Disturbing financial statistics

[MrsPete]

I think there are some people who just can't trust themselves to use credit cards responsibly and it is best for them to avoid them entirely . . . Reward cards are the simplest example of this.

I think you're right in theory, but if we believe the statistics, I think MOST people aren't managing credit card debt all that well.

I agree about the rewards. We charge everything: groceries, gas, etc. and pay it off at the end of every month. We love the free movie tickets, etc. that we get as rewards. But that only works if you're living within your means.

 

[disneysteve]

if we believe the statistics, I think MOST people aren't managing credit card debt all that well.

True. 60% of CC holders carry a balance. Any balance negates the value of any rewards earned (with the exception of 0% deals).

 

[HaleyB]

I love the Automatic Millionaire. It is a fantastic system. We have always used auto pay and payroll deductions as a tool. When I got my very first cc I set it up to automatically pay the balance in full out of my checking account. I knew in a real emergancy I could call and change it, but I also knew that it was just enough of a pain to keep me from ever charging more than I could pay off right away. It is still set up that way.

I am not afraid of debt, I just hate it. My Dad was always saying to look at 'the real cost' of things. So we look at gas milage when we buy (used) cars, and Energy consumption on our appliances, and we factor in the cost of credit when we consider charging anything.

Another good book is The Millionaire Next Door: The Surprising Secrets of America's Wealthy by Thomas J. Stanley and, William D. Danko.

 

[stemikger]

Originally quoted by HalyB
I love the Automatic Millionaire. It is a fantastic system.

I have been talking about this book for sometime now. Everytime someone mentions Dave Ramsey I always let them know about this book.

I am going to buy a copy of this book for all the kids in my life before they enter college or even high school.

I really like Dave Ramsey (but his all or nothing approach might not work for everybody). That is why I like David Bach (the Automatic Millionaire) better. It is a much more realistic and easier approach. You will get the same results as The Total Money Makeover. Both books are great, but I think the Automatic Millionaire is better.

Also, Start Late, Finish Rich is another great book by David Bach. I also like David Bach's investment style better.

 

[TNKBELL]

I have been talking about this book for sometime now. Everytime someone mentions Dave Ramsey I always let them know about this book.

I am going to buy a copy of this book for all the kids in my life before they enter college or even high school.

I really like Dave Ramsey (but his all or nothing approach might not work for everybody). That is why I like David Bach (the Automatic Millionaire) better. It is a much more realistic and easier approach. You will get the same results as The Total Money Makeover. Both books are great, but I think the Automatic Millionaire is better.

Also, Start Late, Finish Rich is another great book by David Bach. I also like David Bach's investment style better.

I was wondering how this book differed from Dave Ramsey's! Thanks, I've just reserved it at the library!!!

 

[stemikger]

Originally quoted by Tinkbell
I was wondering how this book differed from Dave Ramsey's!/QUOTE]

The biggest differences and in my opinion the most important ones are that The Automatic Millionaire has you attack all your goals at once without a budget and he seems to be more of an advocate of index funds whereas Dave Ramsey prefers managed funds.

For instance there are no baby steps to go by and no budget to adhere to. If you take the time up to set up everything automatically, the rest is on auto-pilot. You can simply spend the money that you get from your paycheck because everything is already taken care of. Much easier then budgeting. It takes all the temptation out of your hands.

Also David Bach's investment style is a lot more like mine. He has something called an investment pyramid that is a great tool. But if that is something you don't want to bother with you can simply put all your money in one balanced index fund and call it a day. It dosen't get any easier then that.

Dave Ramsey is more into managed funds that charge higher fees. If you stick with a Vanguard balanced fund or one of their target retirement funds you will be on your way with one fund and a lot less headaches of having to rebalance every year and wondering if the fund manager is doing the right thing while he is taking a large portion of your profits (if you make any that year).

Also, Davey Ramsey is much more hardcore trying to get everyone to cut all their cards up and never using credit again. In the real world I think one credit card is good to have and using it responsibly is the key. Also, his all or nothing approach can be dangerous if you get stuck on one particular baby step for too long. He advises you to not invest until you get past the first two or three baby steps, but I think that is bad advice, because time is plays a very criticial role in making money with investments.

It really depends on your personality and which plan works for you. If followed both books will get you there, but the bottom line is you have to put it into practice and see which one fits your lifestyle.

I hope this helps. Sorry if was so long.

 

[Debbie]

I am going to buy a copy of this book for all the kids in my life before they enter college or even high school.

I got The Automatic Millionaire for my two boys, and Smart Women Finish Rich for my daughter. All are in post-secondary school. I've read Start Late, Finish Rich myself, since 3 kids in post-secondary and 2 following not far behind them, mean that I am...starting late!

 

[chrissyk]

I think you're right in theory, but if we believe the statistics, I think MOST people aren't managing credit card debt all that well.

I agree about the rewards. We charge everything: groceries, gas, etc. and pay it off at the end of every month. We love the free movie tickets, etc. that we get as rewards. But that only works if you're living within your means.

We do this too, and it works out well for us. However, there is a theory about rewards cards that says that people charge things that they wouldn't otherwise buy just to get the points. I used to think that that was bunk, but my mother made a similar observation about my sister recently and I had to agree with her. My sis pays in full as well, but a lot of times she charges things and then says "but I'm getting POINTS". I wonder if she'd be buying the stuff otherwise, KWIM?

 

[disneysteve]

However, there is a theory about rewards cards that says that people charge things that they wouldn't otherwise buy just to get the points.

I think there is some truth to this. I'm guilty of it myself in one respect. We primarily use a Marriott Visa. We earn reward points good toward free stays at Marriott hotels. Points earned with the CC are combined with points earned by actually staying at a Marriott. The result? We are much more brand loyal to the Marriott chain, even if there might be comparable but less costly hotels in the area. When planning any travel, I always check for Marriotts first. But I do still comparison shop. If I find a much better deal with another chain, I'll take it. But if the other chain is only a few dollars cheaper, I'll choose the Marriott since the reward points have value too.

Of course, we've also come to enjoy the dependability of what we get with Marriott properties. There have been many times over the years that I ended up writing nasty letters and getting refunds after stays in other hotels. I've never once had to do that with a Marriott. That was why I decided to join Marriott Rewards and get the Marriott Visa in the first place.

 

[can'twait]

I have a Upromise card and I just saw that you can get 10% rewards on some purchases, like at grocery stores, but I don't care! I'm not using the confounded thing! I go to Bed Bath & Beyond and pay cash, even though I know they participate with Upromise. Someday I will use it for rewards, but not anytime soon. A reward is a bonus. I don't go out of my way to get them, but if one comes along I'll take it. It's more important to get rid of the %#@! interest payments. It makes no sense to get a 10% reward while you are paying 14% interest. If you can charge up all you can and pay it off monthly, more power to you. We just never seemed to be able to budget what we charged, and ended up not being able to pay it all, and then it would snowball. Cold turkey is the only way we can do it for now.

 

[crisi]

My favorite is Eric Tyson's "Personal Finance for Dummies." Its the same sort of advice, its easy to read, its well indexed, it has some nice workbook features in the same book.