WEBVTT - Using Credit Cards as Nature Intended #629 0:00:00.080 --> 0:00:03.159 Welcome to How the Money. I'm Joel Matt and today 0:00:03.240 --> 0:00:26.680 we're discussing using credit cards as nature intended. Yeah, not 0:00:26.840 --> 0:00:29.600 to immediately polarize everybody, but we think that there is 0:00:29.640 --> 0:00:32.199 a right way of going about using credit cards and 0:00:32.280 --> 0:00:36.120 a wrong way. There's a way that nature intended for 0:00:36.200 --> 0:00:37.880 us to use credit cards, and that's what we're talking about. 0:00:37.920 --> 0:00:40.559 When we crawled forth from the primordial us, there was 0:00:40.600 --> 0:00:43.000 a way to use the plastic properly. And a lot 0:00:43.040 --> 0:00:45.440 of people this is a polarizing topic. That's kind of 0:00:45.760 --> 0:00:47.919 when we started to think about this episode, we were like, man, 0:00:47.960 --> 0:00:50.519 there's there's comments from people right and left in the 0:00:50.520 --> 0:00:54.800 personal finance space, some either deify credit card usage or 0:00:54.920 --> 0:00:57.880 in some demonize it. And you and I were, of 0:00:57.920 --> 0:00:59.720 course in that shades of gray area, and we want 0:00:59.720 --> 0:01:02.040 to talk about how to use them the right way 0:01:02.160 --> 0:01:04.960 because when you do, then you're gonna gain benefits and 0:01:04.959 --> 0:01:07.720 if you use them improperly, you're screwing yourself. Yeah, and 0:01:08.040 --> 0:01:09.880 especially with a topic that does kind of fall in 0:01:09.880 --> 0:01:12.080 that middle ground, it is important for us to come 0:01:12.080 --> 0:01:14.320 back and to revisit a topic like this. Right, it's 0:01:14.360 --> 0:01:17.880 not like a like talking about investing that is really important, 0:01:17.880 --> 0:01:19.520 and we're planning to do that soon as well. But 0:01:20.080 --> 0:01:22.160 when you have a topic like this that could go 0:01:22.200 --> 0:01:25.840 either way, it's probably worth us revisiting these types of 0:01:25.880 --> 0:01:28.600 topics we're eating more often than not. In an attempt 0:01:28.600 --> 0:01:30.720 to be fair, we're even in a steel man the 0:01:30.800 --> 0:01:32.600 arguments from the other side. So we're gonna kind of 0:01:32.600 --> 0:01:35.119 try to take a balanced approach and say, hey, here's 0:01:35.200 --> 0:01:38.440 where caredit cards fall short as a strategy, here's where 0:01:38.520 --> 0:01:42.440 they might make sense, and then you get to decide 0:01:42.680 --> 0:01:44.680 well you think is best based on all the information 0:01:44.680 --> 0:01:46.920 we're gonna try to present here. But before we get 0:01:46.959 --> 0:01:49.360 to that, man, I wanted to mention that when you're 0:01:49.400 --> 0:01:52.240 trying to get someone to make a behavior change, I've 0:01:52.280 --> 0:01:54.600 always thought this, but I've never been great at implementing it, 0:01:54.640 --> 0:01:58.440 But carrots are better than sticks, right, So, and what 0:01:58.480 --> 0:02:01.560 I mean by that depends on how your talking to. Well, 0:02:01.560 --> 0:02:03.480 we think there's literally a conversation Kit and I had 0:02:03.560 --> 0:02:06.000 last night about one of our kids, because trying to 0:02:06.000 --> 0:02:08.440 figure out what is actually gonna work best for this 0:02:08.520 --> 0:02:13.320 particular child given this particular situation, we've tried both neither work, Okay, 0:02:13.880 --> 0:02:15.960 So in this case, sometimes you just have to, um, 0:02:16.160 --> 0:02:17.760 