Where are my anti-debt/credit card people at?

[KineKilla]

Interesting to hear so many on here touting the awesomeness of a paid off home. If you think that you don't have a monthly payment after your house is paid off, you are sorely mistaken.

I own my house.

I still have to pay around $400/mo just for the taxes and insurance. That is never going away and is certainly only going to continue to rise as taxes increase year after year.

Rentals are no different. Even if you own it, there are still taxes, insurance and repairs to be paid. The only difference is that someone else is paying for those...until the gov't gives them a free ride on your dime that is.

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[Whitey Fisk 88]

I saw a post about the "best credit cards", credit cards make me want to vomit so I thought I would make a thread seeing who else has an aversion to debt and specifically credit cards?

Edited to add I have a debit card because many of you think I meant actual cash all the time. I’m not a total caveman.

Do not comment about your credit card rewards, debt arbitrage, or whatever. This is for my cash slinging friends only.




Oh and yes, I am a pretty big Dave Ramsey fan.

The big thing is Daves parents were both investment bankers, they helped him secure loans in his late teens that you and I would never ever ever get in a million years. He didnt work his way up, like almost all the rich, mommy and daddy pulled strings for him to get special treatment.


And he has the balls to tell struggling working folks to work even harder, work 3 jobs, dont eat anything but rice and beans and the ducks at the park. Instead of admitting the current central banking system is inflating away your hard earned money and that the system is broken, he places the blame on the workers and guilt trips them into thinking that its their own fault theyre struggling to make ends meet. And often times it is, but often times its not.

He also has the balls to tell you to pay off every cent of every loan you have while he had all his written off... Wtf people, quit listening to this charlatan

 

[sasquatch]

Who of you cash kings paid for their first home fully in cash?

I did. But I’m also a CC guy, pay off the balance every two weeks when I get paid


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[MattB]

Thanks for the link. I took a look at the link to the "Full Study" (https://cdn.ramseysolutions.net/med...esearch/national-study-of-millionaire-new.pdf). Maybe that's not the best way to label that link, as that paper is a summary without any level of detail about how they got 10k "millionaires" (there is no database that accurately lists millionaires), how that term is defined, how many responded (and didn't respond), what questions were asked, how they were phrased, etc. Knowing more about the surveyed group would help.

Example: "8 out of 10 millionaires invested in their company’s 401(k) plan...." What does this mean? As written, it seems to indicate that every one of the 10k millionaire respondents was was a salaried employee that had the option to contribute to a 401k, and that 8,000 of them therefore did. That seems incredibly unlikely, but if it is correct, what does it mean about people who are self-employed, or otherwise don't have a 401k plan? Or does the statement mean that of the portion who answered that question, all of those answering had a 401k plan and 80% contributed? Or of those who had a 401k plan, 80% of them contributed? I have no doubt that investing in a 401k contributes to wealth, but I don't know what this study contributes to my belief. (And fwiw, the following points about millionaires not investing (much) in single stock positions isn't surprising, especially with respect to 401k plans - as that is often not even an option.)

Basically I don't believe any of it - but I'm a skeptic by nature and I rarely believe anything I'm told, especially if it's tied to making money. I don't believe the summary of any medical or nutritional studies, especially something that is so summarized in the media (like "red wine makes you live longer!") as the underlying "studies" are often rife with errors and the conclusions reached are often not without plenty of explanations. So my disbelief is not limited to DR.

Many employers provide some level of matching for employee 401-K contributions, which directly incentivizes contribution. The match is essentially free money that comes along with contributing. So not only do those likely start investing at a younger age, but they also get a level of matching from their employer which supercharges wealth building over time.

 

[fwafwow]

Many employers provide some level of matching for employee 401-K contributions, which directly incentivizes contribution. The match is essentially free money that comes along with contributing. So not only do those likely start investing at a younger age, but they also get a level of matching from their employer which supercharges wealth building over time.

I’m not sure if you meant to quote my post. I’m sorry. If there’s a comment being made in response to mine I’m missing it.

 

[HvyBeams]

Put me in the debt averse crowd. I rarely use a CC, and when I do, it's not for the rewards. To those of you who can handle huge amounts of debt without caring good for you. We are just wired in the head differently. If that means you are richer than me, good for you. I am glad you are winning at life financially.

