Finances in the news

[creekland]

The news this morning (NBC - local) had a short clip saying that 63% (+/-) of Americans would have difficulty paying for emergency bills like a $500 car repair or $1000 ER visit.  That's a little scary to be honest, but I can actually "see" the statistic being true based upon those I know IRL (mainly via school).

 

I wonder how "average" the Hive is.

 

The poll is 100% anonymous.

 

Right now I'd pay for it via credit card, but it'd be paid off before interest.  We keep very little extra in our checking account, but I can adjust our budget monthly.  We keep credit cards as our quick emergency fund and could go higher than $1000 if we had to (and we get reward points).  Technically, I could get cash, but I'd have to transfer funds to do so.

 

In our economic downturn days, my mom was super critical to assisting us with emergency bills (meaning there was a time we had to depend upon family), but the economy around here has fortunately recovered decently.  

[Prairie~Phlox]

Even though we have the cash on hand, we would use the credit card to earn a % back, we rarely ever pay high bills outright. 

[Aiden]

We could pay with "cash" on hand (meaning easily accessible money in our emergency fund, maintained precisely for those types of unexpected, sudden expenses).

 

We may choose to put it on a rewards card instead, but even if we did that, we'd pay it off immediately with money from our emergency fund.

 

I'm a big fan of having an emergency fund--the money is there when you need it, and if you have to use it, you replace it at the quickest pace you can so that it'll be there next time you need it. We follow Dave Ramsey's advice of having an emergency fund big enough to cover all required expenses for 3-6 months, so $500 or $1000 wouldn't make a big dent in it. If we had to take it out of our normal budget, it would be tougher, but the fund is there so we don't have to do that. Depending on how much came out, we'd refill the emergency fund over a period of one to several months.

 

Edited to add: Yes, I know that having a credit card at all, much less using it for reward points, is not in line with Dave Ramsey's recommendations. I used to be a DR hardliner, but now I trust myself more. My husband and I have proven to ourselves that we're capable of being responsible with money and with credit cards, and we no longer feel the need to avoid all credit cards. We actually never did, as my husband's job requires him to have a credit card for which he legally is responsible (even though he gets reimbursed for the travel expenses he has to put on it).

Edited January 6, 2016 by Aiden

[Night Elf]

I feel silly answering this way, but I always use credit cards to buy nearly everything, and then pay them off as quickly as I can. We do have a small savings account for emergencies though, so we would use that to pay the Visa off before it accrued interest. We don't have family we could borrow from. We are the family that lends money out.

[Lolly]

I chose from what we have on hand because it is in an easily accessed account, but I would put it on a credit card. (I really see the first two answers as being the same choice.) I don't walk around with or keep that kind of money in the house. I prefer using credit card to checks (not to mention many places do not want/take checks anymore), also another cash back fan. I put everything on cash back.

Edited January 6, 2016 by Lolly

[Pawz4me]

Even though we have the cash on hand, we would use the credit card to earn a % back, we rarely ever pay high bills outright. 

 

Ditto.

[regentrude]

We use a credit card whenever possible to collect the airline miles, and pay it off every month. I would never pay this amount in cash and not take the miles.

[HomeAgain]

We've made it a point to always try to keep at least $1000 in an emergency fund, along with a regular savings account.  Had you asked me last year I would have said no, we couldn't have covered it from what we have on hand because we were hit with a slew of things that ate up the fund to where we were down to $17 at one point.

[teachermom2834]

Having had a $1000 medical bill and both cars break down to the tune of another $1000 just in the course of 48 hours I did vote that we could cover it. It is extremely stressful and painful to have that all hit at once but we can manage. I was thinking even before opening this thread that just that fact that we can weather it means we are doing OK.

 

Sometimes I do choose to put something on a credit card even if it will take a few months to pay off just to preserve some cash on hand.