you know, give them up for an option. That's one. 0:02:17.760 --> 0:02:21.400 That's one choice, let's try. But depending on the situation, 0:02:22.040 --> 0:02:24.800 I would say a lot of times a carrot makes 0:02:24.840 --> 0:02:29.919 more sense. And our illustrious power company here where we live, Matt, 0:02:30.080 --> 0:02:32.600 they actually kind of took this to heart and they 0:02:32.600 --> 0:02:35.560 offer a discount for paying early instead of a penalty 0:02:35.600 --> 0:02:38.000 for paying late. And I think that's great, and it 0:02:38.080 --> 0:02:40.480 makes me want to pay my bill early because I 0:02:40.480 --> 0:02:43.320 want to pay the least amount possible. But you don't know, 0:02:43.560 --> 0:02:45.640 I think it is going to incentivize a lot of 0:02:45.680 --> 0:02:49.200 people to approach their power bill the right way, get 0:02:49.360 --> 0:02:51.760 energized about paying it instead of feeling like an idiot 0:02:51.760 --> 0:02:54.359 if they don't pay it on time. Energized and pay 0:02:54.360 --> 0:02:56.600 your power. Yeah. Well, and it makes me think too, 0:02:56.639 --> 0:02:58.800 as a mom and pop landlord, this is the kind 0:02:58.800 --> 0:03:01.120 of thing I'm trying to implement in in my leases 0:03:01.160 --> 0:03:03.919 moving forward with with tenants is to say, hey, instead 0:03:03.960 --> 0:03:06.480 of a late fee for being five days ten late 0:03:06.560 --> 0:03:09.399 days late on your on your rent, how about a 0:03:09.440 --> 0:03:13.639 positive incentive to pay your rent on time. And maybe 0:03:13.639 --> 0:03:15.960 that reframed it for somebody and makes them more likely 0:03:16.000 --> 0:03:18.160 to do that. Yeah, that's true. It just depends on 0:03:18.200 --> 0:03:21.080 the individual, right, because I see a paying quote unquote 0:03:21.080 --> 0:03:23.720 early as just paying on time, like like the way 0:03:23.760 --> 0:03:25.520 I press things. I'm like, oh, yeah, well that's the 0:03:25.520 --> 0:03:27.320 price that you're going to charge me because I pay 0:03:27.400 --> 0:03:30.040 my bill what I'm supposed to as as opposed to 0:03:30.200 --> 0:03:32.120 being penalized when I'm late, you know. And so you've 0:03:32.160 --> 0:03:34.120 got an iron trap up there. A lot of people 0:03:34.160 --> 0:03:36.720 though they're they're easily minis set up to auto pay, 0:03:37.560 --> 0:03:39.880 and so I guess what they're Maybe what the power 0:03:39.880 --> 0:03:41.720 company is trying to do is just incentivized folks to 0:03:41.960 --> 0:03:44.000 get enrolled so that it's not something that you have 0:03:44.040 --> 0:03:45.760 to worry about. Therefore we have to spend less time 0:03:45.800 --> 0:03:48.880 on collections and hounding folks. But yeah, I've not thought 0:03:48.920 --> 0:03:50.560 about doing that with properties, but that could be a 0:03:50.640 --> 0:03:53.920 very very cool way. Maybe if you have a like 0:03:54.040 --> 0:03:57.080 what if you pay before the first like something like that, 0:03:57.160 --> 0:03:58.840 Like if you can pay and have three different prices 0:03:58.880 --> 0:04:01.920 because it's already third first or it's getting complicated, February 0:04:02.400 --> 0:04:04.200 will pay the day before it's do if you pay 0:04:04.240 --> 0:04:08.000 the day before it's do you get a fifty dollar Yeah? 0:04:08.320 --> 0:04:10.760 Like I mean, my guess is that if you implemented 0:04:10.760 --> 0:04:14.880 that tomorrow, more of your tenants would pay before it's due, 0:04:14.920 --> 0:04:17.159 as opposed to like