I still remember clearly when Johnny and I first became apprised to Dave Ramsey. We were in our last semesters of college with just a few months left before our lovely school loans would come a’knocking. A friend of ours lent us Dave Ramsey’s The Total Money Makeover. Up until that point, Johnny and I had always been careful with our spending, but we’d never tracked specifically where every dollar went. But Dave Ramsey’s book gave us a plan.
This is also when the phrase “our freaking budget” was born. Initially, I HATED budgeting. Tracking our every expenditure was such a pain, and it was really cramping my style — literally. I could no longer buy a cute shirt or a fabulous necklace on a whim unless it was in our budget. Grrr. But then we got through our first month of spending, and the empowerment of sticking to a budget was priceless. The hate/hate relationship I had with our freaking budget turned into a love/hate relationship after that. And we owe our first serious take at budgeting to good ol’ Dave.
Anyone who has read any of Dave Ramsey’s books knows how he feels about credit cards. He thinks they’re a total sham and deserve a spot in Dante’s eighth circle of hell (fraud). Cut ‘em up, light ‘em on fire, and never touch one again. No exceptions. For some people this may be the best option, especially if credit cards have been a source of overspending problems in the past. Johnny and I have decided that for us our credit cards are worth keeping around. Here’s why:
Firstly, Johnny and I don’t use credit cards the way that credit card companies intend them to be used. At the end of each month, we pay our entire balance. As a couple we’ve never paid a penny of interest on a credit card. If the money’s not in our budget or our bank account, it’s not on our credit card either. Mentally, we think of our credit card the same as our debit card.
Dave Ramsey argues that credit scores aren’t important. Perhaps we could both get by in life without a credit score, but having a good credit score has time and again made our lives much easier. Here are a few examples:
Renting: Without fail we have had a credit score run on each of us when we have rented apartments in Utah, NYC, Boston, and North Carolina. Especially in a location like NYC where a good apartment gets swiped up within hours, a solid credit score put us a notch above other applicants.
Utilities: When I switched the electric and water utilities to my name in North Carolina, the city ran a credit check on me to determine whether I was a reliable tenant. If I hadn’t had a good score, I would have had to put down a $100 deposit in order to sign up.
Mortgage: While Johnny and I are still saving up for our first house, it is on the horizon, and our credit scores will simplify the process immensely. We still plan on providing a hefty down payment, but our credit score will be considered just as much when a bank decides whether to lend us money.
Better Credit Cards: When we have shown credit card companies that we’re reliable, inevitably better credit cards become available to us, which leads me to my final reason: rewards.
Our first credit card was Johnny’s MTVu Citi card. We had fun tallying up points on that card, even though the rewards were pretty miniscule. We got a few $50 gift cards to Macaroni Grill, which ended up being some of the only occasions we stepped into a sit-down restaurant. We also got our first set of pots and pans, and while they’re admittedly not very nice and very ready to be replaced, they were perfect for our newlywed days.
We’ve now moved on to airline rewards with the JetBlue American Express card and the Southwest Chase card. Those two cards combined have paid for at least half a dozen round-trip flights to visit family, vacation in Florida, and attend a college basketball tournament (Go Cougars!). We never go out of our way to spend extra with our credit cards, but when big expenses do come up, such as suddenly needing a new TV when our old one breaks (crisis!), we put it on our credit card. Not only do we rack up points, but AmEx also adds an additional year to the extended warranty.
So those are the main reasons we use credit cards — and why Dave Ramsey thinks we’re terrible, terrible people. They’re obviously not for everyone. And the reasons to not use them can be just as compelling. What is your take on credit cards? Do you use them? Does Dave Ramsey haunt your dreams at night?