[The Girls' Mom]

Right this second, I'd have to put them on a card, but would pay it off quickly.  This is because I am currently paying a $2000 ER bill...lol.  We don't have much liquid cash on hand.  This is mostly due to our current life stage.  (three teens, a dd and myself in college, some medical stuff)

[creekland]

I chose from what we have on hand because it is in an easily accessed account, but I would put it on a credit card. (I really see the first two answers as being the same choice.) I don't walk around with or keep that kind of money in the house. I prefer using credit card to checks (not to mention many places do not want/take checks anymore), also another cash back fan. I put everything on cash back.

 

The first two probably are the same, because like others, we choose credit cards with rewards (and no annual fees) as our first choice.  I've gotten many free or discounted books and gifts that way.

 

Oh well.  Folks can choose which option they like between the two.  I chose the credit card option with paying it off before interest because that's what we'd do.

[Carrie12345]

On the $1,000, I voted "maybe" because, while I could pay it right now today, there have been times I would have needed to use a longer payment method.  Sometimes because of a tight budget, sometimes because emergencies aren't always spread out far enough!  It's not unheard of for us to have a pet, child, and car emergency in the same month. I hope I didn't just jinx myself!

[marbel]

I feel silly answering this way, but I always use credit cards to buy nearly everything, and then pay them off as quickly as I can. We do have a small savings account for emergencies though, so we would use that to pay the Visa off before it accrued interest. We don't have family we could borrow from. We are the family that lends money out.

 

I don't think that's silly at all. We use a credit card for everything we can, but we do pay it off every month.  It's really another way of paying with cash, except we push the payment off a little bit.  And, we get a bit of a bonus.

[DawnM]

I didn't take the question to mean "Would you use a CC and then pay that off" but rather a, "Do you have this much in the bank to cover either paying it outright or paying off your CC bill when it comes."

 

We have an emergency fund.  It is (IMO) substantial, although we would like to have enough to cover all expenses for a min. of 6 months in that account.   We don't.  

 

If we combined our other savings (ROTH IRAs and such) I suppose we could live fine for 6 months, but that is our ultimate goal, 6 months of living expenses in savings.  Right now we have about 3-4 if we went to bare min.

 

Dawn

[Kathryn]

First question, I'd use a credit card and pay it when due. Second, depending on finances at that moment, I'd do the same, or I'd use the hospital 0% financing.

[marbel]

The first two probably are the same, because like others, we choose credit cards with rewards (and no annual fees) as our first choice.  I've gotten many free or discounted books and gifts that way.

 

Oh well.  Folks can choose which option they like between the two.  I chose the credit card option with paying it off before interest because that's what we'd do.

 

The options are a little different.  Plenty of people choose not to use a credit card for any reason.   We choose to pay as much as we can with credit cards, as long as it doesn't cost us to do so.  We had to have some body work done on our car, which was being reimbursed.   I was ready to whip out a card but then saw a sign in the shop, saying that they took credit cards, but would add 1.5% to the bill to cover their processing cost.  I wrote a check that day.  :-)    Sigh. I like that I can get an Amazon gift card with my points.   It's always a treat even though it ends up going to needed items (though sometimes "needed" is a relative term).

 

(I don't begrudge the shop owner, by the way.  It can be costly for a small business with low profit margins to accept credit cards.)

[creekland]

I didn't take the question to mean "Would you use a CC and then pay that off" but rather a, "Do you have this much in the bank to cover either paying it outright or paying off your CC bill when it comes."

 

In our situation I rarely have that much in our checking account extra, but our monthly budget is more flexible so the funds can be there to avoid paying interest next month.

 

I see no need to keep a special emergency fund as long as I have credit cards with significant credit available and can access funds when needed later.  One earns more on $$ elsewhere.

