The Dave Ramsey Dichotomy...

[highfigh]

I'm sure the brakes make all the difference. That and tires.

My tag line on another forum is:
My mechanic said "I couldn't fix your brakes, so I made your horn louder".

 

[Mikado463]

My tag line on another forum is:
My mechanic said "I couldn't fix your brakes, so I made your horn louder".

LOL, reminds of a George Booth cartoon

'"When was the last time you started her up?" - New Yorker Cartoon' Premium Giclee Print - George Booth | Art.com

"When was the last time you started her up?" - New Yorker Cartoon Premium Giclee Print by George Booth. Find art you love and shop high-quality art prints, photographs, framed artworks and posters at Art.com. 100% satisfaction guaranteed.

www.art.com

 

[highfigh]

LOL, reminds of a George Booth cartoon

'"When was the last time you started her up?" - New Yorker Cartoon' Premium Giclee Print - George Booth | Art.com

"When was the last time you started her up?" - New Yorker Cartoon Premium Giclee Print by George Booth. Find art you love and shop high-quality art prints, photographs, framed artworks and posters at Art.com. 100% satisfaction guaranteed.

www.art.com

That's actually from Steven Wright.

Your cartoon reminds me of the time I answered a Craig's List ad for a small guitar amp. I looked it and noticed that 2" of the insulation was missing form both power cord wires, starting at 1" from the plug. He said "It works great" and my first thought was "Dude, if you had plugged it in, the only thing that would have lit up would be you".

I had never seen one like it and I still haven't- similar, but not the same and as it turns out, it's likely that it was made around 1937. The two newest tubes came out in '37 and the other two became available in '36- all of the other similar amps had an octal plug and socket, to allow removing the chassis from the case without the speaker and the one I had was hard wired. I think it may have been a very early production piece, or possibly a prototype- I would imagine their reaction was "Ugh!" as soon as they tried to pull the chassis.

 

[panteragstk]

That's actually from Steven Wright.

Boy, that's a name I haven't heard in a long time...

 

[highfigh]

Boy, that's a name I haven't heard in a long time...

He may be laying low because Millennials probably don't understand his humor. It must be incredibly difficult to come up with new material in that style.

 

[panteragstk]

He may be laying low because Millennials probably don't understand his humor. It must be incredibly difficult to come up with new material in that style.

Well, I am a millennial and I understand just fine. It's funny, us "elder millennials" can't understand why all the older folks talk about us the way they do....then we interact with the young millennials and understand.

 

[highfigh]

Well, I am a millennial and I understand just fine. It's funny, us "elder millennials" can't understand why all the older folks talk about us the way they do....then we interact with the young millennials and understand.

"It's that younger element" is something I heard as a kid.

You people are all alike.....

I should have posted GenZ, not Millennials.

 

[Blue Dude]

What he gets wrong, and it's bad advice, is 15 vs 30 year mortgage. You should take a 30 year and invest the difference. Don't pay your mortgage off early. You are robbing yourself of investment opportunity.

Credit Score. Yes you need one. ...

Credit Cards. ... I just use them to my advantage.

I dunno, guy. I got a 30 year mortgage when I bought my current home, paid it down like a 15 when I could, refinanced in 2012 to a 15, paid it off completely in 5 years. Yes, mathematically, I could have been investing the extra principal all this time and been better off, all else being equal. But all else isn't equal. I busted my behind for those 10 years or so to pay off the mortgage early, throwing every extra dollar in bonuses and extra work and even a small inheritance on the principal. I doubt I could have remained nearly as focused for that period of time if all I was doing was sending it to the brokerage account. Even if I could, today I'd still have 17 years to go on the original mortgage. No thank you.

If I wanted to, I could take out a mortgage today and invest all of it. There's no way I'd do that. I'll never borrow money for any purpose ever again. The thing about investing is that you can choose whether to do so in a given month, no matter what ups or downs life throws at you. You can't opt not to make your mortgage payment, not for long anyway. Not having a mortgage has made everyday life a lot more relaxing. I've been able to make decisions I'd never be able to make if I still had one, like whether or not to take a lower paying schedule in the time of Covid. With a mortgage payment, that wouldn't even be an option. Without one, our household expenses are low enough that I can easily avoid riskier work. And guess where the entire former mortgage payment goes now? A maxed out 401k, IRAs, HSAs, and a brokerage account.

I don't care about my credit score. It's somewhere in the mid 600s, down from the low 800s when we still had a mortgage. Our insurance is priced adequately, shopped around by an insurance broker. I could probably get a better rate with a higher score, maybe even save $20 or $30 a month. I don't care.

