Wasted Money or How to Save Money

[forgeblast]

We are on a Dave Ramsay type budget. I say type because we have modified it to fit our situation.
I told my wife in year or two we will automate
a lot of billing and harvest rewards but for right now we have it working out great and I do not want to mess anything up.

 

[LD1]

Lots of arguments both ways.

There was a discussion on here not too long ago about the fact that the costs of goods have gone up 2-3% to cover those CC fees the merchants have to pay. And some were arguing that if everyone paid cash then the cost of goods would be lower and we really arent saving anything with a 2% rewards card.

Well......maybe. IF cost of goods is marked up 2%.....and I get a 2% "perk".........maybe I aint really saving anything. But those that pay with cash......are still paying 2% more on goods......

So weather you consider getting the 2% perk is just getting back to breaking even.....or weather you consider it 2% saved.....really is no difference in my book. Because bottom line......I am 2% ahead than if I had paid with cash/check.

So I would argue that there are 3 types of people.....and two being fools...
1. Get the highest perk card you can.....pay in full every month. Charge everything you normally would on this card....this is smart.
2. Thumb your nose at system....pay cash.....cost you 2% more in the long run....foolish
3. Carry a balance.......pay extreme interest rates.......this is really foolish.

I have a rewards card as does the wife tied to the same account. It gets used for just about everything. The only things I dont use the card for are:
1. Cash transactions like buying something off craigslist or local for-sale site, etc
2. The few bills that charge extra to use a card....IF the extra fee is greater than my 2% reward. Like my water bill. $2.75 fee to use a card on a ~$30 bill. OR getting tags at the BMV....$2.75 fee to use card for $40-$50 tags.

 

[rekees4300]

Because bottom line......I am 2% ahead than if I had paid with cash/check.

BINGO :thumbsup:

 

[plowhog]

I had a bad experience with ATT autopay and will never use any autopay from any company again. You give up too much control. Instead, I only use my bank using online banking, and set scheduled and recurring payments. So, I never give my credit card information to a third party. And I get better reports at year end about how money was spent.

My autopay problem originated when I had ATT landline plus DSL. I cancelled the landline, leaving DSL only. What they call a "dry line." Before cancellation I adjusted the monthly autopay fee to the DSL only fee. Unknown to me, ATT terminated my user name and login when the land line was cancelled. They never told me that. So when I later cancelled DSL, I had no "account" and I could not login to stop autopay. At this point I was receiving NO services from ATT but their autopay kept billing me. Month after month after month.

If I called ATT, they would tell me to log into my account. When I told them I could not, and why, they told me I had to visit an ATT store. When I went to an ATT store they told me I had to call the toll free ATT number. I would call again and they again could not find me as no account or service existed. Finally, during a 2 hour marathon call with ATT, I got the autopay stopped. The woman on the phone gave me a confirmation number. But, the autopay charges continued. Like the call never happened.

I reported my credit card lost. It was replaced with a new card and new number. I hoped that would break the chain. The autopay deductions successfully survived the transition from one card number to the other.

After a long time of fighting this, I started reversing the charges on my credit card. I had to call for each charge to dispute that individual charge. After doing that for a while, I received notice that I was sent to collection for the autopay amount. I have a credit rating in the 800's and here I am in collection. I provided documentation of everything plus copies of all bills, etc. to the collection agency. Did not hear anything back for about 3 months. Then I was notified it was referred to a new collection agency. They contacted me demanding payment, and we did the same thing all over again.

They finally gave up billing me-- after a very long time and after many reversed charges on my credit card. Needless to say, I will never reveal or provide my credit card number to a third party for autopay again!

 

[square1]

2. Thumb your nose at system....pay cash.....cost you 2% more in the long run....foolish.

Not really. The average credit card purchase even when the buyers' intention is the same is 5-10% more than the average cash purchase. Often it's because they are willing to pay more for the same item, not because they are getting more for their money. The sensation of parting with money is shielded by the credit card and more is spent. This has been demonstrated repeatedly across all financial spectrums. Rich, middle class, or poor. Getting 2% back when paying 5, 10, 20% more does not Save Money".

 

[rekees4300]

Needless to say, I will never reveal or provide my credit card number to a third party for autopay again!

