I know that Dave gets mad at people’s digital courage and I get that, but I think it was a bit much and kinda hard to watch.
I'm the same tbh, I personally spend almost nothing when I have money on any card and use cash faster. lol I don't like seeing my account go down. I have a credit card(discover) and only use it for things that I'm going to naturally get anyways. ( I don't even use it like that cuz I'm not a heavy spender and don't really want much) I use it for Netflix mainly since I would use my debit card to pay for it anyways, but most of my subscriptions are still on my debit card. I have had my card for about to be a year now and feel like my spending habits have gotten better if anything.
@@Yewon2001 how about you get off his nuts. Maybe you can learn something from someone else. Dave makes great points but stop worshipping him because guess what? He can be wrong an sometimes he is.
@@POLARBEAR.17 fine. Stay in debt. I don't care. I'm debt-free and on my way to retirement in 10 years thanks to Dave. Your financial problems are none of my concern.
Credit cards have been very good for me. I have been paying off the bill every month for around 20 years, and whether something is bought on a credit card or debit card makes no difference to me as I am cash positive, it doesnt encourage me to spend any more. While you arent going to become a millionaire through points getting something back is nice.
There is a reason Dave blasts things like leasing, credit cards, life insurance and such. It is because 80% of people don’t know when to use them and when to avoid them. If you burn yourself on the stove every time you use it, it is NEVER good for you to use.
Dave isn't opposed to life insurance. He's opposed to ripoff insurance/investment products like "whole life" and "universal life," which are many times more expensive than term life.
If you're already spending that money on things in your life, it's a no brainer. You don't spend the money for the rewards, you reap rewards on monies that will be spent regardless of payment method.
actually it is not nonsense for the vast majority of people who use CC's. very few use budgets and have any kind of real control over their money. which is why the vast majority of americans are in CC debt. stop being an internet keyboard outrage warrior, and actually make an attempt to understand what is meant by what is said
"The Credit Card is the Cigarette of the financial world." I don't agree with that analogy. Credit cards are good if used right in my opinion. Go to get gas I already need? Might as well get 2% free money, right?
I would argue it's not so much "free money" as it is avoiding "the cash tax". Credit card companies charge a processing fee per transaction to merchants to allow their customers to pay with their preferred piece of plastic in that store. Since so many people pay with plastic, the processing fees are passed along from the merchant to the customer in the form of inflated prices. Cash/debit users cover the cost of this per transaction processing fee, the cash tax, themselves. People who use cash rewards credit cards *responsibly* pass it along to the banks.
I have come to realize the reason he doesn't give an inch on his stance is because as soon as he does, some people (who shouldn't be using credit cards) will take that as an excuse to use them. Shortly thereafter, it won't go so well for them. So he just says absolutely no all the time, which is wrong, but I get it.
I have come to realize the reason he doesn't give an inch on his stance is because as soon as he does, some people (who shouldn't be using credit cards) will take that as an excuse to use them. Shortly thereafter, it won't go so well for them. So he just says absolutely no all the time, which is wrong, but I get it.
He’s saying we’re susceptible. Even though credits cards are logically sound to use if played right. Human emotions and subconscious is omnipresent. I did have that problem when I got my first credit card. I didn’t go into debt but I did spend more than I would have. I know my fault now and I’m extra vigilant on those tempting but unnecessary expense.
I spend more money with cash. With credit cards I get a statement that helps me to keep records. When I am spending cash I thank that it is ok to spend when I use a card I think about it.
Why Dave Ramsey is wrong. Quotes statics of how using plastic increases the amount you spend vs cash. Proceeds to tell you to use a debit card - which has the same affect using a credit card does in terms of spending more.
I have a credit card, I use it like a debit card. Only for what I can afford, I buy. I like the CC because it offers cash back, on the same purchases I would've made anyways (gas, utilities, groceries, necessities I want, occasional things you save up for), and also buyer protection (someone uses it fraudulently). I do agree that using plastic is easier than giving up dollar bills. In the end, paper or digital, money is money, as long as you value it I don't see a huge difference.
I know many people can not handle the ease of using credit cards and loose control very quickly to the point they can not pay them off. I agree, it is very easy to spend money with credit cards without touching or seeing the money and I admit I am one of them, but I have been using credit cards since 1975 and haven't paid any interest by never buying anything I could not pay off at the end of the month. Using credit cards give a lot of protections and perks. No, I did not become a millionaire with my cash back rewards, but free money is free money and my 827 Fico score is also a plus in many ways that Dave does not like to talk about. Since I am using cards for convenience and protection they provide, the way I see it, I am using the banks, they are not using me.
Sounds like credit cards and your 827 FICO score are an important part of your lifestyle. "I am using the banks, they are not using me." Yet for some strange reason, they are happy to give you an elite FICO score that you proudly broadcast to others.
For someone who believes people control their own destiny, and who believes people can change their behavior via the power of choice, it's interesting that Dave sees a person with a credit card as a mindless robot, controlled by the overwhelming temptation of the card. An inconsistency in order to further the anti-debt Ramsey brand?
Idk about y'all, I treat my credit card like my debt card. At the end of the year I cash in my cash back rewards. I don't care how much it is, it's better then nothing. That's a mortgage payment, 3 car payments, a nice paid hotel for vacation, set of new tires, that's 27 fill ups at gas pump, one year home Ins, whole year of car Ins plus 3 car registration fees. When I have my card I do have a pain not to charge on things I want. Only get what I NEED" no thanks I don't wish to super size" " no I won't have the big streak, give me the 2 for $20". I'm not saying your going to get rich, just get reward for your everyday spending
Daniel Garcia teach me because I’m confused now. I see a lot of people saying what you’re saying and it’s opening my eyes more about credit cards. I’m 20 and I’ve been told never use it since I was 18.
@@PapaBoat777 key is be responsible. Only spend what you have but not all of it. Example: say you spend on average $300 a week on everyday life times 52 weeks, that's $156 @ 1% Discover card every quarter has a different % cash back Could could : 5% on Groceries 5% on Amazon 5% gas 5% moives 3% on this and that 2% on something Its changes so often . It's not always 1% $156 could change to $300 or more with discover card. You not trying to get rich. You just trying to earn a little That's money you dont have But you must pay the credit card off in full or it's not going to work out. Getting charge Interest will be point less on cash back you can also pay it off every week. Im just saying , That little cash back at the end of the year can help you out. ( you can cash out anytime, but I wait a full year) Even business has cash back rewards. The amount of money they spend for work they can buy a new honda civic every year. I tell you what, start with this. Put all your Bill's on one credit card automatic with cash back card Water bill Car insurance Cable Hulu Netflix Light bill So on. Pay that bill off every month. In one year you might look at about $125 cash back Not much but you can still do something with that money . Every little reward helps out
Daniel Garcia well thank you very much! I was always iffy about Dave’s no credit card thing and how it’s bad! I’ll be trying this out soon when I get a new job. Corona unemployed me so I’m looking for a job lol. Thank you!
For most people credit cards land them into trouble or at best it is a break even. Even if you get rewards, there have been psychological studies that show you unconsciously spend more with a credit card which most times negates the benefits of the points.
Not using a credit card is so dumb. It's not an opinion; it's a undeniable fact. I can keep track of everything I spend on an app like Mint if I use credit cards only. Plus I get rewards (3-5% cashback on gas, for example). People shouldn't blame credit cards for their lack of discipline.
That's another thing people don't realize. Go spend cash for a week and tell me down to the penny where it went. Is it possible, sure- hold on to all the receipts. I would rather just check an app at my convenience lol
Michael Jay - Value Investing Yeah for most people. Not me. I have common sense and reading/math skills. Anyway people paid more than 15 billion in in debit card overdraft fees last year. What does psychological studies show about that? Like I keep saying,no matter what credit or debit card you use it all boils down to being responsible.
I’m glad I’m not the only one thinking if we are able to budget our money and pay off debt using Ramsey process then we can also handle paying the credit card bill that is used for household expenses and gives 4% cash back towards those very expenses which in turn gives me extra cash. And yes I’m still debt free because I immediately transfer money to pay the credit card as if it were cash. And let’s also not forget that credit cards are useful when you rent a room in a hotel and they put a hold on your money just in case you break something. Or if they overcharge you for your room by hundreds of dollars (which happened to me) That money is tied up as a pending transaction in your account until they release it back to you. I’d rather use a credit card for this purpose so my account funds aren’t held hostage.
Sylvester Stallone looked so cool when he played Rocky standing at the corner in Philadelphia wearing a black fedora leather jacket and having a cigarette hanging outta his mouth that would flap up and down whenever he spoke.
The fact that some people simply can't control themselves with credit cards is more than enough reason to not use it. In debt or not. On time payments or not. For some people it just shouldn't even be an option. That's what Dave is saying.
This advice makes sense for people who have spending problems and don’t plan on investing in real estate. A good credit score will ensure you are guaranteed for a loan with favorable interest rates. This will be especially helpful in real estate when leveraging debts. His argument against credit cards is comparing it to smoking cigarettes, but doesn’t really explain why credit cards are bad. It seems as though it’s a deflection. This leads me to think that if someone is responsible with a card and their spending, you get good perks and a good credit score. Those can be used to make every day life better, which is good in my book.
I think there are ways to utilize them smartly. But Dave is pointing out that very, very few of us spend wisely or within limits when we use credit cards. And all of that overspending on meaningless things could go towards investment instruments. He's right. The plastic entices you to spend more than you need, and amass more than you want.
Hey Dave, I paid off my mortgage a couple months ago, it’s value is 240K, I bought it for 100K, 10 yrs ago. I drive a 12 yrs old truck and a 10 yrs old SUV for all the grand kids. Everything is paid for, I make about 120K a month and live on 50K a yr. I am ain’t to be rich or live money to my grand kids, but my life insurance will give them enough. I am 56 yrs old and my retirement pensions will be about 10K a month in 4.5 yrs. I ain’t married or do I plan to be. My credit score is 840 and I do use 6 credit cards for whatever bills like light bill, groceries or phone bill and cable. But I pay them off every month. Credit cards ain’t for everyone or billing rich.