taking that great speriod up until 0:04:17.800 --> 0:04:20.680 you know, the last day possible, even if you went 0:04:20.720 --> 0:04:23.400 ahead and charged, if you went ahead and raise the 0:04:23.440 --> 0:04:26.200 standard rent by fifty bucks, the psychology, what you're saying 0:04:26.240 --> 0:04:28.799 is the psychological component would kick in and cause people 0:04:28.800 --> 0:04:30.560 to pay early. I think so. Yeah, I think so. 0:04:30.680 --> 0:04:31.919 I was glad to see this. I think that's one 0:04:31.960 --> 0:04:34.599 of those things where we we don't give as much 0:04:34.640 --> 0:04:37.039 credence as we could to Psychology is and there's ways 0:04:37.080 --> 0:04:39.760 to motivate people, I think, to do the right thing 0:04:40.120 --> 0:04:43.080 without like making them feel like idiots for you know, 0:04:43.240 --> 0:04:45.640 for being a little late. Instead, let's let's incentivize them, 0:04:45.720 --> 0:04:49.359 let's give a positive encouragement to do the right thing earlier. 0:04:49.880 --> 0:04:51.560 All right. The beer that you and I are going 0:04:51.560 --> 0:04:54.520 to enjoy during this episode is called the Judge and 0:04:54.600 --> 0:04:59.040 this is a chocolate vanilla porter from Memphis made Bruined Company. 0:04:59.080 --> 0:05:01.200 Looking forward to enjoying us one and we will share 0:05:01.200 --> 0:05:03.280 our thoughts at the end of the episode, for sure. 0:05:03.320 --> 0:05:05.680 All right, But let's get onto the subject at Handmatt, 0:05:05.760 --> 0:05:08.920 we're talking about using credit cards as nature intended. And 0:05:09.080 --> 0:05:11.280 if you've been listening for any length of time, Matt, 0:05:11.320 --> 0:05:13.080 you just mentioned that the craft beer we're drinking on 0:05:13.120 --> 0:05:16.360 this episode, of course, any how do money listener knows 0:05:16.400 --> 0:05:19.400 Matt and Joel like beer, right, and not just crap beer, 0:05:19.440 --> 0:05:21.960 but good beer. Right, And we're drinking this one here, 0:05:22.400 --> 0:05:24.160 looking forward to talking about at the end of the episode. 0:05:24.200 --> 0:05:26.520 But crap beer. I don't know. Maybe you said not 0:05:26.560 --> 0:05:29.320 crap beer, you said good beer. Yeah, okay, not crap beer, 0:05:29.360 --> 0:05:32.840 craft beer. Crap beer sounds a lot like craft beer. Yeah, 0:05:32.839 --> 0:05:35.760 there's a several different thing. But I think interestingly enough, 0:05:35.760 --> 0:05:37.640 we're talking about how credit cards can be polarizing, well, 0:05:37.800 --> 0:05:41.039 booze can also be a polarizing subject. We've had emails 0:05:41.040 --> 0:05:43.120 from folks who say they'd like to listen to the show, 0:05:43.360 --> 0:05:45.479 but they just can't do it because of our stance 0:05:45.520 --> 0:05:48.440 on alcohol. We've heard from other folks who attend their 0:05:48.440 --> 0:05:51.839 local religious congregation and they tell us, hey, we'd happily 0:05:51.880 --> 0:05:55.240 tell everyone we know about you guys, but you got 0:05:55.320 --> 0:05:57.320 to kick the beer thing to the curb, and at 0:05:57.400 --> 0:05:59.880 least in some circles, kind of like the one I 0:06:00.000 --> 0:06:03.000 grow up in. Beer can be a polarizing thing. But 0:06:03.839 --> 0:06:05.760 I want to say two things. One we I don't 0:06:05.800 --> 0:06:08.360 fault those folks. If our affinity for beer isn't your 0:06:08.400 --> 0:06:11.200 cup of tea, that's okay. We were not going to 0:06:11.320 --> 0:06:13.160 force you to listen. We can't force you to listen. 