(The following is an abbreviated transcription from a video Linda and I recorded. Please excuse any typos or errors.)
Everybody knows that Dave Ramsey hates credit cards. And it’s funny, because people just assume that I feel the same way. However, we don’t share the same credit card philosophy.
I’m not ANTI credit cards, just like I’m not anti mortgage nor am I anti car loan.
Now there are facets that we do agree with.
And Linda & I are going to talk about in this article.
We recorded the discussion of our credit card philosophy that you can listen to on our Podcast, or if you would rather read the full transcription, you can do so here in this article!
People just assume that I share Dave Ramsey’s credit card philosophy
Linda: We’re going to be talking about why we don’t hate credit cards.
Bob: Yeah. Let’s talk about that.
Linda: I really feel like if we don’t talk about this, we are doing a disservice.
Bob: Well, yeah. Just so you know, we all know Dave Ramsey. Everybody who knows Dave Ramsey already knows about Dave Ramsey and these scissors chopping up credit cards.
Everybody knows Dave Ramsey hates credit cards. And it’s funny, because people just assume that I feel the same way who maybe email me.
Linda: I think they just assume that that’s a popular opinion that everybody feels that way.
I am not ANTI credit card
Bob: Yeah. Dave has made it very popular. I tend to not agree. We don’t agree. We don’t share that philosophy.
Linda: We don’t a hundred percent agree.
Bob: Yeah. There are facets of it that we do agree. We’re gonna talk a little bit about that. But at the end of the day, I think what it comes down to is that I’m not anti credit card. Just like I’m not anti mortgage or anti car loan or whatever.
A credit card is simply a financial tool
Bob: And so as a result, The credit card is just simply another financial tool. Just like them. It’s no more or less evil than having a mortgage on your house. And so you have to view it through that lens.
Yes, the interest rates tend to be higher. But like right now, if you go back to the early eighties mortgage rates were nearly 20%. You can get credit cards with lower rates than that. It’s just the nature of the economy and where we are right now with everything.
Our credit card rules
Linda: So yeah, when we talk about the beginning of our marriage and in particular me, my spending. I needed to cut the credit cards for sure.
Bob: We both did. And so we didn’t have credit cards for seven years?
Linda: Seven years. And we set some rules that if we were not paying it off every month, then we’re not having a credit card.
Bob: That’s how we got back into using a credit card, we had credit card rules.
Linda: It was a hard stop if we weren’t paying it off.
Bob: So we went probably seven to 10 years without using credit cards when we first got married. And that was one of our first rules.
Know yourself and use credit cards responsibly
Bob: Once I decided, all right, I’m going to try to get another credit card again, see if we can not destroy our finances by having a credit card (since we already paid off our credit cards!).
Bob: And that was the rule. If we ever carry a balance from one month to the next, then, we’re getting rid of it again.
It’s just part of knowing yourself and that’s what we did. And that’s what I recommend everyone do. Know yourself. If you can’t use a credit card responsibly, then don’t get one.
Personal finance is personal
Bob: This is really simple. It doesn’t have to be a black and white answer for everyone. Personal finance is personal.
Everyone’s situation is different and you just need to know yourself You can’t delegate your personal finance. You have to make these decisions yourself. You have to be the one who’s in charge of your finances.
I talked to some people who just want to hire a financial advisor just to do everything for me. And that’s fine.
Linda: That’s me.
Bob: It’s fine to hire someone to help you with some financial stuff. But at the end of the day, you are responsible.
God made you the steward of your money
Bob: God made you the steward, manager, of the finances he’s entrusted you with… not someone else. So you can hire someone to help you, but you have to be responsible for it. It is our responsibility to manage that, just like it is to manage our time, to steward our children, our health, whatever, all of these different things.
At the end of the day, that responsibility has been given to us by God. And we can’t just kick that can down the road to someone else.
Bob: Now. Like I said, we can bring people in to help and I think that’s great. But you can’t abdicate that responsibility to someone else.
Linda: If you know your weakness, you know that… “okay I’m not going to do the best job I can do on my own.” Right?
Linda: And so some people probably need to say, well, I can’t do this on my own. Right?
Bob: Yeah. No, absolutely. That’s why we sell financial education. We have courses where we help people do this. We want to help as far as we can.
The bottom line is this. I don’t have a problem if you hire a financial advisor or an accountant or any other financial help, but ultimately you and I are responsible to God for managing what we’ve been entrusted with. Right?
How a credit card is like a chainsaw
Bob: Back to the credit card. I tend to think of a credit card like a chainsaw. We have a chainsaw, Linda has seen me chop some stuff down with it.
Linda: I’ve never used it myself.
Bob: She’s never used it. And we have a seven-year-old son who wants to use a chainsaw. Now, am I going to let him use a chainsaw? No.
Bob: Okay. Why not? Because it’s dangerous tool. Okay. I know how to use a chainsaw and I have successfully not chopped off my hand so far. I’m excited about that.
Linda: Or even a finger.
Bob: Or a finger. I have all my fingers too, but it is a dangerous tool.
But when I need to pull down a tree, it is a whole lot easier than using a handsaw or using a hatchet or a butter knife. A chainsaw is the best tool for the job and it makes my life a whole lot easier by using that.
So that’s why I have a chainsaw.
The trouble with credit cards is not the credit card itself
Bob: I tend to view a credit card, the same way. It is a tool that has potential to cause harm, and that can be dangerous. But the root of the problem, I found in our life and most of the people I’ve talked to, the reason that people tend to get in trouble with credit cards isn’t the credit card itself.
Finding the root problem
Bob: It’s the root problem of overspending or a lack of contentment (or something like that). Now I can’t say that unilaterally across the board for everyone.