I'm sure he uses CC ,when you're a millionaire you can talk smack. Just buy his books . Cash rewards can't make you a millionaire uh duh but point building is getting a bit back towards CC payments or bank savings.
Having lost thousands out of my bank account due to debit card fraud and waiting weeks for them to correct it, I’ll never use a card directly associated to my ACTUAL money ever again. 😆 Monthly payoff + added security + some added bonuses (like free flights home) for buying the same things I’d buy with a debit? Yes please.
Adding to the Fast food example- if paying cash, one would plan in their head how much they would pay n hence questions like ‘u want to supersize or add coleslaw?’ Would be a no thank you more often than case when u just showed up with a card with only food in mind, not the calculation of cost behind it.
Hey Dave, great show. One thing: while you’re correct that the cigarette business is in decline, here, in the US, it is booming overseas in places like Indonesia. Thanks for the great videos, as always!
People on here stating that everyone who uses credit cards spends more than they normally would needs to take a psychology course because they have no idea how these studies are done and what the actual implications of the studies are...they have no idea what a null hypothesis, alpha level, confidence interval etc are it’s incredibly irritating
I like Dave and I believe that most of the time he has sound advice. And I agree that credit cards are NOT for everyone. But I vehemently disagree with his logic on this subject. What difference does it make that I buy the things that I'm going to buy anyway (food, clothes, etc.) with a credit card and get points for doing so? Not to mention other benefits like extended warranties, price protection, etc. I don't see using credit cards as "wealth building" I see it as making some passive income (aka fun money). That means free trips and free items that I don't have to pay for!
Agreed. And the question wasn't about using credit cards as a wealth building tool, it was about optimizing ordinary spend as you are describing. Dave answered a question that was not asked just so he could go off about credit cards again.
@@Convexhull210 You're right, they're not passive income, but they do help you avoid the "cash tax". Given the prevalence of paying with plastic and that credit card companies charge merchants a processing fee per transaction for a customer to be able to swipe their card in that particular store, prices are inflated by the merchant to cover the costs. A customer paying with a credit card passes those costs onto a bank to cover, and often times comes out ahead. That money is passed along to the customer paying with a credit card in the form of points, a statement credit, or cash. A customer paying with cash or a debit card that doesn't offer rewards is personally covering that cash tax. In addition to avoiding the cash tax, if you collect sign-up bonuses responsibly (e.g., you only put ordinary spend on your cards and pay your balance in full every month), you can make hundreds if not thousands in a year.
Here is the rub. As a business owner/operator it only makes the most sense. Doing the accting when a business goes above a certain threshold the rewards overcome the risk/reward threshold.
Dave’s RIGHT as usual. My dilemma, is whether I should retire in Mexico or in Europe. Thanks Dave,I have to make a tough choice! A few years ago my choice was pay credit cards or eat. Follow the Dave plan, if you want to follow your heart and make your dreams a reality.
I agree with Dave on a lot of things but one I don't is his hate for credit cards. I think every responsible 18 year old should get their first credit card the day they turn 18. I didn't do that. I was 25 years old looking for a house mortgage and got ridiculous interest rates or straight up denied from numerous banks. You know why? Because I had no credit. I never took out a loan in my name, never had a credit card, or anything. So here I am with a crazy interest rate which is costing me thousands extra because I didn't get a credit card and use it responsibly by paying the balance in full at the end of every month. It's not just about getting 1% cashback, it's also about getting a good credit score.
Daylon Simington Except people do and get overdraft fees to top it off. People that mishandle money are broke typically regardless of what method they used to pay for things. The problem is lack of self control not an inanimate object. "It's not my fault judge, the piece of plastic made me do it!!!" Yeah... Riiiiiight... Totally don't blame it on your inability to control your emotions and spending on an inanimate object. I'm sure that'll hold up.
no you can't Debit Card comes from your checking account and your savings account. If you swipe one of these you will overdraft. I know because I use one.
You could still get into trouble with them. What if you go broke and can't make your rent/mortgage payment? A credit card is probably not going to throw you out of the house.
I get what he's saying, and he's right. But he's stateted also that he pays with a debit card, which is also made of plastic. And he gets that back as well.
Dave I use my credit card to avoid international transactions fees . I’m keeping my plastic and I’m very responsible. I owe zero on all my credit cards .
You're putting the numbers that tie directly to your bank account out there when you use your debit card. If someone gets your checking account money, good luck getting it back in timely fashion. If they get your CC number, you don't lose anything
Did "plastic surgery" a couple of years ago, no more credit cards, don't understand why people are okay using credit cards, borrowing money at 18% interest, doesn't make sense, credit cards are the bank's version of payday loans.
The funny thing is that I spent more just using a debit card or cash and less now that I have 11 credit cards. That cash trick might work for the older gen but the newer gen checks their balance on apps 24/7.
My question out of think Dave said $97,000.00 a year does that person save. I have gone to churches, homeless shelters, food distribution centers. I have met many people who used to make $100,000 a year and didn't save a dime because they thought the income would always be there. Because of health issues, company closing, them being fired for various reasons etc they now have to humble themselves and eat with us Riff Raff AKA poor people. If I made $100,000 a year I can live off $50,000.00 and put other $50,000.00 up and invest some. I'm not saying all people that make that kind of money don't save but a lot don't which is said. Here I struggle making barley making ends meet and dream what it would be like yet life, God let people like that have that kind of money.
Brian Waller. Yep all I want is 2 million buy a home, invest some, save some and keep working. Yes $100,000 is not like it was 10, 20, 30 years ago but I would take it and live off of half.
god is not real so he/she doesn't factor into any equation. Churches are nothing more than a money grab to pay the preachers and for the mega buildings that are unnecessary. My wife and I are in our late 20's and make 140k/yr here in Ohio where the cost of living is cheap. We are able to save a good amount in our 401k and ROTH IRAS. Only debt is our home. I agree though that most people find a way to blow all of their income as if it will last forever. I have seen it before and told myself I will never allow myself to be one of them. I hope your dream comes true of making more so you can live comfortably. The two biggest factors when it comes to wealth is which family you happened to be born into (if they were rich or poor and how they taught you about finances) and the second biggest factor is the person you choose to marry. My buddy is married to a doctor who makes over 200k, but she blows it all on clothes, fancy cars and other stupid unnecessary items. I would rather be married to someone who makes 40k and is frugal compared to the person making 200k who will never change their ways of spending.
Some would chastise you for saying you would only save $50k out of $100k, because they would be so 'rich' with $50k and could live for less. My point- maybe worry less about what higher income households save or not, and more about increasing your own income to that level.
I'll never agree with Dave on his issue about credit cards. I'm responsible with credit cards and I've paid them in full every single month since I was 16 years old and now I have excellent credit, and the only debt I've ever had is student loans (which will be paid off in full in about a couple months time, thanks to Dave's other teachings about getting out of debt). Having excellent credit has helped me get a lot of perks when buying things (especially renting an apartment, it is difficult to get an apartment without good credit). Also I will counter what Dave says about the emotional impact of cash leaving your hands: when I use my credit card, the moment I finish the transaction, I write down in my cellphone in notepad how much I spent and how much "cash" I have left. And I don't buy extra stuff just to rack up more points, that's just STUPID! =)
If im at McDonald's, it don't change my appetite whether I'm paying with cash or charge...either way in getting a number 1 🙄. And im still going to have a cig afterwords.
I use ccs and have for decades, and yep, I do get discounts -- but mostly, I get them for the signup bonuses, which really add up into many thousands. BUT I do pay them off every Friday AND I still think his advice for NOT getting ANY cards is wise for MOST people, because I do think it's WAAAAAY easier to use them than it is to hand over cash - and that's why so many people get into serious financial trouble. Also, I think his observation at the very end is spot on. (Just as a data point, we have no debt and are big savers... AND we're disciplined enough to still stick to our budget; we just choose to pay using cards that earn bonuses. But that's the difference - really being disciplined and trusting yourself to be disciplined with every purchase and every on-time, in-full payment.)
"Exact same fraud protection." So wrong on so many levels...please compare the process of trying to recover funds stolen through fraudulent transactions on a debit vs. credit card, sooooo much easier to do with the credit card company vs. your bank, regardless if its a regional bank or credit union. Dealing with the process with the bank can take days/weeks and leave you without your funds. I'd be curious if any of Dave's employees use Credit Cards or if his hiring procedure pulls a credit report. The caller/emailer wasn't being judgmental at all, if anyone is judgmental in this case its Dave. For responsible people who pay in full every month, Credit Cards are a valid financial vehicle. I understand why Dave is so against them, but the paint with a broad brush argument he uses just gets really old and he sounds like a grumpy old man who just raises his voice when he can't prove himself right. Also stop citing your numbers Dave...more people live in New York City than listen to your show or have gone through FPU, so stop acting like you've talked and worked with EVERYONE like you generalize you have. You've worked with less than 1% of the population. Sorry but I just get so sick of the "Credit Cards are evil and can't work for anyone" argument he bludgeons us with.
TeKnoVKNG23 I tell people if they use a debit card while traveling out of the country to have a credit card for backup. Seen too many debit card holders stranded for a few days in places with no money waiting for the issue to be fixed.
I know that I am being shadow banned, but I will leave this comment anyway. Dave is being so stubborn on the issue of credit cards. AT LEAST, he should tell the truth about their upsides. One of them is online purchases. I'll bet most everyone does them. I don't think that Dave could deny that credit cards are safer than debit cards for those purposes. Don't get me wrong, Dave's advice is Golden, and MOST people would do well to follow his advice. But, he has a hard-on for Credit Cards that borders on arrogance.