0:06:13.360 --> 0:06:16.040 But it's also important to mention that we can't please everyone. 0:06:16.360 --> 0:06:18.160 You know, we might not say it enough, but we 0:06:18.320 --> 0:06:21.400 practice moderation. Matt and I do. We we don't drink 0:06:21.640 --> 0:06:25.040 very much. We limit our intake and that's a really 0:06:25.080 --> 0:06:27.880 important thing to us. But yeah, there are other things 0:06:27.880 --> 0:06:30.480 that can be just as polarizing. Light credit cards. Everyone's 0:06:30.480 --> 0:06:32.520 got a hot take out there. They're either the greatest 0:06:32.520 --> 0:06:36.480 thing since sliced bread or they'll ruin you overnight. But reality, 0:06:36.520 --> 0:06:38.040 it's a bit more nuanced, and that's what we want 0:06:38.080 --> 0:06:43.880 to discuss today. Nuanced or being logical, balanced approach. These 0:06:44.120 --> 0:06:48.480 are not prize attributes in our society today. They specially 0:06:48.480 --> 0:06:51.440 when it comes to mass media. A hefty TikTok following yeah, 0:06:51.560 --> 0:06:54.479 hot takes and off the cuff remarks does end up 0:06:54.520 --> 0:06:57.200 getting all the press. There is often little room for 0:06:57.279 --> 0:06:59.040 those shades agree that we talked about in the world 0:06:59.040 --> 0:07:02.600 that we live in. On that note, billionaire businessman Mark 0:07:02.640 --> 0:07:05.680 Cuban he uh, he recently said that if you use 0:07:05.720 --> 0:07:09.159 credit cards, you don't want to be rich. Obviously, great 0:07:09.200 --> 0:07:11.600 hot take for all the writers over there at CNBC. 0:07:13.000 --> 0:07:15.160 I love that kind of stuff. Start writing this article now. 0:07:15.320 --> 0:07:18.400 He makes it sound like credit cards are the devil 0:07:18.560 --> 0:07:23.040 with those remarks, kind of like Bobby Boucher uh foodsball territory. 0:07:23.640 --> 0:07:25.960 But of course they are not. Uh. In fact, there 0:07:26.000 --> 0:07:28.080 are a lot of how the money listeners out there 0:07:28.080 --> 0:07:31.880 who are on their wealth building journey while simultaneously using 0:07:32.040 --> 0:07:35.200 credit cards. We most definitely fallen into that camp as well, 0:07:35.200 --> 0:07:38.080 where we are with you on that. So today we 0:07:38.160 --> 0:07:39.920 are going to discuss the pros and the cons of 0:07:39.960 --> 0:07:41.760 credit cards, and then we're gonna talk about how to 0:07:41.960 --> 0:07:45.160 use credit cards most effectively, how does that you can 0:07:45.200 --> 0:07:47.760 optimize that use. We're gonna discuss all of that today, 0:07:47.800 --> 0:07:50.119 all right, So let's let's do it because and let's 0:07:50.240 --> 0:07:53.240 first give some credence maybe to Mark Cuban, because he 0:07:53.400 --> 0:07:56.440 is right at least in part uh. And and let's 0:07:56.520 --> 0:07:58.520 go through some of the biggest reasons to not use 0:07:58.560 --> 0:08:00.640 credit cards. Some of the main reasons at the people 0:08:00.640 --> 0:08:03.040 who say that they are the devil, why did they 0:08:03.080 --> 0:08:04.440 say that. Well, we're gonna get into that in just 0:08:04.480 --> 0:08:06.760 a second. But I think human is right when he 0:08:06.760 --> 0:08:09.559 says credit cards aren't going to make you rich, that's true. 0:08:10.520 --> 0:08:12.200 Agree with him on that and say that he said 0:08:12.240 --> 0:08:15.000 that they're going to keep you from getting rich. Well, yeah, 0:08:15.040 --> 0:08:17.160 that's a good point. But like if he's talking about 