Dave Ramsey budget but still use Credit cards for everything?

[Ottakee]

My friend asked for help in figuring this out. Her and her dh are doing the Dave Ramsey class right now (as are dh and I).

 

They use credit cards for EVERYTHING--from utility bills to car insurance to gas and groceries. She very rarely uses cash for anything. The reason is that her dh works out of state and the airline miles they get from the credit cards gets her dh home a few times a year on free tickets. They can't afford to give this up---tickets from Alaska to Michigan are not cheap.

 

She is trying to figure out who to still use the credit cards but do the Dave Ramsey style budget--as she won't have envelopes, etc. They DO pay the credit card balance off in FULL every month so they have NO interest, No late fees, etc.

 

Any practical ways for her to set up her system to make this work?

[mrs.m]

DR says that CC's are ok. But the first time you don't pay it off in full, it has to be cut up.

 

That said I don't think it would be much different than how I use a debit card. I have a small notebook with a page for each category. Each time I spend out of that category, I minus it from the available balance. When it gets close to zero, I stop spending or a borrow from another category! I never bounce my account!

[Holly IN]

DR never said CC is ok. Only those that are attached to your checking acct such as debit cards. I never ever heard him say CC are ok.

 

Holly

[....]

We haven't used a credit card in 3 years. Your friend CAN do it!! (tell ur friend) :tongue_smilie:

[mrs.m]

DR never said CC is ok. Only those that are attached to your checking acct such as debit cards. I never ever heard him say CC are ok.

 

Holly

 

I heard him in the video presentation.

[2squared]

We use credit cards for the cash back and have never carried a balance. At the beginning of the month I figure out a budget (that dh concurs with), and then I track our spending frequently. I use Quicken, and I watch the daily spending like a hawk. We do pull out a little bit of cash for blow money, but that's less than $50/month.

 

She can still use her credit cards. She has to find a system for tracking how much they are spending daily.

[kmacnchs]

not really sure why your friend is in the class if they aren't in debt... If they pay it off in full, they are okay! They are doing it the right way!

[mrs.m]

DR never said CC is ok. Only those that are attached to your checking acct such as debit cards. I never ever heard him say CC are ok.

 

Holly

 

But I think you are right: http://www.daveramsey.com/article/the-truth-about-credit-card-debt/lifeandmoney_creditcards/

 

I am CERTAIN that we even discussed that it was ok until you mess it up and then you have to cut it up. As a group we were surprised that he said that.

 

But after reading that article, I think one could reduce spending enough to budget for those plane trips? I'm not sure. I use a debit card.

[cjzimmer1]

I'm doing it this way. I'm simply not comfortable carrying large amounts of cash with me or even keeping it in my house. And I know Dave advocates debit cards and claims you are offered the same protections as a credit card, the fact of the matter is if some hacks into your debit card, you have no money until it's fixed, whether its getting the charges reversed, getting the account unlocked whatever. it might only take a few hours to fix or it might take a few days. Either way you are out of money until it gets fixed. It's not instantaneous. And that's what concerns me. What if you have problems and then really need money for something. So that's my beef with his cash/debit only style.

 

Anyways we use our credit card for almost everything too. I've had a credit card for 18 years, I've never NOT paid it in full but when you pay it off it was always the month after the charges were made. This made it confusing for me to keep track of what I was spending each month and trying to see how I was doing on my budget. So I took a few months and bought nothing that was absolutely essential so that I could "shift" when I was paying for things.

 

So every transaction I make, I come home and enter it in Quicken. Then on the last day of the month, I pay off my credit card for everything I bought that month. Because I am technically paid ahead, I can pay whenever I want and am not tied to their payment dates. So even if they haven't registered a transaction yet, I'm still paying it off so that I always have a clean slate for the next month. I've only been doing this a couple of months but it's working very well. And since I have my budget set up, there is always enough money in the checking account to pay off the credit card each month because it was already budgeted for each item that was charged.