This is so true in my case. Plastic definately removes the spending friction. I am addicted to plastic. Since listening to dave I've gotten it down to one credit card which I leave at home. All purchases are either cash or debit card and since I have gotten out of debt and saved quite a bit of money. I'm not completely cured yet my CC is attached to my Amazon account which I use mostly for my side business so I don't have to worry about over drawing any account. I do admit though having that CC makes me still buy stupid things occasionally. My wife often asks "another Amazon package?" LOL
Dave should talk to Graham Stephan
Sameerah Mohammed I would pay to see this
Graham has some fine videos.
Sameerah Mohammed that would be an awesome video!
Sure, he sells high end real estate. He does really well, but he is not worth 200 million and debt free. So Dave knows just a bit more than him.
@@justinacase2623 dave is literally two times older than graham…in 30 more years when graham is daves age, im sure his net worth is gonna way way more than daves today and hes gonna be debt free by then
The credit card vs cash argument has always felt opposite for me. When I pay cash it doesn't leave my bank account but when I look at my statement and see that money was taken out.... that's what hurts me.
100% agree with you on that
Because Dave's arguably extreme POV is outdated and generally more relative for older generations.
same for too. I think this is because my spending money is in my account. but what he's talking about is if you follow his plan your spending money for that week or month would be in cash
Paying off your credit card every month with your bank account hurts too
Same
Oh man the credit card company that gives me 5% cash back just tricked me into buying gas for my car so I can get to work! No wonder they have nicer buildings than me. Darn it
Oh man, if only you had actual money instead of borrowing it from a corporation that charges you for doing so. No wonder they have nicer buildings than you. Here's your sign.
I have 0 debt. Own my home. Funny how you act like you know somebody through a comment. God bless you
Listen, I get it, you like to use borrowed money to pay for an item/service that at the end of the month you will have to use your own money to pay for anyhow. You like to walk in circles, but for me I like to walk in a straight line and use my own money to pay for the item/service in the first place and be done with it. Simple and efficient. Have a great day.
WolfWood 👏 yes!! Best description ever! I feel the same. I don't like having so many open ends in my life.
WolfWood they are good for consolidating bills though. If you have a water bill at the start of the month, and electricity at the end, some other bills in the middle.. then a cc gives you one amount to pay at the end of the period.
Dave's logic is faulty.
"You know how much you get back for $100k of expenditures? $1k. That's not wealth building"
Of course it isn't, but it's $1k more purchasing ability than if you simply stuck with a debit card. Nobody is claiming to be able to get rich off of credit card awards, dude.
jhbigler it’s $1,000 more dollars you can throw into the stock market each year! And 1% isn’t even that good! There are cards with way more cash back that are free to use.
jhbigler right. Dave can be soo condescending about that. No one ever said they get rich with rewards. More money is more money
You're absolutely right. The question was about optimizing ordinary spend, not using a credit card as a wealth building tool. Gabe clearly understood the difference, yet Dave chose to conflate the two just so he could yell about credit cards. Granted, that's a key component of Dave's system, and given his average caller is up to their eyeballs in debt, it makes sense to tell that person to avoid credit cards.
It's also very disingenuous of Dave to say that none of the millionaires surveyed cite credit cards as a wealth building tool, because they too would recognize the difference between optimizing ordinary spend and building wealth. A cash back card avoids the "cash tax" incurred by customers paying with cash as merchants inflate prices to cover the processing fees assessed by the credit card companies. A cash customer covers the cost him/herself whereas a customer paying with a credit card has the bank cover those costs and often times comes out ahead. I'm sure millionaires would liken using a cash back card to using a coupon - and we all know how much Dave likes to point out how many millionaires use coupons and the frequency with which they use them.
Vintage Bee I don’t know about you but spending money is a part of life. Groceries, household, bills.
@@thehedgerow if you pay back the card on time, then there is no interest, so yes it's free money as long as you are using the card to pay for things you would have bought anyways, like food and bills. CC companies offset this by taking advantage of the people who are bad with credit card. They offer these perks knowing that for some people it will lose them money, but a majority of people will make them so much more
The reason he’s never met any millionaires who have said “Hey, I’ve made all my money with airline miles,” is because NO ONE IS SAYING THAT. Even people who can aggressively take advantage of those 5% or 6% categories aren’t building wealth that way. The points and cash back are the icing on the cake to money you’re already spending anyway, nothing more.
I could stay warm for the next 17 years by fueling a fire with a straw man that big.
hahahah. love the analogy. Good luck changing this boomers mind, though
But people overspend just to get those points
Yep. Gabe asked about credit cards to optimize ordinary spend and Dave distorted it into him asking if they are a good wealth building tool. Not sure how you can conflate the two. Well, willfully is how you conflate the two.
Dave is always so quick to say that none of the millionaires surveyed cite credit cards as a wealth building tool, even though that is in no way indicative of whether they use them. I also find it interesting that Dave is so quick to point out how many millionaires use coupons and the frequency with which they use them. I bet if asked, those same millionaires wouldn't cite coupons as a wealth building tool either. Rather they would say coupons are a way of optimizing their ordinary spend.
Why is the average household in $17,000 in CC debt? How much CC debt do you have?
@@khadijahjones2460 some people do. I dont. I just buy groceries and pay my water bill and internet bill with mine. No i dont take extra long showers or buy more food because its a credit card. In my head it money. I budget myself. I restrict my water use and buy the food i need to live. Thats just me though.
Same old argument here that falls flat on its face
The problem is the credit is a huge deal in the United States. If you have poor or no credit you essential pay more for property, goods, and services that you need.
Indeed.
Exactly. Having a poor credit score will make life harder. Dave should advise people just to have one credit card with a low limit so people can't go mad with it. When the company tries to up your limit you phone them and refuse. By having a low limit you still get all the benefits of a good score.
I'm weird. I feel like I'm getting away with something when I use cash and throw away the receipt. No one will know I spent a whole $12 on M&Ms or a pair of shoes I may never wear. Heck, I'll even forget about it in a couple days.
Debit card keeps a record of my financial wrongs. Credit card even more so because it's like paying for everything twice, once at the store, second though mobile banking. It's not more friction, but it is more guilt.
EXACTLY!
Interesting take on the issue.
Dave's whole argument of overspending is cash vs card. The exact same thing applies to debit cards but at the end he still suggests a debit card.
yup!!!!!!!
Brian, if that is your issue, then the Credit Card isn't the problem
Brian Waller, You're making a completely separate argument that Ramsey doesn't make. He's talking about the lack of "friction" that occurs when you use plastic. What he means is that it feels more painful to part with cash than to swipe a card. So he's arguing that credit cards cause you to spend more than you normally would. That logic applies equally to debit cards, but he contradicts himself by encouraging debit card use.
Except, as has been documented, you don't tend to overspend as much with a debit card as with a credit card. So however similar credit cards and debit cards are in terms of friction, the studies show that debit cards are a better option.
Ultimately, Dave is a pragmatist. Living a cash-only life for most people is impractical, at best. It's the same reason why he rails against the evils of debt, while basically being okay with borrowing to buy a house. It's not that he thinks mortgages are good wealth-building tools. He just realizes that, given what it costs to own a home, for lots of people, taking out a mortgage is likely the only way they'll ever be able to own their own home.
NOPE! Debit cards will allow you to overspend and then charge you an overdraft fee. With a debit card you get the item and you get the card back, just like a credit card
IF YOU ARE AN OVERSPENDER, YOU'LL FIND A WAY
NO MATTER WHAT THE PAYMENT TYPE
So true.
But that doesn't cancel out Dave's point. Studies HAVE shown that people ARE absolutely more conscious and careful of how much they are spending when physical paper CASH is leaving their hand verses swiping a plastic card. That's the most important point.
67NewEngland. True but one can overspend a little or alot.
But, in the end, it is still lying to yourself
not true spending cash makes you stop at 0 no matter what. only borrowers have the ability to wreck their lives with credit cards.
Lisa Muryn You guys just don’t get it. Dave has traveled the world and has met and spoken with billions and trillions of zillionaires. And guess what? None of those billionaires made their millions by relying on credit card rewards and airline miles. Ditch the credit cards and start your path to becoming a billionaire like the rest of us.
Dave often deflects with the claim that no millionaires made their money through credit card points. Nobody is making that argument. I’m sure plenty millionaires enjoy credit card perks and are interested in keeping their credit score high while being responsible with their lines of credit.
Yeah, and no millionaires made their money by using coupons, but I'm sure they use them
Check how much more you spend, perhaps unnecessarily, when you use plastic debt, just for the sake of perks
Yeah that's the part I do not understand either. If you are going to be traveling regardless and are able to stack rewards to reduce the cost of traveling (while not spending more than you normally would) why would that be a bad thing? Isn't part of being wealthy saving money and being frugal? Certain credit cards can save you hundreds to over a thousand dollars in value. The key is not to go over your means, but his show is always tailored to the least financially responsible I suppose. Also, why is he always so defensive when people ask him genuine questions that don't align with his values? He always makes it seem like "between the lines" they are calling him an idiot... when in reality they are just actually curious for his input. He's too offended sometimes.
Eric Panos While we keep that mindset of not going over our means, I feel that subconsciously, maybe even a little, we give in to that credit card and spend just a little more. The reason I believe Dave is only so against credit cards is due to the audience he has watching, people obviously trying to get out of debt. He has to put on a debt free mind to the viewer, with the exception of a home loan.
Yeah, my father-in-law is an actual millionaire who uses a credit card for almost everything and pays it off every month. I don't think he's ever claimed that using the credit card is what made him a millionaire. I have one credit card and I use pretty much exclusively for internet purchases. I really don't like using debit card over the internet since it's directly tied to a checking account. At least with the credit card I could dispute a fraudulent purchase and it wouldn't affect my bank account any.