0:08:17.240 --> 0:08:19.080 like that they won't make you rich, I think that, 0:08:19.320 --> 0:08:22.040 you know, I could get behind that, Like nobody's gonna 0:08:22.240 --> 0:08:23.680 sign up for all the credit cards in the world 0:08:23.680 --> 0:08:25.360 and be like, that's how I didn't look at all 0:08:25.360 --> 0:08:27.960 the secret to my success bonus points and rewards, that's 0:08:27.960 --> 0:08:30.080 how I funded retirement. No, it's gonna take a whole 0:08:30.120 --> 0:08:31.960 lot more than that. Right, if we were to talk 0:08:31.960 --> 0:08:34.520 about wealth Matt for building wealth for like three hours, 0:08:34.840 --> 0:08:36.960 it's unlikely the credit card usage would even come up 0:08:36.960 --> 0:08:39.480 in that conversation. There are so many more levers that 0:08:39.520 --> 0:08:43.079 you need to pull. Credit cards are a peripheral way 0:08:43.559 --> 0:08:47.959 to boost your finances, right There not some magic secret 0:08:48.000 --> 0:08:51.880 sauce to building wealth. That's that's for sure. And uh, 0:08:52.240 --> 0:08:54.680 it's still that doesn't mean that they can't play a 0:08:54.840 --> 0:08:58.320 role in your personal finances. But before you know, we 0:08:58.480 --> 0:09:01.319 talk about the property what we like about credit cards, 0:09:01.400 --> 0:09:04.880 let's just pay some service and talk about the biggest 0:09:04.920 --> 0:09:07.560 cons to using them and some of the reasons that 0:09:07.600 --> 0:09:10.880 people should consider avoiding credit cards altogether. Of course, yeah, 0:09:11.200 --> 0:09:12.800 I mean you said earlier that we're gonna steal man. 0:09:13.120 --> 0:09:15.440 That being said, we are always careful and we always 0:09:15.480 --> 0:09:18.000 want to make sure that folks are using credit cards 0:09:18.160 --> 0:09:20.200 the right way, because if you do not use this 0:09:20.320 --> 0:09:23.920 financial tool properly, it really could shipwreck your finances. Right, 0:09:23.960 --> 0:09:26.680 if you can't pay the bill on time and in full, 0:09:26.720 --> 0:09:29.079 it's going to cost you big money every single month 0:09:29.120 --> 0:09:32.079 because interest rates they're going up, and so that means 0:09:32.160 --> 0:09:35.280 that your lack of disciplined use, your your lack of 0:09:35.320 --> 0:09:37.439 discipline spending is going to cost you even more money. 0:09:37.800 --> 0:09:40.959 And this is of course the biggest potential downfall of 0:09:41.080 --> 0:09:44.280 using credit cards, and even a few months of poor 0:09:44.320 --> 0:09:46.480 credit card usage can dig you a hole so deep 0:09:46.480 --> 0:09:49.400 that it will often take you years then to climb 0:09:49.440 --> 0:09:51.800 out of it. And so while this is a major 0:09:51.840 --> 0:09:55.200 con and certainly is a reason for caution, like this 0:09:55.240 --> 0:09:57.800 alone doesn't lead us to think that credit cards should 0:09:57.880 --> 0:10:00.520 be off limits. I mean we're talking about how a 0:10:00.520 --> 0:10:02.080 credit card is a tool, right, Like it makes me 0:10:02.080 --> 0:10:05.319 think about just using like a knife in the kitchen, 0:10:05.559 --> 0:10:07.839 and just because it could potentially cause you harm, does 0:10:07.840 --> 0:10:09.439 that mean that that is now a tool that you 0:10:09.520 --> 0:10:13.200 completely avoid for the rest of your life. No, absolutely not. 0:10:13.760 --> 0:10:16.960 You instead learn how to properly hold a knife. You 0:10:17.040 --> 0:10:21.040 learn how to dice vegetables or in your case, trim 0:10:21.040 --> 0:10:23.560 fat off of a brisk ul um. Yeah, eventually I 0:10:23.559 --> 0:10:25.360 was like, that does not compute. I don't need vegetables. 