User talk:DebtFree

I'm responding to your credit score discussion page edit:


 * I don't think you actually read Dave Ramsey's book. That or you do not get the point.  He has a million dollars because he did not borrow money.  If I have no house payment sending my kid to college is no problem.  Borrowing money is by no means "saving" for an emergency.  If you had read his book you would know that is the first thing Dave Ramsey tells you to do. SAVE for an emergency instead of relying on credit.  I've never had to "scrape down" to my last pennies to purchase a car because I budget for it in the future.  If you can afford the payment please explain to me why you cannot afford to save the same amount each month into savings?  Of course credit cards are free because they are charging you 18%+ on any balance.  Do you really think that the banking industry spends billions on advertising credit cards each year so you can use their "free money"?  Everyone argues the "responsible use" of credit cards but apparently only 20% of card holders do it.  Middle class people generally stay that way because most have been convinced the use of OPM (Other People's Money)is how you build wealth when ironically must end up middle class or retire poor.  A lot of people need to wake up and realize that banks are NOT non profit organizations. DebtFree

I've never read his book, but I get the point. There are several perfectly valid reasons to use leverage as a consumer, including owning a credit card:

1. People beginning their careers will immediately face many expenses: a car, a deposit for an apartment, furniture, vacuum cleaner, etc. Mommy and daddy aren't there to help out everyone. For the vast majority of people, saving during college is an impossibility. So you're gonna have to take out loans; that's life for those of us who aren't rich. If you don't have the money up front, you have no choice but to spread the expense out over time. Also, people may not want to wait until they have enough money to pay for a house in cash.

2. It may be perfectly wise to use leverage to invest in a home; people may actually expect to pay less in interest and taxes than they would for an apartment. Or they may reasonably expect a house's value to rise.

3. Furthermore, using revolving credit is perfectly rational. You have three options:

a) use a credit card irresponsibly b) don't use a credit card c) use a credit card responsibly

Just because many people use credit cards irresponsibly does not mean c) is not an option. It is. You've presented a false choice between a) and b). Credit card companies do collect money from vendors and could make money entirely from responsible borrowers. But I suspect that you're right; they make far more off of collections from unfortunate individuals who may face difficulties in life and decide to use credit cards to bail them out. These people may feel that they have no other choice--if it's a choice between asking a friend for a huge loan and gambling that your circumstances will change and you can buy your way out of credit card debt, many people will choose to use credit cards badly. But saying that doesn't make their choice any easier or change the fact that it is, in fact, possible to simply RUN OUT OF MONEY.

even if you have a job.

even if you don't use credit.

even if you save.

Bad luck can happen to anyone. People contract serious illnesses. Insurance companies cite weird technicalities and refuse to pay for things. People get divorced and lose money that they spent years saving. They lose their money in what seemed like good investments. They are robbed, shot, extorted, and generally taken advantage of. And credit card companies are there to swoop in when people are hurting and ready to make an irrational choice. But the solution isn't to just throw credit out entirely. The solution is to educate yourself a little bit about how credit works and beat the house. If you do use credit responsibly, you can even keep higher average monthly balances in your savings account and earn interest on money that you do not have. You can float expenses a few weeks into the future if you're beginning a new job and waiting for a first pay check. And if you make rational decisions, having a credit card shouldn't cost you a penny.

Also, just using electricity is a form of borrowing. You are using something you don't own! At the end of the month, the cycle begins again.