[KrissiK]

We use credit cards for everything, too. We never carry a balance. I know one problem he says about CC is that you tend to spend more when you're shopping if you know you're putting it on the CC. However, I say, I know I budget this much per month on clothes for myself. So, I will not spend more than that, no matter how I pay for it. It just takes a little more of a conscious effort. We use the CC because I have an Amazom.com card and get $25 gift certificates for points. It's a great deal.

 

Like the previous poster, it did throw off my budget because I'd buy the thing in June, but my cc payment wasn't due till July. So, I make 2 payments a month, making sure I pay for things the month I buy them in.

[LMA]

We do not carry cash. We use the CC for everything, even to pay our oil and cable bills, and then pay the balance off each month. My husband doesn't want a debit number floating around that is attached to the checking account. Plus we get rewards for using the card from Citi.

 

A debit card is a link to your account. Even for Paypal, we have a separate account with a small balance. The cc protection for fraud and protection for damages is much better. You just keep track of what you buy as you use it.

[Prairie~Phlox]

I see no problem with your friend taking advantage of the CC that way and earning the miles. We use CC for this main reason too, to earn more money in our pocket (Discovercard cash back). We do not carry a balance and I do not spend more because I use my cc. It's just being wise and knowing how to budget and balance things. I would not feel comfortable having a large amount of cash and according to my bank, my debit card is safer when swiped as a credit card, not a debit card, so I use that too. I use Quicken and just keep track of things very closely.

 

I want to ad, earning rewards is kind of like couponing. Why go to the store and pay full price for something if there's a coupon out there for $1.00 off. If it's something I buy anyway and can save a lot of money, it doesn't make sense to try and do away with it.

[Ottakee]

We haven't used a credit card in 3 years. Your friend CAN do it!! (tell ur friend) :tongue_smilie:

 

They COULD do without the credit card but this gets her husband 2-3 FREE trips home a year--something they aren't going to give up. As I mentioned, they never carry a balance so the credit card it not causing any debt for them.

[Ottakee]

Thanks, I will pass this on to them. Even though they have no debt other than their house they are wanting to save more for retirement, pay off the house earlier, and be able to give and save more--that is why they are in the class.

 

I will mention the Quicken to her and I have the Money Matters software as well.

[2squared]

Then on the last day of the month, I pay off my credit card for everything I bought that month. Because I am technically paid ahead, I can pay whenever I want and am not tied to their payment dates. So even if they haven't registered a transaction yet, I'm still paying it off so that I always have a clean slate for the next month. I've only been doing this a couple of months but it's working very well. And since I have my budget set up, there is always enough money in the checking account to pay off the credit card each month because it was already budgeted for each item that was charged.

 

:iagree: Exactly what I do. I pay the current month credit card balance on the last day of the month so my balance is 0 at the end of the month. I enter my daily transactions in Quicken, so I always have $ in my checking account for the payment.

[melissel]

I'm doing it this way. I'm simply not comfortable carrying large amounts of cash with me or even keeping it in my house. And I know Dave advocates debit cards and claims you are offered the same protections as a credit card, the fact of the matter is if some hacks into your debit card, you have no money until it's fixed, whether its getting the charges reversed, getting the account unlocked whatever. it might only take a few hours to fix or it might take a few days. Either way you are out of money until it gets fixed. It's not instantaneous. And that's what concerns me. What if you have problems and then really need money for something. So that's my beef with his cash/debit only style.

 

These are my concerns with debit cards as well. I've heard enough stories and seen enough posts here about debit accounts being hacked and banks accounts being fouled up.

 

Also, I find myself spending more with cash. I found that I'm far more likely to spend $2 here and $3 there when I have the cash in my wallet. I never use my CC for small transactions like that, so it saves me that way. Plus we have a very good points program, and I'd hate to lose access to that. I think if your friend is discipline and can be on her guard about sneaky spending that might crop up, she should be fine.