0:10:25.679 --> 0:10:29.240 You learnable occasionally, but you learn how to take care 0:10:29.240 --> 0:10:31.559 of a knife, how to keep it sharp, because all 0:10:31.600 --> 0:10:34.360 of these things are just the proper way of using 0:10:34.440 --> 0:10:37.840 that tool. Like to say, it's such a infantalizing view 0:10:37.840 --> 0:10:40.120 to say that, oh, this could cause you harm, therefore 0:10:40.200 --> 0:10:43.640 you shouldn't ever be allowed to use it. That is 0:10:43.760 --> 0:10:45.840 not the approach that we take when it comes to 0:10:46.280 --> 0:10:48.040 things like credit cards or other tools in our life. 0:10:48.160 --> 0:10:50.560 You're right and fantializing it. We're treating adults like children. 0:10:50.640 --> 0:10:53.680 And it's and it's not that there aren't risks here 0:10:53.760 --> 0:10:55.720 when we use credit cards. That's what we're talking about now. 0:10:55.800 --> 0:10:57.800 The first one you just mentioned improper use. If you 0:10:57.920 --> 0:11:00.600 use a credit card improperly in your racking up debt 0:11:00.840 --> 0:11:03.040 because you can't control your spending, that's one reason to 0:11:03.080 --> 0:11:06.560 consider not using them at all. Another another reason that 0:11:06.640 --> 0:11:08.520 a lot of people point to, and I think they 0:11:08.559 --> 0:11:11.000 make a good point, is that it can lead to overspending, 0:11:11.120 --> 0:11:13.839 right because even if you can and do use the 0:11:13.920 --> 0:11:17.360 tool properly, there are other potential downsize to using plastic 0:11:17.440 --> 0:11:20.760 for everything. And some folks they spend more using a 0:11:20.760 --> 0:11:23.320 credit card because it doesn't feel like real money to them. 0:11:23.400 --> 0:11:25.480 Swiping it's just so easy, and Gus, we're not really 0:11:25.559 --> 0:11:28.679 swiping anymore. We're more like inserting or tapping, which I did. 0:11:28.720 --> 0:11:30.920 I love tapping. Tapping is the great It's the greatest. 0:11:30.960 --> 0:11:33.480 It's so much, so much better. Like I hate inserting 0:11:33.520 --> 0:11:36.160 the well, the inserts. It felt like a step backwards, right, 0:11:36.200 --> 0:11:37.920 like like we've been swiping for years and then they 0:11:37.960 --> 0:11:39.520 switched to the insert and then on top of that 0:11:39.520 --> 0:11:42.719 it's got that like sound effect, which but just being 0:11:42.720 --> 0:11:44.200 able to set it on top of like the little 0:11:44.240 --> 0:11:47.400 square device for like a split second. I love it. 0:11:47.400 --> 0:11:50.560 It's nice, right and it's but it just doesn't trigger 0:11:50.600 --> 0:11:53.040 the same psychological response that happens when we fork over 0:11:53.080 --> 0:11:55.720 actual greenbacks we need. That's what they say. Yeah, when 0:11:55.720 --> 0:11:56.920 you have to reach into your wallet and we have 0:11:56.960 --> 0:11:58.960 to pull out cash, it's like there's some sort of 0:11:59.040 --> 0:12:01.640 like meant whole pain that comes along with it that's 0:12:01.640 --> 0:12:03.720 actually good for us. Is what the study is, literally 0:12:03.720 --> 0:12:06.079 giving something over. But there's also there's been there's other 0:12:06.080 --> 0:12:08.280 studies that say the opposite. Yeah, that as well well, 0:12:08.320 --> 0:12:11.319 And there's also I think part of it is generational 