Whenever trouble starts with a company, I stop autopay and erase all credit card info to preclude continued billing. Your example with ATT is extreme but isn't surprising, since I have also dealt with that company before, the experience was very negative and will never do business with them again. :thumbdown:

 

[jmc]

Plowhog, thanks for posting that nightmare. I have been thinking about dropping my ATT landline but keeping their DSL. And I have autopay now. How would you handle it if you could redo it?

 

[LD1]

Not really. The average credit card purchase even when the buyers' intention is the same is 5-10% more than the average cash purchase. Often it's because they are willing to pay more for the same item, not because they are getting more for their money. The sensation of parting with money is shielded by the credit card and more is spent. This has been demonstrated repeatedly across all financial spectrums. Rich, middle class, or poor. Getting 2% back when paying 5, 10, 20% more does not Save Money".

Then you need to have more discipline.

For me......every dime I charge to my CC.......is the EXACT SAME as if I didnt have a card.

When we go grocery shopping......we get what we need. Pay (with card) and leave. Would be no different than paying with cash.
When I pull up to the pump to put gas in.....I fill it up. By swiping the card doesnt cause me to spend 10% more on fuel that wont fit in the tank anyway.
When I pull into a fast food joint I know what I want. I dont ever order 10-15% more just because I have a credit card.

My spending habits are exactly the same....no matter the payment method. The credit card doesnt shield me from anything. Every 30 days I feel the impact. But doesnt change a thing.....Except I dont have to walk around with a wallet full of cash.....and I get to share in the profits of the merchant fees with my CC company.

 

[square1]

Across all financial spectrums repeatedly. You may be the exception, definitely not the rule.

 

[CobyRupert]

Lots of arguments both ways.

Well......maybe. IF cost of goods is marked up 2%.....and I get a 2% "perk".........maybe I aint really saving anything. But those that pay with cash......are still paying 2% more on goods......

Because bottom line......I am 2% ahead than if I had paid with cash/check.

Sort of like the 'Prisoner's Dilemma'. Individual gain, over collective good. You'll contribute to the problem (raised prices) because you have a way to negate the problem (rebates) you've created.
Sort of like people with air conditioners don't mind the environmental heating effects of the coal plants it takes to power them.

Don't get me wrong or take this personally, I'm guilty too.

 

[ultrarunner]

We are credit adverse and never carry a balance.

That said, you really can't exist if you have to travel for business without a card.

I liked the American Express and Discover through Costco... not thrilled with the new one.

For many years I would have to turn in my work expenses every two weeks... during times of expansion I was able to rack up a lot of airline miles... last year I got an official company card... more trouble than it is worth and not always does it work but that is a different story.

I think realizing where you money goes is just as important as knowing where it comes from... some are excellent at making money but can't hold onto it... others are super frugal but miss opportunities for income.

Realizing that you have choices is the first step in my thinking...

One thing I detest is reoccurring bills... probably why I never have had cable or cell phone and that cell service is spotty here.

I manage rentals and to a last one... my low income families all spend a lot of TV... some spend $2,000 a year... it boggles my mind.

A more simplistic approach is to "Pay" yourself first... set a portion aside from each paycheck as if you don't even have it...

My very first real job was $50 a week at age 12... payday was every Friday... $20 to my savings, $20 each week to my folks for room and board a couple of bucks to with holding and about $6 left for me to spend... kind of followed this my entire life... using savings only for things like buying property.

 

[ovrszd]

I love contradictions. When an answer can be both "yes" and "no", and both answers are true.
Yes, as an individual, you can save 1%, 2%, 3% etc...by using a credit card. But there's a tipping point collectively. When a certain percentage of customers use credit cards, who charge the retailer 1%, 2%, 3% in transaction fees, what do you think happens to the price of the item? It's going to go up 2%.
So what have you saved when you get 2% back on an item that's marked up 2%? Is it 0% or 2%? Answer: Both.

Locally, there is a convenience store chain that offers 10 cents a gallon reduction on gas if you use their "membership gas card" that directly deducts from your linked bank account. At first I wondered, why do they do this? I'm pretty sure it's so they don't have to pay the credit card company, and it's a way to get around not being not allowed (by the credit card companies) to offer a "cash price" reduction.