 

[MattB]

Many employers provide some level of matching for employee 401-K contributions, which directly incentivizes contribution. The match is essentially free money that comes along with contributing. So not only do those likely start investing at a younger age, but they also get a level of matching from their employer which supercharges wealth building over time.

It was commentary to add context regarding your disbelief in the notion that 8 of 10 millionaires participated in their employer's 401-K as they can be a pretty good way to generate wealth. An individual can contribute up to $22,500 for 2023 and many employers matched a percentage of base salary dollar for dollar up to a certain percent of base salary (e.g. 6%). Even without investment appreciation, that can up pretty fast. Add to that the correlation between net worth and income level, it wouldn't surprise me in the least that a high % of millionaires participate in employer-based 401-K's.

 

[fwafwow]

It was commentary to add context regarding your disbelief in the notion that 8 of 10 millionaires participated in their employer's 401-K as they can be a pretty good way to generate wealth. An individual can contribute up to $22,500 for 2023 and many employers matched a percentage of base salary dollar for dollar up to a certain percent of base salary (e.g. 6%). Even without investment appreciation, that can up pretty fast. Add to that the correlation between net worth and income level, it wouldn't surprise me in the least that a high % of millionaires participate in employer-based 401-K's.

Maybe my point wasn’t clear. I know what a 401k is - and I’m not disbelieving 8/10 people - of a given population may contribute to them. But the point was geared more towards the universe of respondents to the survey. I personally don’t believe that 100% of 10k millionaires had 401k plans - that would mean every single millionaire surveyed was an employee with a company that had a plan. But the “study” just doesn’t make clear what it is saying, or how the survey was conducted.

 

[Cowbell]

I expect there is plenty we agree with, but pointing out where he's wrong/overstating/profiting isn't bashing, it's opinion (and in some cases, fact or truth). And I personally don't think this is an ends justifying the means situation, as there are other ways to get out of debt or manage your finances without going to a one-size-fits-all financial evangelist website with links to various pay-for affiliates.

Could you show an example? I would have thought that you only save the interest expense * the tax rate, still leaving you out of pocket on a net basis.

In my business, we use credit lines for inventory. Meaning the more debt we incur the higher our inventory is and usually inventory turnover. Last year for every dollar I borrowed, I paid 6 cents in interest but netted 30 cents in profit after

 

[M1SF1T]

I have a premium credit card, put all my purchases on it and pay it off every month. I never carry a balance.

That spending that I world be getting nothing for were I paying cash gives me points that I redeem for Visa prepaid cards to pay for expenses like gas or groceries, it gives me purchase insurance, travel medical insurance, car rental insurance, covers my nexus pass, gives me lounge access at airports (I frequently travel) where I get free food, drinks, coffees...

If you can manage a CC properly and not carry a balance you're leaving money on the table not using one.

 

[Outdoorjoe318]

You should listen to what frank abignale has to say about this. Credit cards exclusively, paid in full every month, and they aren't just for rewards. Much more secure than debit.

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[Pharmseller]

Me too with the pay off monthly.

Nearly every purchase I make I use plastic.

Rewards are nice.

 

[sasquatch]

Put me in the debt averse crowd. I rarely use a CC, and when I do, it's not for the rewards. To those of you who can handle huge amounts of debt without caring good for you. We are just wired in the head differently. If that means you are richer than me, good for you. I am glad you are winning at life financially.

Credit cards do not mean debt.

Huge diff between the two that this thread seems to imply ppl don’t realize


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[HvyBeams]

Credit cards do not mean debt.

Huge diff between the two that this thread seems to imply ppl don’t realize


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I said I was debt averse. I am totally debt free, including my house. I have a decent net worth with decades to work if I choose to do so. The OP asked about credit cards and I replied I rarely use them. My household spends more money using them. Thanks for the financial education though.

 

[Thess87]

Maybe my point wasn’t clear. I know what a 401k is - and I’m not disbelieving 8/10 people - of a given population may contribute to them. But the point was geared more towards the universe of respondents to the survey. I personally don’t believe that 100% of 10k millionaires had 401k plans - that would mean every single millionaire surveyed was an employee with a company that had a plan. But the “study” just doesn’t make clear what it is saying, or how the survey was conducted.

If I’m understanding you correct you believe 8/10 millionaires don’t work regular jobs? I would probably disagree with that. If that’s what your saying what makes you think that?

