A friendly challenge – Credit Cards vs. Cash Showdown

Written by Sam on September 26, 2006 – 7:06 pm -

I’m a big fan of Ramit Sethi’s personal-finances blog iwillteachyoutoberich.com. It’s no secret that he spends everything on his credit card (paying it off every month) and is opposed to a cash-based budget. About 4 weeks ago, I read a transcript from a chat he conducted and found the following question and response:

Q: what do you think about not spending anything on credit cards? everyone else is in trouble so why not use cash only!”

A: that advice is not for smart people who read personal-finance blogs. i hate that ad-vice because it panders. it assumes, “everyone else mismanages credit cards, so you probably will too” ARE YOU A MORON I WANT TO YELL answer: no.

For the past few weeks I couldn’t get this statement off my mind. It’s one thing to have a strong position ;-). It’s quite another to insult those who follow a perfectly legitimate and arguably superior system of financial management.

To resolve this issue, or at least let the blog-reading community decide for themselves, I challenge Ramit to a good-spirited showdown: Credit Cards vs. Cash. Ramit can present the credit-card arguments and I’ll present the cash/debit arguments. The readers on each side can also chime in. I read a similar showdown about productivity a while back and thought it was useful.

Please leave a comment and let us know what questions or views do you have about credit cards vs. cash? What questions would you want to see addressed if a showdown takes place?

If Ramit accepts we’ll decide the terms, time, and format. Let’s have Ramit express his spirited feelings in a more articulate and useful way.

Posted in Budget, Budgeting, Budgets, Cash, Credit Cards, Debit Cards, Finance, Finances, Money, Personal Finance, Spending | 26 Comments »

3 keys to making your personal finances work as a couple

Written by Sam on September 20, 2006 – 11:34 pm -

Get Rich Slowly recently had a reader pose the following question:

“While I try my best to “get rich slowly” I have one huge issue: a husband. My husband likes to spend money. I’m referred to as the “Thrifty One Who Won’t Allow Me To Buy Stuff” and he’s referred to as “That Jerk Who Buys Stuff”. Do you have any advice for couples that need to have the other half put on a strict budget without making them feel like a child?”

I posted a comment at Get Rich Slowly in response, but I thought this excellent question deserved a more thorough answer, so here goes.

Read more »

Posted in Budget, Budgeting, Budgets, Couples, Finance, Finances, Money, Personal Finance, Relationship, Relationships, Spending | 4 Comments »

A productive way to “keep up with the Joneses”

Written by Sam on September 19, 2006 – 9:50 pm -

I recently listened to a podcast interview at The Money Blogger Podcast with J.D. Roth from Get Rich Slowly. The interviewer, Scott, mentioned the fact that some personal-finance bloggers, like the one at the end of this post, display their net worth online. While I’ve not felt comfortable displaying such information, I think it’s great that others have.

Personal finances are such a private thing and are managed behind closed doors. People avoid in-depth discussions about how they manage their personal finances out of fear that they’ll be judged or will feel inadequate. Understandably, people don’t share specifics of their financial situation. But unfortunately, we don’t even talk in general terms. This creates a vacuum of real-life information and a lack of yard sticks to measure our progress against. Instead, all we see of others is the exterior. We see their new car, fancy house, and weekend toys. What we DON’T see is how they achieved such external glitz. Debt statistics indicate that for a large portion of “joneses,” their external wealth comes with some degree of debt. Even more hidden are the other financial goals the joneses have given up to achieve their external wealth.

I applaud those who have posted their net worth for others to see. It gives us a new standard to reach for. It’s a new, more productive and healthy way to keep up with the joneses; one based on savings and living within our means rather than external appearances regardless of the “internal” cost.


Posted in Finance, Finances, Money, Personal Finance, Saving | 3 Comments »

Personal finances can be a “deep mess”

Written by Sam on September 15, 2006 – 2:55 pm -

My friend Clark once introduced me to the concept of the “deep mess.” A deep mess is one that gets worse before it gets better. Cleaning out a closet is an example of a deep mess. To get it cleaned out and organized, you first need to take every thing out. Then, once everything has been spread out and you can see what’s there, you can put it back in an orderly, organized fashion.

Starting a new personal finance or budgeting system can also be a deep mess. It will usually get worse before it gets better. But it WILL get better with consistent effort.

Read more »

Posted in Budget, Budgeting, Budgets, Finance, Finances, Money, Personal Finance | 2 Comments »

8 ways to save for a short-term emergency fund (or any personal finance savings goal)

Written by Sam on September 12, 2006 – 9:34 pm -

For the next 2 or 3 posts, I will be addressing questions that have come up over the last few weeks. After posting the article about creating and managing a short-term emergency fund, I received the following question:

I was wondering if you could mention some practical ways of building a STEF; any advice would help, especially for those on irregular incomes.

There’s really no trick to building an STEF. It’s mostly a matter of focus and making it a priority. That being said, here are some ideas to help get you started.
Read more »

Posted in Budgeting, Emergencies, Finance, Finances, Money, Personal Finance, Saving | 18 Comments »

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