[creekland]

The options are a little different.  Plenty of people choose not to use a credit card for any reason.   We choose to pay as much as we can with credit cards, as long as it doesn't cost us to do so.  We had to have some body work done on our car, which was being reimbursed.   I was ready to whip out a card but then saw a sign in the shop, saying that they took credit cards, but would add 1.5% to the bill to cover their processing cost.  I wrote a check that day.  :-)    Sigh. I like that I can get an Amazon gift card with my points.   It's always a treat even though it ends up going to needed items (though sometimes "needed" is a relative term).

 

(I don't begrudge the shop owner, by the way.  It can be costly for a small business with low profit margins to accept credit cards.)

 

Good point.  We actually tend to purposely NOT use credit cards when in mom and pop places so they don't have to pay the fee.  Often (for us) those are restaurants though, so well under that $500 "emergency" cost.

 

I've yet to come across a place that charges a fee for more extensive costs.

 

Actually... middle son's college does... so yes, that one comes from our bank account rather than paying the fee.  It's not an emergency though.

[MrsRobinson]

I am so thrilled to be able to vote we'd pay with cash on hand! I would have not been able to select that one 6 months ago. We got caught up with credit cards in our early 20s trying to keep up with friends that had more money than us. We cut up our cards and finally paid them off and are building an emergency fund.

 

For us, we have to sacrifice the airline miles or cash back rewards and just pay with cash to ensure old habits don't resurface. Maybe in 10 years, I'll trust us again to use credit wisely. We'll see...

[Bluegoat]

Well, we have a LOC rather than a traditional credit card,  and it has room for those expenses.  We could probably pay off the difference within the month, though not the LOC which isn't just for cash-flow type things but has a significant pension related loan attached to it.

 

If necessary, we could also borrow from family.

 

We also have a savings account, how much is in it can vary but it is never really big as larger amounts we put towards the LOC debt.

 

All this being said - we are much closer to the line than I would like.  I often feel our house is a liability rather than an asset, which I hate.

[Runningmom80]

I'd put it on a card to earn points, but we have enough for either of those on hand.  There were definitely months in the early years where that wasn't the case, and it was scary!

[chiguirre]

I do have hurricane money hidden away, but I'd never dig it out to pay either of these bills. I'd put them on the card and pay them off before they accrue interest. I do think it's important to have cash on hand in case your whole town loses electricity and you need to buy ice or gas for cash.

[creekland]

 I do think it's important to have cash on hand in case your whole town loses electricity and you need to buy ice or gas for cash.

 

We usually have a couple hundred cash on hand (in the house, but not on us) for emergencies.  However, those "emergencies" are usually take out or trips to our favorite local eateries...  Nonetheless, we replace the fund the next time one of us takes a deposit to the bank.

[marbel]

I do have hurricane money hidden away, but I'd never dig it out to pay either of these bills. I'd put them on the card and pay them off before they accrue interest. I do think it's important to have cash on hand in case your whole town loses electricity and you need to buy ice or gas for cash.

 

This is something I always try to do but then I end up raiding the stash.  Ideally I would have a couple hundred in small bills and quarters.  Somewhere I read to keep rolls of quarters around, but I just throw coins in a cookie tin.   Need to work on that. 

 

[J-rap]

 

 

In our economic downturn days, my mom was super critical to assisting us with emergency bills (meaning there was a time we had to depend upon family), but the economy around here has fortunately recovered decently.  

 

This was true with us too.  We had many years when an emergency like this would have really been hard.  But of course we had emergencies like that, as everyone does.  Our parents graciously helped us out.  Now, we are able to help our parents out and I'm so happy we can.

[JustEm]

Well we just had to unexpectedly purchase a new oven to the tune of 700 bucks because ours broke. We used our Lowes card with 18 month financing at 0%. We could have paid for it with money in our accounts but that money is better served earning us interest for the next 18 months.

[Southern Ivy]

I voted yes to both. We have car maintenance envelope, plus additional emergency funds. We have an HSA and we have enough in the HSA to cover the medical expenses. 
We also have several other "sinking funds" - insurance, gift money, travel money - that if the emergency were dire enough, we could pull from those too. However, we would try to cash flow the funds first before taking out of those funds. 