The whole “cash triggers pain” thing is for old people accustomed to using cash. I didn’t grow up using cash so using plastic is the same thing for me. My pain censor is not my form of payment but rather the price or bill of the product or service.
Valod Hopar EXACTLY!!! Common sense. I can't stand Dave's condescending, disingenuous, misinformation.
Sounds like you've never used cash. Try it. Put your credit card(s) away for a month. Withdraw cash from your bank and only use that cash when you buy things. If you run out, go back to the bank and withdraw more cash. At the end of the month, reflect on what you did and whether it changed your mindset about spending.
Leland Johnson
I get better result with my credit cards.
Leland Johnson appreciate the advice but to me that’s like saying don’t use your smartphone for a month use your 10 year old flip phone and see how it feels. Plastic is extremely convenient, don’t waste time with banks, deal with dirty change and coins, quicker form of payment, etc. is cash supposed to make me eat half my lunch portion and fill up half my gas? I think it might help wild spenders but not people with routines who know what they spend going in.
@@user-vq6bl3ic5j I agree with you, I tried using cash and I noticed that I'M SPENDING MORE and I am less in control.
I think that people forget the basic principle is that you do not spend more than you earn. It should matter less how it done.
Maybe ccs aren’t good for the folks that call into your show most of the time Dave but for the responsible adult credits are a massive tool useful for all sorts of things
Self control is the key. If you don’t have it, stay away from credit cards. If you do have it, credit cards are not an enemy
Dave again with his one size fits all approach
I have a cash-back card, but I'm not using it to "create wealth". I use it for autopay on many of my monthly bills. Electric, phone, etc. gets paid this way. I then use the cash-back to pay towards the CC bill. It's a way for me to squeeze a bit more out of my money.
I get what DR is saying, but he's awfully rude and judgmental when discussing this topic.
Jennifer Tackett I agree with you. Same.
You're absolutely right. And if you'll notice, Gabe didn't ask about building wealth with a credit card, he asked about optimizing ordinary spend as you describe. I'm a big fan of Dave, but he definitely answered a question that wasn't asked on this occasion.
Ask any bankruptcy attorney about his clients. They think the same thing, it worked till it didn't. They all had a plan to pay it back. Being debt free, not trying to game 2%, will make you wealthy.
@@justinacase2623 who has the time or money to ask that💀
@@justinacase2623 pure ignorance. It's passing up free money.
While I respect Dave's opinion, I find it hard to believe that any person who isn't already up to their eyeballs in debt has ever said they would get rich because of rewards.
YellowBrickExpat Using a credit card is the same as getting a discount pretty much. I know plenty of millionaires that take discounts all the time which is the entire point. Dave is bit hypocritical with this topic since a debit card is plastic as well.
YellowBrickExpat I agree. I don’t get rich on my cash back but it does allow me to stay on vacation an extra day
@@blahhblah6635 he's not hypocritical. a credit card is debt, a debit card is not. Dave is 1000% anti debt. for more clarity watch his clip "how cash changes the way you look at money"
He keeps saying this and I don’t understand why …it doesn’t make sense
Do not underestimate dumb.
why you get rich when you use cash. Walking to a store, looking at a pair of shoes reg $99, now $49.99. Credit card spenders grab them quick thinking they scored big time; 50% off plus 5% cash back. Cash spenders look and think "should I buy them? I have $200 cash now, but I need $100 for my groceries tomorrow, my car oil change $50, fill my gas $40; my bank account's reserved for my mortgage and car payments only. Well, my shoes are still good," and walks out.
I don’t agree with Dave’s blanket generalization regarding credit cards. I only buy what I need, stick to my budget, pay it off every month and use the cash back for vacation
Holly B exactly sir
Well, he's an over generalization-ist. If you speak as much as Dave, and over generalize, eventually you wont be able to tie all of the loose strings together.
And you had to spend how much to get a vacation?
60-120 is enough for vacation?
@@ncg8224 $60-120? Usually $750-1,000 in cash back goes to vacation
The thing I find funny is that they want people to drive beater cars and have emergency accounts. Well, I do have an emergency account. I also have a beater car. When I was a bit younger, my credit card was used to keep my older cars on the road. Sometimes, it's nice to have that extra purchasing power when a car repair costs $1,000+ and you're afraid to take that much out of the bank and choose to pay a third at a time.
I get 6% back at the grocery store and 3% back at the gas station, essentials I'm already buying. It's the exact same items each time regardless of payment type. Zero debt btw Dave!
Vinny Ocean I mean if you have a credit card you have debt, but I get what you’re saying. 👍🏼
@@winter117a not if you pay it off in full smh...
Michael Stack Every time you pay with a credit card you are incurring debt because you are using money that is being credited to you. As soon as you pay that off, your debt is gone. The point is that technically, every purchase with a credit card is creating debt. You just reset that debt counter every time you pay the card off.
AMERICAN PATRIOT My wife and I do the same thing. It’s still debt until it’s payed off, tho. That’s all I’m arguing.
And well done managing that! The vast majority of people don’t have the self control to do that. You really have to train your brain to think of your credit card as a debt card or else you’ll fail to pay it off each month and it *could* get out of control.
and its not worth it
I disagree here. I have to have a credit card because my employer requires I have one. All my business expenses I use it for get reimbursed. I get a statement each month with all the expenses and I submit to my work, you don't get a statement with cash.
In the ten years I've had this credit card, I've never once spent it on personal items for myself.
Self control is the issue here, not credit cards.
The Awesomer85 you do realise that that is a special situation and 99.9% of people don’t aren’t in a job like that.
This is not the same thing. You are not responsible for paying that credit card back. The owner is. As a good employee, you are required to only put necessary business expenses on the card. You get fired if you went crazy on it.
So you are fronting money for a company you work for, but do not have ownership in? You do understand that if they fold you are on the hook for those charges.i would have a chat with the boss. Scary situation to be in.
They give you back your debit card after your purchase too right?
yes, but with a debit card the money must be in bank account. for more clarity watch his video "how cash changes the way you look at money"
@John Lester Your point is too logical
@eatpigsnot I understand that, but Dave expressly said that is the physicality of cash that makes the transaction painful. Thus, a debit card would be the same because it is plastic.
Dave's logic is sound. From his perspective, if you're trying to help people get out of debt, you can't give them ANY wiggle room to come up with excuses as to why they can still have a credit card. If they're already in debt, its indicative of not being able to handle credit cards. So he can't say, "Well, if you're careful...." because they won't be and people will blow it.
As for the people who ARE careful with their credit cards and debt, they have to understand that they're in the minority. Only 1/3 of people pay off their credit cards every month. And on average, Americans have $5,000 in credit card debt each. It can be a dangerous game. Someone could be responsible for years, and then suddenly, an "emergency" comes up and it can't be paid off in full.
1:20 I took the 5% cashback I was earning on a credit card, instead of using a debit card for stuff I would’ve purchased anyways. (Phone, utiIities, insurance policies) I always pay my balance in full every month. I earned $1000 in cash back and invested it into my Roth IRA. Is that not a good use of a cashback program?
No, it isn't. You're playing into the credit card companies' games, and all kinds of academic studies show that you spend more chasing those points & rewards than if you used cash.
@@TheRamseyShow All these "studies" you talk about, no one can find. They appear to be figments of your imagination. How about if you only used Credit Cards to pay for mandatory bills such as cell service, car payment, rent, etc. where there was no opportunity to overspend? Why in the world would it not make sense to use a credit card?
Dave says cut up all credit cards and don't worry about your credit score, but I still want to have good credit for many reasons. At the same time I agree that having a credit card around could make me spend more even if I pay the bill in full each month. To remedy this, I'm going to attach some of my fixed bills to the credit card and then cut up the card so it can't be used for anything else. then continue to make sure it's paid in full each month.
IMO, actually cutting up the physical card is an OK idea if you carry cash or debit. It certainly eliminates impulse buying except for online temptations like Amazon, Ebay, or streaming services. Mostly VISA spending doesn't use the physical card but is just for EFTs from the utilities/vendors that themselves initiate from the VISA account. I won't cut my card up but can take a picture of it, then put it in my safety deposit box. Wait! What about the gaspump, groceries, or emergencies? I had to buy a used tire from a junk yard in a pinch last month with VISA. Maybe place it somewhere it is inconvenient, but possible to get to like a locked glove box? You know, there are unforseen flaws in every plan.
1. Who, even in their squirrel-crossing-rush-hour-traffic-mind, would make an argument that rewards points make you rich? Who in the heck would even correlate the two??
2. While you have to advocate against them, seeiny as how many of your viewers/listeners have self control issues, you can't lump everyone into the category that we'll spend more out of the budget. That's a heck of an assumption. Many many will only use it for items that already have cash for. In other words, if they can't *immediately* transfer the balance for the purchase, then they don't purchase it.
3. Obviously the points aren't a lot, but last time I checked, I have to pay my electric bill, cell phone, food, insurance, work expenses. Why not do it in a way that gives a little extra perk. Just because the amount is small doesn't mean it has no value. You'd still pick up $10 of the ground despite it only being $10.
1. Some people like to brag about paying off their credit cards at the end of every month, and getting CASH BACK. These people claim that they are really ripping off those clueless banks, but they also tend to have a *lot* of credit cards. Dave is pointing out that rewards points are not a way to get ahead.
2. You say that "many of (his) viewers/listeners have self control issues." Ponder this for a moment. Does the *moral* problem lie with the people who get into debt, or with the predatory banks that purposefully market debt to people who cannot handle it?
3. If you *only* use your credit card to pay utility bills, then maybe the math is *slightly* in your favor. Not knowing you personally, just taking the average case, it's likely that you use the card for discretionary purchases as well, where you spend more with plastic than you would with cash, wiping out the small advantage from your utility bills.
