How do you not use the credit card

Palooka · 05-07-2009, 04:24 AM

Yes, I am being real. I need new tires on the car and putting it off because I don't want to use the cc, unexpected medical and dental bills, children and their needs, etc.

If you own a house..so many things go wrong like furnice/air/windows/electric/plumbing/etc...true? Spring time we need to invest in some lawn care also. How does one really save for this when you can't predict it? Lets not forget about personal properity taxes and just the small thousand that 'should just be there, just in case.'

I just don't think we can save enough for whatever will come our way? That is why I have used the plastic before.

You can say cut back this and that but that wouldn't even make a dent in some of the major bills that might knock on your door.

Anyone with me? How did you deal and advice I would love to hear or just personal experience. Also I think it depends on where you live too.

TIA

kita · 05-07-2009, 05:26 AM

All those paymentsmade by the credit card are just delayed. You have to budget for those items at some point. Yes, the credit card allows you to move the payment around (for a price), but it will have to be paid.
I haven't perfected the art yet, but the idea is that you start saving what you can so that if you have to use the credit card, it won't be so much. Then it is easier to pay off. Then it will be easier to save for those big bills.
And at least for me the process of paying off debt, including the CC takes years, for that very reason.
So, make some drastic cuts for six months and see if you can pay down the cards, and save for insurance, taxes and lawn care. Maybe back off a bit as the CC bills come down so you don't feel too desperate and give up, but keep saving for the predictable expenses that you mentioned and then start adding some for unpredictable. I don't think I will completely give up my cards, but I will try to only use them for emergencies.
But if you are using them for taxes and insurance, then your very basic budget is out of whack.

khaski · 05-07-2009, 08:35 AM

Get an emergency fund in place, say $1-2K. This pays for the emergencies that creep up without using the plastic, and you will feel GREAT the next time some $600 bill comes up unexpectedly and you already have it there!

ladykemma2 · 05-07-2009, 08:41 AM

Quote:

Originally Posted by Palooka

Yes, I am being real. I need new tires on the car and putting it off because I don't want to use the cc, unexpected medical and dental bills, children and their needs, etc.I save 100 bucks a month for car maintenance and repairs and another 10 a month for quarterly oil changes.

If you own a house..so many things go wrong like furnice/air/windows/electric/plumbing/etc...true? Spring time we need to invest in some lawn care also. How does one really save for this when you can't predict it? Lets not forget about personal properity taxes and just the small thousand that 'should just be there, just in case.'i have freedom accounts - take the amount of the annual bills, divide by 12, and put that aside monthly. I save 250 a month for home maintenance and upkeep.

I save monthly for predictable annual medical,vet, dental, and new eyeglasses.
I just don't think we can save enough for whatever will come our way? That is why I have used the plastic before.

You can say cut back this and that but that wouldn't even make a dent in some of the major bills that might knock on your door.

Anyone with me? How did you deal and advice I would love to hear or just personal experience. Also I think it depends on where you live too.

TIA

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hotprincesscm · 05-07-2009, 08:44 AM

I plan whatever purchases I can....But if it's an emergency and I need to, I use a credit card...I don't have an EF in place yet...and my savings is very small still...I'm trying to work on both...but until I get them up to a comfortable point...I use a credit card if it's a real emergency. Hopefully soon, I won't have to worry about it, it'll all be aside in my EF.

Michelle · 05-07-2009, 09:03 AM

Sometimes things just keep happening, and it's hard to get an EF in place. A lot of the time it's circumstantial (at least here it is), and I am always building up an EF, then depleting it, then building up. In the interim, if I don't have enough in the EF, then I DO use the CC and pay it off when the bill comes in.

I could make you a list of things we've had to pay for over the past few years that all cost more than a baby EF. It's one thing I think DR needs to change about his plan. (but I digress

)

Momto2Boyz · 05-07-2009, 09:31 AM

It really is hard to get in the mindset of not using plastic at all. But it can be done...if and only if, you have enough incoming coming in to cover the expenses, in the first place.

So, one thing you might try (granted I don't know your situation) is finding a way to make some extra money to fund an EF. Maybe have a garage sale, think of any talents you have that could make you some extra money with little to no investment, and fund your EF that way.

It's easier said than done, to get off credit cards. 5 years ago, Dh and I couldn't have done it, becuase we just didn't have enough money coming in to pay the bills, credit cards and still put money away, even though we were already scrimping as much as we could. But once DH got a better paying job, and we eliminated day care, we were able to pay off the cc's, and get money put away for emergencies.