We haven't had a credit card for 10 years or more. We used them appropriately, never paid more than we couldn't cover in cash, paid them off every month. But we don't miss them and don't want another one. We buy what we need with debit cards and don't care about rewards, points, miles or what have you. If we want to buy airline tickets, we go buy them and aren't concerned with meeting the requirements to redeem miles. We don't care about 2% cash back because we just don't use them for all that much. It's just much simpler to present the same debit card and never be concerned about the purchase, even to the extent of paying a credit card bill.

There is much to be said for simplifying your financial life. Our investment plan is very simple. We only pay bills for the services we use. Our budget is relatively simple, and modest for our income. We are on track to retire at least 7 years earlier than expected. We make major purchases by doing thorough research, getting the best deal we can, and writing a check for the purchase amount. We are adequately insured at good rates. And we simply aren't stressed about financial matters. Rain or shine, we're going to be okay. Not very many people can say that, especially when they try to complicate their financial plan by borrowing money. Never again.

 

[Irvrobinson]

I don't care about my credit score. It's somewhere in the mid 600s, down from the low 800s when we still had a mortgage. Our insurance is priced adequately, shopped around by an insurance broker. I could probably get a better rate with a higher score, maybe even save $20 or $30 a month. I don't care.

That's a terrible FICO score. You probably have no idea the myriad of ways it has negative impact.

We haven't had a credit card for 10 years or more. We used them appropriately, never paid more than we couldn't cover in cash, paid them off every month. But we don't miss them and don't want another one. We buy what we need with debit cards and don't care about rewards, points, miles or what have you. If we want to buy airline tickets, we go buy them and aren't concerned with meeting the requirements to redeem miles. We don't care about 2% cash back because we just don't use them for all that much. It's just much simpler to present the same debit card and never be concerned about the purchase, even to the extent of paying a credit card bill.

This explains your lousy FICO score. I get about $500-1000 in after-tax cash back from credit cards annually, and there's no price difference in the products (except maybe for a few gas stations I don't buy gas at anyway). In a few years where I travelled a lot it was more like $1500. I don't know about you, but if I found $500 sitting in the parking lot, and picking it up got my FICO score above 800, you can bet I'd bend over pretty quickly.

I don't even have a debit card. NO ONE gets direct access to our cash accounts. End of story. Credit card accounts provide a buffer against fraud and expensive merchant mistakes, for free. Debit cards are a security risk. Cash is too subject to loss and theft, and it's difficult to even prove how much you have for insurance purposes. Checks are too easily forged, and straightening things after an incident out can be time-consuming and annoying.

There is much to be said for simplifying your financial life. Our investment plan is very simple. We only pay bills for the services we use. Our budget is relatively simple, and modest for our income. We are on track to retire at least 7 years earlier than expected. We make major purchases by doing thorough research, getting the best deal we can, and writing a check for the purchase amount. We are adequately insured at good rates. And we simply aren't stressed about financial matters. Rain or shine, we're going to be okay. Not very many people can say that, especially when they try to complicate their financial plan by borrowing money. Never again.

I agree with the no-mortgage thing, as I said in a previous post. But you've taken the "simplification" thing to absurdity.

Your financial life strikes me as an ill-conceived path for no benefit.

 

[jinjuku]

I don't care about my credit score. It's somewhere in the mid 600s, down from the low 800s when we still had a mortgage.

Good or bad FICO scoring is what it is. Credit cards have zero cost to own and it's all upside for responsible users. Just setup auto-pay for the statement balance every month and get a $2 cup of coffee once a month. Do that for three cards and your credit rating would still be in the high 700's if not 800's.

I'd rather have the high score and not need it than not have the high score and need it.

 

[snakeeyes]

I really like the idea of paying a mortgage off early if that fits in your budget. That frees up a lot of cash each paycheck once it’s paid off.

 

[Blue Dude]

That's a terrible FICO score. You probably have no idea the myriad of ways it has negative impact.

...

Your financial life strikes me as an ill-conceived path for no benefit.

I have to be honest with you, it's hard to see how. We own everything free and clear, are on very solid financial footing and have no plans to borrow any money, ever. There's nothing I need that I can't get right now, at a reasonable price, with or without a high FICO score. A FICO score is just an indication of how you've interacted with debt. Why should I care what some algorithm thinks of my borrowing habits? It just doesn't matter to me.

