We could extend this credit card theory on both side for a long time.

I am not saying that I never buy useless or unnecessary stuff. I actually do waste money. As most people do. However, I never overspend. So regardless of which method I use (cash, bank card or credit card), I will still end-up with no pending debts at the end of the month. This is why I use my credit card for every single purchase. Hence, I have figured I would be better off making a few extra bucks while spending this money anyway. If I ever lose my job tomorrow, I would have a 1K-2K balance on my credit cards and 1-2K in my bank account sitting there to pay it. So I would not have a dollar owed on my card at the end of the month.

Then again, if you can’t spend according to your budget, don’t apply for a credit card. But that won’t solve your initial problem; sticking to your budget. There are million other ways to overspend without a credit card (getting a big mortgage for example).

Even though I have not the same way of thinking as Larry, I think you should give me a chance and read a few more posts. I shouldn’t be too bad as it was your first reaction in 2 months of posting

Take care,

Mike.

@Gholmes – I hear ya. I was this | | close to writing a blog post about this site dying little by little, but it was too much of a downer.

@Mike – I’ve read this theory time and time again. Unfortunately, credit cards are not tools – shopping is not a mechanical action – people are not machines.

One minute, this little scheme is used for all daily purchases (none of which are unplanned, outside the budget, or impulsive – never, ever). Then suddenly it’s just food, gas, and internet. Near the end, we’re back to buying coffee and a car with the card. Plastic is a drug, that will suck you in. As you see here. First it’s just the necessities “you’d buy anyways”, then suddenly you’re making a down payment on a car with it (you can buy those used, BTW)

But don’t worry, we’ve got 27 easy steps to credit card success! – Ok, maybe it wasn’t twenty seven. 2 absolute rules + 4 steps + 4 credit card ads as big as the post. I guess it’s 4 steps for cash too:

step 1 – pay for purchase with cash
step 2 – go home and play with the kids
step 3 – spend some time with the Mrs.
step 4 – Never worry about the purchase again because it’s over and done with

But then you got all this stuff with your points! Sweet, sweet points. Consumer Reports shows most of those never get redeemed before expiring. But that’s ok, we’re talking about $1000 in paint (you can buy that ‘used’, BTW – Habitat Re-store), I’ll generously guess $100 in zoo tickets plus another $100 for the movies (he did include the popcorn!), and another $100 for the toaster and phone (I’m sure they are quite nice). So $1300 in a year for spending how much on that card??? You could have bought that car used and saved that amount with your eyes closed. It’s a lot of wasted effort, with your eyes on the wrong prize.

I know, I know you never buy extra stuff. As if. Again, once the focus is on credit card rewards, you’re playing a losing game. And that’s not to say that you’ll incur interest by doing it. The Mrs. held a rewards card for 8 years – through the years when very few get by without debt, college. And she never carried a balance, never paid interest. Yet we shredded it just the same. Overspending =/= debt. But the encouragement to spend and spend often results in all those $1 coffees and indiscretions at the grocery store. Don’t tell me you’re not spending more by using plastic, new-car-breath.

Oh, yeah, then just pay the card off at the end of the month. This line used to be such an easy sell in the blogosphere. But then 2007 hit and the economy tanked. Tell this to the folks whose jobs were cut unexpectedly. It was probably an easy sell before then, but then 2001 and the dot com bubble burst. Tell this to all those young techies who showed up to work to find the doors locked for good. The core issue here is this: shortsightedness. Not only the assumption of having the money come next month, but also the intricate machine required to make all this work. It just takes one piece to break, one gear to fail, one slip – maybe out of your control – to bring the whole system down. It assumes the best case scenario every time. That’s not to say it can’t work, but ask some of those folks that took 10% pay cuts about paying all the bills the next month….

I could probably keep going. But I shouldn’t.

There is a difference between telling people to waste money through credit cards and to save money with a transaction tool.

You have 2 options: either you pay your gas, phone, cable and internet cash and to don’t make a penny out of it or you take your rewards credit card and earn a few hundred bucks every year from this strategy.

This is also part of gathering little by little.

Cheers,

Mike.

I agreed with Larry that not leveraging your monthly money cash flow is the best way to gather little by little.

It feels to me that most folks of our generation has been bought by the marketing gimicks of the lender.

Did I miss something?

By the way – if you go to a movie and scrounge around under the seats you can probably get some “used” popcorn.

You are telling me that I encourage people buying new instead of used. Now if you know where I can buy used internet services, used gasoline and used food, let me know! I am suggesting to put things that you have to buy anyway on your credit card, not extra stuff!

Are you really going to put more gas in your car because of the way you pay it? talk more on the phone? I don’t think so.

Actually, you don’t even need to be responsible. Here’s how you can do it:
#1 set up a savings account
#2 set up an automatic transfer from your regular bank account to your savings account in the amount of grocery/gas/utility bills
#3 use your card to pay those expenses ACCORDING TO YOUR REGULAR BUDGET
#4 pay the credit card every month in full.

I have been doing that for the past 6 years and I paid 0$ in interest charges. However, I was able to get;
- $1000 worth of paint for my house (can you buy used paint?)
- Going to the zoo with my kids for free every summer (can you buy used visit to the zoo?)
- Going to the movie (including popcorn) for free several times, etc.

I even get my toaster and my phone free from my rewards points! (ok, those you can buy used!).

Telling this is a terrible advice is like telling people they should not drive their car: after all, your speedometer shows you can drive up to more than 120 mph… do you HAVE to do it? It is the very same thing with your credit card. Both your car and your card can be tools of massive destruction. However, if they are used carefully, they can do a lot for you!