0:12:11.440 --> 0:12:13.520 and it's changing exactly. And I think we've heard from 0:12:13.520 --> 0:12:16.120 a lot of our younger listeners who say, actually, it's 0:12:16.120 --> 0:12:19.000 more painful for me to use my credit card. Cash 0:12:19.040 --> 0:12:21.720 feels like the free money. So I think depending on 0:12:21.760 --> 0:12:24.880 how you are raised, what era you were born in, 0:12:25.320 --> 0:12:27.880 that it might not ring true in the same way. 0:12:28.040 --> 0:12:30.440 But I think it isn't important to mention some people, 0:12:30.920 --> 0:12:34.240 probably good chunk of people are more likely to overspend 0:12:34.360 --> 0:12:38.600 because maybe they get excited about earning the rewards, or 0:12:39.000 --> 0:12:42.480 they just or it doesn't make them feel the pain 0:12:42.600 --> 0:12:45.320 of spending money in the same way when they're using plastic, 0:12:45.360 --> 0:12:47.520 when they're using a credit card and so yeah, I 0:12:47.559 --> 0:12:50.559 think that is a potential problem that credit card users 0:12:50.600 --> 0:12:53.160 run up against. Yeah, they're they're they're definitely seems like 0:12:53.520 --> 0:12:55.520 I mean, if you were only using cash, I would 0:12:55.559 --> 0:12:58.520 totally agree with the fact that it's going to seem 0:12:58.559 --> 0:13:00.840 like there's more of a finite amount of resources, right, 0:13:00.840 --> 0:13:02.720 because that's the thing with credit card the envelope method. 0:13:02.800 --> 0:13:05.480 You can't overspend exactly. Yeah, when you've got a credit card, 0:13:05.960 --> 0:13:07.600 or even a debit card for that matter, I mean, 0:13:07.720 --> 0:13:09.760 you're not really thinking about how much do I have 0:13:09.880 --> 0:13:13.479 left in this particular category. When it comes to groceries 0:13:13.600 --> 0:13:16.280 or you know, eating out, it does feel a bit 0:13:16.320 --> 0:13:18.760 more limitless, which which I totally get. Yeah, And so 0:13:18.880 --> 0:13:21.920 even if you are not using it improperly in a way, 0:13:21.920 --> 0:13:23.920 like even if you are disciplined about paying that credit 0:13:23.920 --> 0:13:26.200 card built off on time and in full each month, 0:13:26.440 --> 0:13:29.240 you still might end up spending more than you'd like to. 0:13:29.559 --> 0:13:32.439 And that is a problem, right, because you're trying to 0:13:32.480 --> 0:13:34.400 accomplish all sorts of money goals, and if you're spending 0:13:34.400 --> 0:13:36.400 too much because it's easy, that's a problem. And I 0:13:36.400 --> 0:13:38.199 think one thing that could remedy this mat There was 0:13:38.240 --> 0:13:41.440 a study I saw about printing credit card balances on 0:13:41.520 --> 0:13:44.720 receipts every time we purchased something that would be helpful. 0:13:44.720 --> 0:13:46.560 I think then all of a sudden, it wouldn't feel 0:13:46.559 --> 0:13:48.520 limit less because you're like, oh, that's how much I 0:13:48.559 --> 0:13:50.760 have left, okay, yeah, Or that's how much I've spent 0:13:50.840 --> 0:13:53.240 this month, that's what the balance is at. Those kind 0:13:53.280 --> 0:13:57.160 of reminders I think would trigger something in us that 0:13:57.200 --> 0:14:00.520 would be helpful. So, yeah, limits can be helpful, when 0:14:00.559 --> 0:14:03.040 balances can be helpful. That's going to happen in time soon. 0:14:03.120 --> 0:14:04.839 But I kind of wish it would because I think 0:14:04.840 --> 0:14:07.000 that would at least help on this front. Yeah, But 0:14:07.160 --> 0:14:10.559 