My FICO score sucks because there's very little remaining credit history in it (the two mortgages), not because any of the information is negative or I've misbehaved with money. On the contrary, I can show a both a high income and high net worth to anyone with a need to know, and so far nobody has had a need to know. If it comes down to it, I could work with a financial firm that would underwrite a policy the old-fashioned way: actually look into whether I can pay. If they want my business, they can take a little time to review my financial record vs simply pulling an empty credit report.

Debit cards have the exact same financial protection as credit cards, so long as they are run as credit (without the PIN). Same system, except the money comes out of your account right away instead of accruing to your credit balance. Same fraud protection, same terms of service, same everything. It's a MasterCard issued by our bank, and it behaves like that in every respect. If the number is compromised, the card is frozen and they ship me another one. We have backup debit cards with another bank we use if the primary ones are compromised. We have never, not once, had to fight to get our money back, or even had anything taken out without being immediately notified. No worries.

I'd make the argument that we've been financially successful because we've kept it simple, don't borrow money, don't buy things we can't afford, and live well below our means. It's simply not worthwhile for us to play games with professional marketers to try to squeeze 2% out of retail purchases, or go out of our way to hit Bingo on some score that some cubicle dweller needs to issue us credit we don't want and will never use. We just don't bother with that sort of thing anymore. Even in a culture as heavily consumer-focused as ours, it's still possible to opt out and just live your lives. "Everyone knows you need to build credit to get ahead. Everyone knows you should borrow at low interest rates to use Other People's Money. Everyone knows to use good debt and avoid bad debt..." In other words, "everyone knows" what the professional marketers tell them to think. Most people can't meet a $400 emergency without borrowing money, most people use credit to buy things now they can't yet afford, most people live paycheck to paycheck, most people find themselves unable to retire before their body gives out. So forgive me if I just go with what works instead of listening to the conventional wisdom of people with no control over their own money.

 

[Irvrobinson]

I have to be honest with you, it's hard to see how. We own everything free and clear, are on very solid financial footing and have no plans to borrow any money, ever. There's nothing I need that I can't get right now, at a reasonable price, with or without a high FICO score. A FICO score is just an indication of how you've interacted with debt. Why should I care what some algorithm thinks of my borrowing habits? It just doesn't matter to me.

Because, as jinjuku and I have pointed out, your FICO score is used for a lot more than you apparently think.

My FICO score sucks because there's very little remaining credit history in it (the two mortgages), not because any of the information is negative or I've misbehaved with money. On the contrary, I can show a both a high income and high net worth to anyone with a need to know, and so far nobody has had a need to know. If it comes down to it, I could work with a financial firm that would underwrite a policy the old-fashioned way: actually look into whether I can pay. If they want my business, they can take a little time to review my financial record vs simply pulling an empty credit report.

No one will take a little time. Like your insurance company. No insurance company I've ever heard of writes a policy the old-fashioned way. You've already admitted you think you pay on the order of $30/month more for insurance. I get your off-the-grid attitude, but your philosophy is not a good model for people to maximize benefits from the US financial system. It's just your preference.

Debit cards have the exact same financial protection as credit cards, so long as they are run as credit (without the PIN). Same system, except the money comes out of your account right away instead of accruing to your credit balance.

That's the entire point. Debits cards have no buffer from bad actors. Either do checks. I'm aware of the federal consumer protections for debit cards, but they aren't as safe exactly because they give merchants the ability to get funds from your checking account directly. Basically, they're never safer, unless you can't control yourself. Read all about it:

Are Credit Cards Safer Than Debit Cards? - Experian

Credit cards offer more protection than debit cards in the event of fraud, making them the safer choice. Here's what you need to know.

www.experian.com

And, since most products and services are priced exactly the same for credit and cash customers, by not taking advantage of credit card cash back policies cash/check/debit card users are effectively subsidizing credit card users. Thank you.

Same fraud protection, same terms of service, same everything. It's a MasterCard issued by our bank, and it behaves like that in every respect. If the number is compromised, the card is frozen and they ship me another one. We have backup debit cards with another bank we use if the primary ones are compromised. We have never, not once, had to fight to get our money back, or even had anything taken out without being immediately notified. No worries.

I'd make the argument that we've been financially successful because we've kept it simple, don't borrow money, don't buy things we can't afford, and live well below our means. It's simply not worthwhile for us to play games with professional marketers to try to squeeze 2% out of retail purchases, or go out of our way to hit Bingo on some score that some cubicle dweller needs to issue us credit we don't want and will never use. We just don't bother with that sort of thing anymore. Even in a culture as heavily consumer-focused as ours, it's still possible to opt out and just live your lives. "Everyone knows you need to build credit to get ahead. Everyone knows you should borrow at low interest rates to use Other People's Money. Everyone knows to use good debt and avoid bad debt..." In other words, "everyone knows" what the professional marketers tell them to think. Most people can't meet a $400 emergency without borrowing money, most people use credit to buy things now they can't yet afford, most people live paycheck to paycheck, most people find themselves unable to retire before their body gives out.