[Evan]

We do keep enough emergency cash in our house that we could pay off both bills with that cash.  Of course we wouldn't do that.

 

For the car repair one of us would likely just write a check.  I could say that would come out of our emergency fund but it would really be below the threshold to feel like an emergency. 

 

For the ED (my wife will be proud I'm not calling it an ER), depending on what was easiest or preferred by the hospital,we would write a check or use a credit card to be paid off at the end of the month. We often put things on credit cards for convenience purposes but always pay the credit card bill in full during the grace period. We currently budget 30K a year for out of pocket health expenses, thus, the hospital bill would come out of that category when we were reconciling expenses.

[Truscifi]

Yes, we have an emergency fund for such things - now. A few years ago, not so much. We have worked hard the past few years to build that up and pay down debt.

[SparklyUnicorn]

We do have an emergency fund, but we didn't always.  It can easily be wiped out by one small event.  If a second event happened shortly after we'd be in that boat.  Although, we have kick ass credit, so we can get very good terms of borrowing.  I do often use cards that offer a free financing period.  I figure why not?  That takes care of the situation at no extra cost AND my emergency fund is intact. 

 

 

[Arcadia]

We just paid $1.2k for struts and tires replacement as well as oil change at the same time. We paid with credit card but could have paid with debit card so I vote cash.

For medical emergency, hubby's current employer is good with HSA so our HSA could cover the $1k out of pocket. We would be able to pay with debit card so I vote cash for that too.

If you are referring to actual dollar bills, I would need to raid my kids piggy bank.

[Joules]

 

 

I've yet to come across a place that charges a fee for more extensive costs.

 

 

 

We stayed at a B&B that gave us a 10% discount for cash.  We reserved the room on a card, but gave her cash when we left.

[SparklyUnicorn]

We stayed at a B&B that gave us a 10% discount for cash.  We reserved the room on a card, but gave her cash when we left.

 

Wow, never encountered that.

 

Except some gas stations here charge more if you use cards.  I still use a card because I rarely carry cash and getting cash is not convenient.  I don't drive a lot though.  If I did I might be a little more careful with what I spend on gas.

[creekland]

Wow, never encountered that.

 

Except some gas stations here charge more if you use cards.  I still use a card because I rarely carry cash and getting cash is not convenient.  I don't drive a lot though.  If I did I might be a little more careful with what I spend on gas.

 

It's generally a 5 cent discount for cash around here.  If I put 13 gallons in my car, that's a whopping 65 cents - not enough for us for the hassle of waiting in line and/or impulsively buying something inside while paying there.  I'll take the credit card reward points instead even though those are few too.

 

I won't drive miles out of my way for 5 or 10 cent cheaper gas either, though we will use less expensive places if they're directly on our way.  The difference in 65 cents or a dollar can easily be used up in the extra miles, though some people have a tough time seeing that for some reason or another.  Certain people I know will drive 15 - 20 miles to save 2 or 3 cents per gallon.  They are losing money in reality.

[SKL]

I have cash which I can access in a couple of days.  This earns interest a lot faster than leaving it in a checking account.  Therefore I limit the amount I keep in the checking account.

 

I pay most things by credit card.  I pay the cards off before interest can accrue.

 

I answered "from cash on hand" because it's basically the same thing, except my way is a little cheaper.  :)

[Carrie12345]

I do have hurricane money hidden away, but I'd never dig it out to pay either of these bills. I'd put them on the card and pay them off before they accrue interest. I do think it's important to have cash on hand in case your whole town loses electricity and you need to buy ice or gas for cash.

 

Just a word to the wise, a gas station that can't take a card because electricity is out is unlikely to be able to pump gas without said electricity.

Which reminds me, I need to check my gas cans, lol.