Don't let what I said get you down...you can still do it, you just might have to get creative to find a way to get that EF funded to start you out!

madhen · 05-07-2009, 09:45 AM

I just put $25/week into my EF, and any windfall money that comes my way. Some people put $5-10/week. You'd be surprised how much it adds up. Like others have said, you have to look at paying by cc as worse than paying in cash. You are just delaying the hit, and when it comes, it comes HARD. Pay lay-a-way when you can, negotiate with people on repairs to keep things running until you can get enough money to afford totally fixing things. Once you get the cc's paid off, you'll have all that money that is currently going to pay off debt that you'll be able to save toward future emergencies.

savvy_sniper · 05-07-2009, 09:48 AM

We had to put 4 new tires on hubby's truck about 6 months ago. Discount Tire offered him a payment plan with no finance charges if paid up in a certain amount of time. I think it was 6 months, but it could have been three. Whatever it was, he paid it off before the deadline so there were no finance charges.

tervsforme · 05-07-2009, 10:15 AM

I also save monthly for these type of expenses, household repairs, etc. I have a fixed amount from my paycheck automatically go into a separate account that I use for just these types of expenses, property taxes, homeowners insurance, extra repairs, etc. I still don't have everything figured out as well as I would like, but it's a start. I totally understand where you are coming from though, it's definitely hard to get started in that direction, especially when things keep popping up.

jmd5294 · 05-07-2009, 11:37 AM

We set money aside in a separate account for stuff like this-- a set amount every month gets put into our separate account. That account also holds our monthly grocery money, water/sewer/trash bill (comes quarterly), and car insurance money (gets paids 2x/year). This money is separate from our savings account.

If you don't have the money, don't invest in lawn maintenance. Figuring out what you "need" vs what you "want" also helps keep you from using credit cards. If the a/c goes out, you do without until you can afford it, etc etc

Contrary Housewife · 05-07-2009, 11:43 AM

Part of figuring out our budget was coming up with "unexpected" expenses that really aren't, like car repairs and oil changes, taxes, and medical. You should have a good idea what your taxes are based on last years bill. Save 1/12th of that every month. I almost never have a medical bill less than $90 and it's often twice that.

Guesstimate on car expenses. An oil change is $20, and needs to be done 3-4 times a year. An average repair bill for something like brakes or steering is $300-500. You need to figure these into monthly savings or emergency fund.

These may not be weekly expenses but they will happen and you have to save for them. Even if you only have a little bit set aside when it happens you will be better off than having to put the entire thing on the CC.

I always ask, when the bill is kind of steep for me, if they will take payments, even if it is only half now and the other half in 30 days. This way I don't have to take my balance down to zero or try working with a $10 grocery budget that week.

Something like a new furnace you may not be able to save for in a short time, but this is a good reason to start on an emergency fund of about $5000.

DH was out of work over the winter and as soon as he went back I started saving aggressively to replace our EF.(It was supposed to be for a new car) As luck would have it, our AC went... just as I accumulated enough to pay for a new one. So we're back to zero [fingers crossed] and I'm hoping the car holds out a while longer....

kmonokwe · 05-07-2009, 12:31 PM

The trouble with using credit cards as your emergency bailout is that it perpetuates itself. As long as you have credit cards to pay on, you're not going to feel like you can really save anything. I agree with a pp who said to stop and evaluate what you really NEED. Lawn care isn't something that constitutes an emergency, in my opinion. Its a good investment, but not if you're "in a pinch" or will have to put it on a cc.

Most have already said that they save a sink fund or a freedom fund for intermittent expenses. Things you know will arise at some point, but aren't really regular monthly expenses. Lawn care would certainly fall under this category, I think. My sink fund has auto maintenance, auto registration (1/12 contributed each month), clothing, holiday travel, and gifts. We don't own a home yet, but once we do, a large chunk for maintenance will be added. Perhaps a category for medical expenses is a good idea here, too. There are the prescriptions you know you need every month - that should be in the budget - but there are copays and unexpected illnesses...The great thing about the sink fund is that when an "emergency" or unexpected expense in one of these categories comes up, you frequently don't even have to touch your general emergency fund. We had to replace the catalytic converter in our pickup a few weeks ago. We had enough in the sink fund under maintenance to cover it! And I know I'll be putting another $50 in there this month, so we're already covered for something small that might pop up. Its a remarkable feeling of freedom, to know that whatever happens, we'll be okay, and we won't owe anybody anything!

Ps. We don't have a single credit card. We never have, really, so this mentality of using it as an emergency resource has never occurred to me. I can't see how being broke and going into more debt is a good "solution" to any emergency. The trouble is, you have to cut back for a little while in order to get ahead. Getting out of debt so you can actually set money aside for emergencies is the hard part.

AnnK · 05-07-2009, 01:28 PM

In our case in order to get the cards paid off and get an EF we simply ignored those things that creep up. I know that's not always an option and I know that it's not for everyone but it worked out for us.

Here are some examples.

Our storm door needed replaced. Instead Dh took it down and took it apart. He removed the rotten inner core and replaced it with plywood we have in the garage. He then glued the outter skin back down. It's not perfect but it will do until a good sale comes around and we have the cash.

I chose to put used tires on my van instead of new ones. Saving hundred's. When we had the cash saved we sat and waited until sears ran a sale.

There are times when it feels impossible not to use a credit card but somehow or another we have managed to avoided it for three years and counting. My advice is to get rid of the cards. If they aren't there you won't have the option and you would be surprised how creative you will get.

justpeachy92 · 05-07-2009, 01:28 PM

We haven't used a credit card in almost 7 years. I stash a min. of $150 a month into a seperate account. This money is there to cover things like new tires, dental fees, or other unexpected things. I came up with $150 for my amount because we have 4 kids, and that is approx. what it would cost me if all 4 got sick and needed to go to the Dr.s and have prescriptions filled. With our dental insurance $150 is a little more than our out of pocket expense to have a couple cavities taken care of. Thankfully the kids rarely get sick and last time at the dentist only one child had a cavity, so the money builds up and is their for other things.