 

[fwafwow]

If I’m understanding you correct you believe 8/10 millionaires don’t work regular jobs? I would probably disagree with that. If that’s what your saying what makes you think that?

That's not what I'm saying. See post #215.

The "study" (really a marketing piece summary) is so short on any detail on how they decided what a millionaire is, how they found them, what they asked, etc., that it is worthless IMHO. Candidly, without that sort of detail, I don't believe any of it, for the reasons I've stated above.

My point on the "study" statement about 401k usage is just an example. Read literally, the "study" suggests that EVERY one of the 10k who supposedly replied (or participated - it's not clear) had a salaried job that offered a 401k plan and that 80% of them participated in it. If you were able to somehow find 10k "millionaires" (however defined) and got all of them to reply to this particular question (doubtful), I would bet any amount of money that not 100% of them were salaried employees AND with a 401k option. There's not a single millionaire who was self-employed, or worked at a "regular job" but that the employer didn't offer a 401k plan?

 

[HuntHarder]

So you think it's that crazy of am idea that all of them were, at some point, offered a 401k at their place of employment? I would say pretty much everyone I know has worked at a place that offered a 401k at some point of their lives. All of them participated atleast a little as well.

 

[HuntHarder]

Interesting to hear so many on here touting the awesomeness of a paid off home. If you think that you don't have a monthly payment after your house is paid off, you are sorely mistaken.

I own my house.

I still have to pay around $400/mo just for the taxes and insurance. That is never going away and is certainly only going to continue to rise as taxes increase year after year.

Rentals are no different. Even if you own it, there are still taxes, insurance and repairs to be paid. The only difference is that someone else is paying for those...until the gov't gives them a free ride on your dime that is.

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Not sure anyone is touting the awesomeness, more proud of achieving something most strive to do. I think we all understand there are more fees ( taxes, insurance, upkeep) involved, even with no mortgage payment. Im not sure about everyone else's, but my p&I make up about 75-80% of my monthly payment. So big reduction if house is payed off..

 

[Phaseolus]

Debt free since 2005, use and pay off credit card monthly. House, vehicles, and elk tags are paid for.

 

[fwafwow]

So you think it's that crazy of am idea that all of them were, at some point, offered a 401k at their place of employment? I would say pretty much everyone I know has worked at a place that offered a 401k at some point of their lives. All of them participated atleast a little as well.

Yes, or it is at least incredibly unlikely. As for someone who "at some point" had an opportunity to participate, the "study" suggests that 80% did so and in such a meaningful way as to that participation having been a major factor at becoming "millionaires", so a passing opportunity to have been in a plan seems inconsistent with the statement.

Let me separate the issues -

• I have nothing against 401ks. I have one and I've been doing it for so long (I'm so old) that the above referenced annual contribution limit doesn't apply at my age.
• I think everyone who has an opportunity to participate in a 401k should, especially to get the employer match (if available).
• I think participating in a 401k, and investing generally, is much more likely to make you a "millionaire" than many other activities (especially selling stuff on the RS classifieds).
• UNRELATED to 401k and investing benefits and focusing on this "study":
  • I don't believe any "study" when the "author" doesn't share the methodology, much less the underlying data
  • I don't believe 10,000 millionaires could be found without some explanation as to how they were found (ignoring for now the definitional issue) - there is no central database to know that someone has any level of wealth, so any participants at a minimum had confounding factors, such as self-selection
  • I don't believe 100% of 10,000 surveyed were salaried employees - especially since based on my personal experience, many people who are wealthy ("millionaires" and above) did not make their wealth from their salaried jobs. Not even 1% were self-employed? Not even 1% is a "millionaire" from inheritance?
  • Even if 100% were salaried employees, I don't believe 100% of them had access to a 401k

It would be much more likely that the actual statement should be something like: "Of 10,000 people we surveyed who described themselves as 'millionaires,' x number of them worked for a company that offered a 401k plan, and of those x number, 80% participated in the plan."

My overall point is that although I might agree with some of the conclusions in the study (like using a 401k is more likely to make you a millionaire), I don't believe it because someone said they did a "study", and the above points (as nit picky as they are) are reasons to support my disbelief. If someone has access to better data about the study, I'm more than happy to admit I'm wrong. And this has gone way off of the rails perhaps because I should have been more clear in my above posts.