Now Coby,,,,, you can't go throwing logic into these discussions!!!! Haven't you realized those who use their CCs regularly take serious offense to anyone who doesn't???

 

[fried1765]

I love contradictions. When an answer can be both "yes" and "no", and both answers are true.
Yes, as an individual, you can save 1%, 2%, 3% etc...by using a credit card. But there's a tipping point collectively. When a certain percentage of customers use credit cards, who charge the retailer 1%, 2%, 3% in transaction fees, what do you think happens to the price of the item? It's going to go up 2%.
So what have you saved when you get 2% back on an item that's marked up 2%? Is it 0% or 2%? Answer: Both.

Locally, there is a convenience store chain that offers 10 cents a gallon reduction on gas if you use their "membership gas card" that directly deducts from your linked bank account. At first I wondered, why do they do this? I'm pretty sure it's so they don't have to pay the credit card company, and it's a way to get around not being not allowed (by the credit card companies) to offer a "cash price" reduction.

If a price goes up at one retailer, you can always buy from another.
It is called: "the free market".

 

[plowhog]

How would you handle it if you could redo it?

I am already kind of re-doing-it with many companies. That is, I never ever use "their" autopay.

If I were in your shoes, I would cancel autopay today. Either start to pay it manually (ugh) or through online banking that you control. Once you have that established (through at least one billing cycle) then I would make the changes to your account. Maybe ATT has fixed their problem in this area but it isn't worth chancing.

 

[fried1765]

Not really. The average credit card purchase even when the buyers' intention is the same is 5-10% more than the average cash purchase. Often it's because they are willing to pay more for the same item, not because they are getting more for their money. The sensation of parting with money is shielded by the credit card and more is spent. This has been demonstrated repeatedly across all financial spectrums. Rich, middle class, or poor. Getting 2% back when paying 5, 10, 20% more does not Save Money".

I do not understand how you arrive at your conclusion!
I shop for price with basically EVERY item I buy.
I pay the exact same price, that anyone else would pay with cash, for the exact same item.
I get 2% cash back, the cash paying person does not.
How am I NOT saving money?

 

[CobyRupert]

If a price goes up at one retailer, you can always buy from another.
It is called: "the free market".

Irrelevant. The CC company charges both.

 

[LD1]

Irreverent. The CC company charges both.

Yep. And until a merchant starts offering a cash discount (or charge a fee to use a card) in excess of my "rewards"......then I will never use cash. Thats like volunteering to pay 2% more to use cash vs card.

So since the CC card company gets ~3% profit from the merchant........and the merchant charges EVERYONE 3% more for goods and services to cover their costs.......I'll choose to at least recoup 2% of that.

Am I paying 1% more in the long run than if credit cards were never invented in the first place......probably. But its still 2% LESS than everyone that pays cash. and 2% LESS than if I were to pay cash. So either way.....I save 2% vs a cash buyer. So thats what I'll continue to do until something changes with the system as a whole. I am gonna continue to do what is in my best interest financially.....foolish not to do so.

 

[4570Man]

Some places won’t budge off list price. You might as well swipe the card. Small businesses will almost always give a better cash price. Advertising a higher CC price is illegal. Advertising a lower cash price is fine.

 

[LD1]

Advertising a higher CC price is illegal. Advertising a lower cash price is fine.

Not sure if that is true or not. At least not for everything.

Maybe its the wording? They dont charge a higher price for the good/service......but they charge a "convince" fee for using a card.

Centurylink (phone/internet).....Delco Water......and Ohio BMV......And county treasurer for property taxes are the 4 bills that I do not pay with a card because the fee is higher than the perk

 

[CobyRupert]

Some places won’t budge off list price. You might as well swipe the card. Small businesses will almost always give a better cash price. Advertising a higher CC price is illegal. Advertising a lower cash price is fine.

There's some logic for you! Is that a government law?

Heck, I know some places if you pay cash, it's tax free too! (Shhhh. :shhh
And in NY, that's a LOT bigger savings than the 2% CC rebate.

(^ Again, another example of individual financial gain at the collective expense of others! )