[SparklyUnicorn]

I do have hurricane money hidden away, but I'd never dig it out to pay either of these bills. I'd put them on the card and pay them off before they accrue interest. I do think it's important to have cash on hand in case your whole town loses electricity and you need to buy ice or gas for cash.

 

Then again most businesses these days are rendered useless without electricity.  Even when I worked in a grocery store MANY years ago we had to close if the power went out. There was no way to ring orders.  We once were in a restaurant and ate and then the owner came over and said dinner was on him because his computer was down and he couldn't process the order. 

[bluemongoose]

My DH has an illness that requires us to set aside an account to use when he needs to take unpaid medical leave from work. We try to keep enough in this account to pay all the bills for 3 months if we had to. We can and do use this account for smaller things that come up like your examples. Unfortunately it means we have never taken a family vacation (we are so excited we are finally going to take our first one next year!) and we have to be frugal with our expenses.

[Lolly]

Well we just had to unexpectedly purchase a new oven to the tune of 700 bucks because ours broke. We used our Lowes card with 18 month financing at 0%. We could have paid for it with money in our accounts but that money is better served earning us interest for the next 18 months.

Hate to mention this since you have already made the purchase, but Lowe's gives an immediate 5% discount on items purchased on their credit card. I can't find any bank willing to pay that high in interest! of course, there is also the case to be made if you need to keep that money available for emergencies.

Edited January 6, 2016 by Lolly

[SparklyUnicorn]

Hate to mention this since you have already made the purchase, but Lowe's gives an immediate 5% discount on items purchased on their credit card. I can't find any bank willing to pay that high in interest! of course, there is also the case to be made if you need to keep that money available for emergencies.

 

I think you must have misread her post?  She said she used her Lowe's card. 

[6packofun]

No to both.  We live on the edge of disaster, I guess.  I just had a scare with a breast lump and we're waiting to see how this ruins our finances further since we have a $3k deductible that we can't cover. Having insurance gives us very little reassurance, although having to work out where $3000 comes from is better than the whole bill, of course.  

 

I think the most frustrating part of this is that the only way to remedy this way of life is for us to change our lifestyle in such a way that spending time together and being home for our children CANNOT be the priority we feel it should be.  I could go to work doing some stupid job and we'd STILL be making less than we should for a family our size.  If I gave you dh's education and resume of skills and experience there is NO way that anyone would say that he deserves to be making $55k per year (regardless of how many kids we have to support).  But the field, the economy, and other factors seem to be working against us.  We can never dig out and that's just that.  We are in our 40's and have to ask dh's mom for help every time our vehicles break down.  It's sad and pathetic.  :(

[Lolly]

I think you must have misread her post?  She said she used her Lowe's card. 

 

When you use the card, you have the option of receiving a 5% discount OR 18 mths free financing. I didn't type enough to be clear about what Lowe's offer was. :o

Edited January 6, 2016 by Lolly

[SparklyUnicorn]

When you use the card, you have the option of receiving a 5% discount OR 18 mths free financing.

 

Ohhh

 

I think I'd still like the 18 month financing. 

 

:laugh:

[AmandaVT]

Is there a "yes I can pay it with what I have on hand, but I wouldn't like it" option? 

 

A few years ago we would have been in big trouble if we needed to deal with a $1000 emergency and a $500 one would be scary. We were doing full on Dave Ramsey then and had closed all of our credit cards and lived paycheck to paycheck, trying to pay off debt and live as frugally as possible. When I needed a root canal and crown and had to pay for both up front, I needed to get a loan from my dad which was a low point. We got a credit card for emergencies after that. Thankfully our finances are a bit better now and we could pay for either of those emergencies. (but I'd be grumpy)

[Lolly]

Ohhh

 

I think I'd still like the 18 month financing. 

 

:laugh:

 

And, if you need to make purchases before you can save the $, it is the better deal. But, money wise, it is better to take the 5%. The 5% would be $35 off. The money sitting in the bank will not come close to that amount over 18 mths. It would be closer to $12 (likely not even close to this!) if you are getting what is currently a great rate.

