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Dumping Debt and building wealth with Dave Ramsey JANUARY - Page 7

post #121 of 585
Quote:
Originally Posted by littleaugustbaby View Post
Why couldn't you just use a debit card? There is really no benefit to using a credit card and immediately paying it off.
Credit cards sometimes offer protections that debit cards do not have.

Also, if on the off chance your debit card number was stolen, a thief could empty out your bank account in no time flat. Yes, you would eventually be reimbursed for the funds that were stolen. But while you're waiting for the bank to process everything, you'd be left without any money to buy groceries, pay bills, etc. Yes, you'd have your baby emergency fund- but for most people (myself included) $1000 wouldn't cover the month or two worth of expenses that I'd need to cover while I was waiting for the bank to restore my money.

If your credit card number is stolen, you'll still have money to pay bills.

I always use my credit card for online purchases. I'll put extra money towards the credit card bill immediately to pay off the purchase. I know that some people are comfortable using their debit cards to pay for online purchases, but I'm not.
post #122 of 585
We took a hit today.

DH had a toothache, and the first dentist was $75.00, but he sent him to a second dentist for a root canal. The first thing the root canal dentist's office said to him when he walked in was how much it was going to be. They didn't take insurance (which we don't have anyway) and wanted payment in full before leaving. $1,300.00. Then $33.97 for the RX for pain and antibiotics. So, a grand total of $1,408.97, plus DH lost a day of work while getting all this done (he's self-employed).

The upside - we have it in the emergency fund and can pay it but it practically depletes our EF.

The downside - could this have been prevented had DH gotten regular dental care? He cancelled two appointments last year, one in August and one in September, for his regular dental checkup, which was way overdue back then. And he still needs to get a filling in the tooth where the root canal was done. And he needs a crown on another tooth.

But there is an upside, right?
post #123 of 585
Oh, and for the roll call, I'm on BS #2- debt snowball.
post #124 of 585
Quote:
Originally Posted by littleaugustbaby View Post
No! Dave doesn't want you to consolidate or refi or move debt around, because it doesn't take care of the problem. Your best bet is to attack the debt, paying off the smallest balance first, regardless of the interest rate.

Rolling the CC's into another loan doesn't mean that they are paid off - the debt is still there, it is just in a different place.
But our interest rate was 29% on the credit cards. We got a home equity loan for 6%. We can pay the cc's off in nearly double the time (more once the car is paid off) because of a home equity loan.
post #125 of 585
Quote:
Originally Posted by annethcz View Post
Credit cards sometimes offer protections that debit cards do not have.

Also, if on the off chance your debit card number was stolen, a thief could empty out your bank account in no time flat. Yes, you would eventually be reimbursed for the funds that were stolen. But while you're waiting for the bank to process everything, you'd be left without any money to buy groceries, pay bills, etc. Yes, you'd have your baby emergency fund- but for most people (myself included) $1000 wouldn't cover the month or two worth of expenses that I'd need to cover while I was waiting for the bank to restore my money.

If your credit card number is stolen, you'll still have money to pay bills.

I always use my credit card for online purchases. I'll put extra money towards the credit card bill immediately to pay off the purchase. I know that some people are comfortable using their debit cards to pay for online purchases, but I'm not.
Visa and Mastercard both extend the same protection for debit cards that they do for credit cards. Depending on the issuing bank, if someone steals your debit card or your credit card and empties your account, you will generally have the money back within 1-2 days. A $1000 baby emergency fund should generally be enough to tide anyone over for 48 hours, unless there is some exceptional emergency.

Here's Dave's Credit Card Q&A:
http://www.daveramsey.com/etc/cms/cr..._q&a_7041.html
post #126 of 585
Quote:
Originally Posted by littleaugustbaby View Post
Why couldn't you just use a debit card? There is really no benefit to using a credit card and immediately paying it off.
I think debit is much different in Canada than the US. I've rarely seen the debit option for online stuff on Canadian sites.
post #127 of 585
Quote:
Originally Posted by mtm View Post
I think debit is much different in Canada than the US. I've rarely seen the debit option for online stuff on Canadian sites.
Most debit cards in the US are linked to Visa and Mastercard, and can be used anywhere that Visa and Mastercard are accepted. Is it not the same in Canada?
post #128 of 585
Quote:
Originally Posted by littleaugustbaby View Post
Visa and Mastercard both extend the same protection for debit cards that they do for credit cards. Depending on the issuing bank, if someone steals your debit card or your credit card and empties your account, you will generally have the money back within 1-2 days. A $1000 baby emergency fund should generally be enough to tide anyone over for 48 hours, unless there is some exceptional emergency.

Here's Dave's Credit Card Q&A:
http://www.daveramsey.com/etc/cms/cr..._q&a_7041.html
I know that's what they say, but I've seen it work out differently in practice. I know people whose debit card numbers were stolen, and it took weeks and weeks for the money to be deposited back into accounts. And in the meantime, the victims had several checks bounce. It all worked out eventually, but it was a HUGE paperwork nightmare to get everything taken care of.