Leland Johnson
1. Actually, I always say if you can't immediately pay off your balance right after the purchase, then you have no business using them (work expenses aside). End of the month is ridiculous, you should be able to pay it off right now (unless your bank makes you want until the transaction finished processing) Rewards points aren't a way to get ahead - the sky is blue.
2. Both.
3. Yes, I'm not the average case. I use it for other items, but only for things I've already budgeted or saved up for. So, when we went on vacation, I used the CC, but already had the money in the vacation fund. When we bought the car on CC, we had the 10K in the newer car fund. When said car, needed new tires, the CC was used, but that money was sitting in the vehicle maintenance/repair fund. Do we buy extra because if it, no. Do most people - absolutely. If we don't have the money in checking account or one of the savings funds, we don't use the the CC.
Here's how my wife and I operate
1. Main checking account
2. My blow money checking account $50 monthly
3. Wife's blow money checking $50 monthly
4. Baby's day care checking
5. Emergency savings - 20k cap
6. Vehicle maintenance savings - 2k cap
7. General family savings - 3k cap
8. Daughter's general savings to invest account - 3rd party account needs $100 for each deposit
9. Daughter's education saving to 529 - 3rd party account needs $100 for each deposit
10. Newer car savings - (cap still in discussion)
11. House savings - 80k goal for the next two years for down pmt, halfway there
12. Fun savings - 1k cap
13. Vacation savings - 10k cap
14. Wife's master's degree savings - ?????
Ryan Lewis - is blow money like fun money - you can use it for anything?
roxcyn Yes, for things you *want* in excess, but don't *need* that only involves you individually. We can put our wants in the budget, but within reason. If it's excessive, then blow money. Assuming you're debt free.
@@lelandjohnson1812 1. People who truly understand how to optimize ordinary spend with credit cards don't think they are getting "cash back", rather they see it as avoiding what I like to call the "cash tax". Since so many people pay with plastic these days, and all those companies charge processing fees per transaction to the merchant in order to allow customers to swipe their piece of plastic in that particular store, prices are inflated by the merchant to help cover those processing fees. Using a cash back card makes it so the bank, not the customer, is covering the processing, thereby enabling the customer paying with a credit card to avoid the cash tax. Conversely, people who pay with cash/debit (assuming the debit card doesn't have rewards) cover the cash tax themselves.
2. The whole morality issue you raise has absolutely nothing to do with one's ability to manage a credit card correctly.
3. The math is always in your favor if you never carry a balance and only use the card for ordinary spend (see #1).
Yes, because a credit card is forcing you to spend more. Sounds more like a lack of self discipline if you're spending more than you can afford. No one is trying to get rich by using credit cards. I never use cash because if I get robbed, that money is gone for good. If a card gets stolen, the bank doesn't fault me.
The problem with this theory is that when you first apply for an apt, house, or a car they will say you have no credit.
If you can’t buy a house,with cash then you can’t afford it.
@@123Teemon so you're suggesting being homeless until you can afford to pay for a house in cash? Because you need credit to rent too.
Alan Canfield Become roommates with some one.I can’t believe you only think there is one option when it comes to someone’s place to stay lol.
Tee'mon Norris Baloney. How ridiculous.
Tee'mon Norris ridiculous. Credit is essential whether you’re scared of it or not. No way around it you will need credit at one point in your life
You don’t have to make money off credit cards but if you do it right, you can use it to your advantage
"Cigarettes don't kill everyone that smokes them, but the are good for no one that smokes them."
Doesn't apply to credit cards. When I use mine in conjunction with a strict budget so I can pay them off every month the rewards basically amount to a 1-2% pay raise for me, free, in exchange for nothing other than spending the money I was going to have to anyway and then paying it off.
I was the same way. Great with my budget. But life happens and with not enough emergency fund I've had to pay interest for a couple months. Paying interest sucks!!
That was a terrible analogy.
I hate saving 5% on gas and groceries. I’d rather carry around hundreds of dollars of cash with me at all times.
Ramsey just quoted a statistic that shows people spend 12%-18% MORE when using a credit card. That wipes out your “5% savings”. You honestly think that credit cards companies lose money when they give back 5%? Like Gabe, you think you’re above the “permeative” teachings of Dave Ramsey. Hope your little financial plan works well for you 😘
@@nathanaelsmith1368 ok so there are multiple things wrong with what you just said. Let me break it down for you:
“Ramsey just quoted a statistic that shows people spend 12%-18% MORE when using a credit card.” - What you are forgetting here is that you don’t have to be a statistic. You can willingly choose to be an exception and spend money on things that you would only be willing to spend cash on. The reason people spend more money on credit cards instead of cash is because credit cards are designed to prey on people who are irresponsible with money and have little to no financial literacy. So yeah, I do save 5% on my purchases because I mainly only buy essentials like gas and groceries that I would otherwise pay cash for. Any non-essential item I buy, I only purchase if I would pay cash for it after waiting at least 1 month to consider whether or not I still want it and I have a hard budget for non-essentials of 10% of my income a year that rolls over into the next year if unused.
“You honestly think that credit card companies lose money when they give back 5%?” - From me, yes, they do. Overall however, they don’t lose money because they gouge interest from all the people who don’t pay off their balance in full each month and give me back a little from what they make off the people who are bad with credit cards.
Dave Ramsey may know how to get people out of debt, but he bases all his strategies off “statistics”. He provides fail-safe strategies anyone with an IQ above 85 can follow to get out of debt by avoiding it at all cost but it is not an optimal one.
Additionally, sometimes it makes more sense to take loans than pay outright in cash. For example I had the option to buy my car outright in cash or finance it. The finance rate on my car was 0.9% over a 4 year period. I chose to finance it because instead of giving that money to the dealership right away, I could put it in a savings account with a 5% APY and have more money at the end of that 4 year period than I would had I just given it all to the dealership right away. How did I get that amazing finance rate? HAVING AN EXCELLENT CREDIT SCORE!!! Get a credit card and pay it in full each month if you want to build wealth.
Not to mention, the S&P 500 has a 10% APY on average so any long-term loan you can get instead of purchasing something outright that has an interest rate of less than 10%, you should get and invest the cash into something reliable and with an average greater annual yield than the loan rate.
I make $75K a year and last year alone, I was able to save over half that, so yes, my “little financial plan” is working amazingly for me. Perhaps you should watch some channels on how to optimize your use of a credit card instead of Dave Ramsey.
Knowing how to use a credit card is like knowing how to lift weights at the gym. If you know what you are doing, you benefit from it, if you don’t, you get hurt. It’s that simple.
@@nathanaelsmith1368 ok so there are multiple things wrong with what you just said. Let me break it down for you:
“Ramsey just quoted a statistic that shows people spend 12%-18% MORE when using a credit card.” - What you are forgetting here is that you don’t have to be a statistic. You can willingly choose to be an exception and spend money on things that you would only be willing to spend cash on. The reason people spend more money on credit cards instead of cash is because credit cards are designed to prey on people who are irresponsible with money and have little to no financial literacy. So yeah, I do save 5% on my purchases because I mainly only buy essentials like gas and groceries that I would otherwise pay cash for. Any non-essential item I buy, I only purchase if I would pay cash for it after waiting at least 1 month to consider whether or not I still want it and I have a hard budget for non-essentials of 10% of my income a year that rolls over into the next year if unused.
“You honestly think that credit card companies lose money when they give back 5%?” - From me, yes, they do. Overall however, they don’t lose money because they gouge interest from all the people who don’t pay off their balance in full each month and give me back a little from what they make off the people who are bad with credit cards.
Dave Ramsey may know how to get people out of debt, but he bases all his strategies off “statistics”. He provides fail-safe strategies anyone can follow to get out of debt by avoiding it at all cost but it is not an optimal one.
Additionally, sometimes it makes more sense to take loans than pay outright in cash. For example I had the option to buy my car outright in cash or finance it. The finance rate on my car was 0.9% over a 4 year period. I chose to finance it because instead of giving that money to the dealership right away, I could put it in a savings account with a 5% APY and have more money at the end of that 4 year period than I would had I just given it all to the dealership right away. How did I get that amazing finance rate? HAVING AN EXCELLENT CREDIT SCORE!!! Get a credit card and pay it in full each month if you want to build wealth.
Not to mention, the S&P 500 has a 10% APY on average so any long-term loan you can get instead of purchasing something outright that has an interest rate of less than 10%, you should get and invest the cash into something reliable and with an average greater annual yield than the loan rate.
I make $75K a year and last year alone, I was able to save over half that, so yes, my “little financial plan” is working amazingly for me. Perhaps you should watch some channels on how to optimize your use of a credit card instead of Dave Ramsey.
Knowing how to use a credit card is like knowing how to lift weights at the gym. If you know what you are doing, you benefit from it, if you don’t, you get hurt. It’s that simple.
@@nathanaelsmith1368 I spent about an hour writing a detailed comment completely obliterating your argument but your cult leader Dave Ramsey shadow-deleted it. Just know that you are entirely wrong and I hope you can educate yourself on credit cards and “healthy debt”, a term that Dave hates, so you can optimize your wealth building strategy instead of just fail-safe idiot-proof brute forcing it like Dave suggests.
@@nathanaelsmith1368 I spent about an hour writing a detailed comment completely obliterating your argument but daddy Dave shadow-deleted it. Just know that you are entirely wrong and I hope you can educate yourself on credit cards and “healthy debt”, a term that Dave hates, so you can optimize your wealth building strategy instead of just fail-safe idiot-proof brute forcing it like Dave suggests.
I had this attitude for all my life. I am 45 and I would like to buy a house. I am responsible, I don't keep a balance and live within my means. I keep my utilization between 2-9 perfect. To each his/her own.
I think credit cards are a wonderful thing, ---IF--- you use them right. I use my CC as if it was a debit. Put funds in to have a negative balance before I pay on it. Reap the benefits. Spend it exclusively on 3 things. 1) bills 2) groceries and 3) gas. No consumer discretion. Used that way it is not a trap. Never paid a dime of interest on my card and collect free groceries like nobody's business!