Edited January 6, 2016 by Lolly

[SparklyUnicorn]

Is there a "yes I can pay it with what I have on hand, but I wouldn't like it" option? 

 

A few years ago we would have been in big trouble if we needed to deal with a $1000 emergency and a $500 one would be scary. We were doing full on Dave Ramsey then and had closed all of our credit cards and lived paycheck to paycheck, trying to pay off debt and live as frugally as possible. When I needed a root canal and crown and had to pay for both up front, I needed to get a loan from my dad which was a low point. We got a credit card for emergencies after that. Thankfully our finances are a bit better now and we could pay for either of those emergencies. (but I'd be grumpy)

 

Yeah we closed all accounts too and did something similar.  It was just too ridiculous in emergencies.  And what am I going to do?  Tell my kid suck it up you have a tooth ache?  No.  So we do have some cards for emergencies now.  One card we use and pay off each month to get points we use at Amazon.

 

And I don't have anyone to borrow money from.

[SparklyUnicorn]

And, if you need to make purchases before you can save the $, it is the better deal. But, money wise, it is better to take the 5%. The 5% would be $35 off. The money sitting in the bank will not come close to that amount over 18 mths. It would be closer to $12 (likely not even close to this!) if you are getting what is currently a great rate.

 

No, but having that cushion of money in the bank while you pay off the oven is worth the extra $35 to me.

[creekland]

I could pay both, but it would set us back badly. 

 

I can't add a like to this one, so adding  :grouphug: and hope that things change for the future.

 

No to both.  We live on the edge of disaster, I guess.  I just had a scare with a breast lump and we're waiting to see how this ruins our finances further since we have a $3k deductible that we can't cover. Having insurance gives us very little reassurance, although having to work out where $3000 comes from is better than the whole bill, of course.  

 

I think the most frustrating part of this is that the only way to remedy this way of life is for us to change our lifestyle in such a way that spending time together and being home for our children CANNOT be the priority we feel it should be.  I could go to work doing some stupid job and we'd STILL be making less than we should for a family our size.  If I gave you dh's education and resume of skills and experience there is NO way that anyone would say that he deserves to be making $55k per year (regardless of how many kids we have to support).  But the field, the economy, and other factors seem to be working against us.  We can never dig out and that's just that.  We are in our 40's and have to ask dh's mom for help every time our vehicles break down.  It's sad and pathetic.   :(

 

Ditto to the above - offering  :grouphug: and wishes for a better future to you too.

[MrsRobinson]

I think the most frustrating part of this is that the only way to remedy this way of life is for us to change our lifestyle in such a way that spending time together and being home for our children CANNOT be the priority we feel it should be. I could go to work doing some stupid job and we'd STILL be making less than we should for a family our size.

I know here you're coming from. Dave Ramsey says to make as much money as you possibly can and pay off your debt in 2 years. It took us 8. But we were willing to let it because we still wanted family time and mom as primary care giver for our little ones. I would still do it the same way even now that we are on the other side. I regret accruing the debt (and 8 years of interest) but I'd regret compromising family time more.

 

I did have a part time office job that dd could come with me to when she was little and I did accounting from home part time when ds was a baby. Then I babysat at home part-time for a family member. So I helped pay it down when there was an opportunity that I could accept without needing child care.

[JustEm]

Hate to mention this since you have already made the purchase, but Lowe's gives an immediate 5% discount on items purchased on their credit card. I can't find any bank willing to pay that high in interest! of course, there is also the case to be made if you need to keep that money available for emergencies.

Oh our funds that are making us money are in stocks which make us more than 5%. If we absolutely needed that money we'd put it on a card and pay it off after selling stocks.

Plus, I actually always talk Lowes into giving me both the 5% discount ,well usually more, and financing. Everything is negotiable, just gotta talk to the people who can approve the discount.