Bob: But I know for both of us, like that was the issue, right?
Linda: A hundred percent an issue for me.
Bob: That was the thing. We had a root issue and the credit card enabled us to get ourselves in trouble. The credit card was just a tool, you know what I mean?
Linda: For me, I definitely had this contentment issue where… I mean, the Bible in Proverbs 27:20 states “the eyes of man are never satisfied.” That was me. I was just like, give me more.
And as soon as I would get the thing I wanted, I then wanted something else. Something I’m actually trying to teach our seven year old currently.
Money is about the heart
Bob: All right. So here’s, what’s interesting about what you’re saying is that in terms of the heart issue here, which as believers, money is about the heart. That’s the thing, how do we keep our heart right with money? That is the thing that matters.
So in terms of what you’re talking about, say you spent $3,000 a month on stuff to satisfy that discontent. And you only had a thousand dollars available.
That means $2000 goes on a credit card. All right.
But say you had $3,000 to spend on that discontent and you actually just bought it. You wouldn’t have the debt, but you still have the exact same heart issue.
Linda: Yup, absolutely.
Bob: Isn’t that interesting to think about. And so, even though you might’ve had the visible signs of having the problem, like the heart problem is still there.
Bob: Hmm. I’m just thinking of the implications of that, because I think that’s pretty significant.
Solving the root problem
Bob: Back to when we started using credit cards. Again, we solved that root problem so that we could add a credit card back into our life without causing problems. So once we got that root issue of discontent overspending removed, then we could add a credit card back into our finances that we actually get some benefits from.
The credit card game changer
Bob: That’s when the game changed for us. And this is why I’m a proponent of having a good rewards credit card.
Bob: For years I didn’t talk about this because so many people are anti credit card. I would find myself talking to my friends about “man, dude, we just got 10 hotel nights for free because we opened this credit card.” And were amazed, they were like “Whoa, whoa!”
And I wasn’t writing about it or creating any podcast about it. And I thought, why am I not? I want to talk to you, my Seedtime family, because you guys are like my friend.
Linda: They are our friends!
Bob: Yeah. My goal is that what I’m communicating to you is just like what I’m communicating to my little sister or my mom or my best friend. I want to be sharing the same conversations with you.
I know that sometimes it’s not a one size fits all thing. But the end of the day, I’m like, why am I not talking about this?
Credit card reward points
Bob: Our lives have been so radically changed by some of these rewards we’ve gotten.
Linda: And another thing that you told me, our credit card reward points are like another form of currency. When we get these rewards points, we are able to actually give some of them away.
We’ve sent multiple people on trips. We will have your mom come fly down here to help take care of the kids. And we are able to pay for that with points. And so it’s like this other form of currency where we can again, use this as another tool and it’s like having free money a little bit.
Bob: Yeah, no, absolutely. Right now we have a few hundred thousand points. Like what we can do with them is just really, really exciting.
Travel perks: flights and hotel nights
Bob: You know, when our first son was born, we stayed at a nice Hyatt hotel in Maryland for 10 days. And it costs us 50,000 points. So completely free for 10 days, at this nice Hyatt hotel (because we had to stay there for part of the adoption) and we didn’t pay a dime for it.
And, we got those 50,000 points just from opening a credit card!
Linda: Yeah, it’s remarkable. And since then, what have we taken well over a hundred flights and we’ve got well over a hundred hotel nights from our credit card reward points.
Bob: Yep. All completely… I shouldn’t say a hundred percent completely free. The main card we use has a $95 annual fee. So, there have been small amounts that we’ve paid. But at the end of the day, we probably have gotten somewhere from $20,000 to $30,000 worth of free travel for a few $95 annual fees.
Linda: It’s been well worth it for us (when you can’t use credit rewards points, see how you can still save on vacation rentals).
Bob: So if you are are having this revelation where you’re like, wait a minute, maybe we should, whatever. Yeah, we have some articles you can check out where I give a lot more detail. We have one article where I wrote basically our whole strategy for how we travel for free.
Chase Sapphire Preferred
Bob: One of the cards that we love the most is called the Chase Sapphire Preferred, be sure to read our overview! Right now, they have a hundred thousand point signup bonus. I don’t know how long it’s going to last. But I do know that it’s not going to last forever.
Linda: Which that’s pretty good.
Bob: Yeah. By far the best bonus they’ve ever offered. And so you can check into getting the Chase Sapphire Preferred credit card for yourself.
There’s a variety of reasons why I’m not an anti credit card, cut up your credit card kind of guy. I think that is right for some people at certain times, like it was for us at a certain time and right now it’s not.
Personal finance is not a one size fits all solution
Bob: We have a book that’s coming out in 2022 and we’re really excited about it. When I started writing the book, I sent a quick survey to a lot of people in our community. I asked them, what are the things you hate about financial books? The most common response was: viewing personal finance as a one size fits all solution.
And that is the heart of this. To make absolute black and white statements and just assume that that applies to everyone, when you’re doing that with personal finance, I think you get yourself in a dangerous situation.
But, it’s a whole lot easier from the educator or the financial gurus perspective to just have those black and white statements that everyone has to fit into a box.
I just prefer to talk about the principles, to help you learn and understand the why behind everything.
Linda: So that you can make the best decision.
Bob: Yes. To make the best decision for you and your family rather than just following someone else’s arbitrary rules.
So that’s that’s my pitch. That’s my spiel for why I’m not anti credit cards.
The bottom line is I’m never going to make you get a credit card. I’m never going to tell you, you have to get a credit card.
Linda: We have no power over that anyway, so.
Bob: But I’m also not going to yell at you if you have a credit card.
So anyway, with all that said, have a great rest of your day!