Glad to see I'm not the only one who pre-pays credit cards and sticks only to ordinary spend.
It's not free if you have to repay it
@@simonsanchez6173 are you dumb? nothing is free at all
No one every got rich off of _______, so you don't need them. That equation can't only be true for credit cards, but whoever else you put in it's place. Coupons, Loyalty Programs, Bogo sales, change in the couch, having a yard sale, selling recyclables, or cashing a birthday check.
coupons, loyalty programs, bogo sales, change in couch and having yard sales haven't destroyed hundreds of thousands of people lives aswell. hence the smoking analogy there's no good reason to be using credit cards, just like there's no good reason to smoke but people still do and that's the risk they choose to keep in their lives
Matthew, then you would agree that Dave Ramsey's equation isn't quite accurate?
Having a retail business myself, I am earning $800 in cash back a month with Capital One, nearly enough to fund both of our Roth IRAs. It is technically possible to get rich off credit card rewards, but it is impossible to pass a physical BECAUSE a disciplined cigarettes technique, pushed your health over the edge.
Dave has met with billions and billions of millionaires. None of them, I repeat, NONE of them, made their billions off of credit card rewards. You think you are beating the credit card companies but they are beating you. They got you right where they want you.
ACR, true. My $800 cashback, I've never thought about the 40K I'm handing over to them each month, ouch! A little truth in advertising would force these credit cards to stop pushing, "Get filthy rich off our cashback, starting with our minimal sign up bonus."
If a millionaire made $10k off credit card rewards over a lifetime, it's a tiny fraction of his net worth.
But even for a millionaire, having $1,010,000 (using cash back cards) is better than having $1,000,000 (using wads of paper bills).
That extra $10k, while only a tiny percentage of net worth, will still buy a lot of pizzas.
CC dont make people spend more. People make people spend more. Just be disciplined dude. Its not rocket science.
Its good advice to not use credit if you have no control but there are plenty of uber rich people who use credit cards for the convenience of carrying plastic...They have cards like the American Express Centurion Credit Card (Black Card) these people use and pay off upwards of a quarter million a year or more...There are plenty of credit cards and lines for the rich...Being rich doesn't mean your responsible or even good with money, it just means your rich...Id love to see the statistics of people, who had a million dollars and how many went broke afterwards compared to how many turned that million into 10 million?
cutlerylover Ive talked with trillions and billions of zillionaires and none of those zillionaires told me they got their zillions off of credit card rewards. Ditch the credit cards immediately.
Well I rent and my credit gets pulled when I need to rent a new place so I care about my credit score Im not a millionaire yet so I dont have the luxery of not caring about my score I cant just go buy a home in cash yet...I dont care about the rewards and I dont pay fees, I just want that number to get a place to live when I need it...I also live out in the woods of PA so my options to just get a rental where the landlord doesnt consider your score is limited as well so everyone situation is different...
I know the top cards can be anywhere from $500-$1500 annual fees...but that has nothing to do with my point at all...my point is the super rich have credit cards too maybe not Daves friends because Dave makes them feel stupid, lol...But out of the 11 million millionaires how many do you think have credit cards?
Also I never said they got anything from their credit cards other than convenience...Go to a Porche dealership and see how many people buy their cars on credit cards, versus checks, versus cash you may be surprised...How much cash do you think most millionaires carry with them?
... says the no name listener that has likely not accomplished much, has built no significant wealth, and hasn't helped anyone out of financial hardship...
Actually the view of money has changed. A lot of people actually view money as a coupon and don’t consider it to be part of their net worth.
I will confirm your statement. I have been spending way less money since stopping using cc. And I did exactly what this guy did.
Skill issue
It was due to your mindset to spend less, you could have done that without stopping credit card use.
I earn several thousand dollars each year from my credit cards, and not once have I ever paid a single annual fee, misc fee, or drop of interest. I get a minimum of 5% cashback on most anything that I buy, I get signup bonuses for spending what I would spend regardless if I put it on my CC or not, and I get thousands worth of free travel each year from premium credit cards that have their annual fees permanently waived. Heck, I have cards that I've never even used and yet I have earned thousands of dollars from that card over time. With the new changes I also have my telephone plan, and netflix/amazon prime paid for completely and 100% free through my credit cards. Two years ago my home was broken into and my laptop was stolen, which the CC company replaced at their own expense. The difference is knowing what you are doing and using cards responsibly instead of being an idiot with your money, but that goes for anything and not just CC's.
Until debit cards are 100% accepted I'll keep one credit card. Just for those times where some counter jockey says they don't take debit cards. I'm too tired to argue with these people. But I've been at baby step seven for at least 15 years now. I don't play rewards games and I don't get on a plane but maybe once every 5-10 years so I could give a rip about airline miles. But 9/10 people (probably more) who do use them are like Dave says. So unless you've really got your act together you should really steer clear.
Sly Foxx a counter jockey at enterprise wouldnt let me use my debit card to rent a car, though it was in good standing and i havecrented a car before from them, unless they had two utility bills that matched my adress on my card. I guess my dl wwsnt good enough. So yeah always good to have one just in case.
I use my credit card at the gas pump as well. Skimmer devices are all around, and I don't want to give thieves direct access to my bank account.
I have had fraud in the past and both debit and credit cards, dealing with fraud on a credit card is a simple and easy process to dispute the charge. On a debit card it is a nerve racking time consuming hassle. Your account gets shut down and I remember it took close to 1 month before my funds were credit back to my checking account. I travel to a foreign country on vacation once per year and a credit card is must have incase of an emergency and the fraud protection. Using a debit card overseas could get you in trouble if fraud happens and your card is shut down, you could be stranded without access to funds.
I don’t care what the studies say, I know for myself personally, I definitely spend a lot less when I use plastic vs cash. Now the plastic can be debit. I feel like I have more control of my money when it is plastic. I can more easily look back to see where it went, which makes me want to spend less of it in a stupid manner, I also don’t need to worry about losing it or the change that comes with was hard transaction.
I also find it weird that Dave is attacking this guy when he is not there to defend himself. Saying it once is fine, but he is making cracks against him the entire video. I know that Dave gets mad at people’s digital courage and I get that, but I think it was a bit much and kinda hard to watch.
I'm the same tbh, I personally spend almost nothing when I have money on any card and use cash faster. lol I don't like seeing my account go down. I have a credit card(discover) and only use it for things that I'm going to naturally get anyways. ( I don't even use it like that cuz I'm not a heavy spender and don't really want much) I use it for Netflix mainly since I would use my debit card to pay for it anyways, but most of my subscriptions are still on my debit card. I have had my card for about to be a year now and feel like my spending habits have gotten better if anything.
Do you own your own home with no mortgage and are debt free? If not, shut up and listen to Dave.
@@Yewon2001 how about you get off his nuts. Maybe you can learn something from someone else. Dave makes great points but stop worshipping him because guess what? He can be wrong an sometimes he is.
@@POLARBEAR.17 fine. Stay in debt. I don't care. I'm debt-free and on my way to retirement in 10 years thanks to Dave. Your financial problems are none of my concern.
@@Yewon2001 if you didnt care you wouldnt have told me to stay in debt lol but go off simp
Credit cards have been very good for me. I have been paying off the bill every month for around 20 years, and whether something is bought on a credit card or debit card makes no difference to me as I am cash positive, it doesnt encourage me to spend any more. While you arent going to become a millionaire through points getting something back is nice.
There is a reason Dave blasts things like leasing, credit cards, life insurance and such. It is because 80% of people don’t know when to use them and when to avoid them. If you burn yourself on the stove every time you use it, it is NEVER good for you to use.
Dave isn't opposed to life insurance. He's opposed to ripoff insurance/investment products like "whole life" and "universal life," which are many times more expensive than term life.
1. A few percent kick back. 2. Protection from fraud and warantees for purchases. 3. Safety from robbery and burglary
$1,000 free money is $1,000 free money. If you pay your card every month then it doesn’t matter.
You only have to spend tens of thousands of dollars to get one thousand "free" dollars! What a deal!
If you're already spending that money on things in your life, it's a no brainer. You don't spend the money for the rewards, you reap rewards on monies that will be spent regardless of payment method.
if you end up spending 15% more than you would with cash, to reach that $100,000 in order to receive that $1,000 it's not worth it at all.
If you're following a budget, this 'spending 15% more' nonsense doesn't exist. That's for people with no budgets and no self-control.
actually it is not nonsense for the vast majority of people who use CC's. very few use budgets and have any kind of real control over their money. which is why the vast majority of americans are in CC debt. stop being an internet keyboard outrage warrior, and actually make an attempt to understand what is meant by what is said
"The Credit Card is the Cigarette of the financial world." I don't agree with that analogy. Credit cards are good if used right in my opinion. Go to get gas I already need? Might as well get 2% free money, right?
wrong
@@666dynomax explain...
I would argue it's not so much "free money" as it is avoiding "the cash tax". Credit card companies charge a processing fee per transaction to merchants to allow their customers to pay with their preferred piece of plastic in that store. Since so many people pay with plastic, the processing fees are passed along from the merchant to the customer in the form of inflated prices.
Cash/debit users cover the cost of this per transaction processing fee, the cash tax, themselves. People who use cash rewards credit cards *responsibly* pass it along to the banks.
I have come to realize the reason he doesn't give an inch on his stance is because as soon as he does, some people (who shouldn't be using credit cards) will take that as an excuse to use them. Shortly thereafter, it won't go so well for them. So he just says absolutely no all the time, which is wrong, but I get it.
I have come to realize the reason he doesn't give an inch on his stance is because as soon as he does, some people (who shouldn't be using credit cards) will take that as an excuse to use them. Shortly thereafter, it won't go so well for them. So he just says absolutely no all the time, which is wrong, but I get it.