I don't know what to say. If you were a computing peripheral device you'd be a printer. Output only. My comment wasn't advocating you use debt, only that a good FICO score has benefits beyond credit worthiness. You've got this off-the-grid financial attitude going, and you're saying you're successful because you did that (your emphasis). You can be successful just by not buying things you can't afford and living below your means, and I would add investing and saving. This financial cult you've cooked up for yourself is fun to read, but difficult to advocate when examining the facts.

So forgive me if I just go with what works instead of listening to the conventional wisdom of people with no control over their own money.

Are you saying jinjuku and I have no control over our money, because we use credit cards?

 

[jinjuku]

A FICO score is just an indication of how you've interacted with debt

This fallacy is partly why I started this thread. You do not have to go into any debt to establish a FICO score. Period. FICO scoring is length of maintaining an account in good standing. It's not how much you went into debt over it. It's amount borrowed to available credit. That could be 0 if you don't have a mortgage.

What I have on my credit report are credit cards, a mortgage, and one installment loan for a new car in 99'. That's it. Since that new car in 99 I've purchased 3 others with cash.

I have a Chase Amazon Visa, Wells Fargo Visa, Amazon Amex, Home Depot, two others I would have to look up, Home Depot card for a 0% offer (yes I could have paid for the $6K purchase up front but I'd be an idiot not to take advantage of 0% for 24 months and invest at ~15-16% and ended up with $7817 after 24 months). My oldest CC is now 20 years.

I put my non-negotiable spend on those cards (internet, cell, groceries, gas, clothing etc) and I have auto pay setup for the statement balance every month on all cards (besides the HD card, that is setup for 6K / 24 months).

Here is the upshot:

I pay $300 a half for my car insurance and that's full coverage btw. I have had a 3.12% mortgage since 2009. In 2020 I had $750 in cash back from my cards. I took advantage of 2 CC offers that netted me $950 in rewards for spending that I was going to do anyways (spend X in 6 months). I use the Amex card for electronic purchases as they double up the typical 1 year warranty to 2 years.

None of this costs me a dime and just minutes of my time. The 20 minutes I spent on getting two cards with cash incentives and was well worth the $950. Not to mention two personal checking account offers that I made $1200 on for doing $10K worth of direct deposits in 6 months.

Dave Ramsey's 'cut up the cards' is perfectly solid advice for people that cannot get their schiit together. Like my ex business partner. Soon as I helped him out with a credit card piggy-back and he was able to get an unsecured Visa he repeated the same exact behavior that had him file for at least one personal bankruptcy and I believe a 2nd.

There is a cost to not having the best FICO score you can reasonably manage. If you happen to live in a state that bans non-lending based pricing due to FICO scoring then this is less important. But employers look at FICO, Landlords look at FICO, Insurance looks at FICO. FICO is a game, learn to game it.

 

[jinjuku]

Debit cards have the exact same financial protection as credit cards, so long as they are run as credit (without the PIN). Same system, except the money comes out of your account right away instead of accruing to your credit balance

There is one issue with this: If your debit card becomes compromised then that is an immediate liquidation of your account and the inherent problems that result (bounced checks, automated account debiting failure etc...) with a CC I'm insulated from that.

Also if you simply setup statement balance auto-pay on a CC there is no balance accruing. It's as if you used your debit card.

 

[jinjuku]

We own everything free and clear, are on very solid financial footing and have no plans to borrow any money, ever.

BTW that's awesome...

 

[Blue Dude]

Because, as jinjuku and I have pointed out, your FICO score is used for a lot more than you apparently think.



No one will take a little time. Like your insurance company. No insurance company I've ever heard of writes a policy the old-fashioned way. You've already admitted you think you pay on the order of $30/month more for insurance. I get your off-the-grid attitude, but your philosophy is not a good model for people to maximize benefits from the US financial system. It's just your preference.



That's the entire point. Debits cards have no buffer from bad actors. Either do checks. I'm aware of the federal consumer protections for debit cards, but they aren't as safe exactly because they give merchants the ability to get funds from your checking account directly. Basically, they're never safer, unless you can't control yourself. Read all about it:

Are Credit Cards Safer Than Debit Cards? - Experian

Credit cards offer more protection than debit cards in the event of fraud, making them the safer choice. Here's what you need to know.

www.experian.com

And, since most products and services are priced exactly the same for credit and cash customers, by not taking advantage of credit card cash back policies cash/check/debit card users are effectively subsidizing credit card users. Thank you.





