Plasectomy

Jamie and I are undergoing a plasectomy this week - we are cutting up our credit cards. We are taking Dave Ramsey's Financial Peace University course, and this week Dave debunked some common myths of personal finance. This was very eye-opening for us, especially what he said about credit cards. I always thought that if I paid off my cards (most) every month, then they actually worked FOR me. They're a safe, convenient way to make purchases, and I can even earn rewards. However, Dave says that "Responsible use of a credit card does not exist."

There are several reasons for this. First, when we pay with credit cards, we spend 12-18% more than we would if we paid with cash. WOW! Dave says when we pay with cash, we actually "feel" the money leaving our hands, but we don't have that same association with credit cards.

Then he got into credit card rebates/reward programs. In actuality, the rewards are minuscule compared to what you have to spend to get them. And since we're spending 12-18% more when we use credit cards instead of cash, those rewards don't seem so sweet anymore.

I have a great real-life example of this. When I worked at Gap in college, I got the store credit card because I earned $10 gift certificates for every $200 I spent. But that wasn't all. After I spent $800 in one calendar year, they gave me free shipping on any purchase! I know I bought a lot more using that card than I would have with cash because of that silly free shipping. I even remember saying to Jamie recently, "I need to spend $200 by Christmas to keep my free shipping benefits," and he was like, "But shipping costs $7." It really does sound silly when you think about it.

My last argument for credit cards was safety. If someone steals my credit card number, at least they don't have access to my bank account like they would with a debit card. But Dave said that debit cards are just as safe, and Visa promises to refund ALL your money if your card is ever mis-used.

Well darn.

So that's what we learned this week, and it had a big enough impact on us that I wanted to share it with you. As Dave says, "Live like no one else (now) so that eventually you can live like no one else."