He’s saying we’re susceptible. Even though credits cards are logically sound to use if played right. Human emotions and subconscious is omnipresent. I did have that problem when I got my first credit card. I didn’t go into debt but I did spend more than I would have. I know my fault now and I’m extra vigilant on those tempting but unnecessary expense.
Too bad UA-cam doesn't let me see the Like to dislike ratio LOL
Dora the Explorer had it right when she said "Swiper No Swiping." Someone should create anti-credit card meme with that.
You are wrong ramsey! You can’t generalize , there are responsible people out there
I spend more money with cash. With credit cards I get a statement that helps me to keep records. When I am spending cash I thank that it is ok to spend when I use a card I think about it.
I pay it off every month.
Why Dave Ramsey is wrong.
Quotes statics of how using plastic increases the amount you spend vs cash.
Proceeds to tell you to use a debit card - which has the same affect using a credit card does in terms of spending more.
I like how you have more protection with the credit card if someone tries to steal your money, and it's kind of hard to buy stuff online without one
Debit Cards
I have a credit card, I use it like a debit card. Only for what I can afford, I buy. I like the CC because it offers cash back, on the same purchases I would've made anyways (gas, utilities, groceries, necessities I want, occasional things you save up for), and also buyer protection (someone uses it fraudulently). I do agree that using plastic is easier than giving up dollar bills. In the end, paper or digital, money is money, as long as you value it I don't see a huge difference.
I know many people can not handle the ease of using credit cards and loose control very quickly to the point they can not pay them off. I agree, it is very easy to spend money with credit cards without touching or seeing the money and I admit I am one of them, but I have been using credit cards since 1975 and haven't paid any interest by never buying anything I could not pay off at the end of the month. Using credit cards give a lot of protections and perks. No, I did not become a millionaire with my cash back rewards, but free money is free money and my 827 Fico score is also a plus in many ways that Dave does not like to talk about. Since I am using cards for convenience and protection they provide, the way I see it, I am using the banks, they are not using me.
Sounds like credit cards and your 827 FICO score are an important part of your lifestyle.
"I am using the banks, they are not using me."
Yet for some strange reason, they are happy to give you an elite FICO score that you proudly broadcast to others.
Leland Johnson weird isn't it?I wonder how many millions we have here😌
Self control is the issue, not credit cards
For someone who believes people control their own destiny, and who believes people can change their behavior via the power of choice, it's interesting that Dave sees a person with a credit card as a mindless robot, controlled by the overwhelming temptation of the card. An inconsistency in order to further the anti-debt Ramsey brand?
Renting a burger with interest.
Idk about y'all, I treat my credit card like my debt card. At the end of the year I cash in my cash back rewards. I don't care how much it is, it's better then nothing. That's a mortgage payment, 3 car payments, a nice paid hotel for vacation, set of new tires, that's 27 fill ups at gas pump, one year home Ins, whole year of car Ins plus 3 car registration fees. When I have my card I do have a pain not to charge on things I want. Only get what I NEED" no thanks I don't wish to super size" " no I won't have the big streak, give me the 2 for $20". I'm not saying your going to get rich, just get reward for your everyday spending
Daniel Garcia teach me because I’m confused now. I see a lot of people saying what you’re saying and it’s opening my eyes more about credit cards. I’m 20 and I’ve been told never use it since I was 18.
@@PapaBoat777 key is be responsible.
Only spend what you have but not all of it.
Example: say you spend on average $300 a week on everyday life times 52 weeks, that's $156 @ 1%
Discover card every quarter has a different % cash back
Could could :
5% on Groceries
5% on Amazon
5% gas
5% moives
3% on this and that
2% on something
Its changes so often . It's not always 1%
$156 could change to $300 or more with discover card.
You not trying to get rich. You just trying to earn a little
That's money you dont have
But you must pay the credit card off in full or it's not going to work out.
Getting charge Interest will be point less on cash back
you can also pay it off every week.
Im just saying , That little cash back at the end of the year can help you out.
( you can cash out anytime, but I wait a full year)
Even business has cash back rewards.
The amount of money they spend for work they can buy a new honda civic every year.
I tell you what, start with this.
Put all your Bill's on one credit card automatic with cash back card
Water bill
Car insurance
Cable
Hulu
Netflix
Light bill
So on.
Pay that bill off every month.
In one year you might look at about $125 cash back
Not much but you can still do something with that money .
Every little reward helps out
Daniel Garcia well thank you very much! I was always iffy about Dave’s no credit card thing and how it’s bad! I’ll be trying this out soon when I get a new job. Corona unemployed me so I’m looking for a job lol. Thank you!
How do you NEED to go eat at the 2 for $20 restaurant??
@@user-hd8ej8yx9p I was just throwing it out there. Chili's and most restaurants have a special 2 for $20 meals .
I'm a cheap person
I do believe in your philosophy especially about credit card but why are you accepting credit card as a method of payment in your online store?????
For most people credit cards land them into trouble or at best it is a break even. Even if you get rewards, there have been psychological studies that show you unconsciously spend more with a credit card which most times negates the benefits of the points.
Does that apply to debit cards too?
If you have so little self control that you order more items just because you are using a credit card, then the Credit Card is NOT the issue! .....
Not using a credit card is so dumb. It's not an opinion; it's a undeniable fact. I can keep track of everything I spend on an app like Mint if I use credit cards only. Plus I get rewards (3-5% cashback on gas, for example). People shouldn't blame credit cards for their lack of discipline.
That's another thing people don't realize. Go spend cash for a week and tell me down to the penny where it went. Is it possible, sure- hold on to all the receipts. I would rather just check an app at my convenience lol
Michael Jay - Value Investing
Yeah for most people.
Not me.
I have common sense and reading/math skills.
Anyway people paid more than 15 billion in in debit card overdraft fees last year.
What does psychological studies show about that?
Like I keep saying,no matter what credit or debit card you use it all boils down to being responsible.
I’m glad I’m not the only one thinking if we are able to budget our money and pay off debt using Ramsey process then we can also handle paying the credit card bill that is used for household expenses and gives 4% cash back towards those very expenses which in turn gives me extra cash. And yes I’m still debt free because I immediately transfer money to pay the credit card as if it were cash.
And let’s also not forget that credit cards are useful when you rent a room in a hotel and they put a hold on your money just in case you break something. Or if they overcharge you for your room by hundreds of dollars (which happened to me) That money is tied up as a pending transaction in your account until they release it back to you. I’d rather use a credit card for this purpose so my account funds aren’t held hostage.
wonder how many people can say “ I became a millionaire by following Dave’s financial advice”. Honest question.
More than can say that they followed your's. Honest answer
Sylvester Stallone looked so cool when he played Rocky standing at the corner in Philadelphia wearing a black fedora leather jacket and having a cigarette hanging outta his mouth that would flap up and down whenever he spoke.
The fact that some people simply can't control themselves with credit cards is more than enough reason to not use it. In debt or not. On time payments or not. For some people it just shouldn't even be an option. That's what Dave is saying.
Skill issue
This advice makes sense for people who have spending problems and don’t plan on investing in real estate. A good credit score will ensure you are guaranteed for a loan with favorable interest rates. This will be especially helpful in real estate when leveraging debts. His argument against credit cards is comparing it to smoking cigarettes, but doesn’t really explain why credit cards are bad. It seems as though it’s a deflection. This leads me to think that if someone is responsible with a card and their spending, you get good perks and a good credit score. Those can be used to make every day life better, which is good in my book.
I think there are ways to utilize them smartly. But Dave is pointing out that very, very few of us spend wisely or within limits when we use credit cards. And all of that overspending on meaningless things could go towards investment instruments. He's right. The plastic entices you to spend more than you need, and amass more than you want.
Hey Dave, I paid off my mortgage a couple months ago, it’s value is 240K, I bought it for 100K, 10 yrs ago. I drive a 12 yrs old truck and a 10 yrs old SUV for all the grand kids. Everything is paid for, I make about 120K a month and live on 50K a yr. I am ain’t to be rich or live money to my grand kids, but my life insurance will give them enough. I am 56 yrs old and my retirement pensions will be about 10K a month in 4.5 yrs. I ain’t married or do I plan to be. My credit score is 840 and I do use 6 credit cards for whatever bills like light bill, groceries or phone bill and cable. But I pay them off every month. Credit cards ain’t for everyone or billing rich.
I totally disagree with Dave's stand on Credit Cards. Let me just put that out there.
OutdoorSurvivalShop He's the millionaire and you're not😂😂🔥😂
But he’s right though. In general most people spend more with plastic That’s a fact jack. It doesn’t apply
To every single person of course
I totally agree with you ,credit cards all day !!!!!!!!!😁
I feel bad for the poor souls who listen to this guy so he can get rich of primitive advice
@@robroberts5244 authoritarian arguments are just pathetic try something new
I'm sure he uses CC ,when you're a millionaire you can talk smack. Just buy his books . Cash rewards can't make you a millionaire uh duh but point building is getting a bit back towards CC payments or bank savings.
Having lost thousands out of my bank account due to debit card fraud and waiting weeks for them to correct it, I’ll never use a card directly associated to my ACTUAL money ever again. 😆 Monthly payoff + added security + some added bonuses (like free flights home) for buying the same things I’d buy with a debit? Yes please.
So, how long have you been a millionaire?
Adding to the Fast food example- if paying cash, one would plan in their head how much they would pay n hence questions like ‘u want to supersize or add coleslaw?’ Would be a no thank you more often than case when u just showed up with a card with only food in mind, not the calculation of cost behind it.
Hey Dave, great show. One thing: while you’re correct that the cigarette business is in decline, here, in the US, it is booming overseas in places like Indonesia. Thanks for the great videos, as always!