This is why I prefer to keep a CC. Credit cards are also important for anyone who wants to rent a car or hotel room. If you use your debit card for renting a car or hotel room, there is often a very large hold put on your account, which makes the funds unavailable for other uses until the charges are settled.
post #129 of 585
Thread Starter 
Quote:
Originally Posted by artparent View Post
have you folks stopped using credit?

*

You bet ya! Never going back there again.

Be well,
post #130 of 585
Thread Starter 
Quote:
Originally Posted by MonkeyPrincess View Post
Is that not true?
Only if you want to live by the FICO score. This is the debt score. I don't want to live by the debt score because the only way you get a good FICO score is to be in debt, get new debt, and pay on debt.

Be well,
post #131 of 585
Thread Starter 
Quote:
Originally Posted by alleyoop View Post
We took a hit today.


The upside - we have it in the emergency fund and can pay it but it practically depletes our EF.

You are a living testiment to why an emergency fund is needed. This may deplete your emergency fund but you will not go into debt over it!!!

Would routine dental help prevent this, possibly, you never know.

Be well,
post #132 of 585
Quote:
Originally Posted by littleaugustbaby View Post
Most debit cards in the US are linked to Visa and Mastercard, and can be used anywhere that Visa and Mastercard are accepted. Is it not the same in Canada?
Nope... my debit card isn't linked at all, and I've never personally seen one that is. My debit is issued by my bank.

I'm glad to see this come up - I asked my husband about it the other day, having heard Dave Ramsey talking about it on his show. I figured it *must* be different here, as I'd never heard of anyone doing it the way that I keep hearing about from Americans.

Erica
post #133 of 585
Thread Starter 

Free lesson on daveramsey.com

You can take a free lesson within the Financial Peace University program. Here is the link.

https://fpuonline.daveramsey.com/

You have to click on this page to get to the lesson.

Be well,
post #134 of 585
Quote:
Credit cards are also important for anyone who wants to rent a car or hotel room. If you use your debit card for renting a car or hotel room, there is often a very large hold put on your account, which makes the funds unavailable for other uses until the charges are settled.
My experience has been that the hold is a night's hotel cost. The last time we did it it was a $89 hold.
post #135 of 585
Quote:
Originally Posted by artparent View Post
i haven't met dave ramsey yet but i'm following along.
we are current on our bills *tick
we are 700/1000 to an emergency fund
we have snowballed both credit cards to 0, but allowed them to pop up again. i'm addressing this in another thread!!! have a creditline to pay down, and another loan. i'm hoping to get rid of our car and join a co-op/ride a bike!
we have a home but we're looking for a bigger one!
so i guess that means we're on step 2, though i am slipping money straight from the gov't to my kids resp's, i just pretend it never existed.

lots of possibilities here.

have you folks stopped using credit?

*
Welcome! And yes, we have stopped using credit. I am very happy about that

Quote:
Originally Posted by alleyoop View Post
We took a hit today.

DH had a toothache, and the first dentist was $75.00, but he sent him to a second dentist for a root canal. The first thing the root canal dentist's office said to him when he walked in was how much it was going to be. They didn't take insurance (which we don't have anyway) and wanted payment in full before leaving. $1,300.00. Then $33.97 for the RX for pain and antibiotics. So, a grand total of $1,408.97, plus DH lost a day of work while getting all this done (he's self-employed).

The upside - we have it in the emergency fund and can pay it but it practically depletes our EF.

The downside - could this have been prevented had DH gotten regular dental care? He cancelled two appointments last year, one in August and one in September, for his regular dental checkup, which was way overdue back then. And he still needs to get a filling in the tooth where the root canal was done. And he needs a crown on another tooth.

But there is an upside, right?
I am sorry to hear that, glad you have the EF in place I go to the dentist twice a year and I have had to have two root canals. I am one of those who is super careful with brushing and flossing, so I was always irritated that I had so many cavities when I truly try to take good care of my teeth. My dentist, however, said that some people's body chemistry is just different, and there wasn't much more I could have done to prevent it. So sometimes it just works out that way



Okay so I had a stroke of luck today. Yesterday our washing machine stopped working. DH looked at it last night and found a small part that was broken. He looked it up online and it is a cheap part, only a few bucks, so that was great. The downside? The place that carries said part is 30 minutes away so I was seriously bummed to have to drive there today because I have this driving ban going on. So DH reminded me that AC Moore is right next to this place, and that I had a gift card for there that I could use to get more yarn for blanket donations. That cheered me up. When my Mom called me this morning I told her about my trip, and she said that she really wanted to go to AC Moore as well, and that she would drive me there so I could save the gas money for my car I am super happy that I don't have to drive up there, and also super happy that she can go yarn shopping with me

I know, small victories, right?

