Why Credit Cards Stink

In my home growing up my mom was a big fan of Larry Burkett. At an early age I was told to avoid debt at all costs and that it wasn't necessary. My dad on the other hand was the free spirit of our family and he loved (and still does) to spend. Money to him was a way of expressing his love to others (and himself of course). Mom handled the bills and the check book. However, talks about money were few and far between. Mom and Dad never seemed to really agree on finances aside from Mom being right and Dad getting away with stuff. At some point my parents "lost their way." We stopped attending church. Dad got a new job with great benefits and profit sharing. That money never got talked about though. I'm not even sure what happened to it. It must have all went to Dad's new debt habit. First it was credit cards managed "wisely" by my mother. Then it was a credit card purchase that couldn't quite be paid off that month. Then we got a new car with a payment higher than the mortgage. Then we bought four-wheelers and all sorts of new toys. All that money disappeared into the void of debt payments and fun living.

Then it happened. Dad lost his job. Everything but the house got repossessed. It was chaotic. Then mom lost her job, and to top it all off our house literally burned to the ground. Fortunately the insurance covered the rest of the mortgage, and gave us some breathing room. As if life hadn't taught him well enough, Dad got another job and kept the same old habits of spending money he hadn't made yet. Their money story goes on from there, but mine is just beginning.

I started working with Dad. I'd had a few small jobs before that. I saved enough money to buy a truck and trade it in for a car later after that. I was a saver. I'd seen the negative effects of debt and being without. Everyday dad and I would stop somewhere to get drinks and a snack and eat out for lunch. I always used the cash I had on hand, but I quickly realized that we wasted a lot of money on food. I started cutting back. I saved up quite a bit of cash. Then I lost my job, and ended up spending most of it on gas to get to church and food to eat our with friends.

I was getting tired of living like that. I was ready for college. I applied and got in, but I didn't have any real money to pay for much other than books. After all my financial aide, I still needed more to pay my tuition. So I got a student loan. That was the beginning of my personal debt story. From there I battled with it. I paid that debt off as fast as I could, but that didn't end my battle with debt. Soon came my first car note. That was "OK" because it was a "need." That's how I justified it. That's how we all justify it. Then came the credit cards. They are so good at selling these things.

I won't get into all the reasons a credit card company might give you to sell you on their credit card. I'll just say that they are good at selling them. The credit card is the most marketed product in America. I thought I was pretty smart. I'd just buy small things and pay the bill in full before the grace period ends. I honestly didn't even understand how the grace period worked, but I knew debt was bad. Then it happened. I couldn't pay the card off one month. At that point I had more than one card. Soon I'd wracked up debt on multiple cards. My wife and I got serious, and we paid down our debts. We were finally debt free, except for the car. Then life hit us with new curve balls. Medical debts we didn't expect suddenly appeared. Then new credit card debt.

This debt cycle continued for years. We would pay off everything, and then somehow wind back up in deep debt again. I read Dave Ramsey's Total Money Makeover, and applied the debt snowball multiple times, but then as soon as I stopped budgeting or life hit us the wrong way or we just made some stupid decision, credit cards were there to "bail us out."

Over the years, I've paid way more in credit card interest than I'd like to admit. I'm sure many of you have too. I've gotten some kickbacks from using the cards, but if you compare that against the interest I've paid, you'll quickly see who the real dummy is.

I know exactly one person who uses credit cards and gets the benefits without the cost of being stupid. The man happens to be extremely wealthy and probably doesn't even need the benefits of the credit card. He employs a full time accountant to make sure his credit cards are paid on time. He then uses the flight miles to travel around the world for free. I know several other people who say they handle credit cards well. I don't believe them. I've watched their lives well enough to see the same tale tale signs from my own experience. The reality is I'm not a wealthy man who can afford to pay an accountant to pay my credit card bills. I'm a regular guy who makes a regular living. Chances are you aren't the guy either.

Here's the thing. If you have to employ someone to pay your bills for you in order to gain the benefits of a credit card, credit cards are too difficult for normal people to use. In addition to that, no one ever got rich by using credit cards. If people got rich using credit cards, credit card companies would be going out of business because no one would be paying in interest.

Credit cards are a scam. They are the payday lender of the middle class. You don't need a credit card. You need a budget and a cash buffer. You can use your cash buffer to borrow against yourself. Be your own credit card. You'll come out on top; I promise. You can use your debit card as a credit card. It swipes, dips, and taps just as well as a credit card. If you disagree with me, call Dave Ramsey, and let me know when so I can listen in on your conversation.

Credit cards are usually used to argue about "building credit." I've had a great credit score. It really didn't win me any awards, but it cost me a lot of time, energy, and money to attain. You might rethink your credit building strategy to acquiring assets. Cash money still buys just as well as a new loan. In fact, it buys even better.

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