People on here stating that everyone who uses credit cards spends more than they normally would needs to take a psychology course because they have no idea how these studies are done and what the actual implications of the studies are...they have no idea what a null hypothesis, alpha level, confidence interval etc are it’s incredibly irritating
I like Dave and I believe that most of the time he has sound advice. And I agree that credit cards are NOT for everyone. But I vehemently disagree with his logic on this subject. What difference does it make that I buy the things that I'm going to buy anyway (food, clothes, etc.) with a credit card and get points for doing so? Not to mention other benefits like extended warranties, price protection, etc. I don't see using credit cards as "wealth building" I see it as making some passive income (aka fun money). That means free trips and free items that I don't have to pay for!
Credit cards don't give you passive income
Agreed. And the question wasn't about using credit cards as a wealth building tool, it was about optimizing ordinary spend as you are describing. Dave answered a question that was not asked just so he could go off about credit cards again.
@@Convexhull210 You're right, they're not passive income, but they do help you avoid the "cash tax". Given the prevalence of paying with plastic and that credit card companies charge merchants a processing fee per transaction for a customer to be able to swipe their card in that particular store, prices are inflated by the merchant to cover the costs. A customer paying with a credit card passes those costs onto a bank to cover, and often times comes out ahead. That money is passed along to the customer paying with a credit card in the form of points, a statement credit, or cash. A customer paying with cash or a debit card that doesn't offer rewards is personally covering that cash tax.
In addition to avoiding the cash tax, if you collect sign-up bonuses responsibly (e.g., you only put ordinary spend on your cards and pay your balance in full every month), you can make hundreds if not thousands in a year.
Here is the rub. As a business owner/operator it only makes the most sense. Doing the accting when a business goes above a certain threshold the rewards overcome the risk/reward threshold.
Dave’s RIGHT as usual. My dilemma, is whether I should retire in Mexico or in Europe. Thanks Dave,I have to make a tough choice! A few years ago my choice was pay credit cards or eat. Follow the Dave plan, if you want to follow your heart and make your dreams a reality.
I agree with Dave on a lot of things but one I don't is his hate for credit cards. I think every responsible 18 year old should get their first credit card the day they turn 18. I didn't do that. I was 25 years old looking for a house mortgage and got ridiculous interest rates or straight up denied from numerous banks. You know why? Because I had no credit. I never took out a loan in my name, never had a credit card, or anything. So here I am with a crazy interest rate which is costing me thousands extra because I didn't get a credit card and use it responsibly by paying the balance in full at the end of every month. It's not just about getting 1% cashback, it's also about getting a good credit score.
But a debit card is also plastic so you can overspend with that as well....
Gina H But it's YOUR money you won't go in to debt over spending! Lol you'll just be broke
Daylon Simington Except people do and get overdraft fees to top it off. People that mishandle money are broke typically regardless of what method they used to pay for things. The problem is lack of self control not an inanimate object.
"It's not my fault judge, the piece of plastic made me do it!!!" Yeah... Riiiiiight... Totally don't blame it on your inability to control your emotions and spending on an inanimate object. I'm sure that'll hold up.
no you can't Debit Card comes from your checking account and your savings account. If you swipe one of these you will overdraft. I know because I use one.
You could still get into trouble with them. What if you go broke and can't make your rent/mortgage payment? A credit card is probably not going to throw you out of the house.
I get what he's saying, and he's right. But he's stateted also that he pays with a debit card, which is also made of plastic. And he gets that back as well.
Dave I use my credit card to avoid international transactions fees . I’m keeping my plastic and I’m very responsible. I owe zero on all my credit cards .
Just performed plastic surgery. Not going to reinvent the wheel
Dave called him a Pharisee?? 🤣
the crazy part for me personally is, when I have cash I tend to want to get rid of it, since I don't like carrying it around
The real problem is that credit cards raise product prices for everyone because of the transaction fees from those credit companies.
Yup
You're putting the numbers that tie directly to your bank account out there when you use your debit card. If someone gets your checking account money, good luck getting it back in timely fashion. If they get your CC number, you don't lose anything
He also thinks having kids and getting married is a good thing.
Did "plastic surgery" a couple of years ago, no more credit cards, don't understand why people are okay using credit cards, borrowing money at 18% interest, doesn't make sense, credit cards are the bank's version of payday loans.
The funny thing is that I spent more just using a debit card or cash and less now that I have 11 credit cards. That cash trick might work for the older gen but the newer gen checks their balance on apps 24/7.
If 100k to make 1k sounds crazy , imagine if he knew about dividends 😂😬
My question out of think Dave said $97,000.00 a year does that person save. I have gone to churches, homeless shelters, food distribution centers. I have met many people who used to make $100,000 a year and didn't save a dime because they thought the income would always be there. Because of health issues, company closing, them being fired for various reasons etc they now have to humble themselves and eat with us Riff Raff AKA poor people. If I made $100,000 a year I can live off $50,000.00 and put other $50,000.00 up and invest some. I'm not saying all people that make that kind of money don't save but a lot don't which is said. Here I struggle making barley making ends meet and dream what it would be like yet life, God let people like that have that kind of money.
Brian Waller. Yep all I want is 2 million buy a home, invest some, save some and keep working. Yes $100,000 is not like it was 10, 20, 30 years ago but I would take it and live off of half.
god is not real so he/she doesn't factor into any equation. Churches are nothing more than a money grab to pay the preachers and for the mega buildings that are unnecessary. My wife and I are in our late 20's and make 140k/yr here in Ohio where the cost of living is cheap. We are able to save a good amount in our 401k and ROTH IRAS. Only debt is our home. I agree though that most people find a way to blow all of their income as if it will last forever. I have seen it before and told myself I will never allow myself to be one of them. I hope your dream comes true of making more so you can live comfortably. The two biggest factors when it comes to wealth is which family you happened to be born into (if they were rich or poor and how they taught you about finances) and the second biggest factor is the person you choose to marry. My buddy is married to a doctor who makes over 200k, but she blows it all on clothes, fancy cars and other stupid unnecessary items. I would rather be married to someone who makes 40k and is frugal compared to the person making 200k who will never change their ways of spending.
Some would chastise you for saying you would only save $50k out of $100k, because they would be so 'rich' with $50k and could live for less. My point- maybe worry less about what higher income households save or not, and more about increasing your own income to that level.
I'll never agree with Dave on his issue about credit cards. I'm responsible with credit cards and I've paid them in full every single month since I was 16 years old and now I have excellent credit, and the only debt I've ever had is student loans (which will be paid off in full in about a couple months time, thanks to Dave's other teachings about getting out of debt). Having excellent credit has helped me get a lot of perks when buying things (especially renting an apartment, it is difficult to get an apartment without good credit). Also I will counter what Dave says about the emotional impact of cash leaving your hands: when I use my credit card, the moment I finish the transaction, I write down in my cellphone in notepad how much I spent and how much "cash" I have left. And I don't buy extra stuff just to rack up more points, that's just STUPID! =)
If im at McDonald's, it don't change my appetite whether I'm paying with cash or charge...either way in getting a number 1 🙄. And im still going to have a cig afterwords.
SKYNET When I leave McD's I tend to get a number 2....
I use ccs and have for decades, and yep, I do get discounts -- but mostly, I get them for the signup bonuses, which really add up into many thousands. BUT I do pay them off every Friday AND I still think his advice for NOT getting ANY cards is wise for MOST people, because I do think it's WAAAAAY easier to use them than it is to hand over cash - and that's why so many people get into serious financial trouble. Also, I think his observation at the very end is spot on. (Just as a data point, we have no debt and are big savers... AND we're disciplined enough to still stick to our budget; we just choose to pay using cards that earn bonuses. But that's the difference - really being disciplined and trusting yourself to be disciplined with every purchase and every on-time, in-full payment.)
"Exact same fraud protection." So wrong on so many levels...please compare the process of trying to recover funds stolen through fraudulent transactions on a debit vs. credit card, sooooo much easier to do with the credit card company vs. your bank, regardless if its a regional bank or credit union. Dealing with the process with the bank can take days/weeks and leave you without your funds.
I'd be curious if any of Dave's employees use Credit Cards or if his hiring procedure pulls a credit report.
The caller/emailer wasn't being judgmental at all, if anyone is judgmental in this case its Dave. For responsible people who pay in full every month, Credit Cards are a valid financial vehicle. I understand why Dave is so against them, but the paint with a broad brush argument he uses just gets really old and he sounds like a grumpy old man who just raises his voice when he can't prove himself right.
Also stop citing your numbers Dave...more people live in New York City than listen to your show or have gone through FPU, so stop acting like you've talked and worked with EVERYONE like you generalize you have. You've worked with less than 1% of the population. Sorry but I just get so sick of the "Credit Cards are evil and can't work for anyone" argument he bludgeons us with.
TeKnoVKNG23
I tell people if they use a debit card while traveling out of the country to have a credit card for backup.
Seen too many debit card holders stranded for a few days in places with no money waiting for the issue to be fixed.
and yet you watched the video..
I know that I am being shadow banned, but I will leave this comment anyway. Dave is being so stubborn on the issue of credit cards. AT LEAST, he should tell the truth about their upsides. One of them is online purchases. I'll bet most everyone does them. I don't think that Dave could deny that credit cards are safer than debit cards for those purposes. Don't get me wrong, Dave's advice is Golden, and MOST people would do well to follow his advice. But, he has a hard-on for Credit Cards that borders on arrogance.
This is so true in my case. Plastic definately removes the spending friction. I am addicted to plastic. Since listening to dave I've gotten it down to one credit card which I leave at home. All purchases are either cash or debit card and since I have gotten out of debt and saved quite a bit of money. I'm not completely cured yet my CC is attached to my Amazon account which I use mostly for my side business so I don't have to worry about over drawing any account. I do admit though having that CC makes me still buy stupid things occasionally. My wife often asks "another Amazon package?" LOL
I just think cash is easier. And I don’t get stuck with a huge credit card bill at the end of the month that depresses me having to pay it.