Anyway, as far as the credit vs debit thing goes.. Right after we were married and I was added to his checking account, our bank calls DH at work, where unfortunatly he has no cell phone service so he did not get the call, and tells him that his debit card has been used at an ATM.. in Russia! Ironically enough, about 30 minutes before his card was used in Russia, DH had used it to buy gas at the local gas station in WV, which really helped as far as proving that DH's card was not stolen. He still had it in his possession. Anyway, they took about $500 out, which was only really in there because that was the wedding money we had. Basically they wiped out the account. So yes, as far as that goes, we were pretty much out of luck for that evening, anyway. However, by the next day the bank had issued a credit back to our account pending investigation. Basically they sent DH some paper work, we don't have passports so obviously we did not go to Russia and use an ATM, and his debit card was cancelled and reissued. It wasn't a long, drawn out process for us.

And for what it's worth, DH had never used his debit card for any online purchase whatsoever. He had also never lost it or even given it to someone like at a restaurant where they take it away to ring up the bill. So that proves that unauthorized purchases can happen even if you avoid online and avoid having your card out of your possession. So that being said, we now use debit if we have to order something online. I do not use credit anymore.
post #136 of 585
Quote:
Originally Posted by shanetedissac View Post
Only if you want to live by the FICO score. This is the debt score. I don't want to live by the debt score because the only way you get a good FICO score is to be in debt, get new debt, and pay on debt.

Be well,

Thank you for explaining.

We also choose not to live by our credit score.
post #137 of 585
I have an honest question for those of you who 'choose not to live my your FICO score.' I understand DR's reasoning for not caring about his FICO score. And I personally don't live my life opening and closing accounts or taking conscious steps to improve my FICO score (which, at the time we bought our house a few months ago was excellent). I just pay my bills when they're due, and that's the extent of my 'working on my FICO score.'

But how do you feel about the fact that credit scores are used for far more than determining whether someone is credit-worthy? FICO scores are used to determine insurance rates, and are often run when a person applies for a new job or apartment. Although I don't live by my credit score, I am a realist who acknowledges that my credit score DOES matter in situtions that have nothing to do with incurring more debt. So I guess I take the attitude that I'd prefer to have a higher FICO score than a lower FICO score. I don't play games to raise my score, but I don't do things that I know will lower it either.
post #138 of 585
Not all apartments/rental situations run a credit report. And having worked in the rental industry, most of the ones who do run credit reports don't go by the FICO score, but by what's actually on the credit report.

There are still plenty of insurance (and mortgage) companies who rely on underwriting rather than FICO. It is entirely possible to live without credit or a FICO score, I've done so very easily for the past 5 years.

I guess I have to wonder why someone who does not want to get rid of FICO or credit card debt would participate in a thread for people trying to follow DR's plan and sing the praises of using credit, when the whole cornerstone of the program is to eliminate all debt, stop using credit, and stop worrying about a FICO score.
post #139 of 585
I would love to stop living by my FICO score, however, since we are hoping to sell this house and buy another one as soon as is feasible, we are very aware of this score because it affects our next mortgage rating. It would great to not have to worry about it, but for us, it seems to be a way of life. For example, our car insurance is partly based on it, even if we rented around here, everyone (at least the decent properties) use the credit score and run credit reports (even I did when I was a landlord), and for a few other things.

Once we buy our new house, I will still want to keep my score decent, because you never know when you will need it.

I sympathize with those with medical bills, they suck! I have tons more doctor appointments this month and since it is a new year, new deductibles and expect to have about 3-4K in bills just this month.

Plus, all my kids are overdue for dental, which is ridiculous. One daughter is overdue for braces, no insurance. I need new glasses, just got new contacts, but had to postpone glasses.

We are doing our rough estimate on taxes and see over 15K in medical already, it sucks!!!!

We do have our emergency fund, I've been hanging on like crazy to that, but my husband's check with tiny, tiny this week (he is on comission) and we may have to dip because I didn't get paid for my January births yet.

But, no going into debt over christmas!!! And we are not behind on anything right now
post #140 of 585
Thread Starter 
Quote:
Originally Posted by annethcz View Post
But how do you feel about the fact that credit scores are used for far more than determining whether someone is credit-worthy? FICO scores are used to determine insurance rates, and are often run when a person applies for a new job or apartment. Although I don't live by my credit score, I am a realist who acknowledges that my credit score DOES matter in situtions that have nothing to do with incurring more debt. So I guess I take the attitude that I'd prefer to have a higher FICO score than a lower FICO score. I don't play games to raise my score, but I don't do things that I know will lower it either.
You are absolutely correct that those with a low FICO score will pay more or even be declined for basic services. I just recently moved to a new home fuel provider and was told that my account was pending on a credit check. We do still have a good FICO score because it has only been a year since we stopped getting new debt. We still have a mortgage and will for many years. I think our score will decreace because we will not be adding new debt.

I am willing to take the extra hit or rejection. Paying a bit extra will still keep me WAY ahead.

DR had talked about how he pays more in insurances and such.

Be well,
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