I don't know what to say. If you were a computing peripheral device you'd be a printer. Output only. My comment wasn't advocating you use debt, only that a good FICO score has benefits beyond credit worthiness. You've got this off-the-grid financial attitude going, and you're saying you're successful because you did that (your emphasis). You can be successful just by not buying things you can't afford and living below your means, and I would add investing and saving. This financial cult you've cooked up for yourself is fun to read, but difficult to advocate when examining the facts.



Are you saying jinjuku and I have no control over our money, because we use credit cards?

I can't remember the last time my credit report got even a soft inquiry for something other than junk mail offers, which I'm supposedly opted out from. I think my cell service did, but I already qualify for their lowest pricing. I already have all the insurance I need, at rates acceptable to me. I don't know if I'm paying more because my FICO score dropped after paying off the house. That was speculation. I'll ask my insurance broker. I was hypothesizing needing specialty insurance, for which manual underwriting is possible. I don't foresee a need for that though.

No argument about debit cards. I don't consider pulling directly from my account a bug, but that's just me. I'm more concerned about fraud or identity theft, and I already have defenses in place for that. The additional buffer of a line of credit is overkill for my situation.

BTW, I don't have any illusions about being off the grid. Nobody is. I just participate as little as possible in the bank-created rat race equating financial health with their willingness to lend you money for their benefit. That's all FICO is.

Your last paragraph summed up what I was trying to say, except better. I think we're mostly in agreement. I'm just opting out of FICO-chasing in addition to that.

I wasn't referring to anyone in particular, just "everyone knows" conventional wisdom. I thought I made that clear but I guess I didn't. Sorry about that.

 

[jinjuku]

Because, as jinjuku and I have pointed out, your FICO score is used for a lot more than you apparently think.

To be fair to Blue, if as a household, they've collectively managed everything well, then the few upshots of having a 720+ score simply doesn't outweigh the other positives they've managed. I 100% get that. Right now if I wanted to I would simply write a check and pay off the mortgage and experience that peace of mind. That point is not lost on me.

After that's done and I have significant savings and investments I really don't need a FICO score. I maintain it because I have it down to a science, it doesn't cost me anything, and if I would ever need it for any advantage it would give me, I have it. The only point I want to make is you don't need to go into debt to get there. Just put your non-negotiable spend on it and automate the payments.

 

[Blue Dude]

There is one issue with this: If your debit card becomes compromised then that is an immediate liquidation of your account and the inherent problems that result (bounced checks, automated account debiting failure etc...) with a CC I'm insulated from that.

Also if you simply setup statement balance auto-pay on a CC there is no balance accruing. It's as if you used your debit card.

I am satisfied with the defenses already in place on my account. There have been unauthorized attempts to use the card but they've been caught instantly before any money is taken out. The only inconvenience is having to issue a new card and change billing for current services to the new card number. The limits on use are well under the account balance so it's impossible to be wiped out, and I can coordinate with the bank to permit a single large transaction if needed. I'd have to do all that with a credit card too. There really is no difference in practice.

 

[Blue Dude]

To be fair to Blue, if as a household, they've collectively managed everything well, then the few upshots of having a 720+ score simply doesn't outweigh the other positives they've managed. I 100% get that. Right now if I wanted to I would simply write a check and pay off the mortgage and experience that peace of mind. That point is not lost on me.

After that's done and I have significant savings and investments I really don't need a FICO score. I maintain it because I have it down to a science, it doesn't cost me anything, and if I would ever need it for any advantage it would give me, I have it. The only point I want to make is you don't need to go into debt to get there. Just put your non-negotiable spend on it and automate the payments.

I agree with all that. I'm also running on inertia since my system runs well and doesn't cause me any significant bother, therefore incorporating a new financial instrument for everyday spending seems more trouble than it's worth. Also I'm trying to present an alternate view of a financial life that rejects the importance of consumer credit scoring, seemingly as a goal in and of itself. That mindset is the result of really clever marketing, rather than objectively assessing financial health, as though responsibly handling debt is one of the most important (if not the most important) markers of financial success. "I'm deeply in debt, with a negative net worth, but I make minimum payments on time, I'm rocking that new flat screen, and have a FICO score of 820, therefore winning!" A lot of people seem to think so.