going back to maybe what some more younger listeners are experiencing, 0:14:10.600 --> 0:14:13.360 I'm I totally agree. I am because the majority of 0:14:13.400 --> 0:14:16.240 my finances are digital. Anytime I have cash on hand, 0:14:16.240 --> 0:14:18.080 it does not feel like real money because I don't 0:14:18.080 --> 0:14:19.840 have a way for accounting for that money. It's not 0:14:19.920 --> 0:14:22.480 incorporated into my overall finances, and so it really does 0:14:22.520 --> 0:14:24.000 just feel like I could spend it on whatever the 0:14:24.000 --> 0:14:25.800 heck I want to spend it on. It feels like 0:14:25.800 --> 0:14:31.040 blow money. Uh, And so I told her exactly, it's 0:14:31.040 --> 0:14:32.520 like I got a couple of twenties in the wallet. 0:14:32.560 --> 0:14:35.760 I forgot those were there, but yeah, definitely something to 0:14:35.800 --> 0:14:39.280 keep in mind. Another con to credit cards, um and 0:14:39.280 --> 0:14:42.480 so what's interesting is that the last one so overspending, 0:14:42.760 --> 0:14:44.400 Jesse meets him. He actually kind of touched on that 0:14:44.440 --> 0:14:47.120 a little bit. He's talking about an experiment that he's 0:14:47.120 --> 0:14:49.200 going to be conducting this year on himself. So Jesse 0:14:49.320 --> 0:14:51.480 meets him, the founder of y NAB you Need a 0:14:51.480 --> 0:14:53.200 Budget when when he came on the show. When he 0:14:53.200 --> 0:14:55.160 came on the show, yeah, we'll link to that episode 0:14:55.240 --> 0:14:58.040 in our show notes because we had an awesome conversation 0:14:58.080 --> 0:15:01.480 about budgeting during that episode. But he also touched on 0:15:01.800 --> 0:15:04.520 an aspect of credit cards that we haven't really explored, 0:15:04.560 --> 0:15:07.400 which is again why I'm glad we're having this conversation now, 0:15:07.440 --> 0:15:11.720 which is he brought up, I guess the moral nature 0:15:11.720 --> 0:15:13.200 of credit cards. You know, he like, he brought the 0:15:13.240 --> 0:15:15.600 question as to whether or not it's ethical, and I 0:15:15.640 --> 0:15:18.600 think that's worth that's worth considering the fact that some 0:15:18.640 --> 0:15:22.120 folks benefit at the expense of others. That's that's definitely 0:15:22.160 --> 0:15:24.840 one of the downsides of credit cards. Estimates show that 0:15:24.880 --> 0:15:30.760 fifteen billion dollars is redistributed annually from uneducated consumers who 0:15:30.760 --> 0:15:35.280 are using their credit cards improperly to educated ones the 0:15:35.280 --> 0:15:37.880 credit cards and you know, it's not the same as 0:15:38.240 --> 0:15:41.400 the lottery. But the truth is that lottery tickets, right, 0:15:41.440 --> 0:15:43.800 they often act like an additional tax on the poorest 0:15:43.960 --> 0:15:46.960 in our society. Uh. And the tax dollars from a 0:15:46.960 --> 0:15:49.920 lot of purchases, they often fund things that then benefit 0:15:50.000 --> 0:15:54.840 those who have more, like funding higher education for middle 0:15:54.920 --> 0:15:57.920 and upper class kids. Well, credit card rewards are only 0:15:57.960 --> 0:16:01.720 a reality because a certain subset of the population ends 0:16:01.760 --> 0:16:04.800 up paying the bank uh pretty big money and interest 0:16:05.040 --> 0:16:08.400 on a consistent basis. That's where all those dollars come from. Uh. 0:16:08.440 --> 0:16:11.720 And so with that mind, should we avoid using them 0:16:11.720 --> 0:16:14.360 because of this dynamic? Right? Like should you not take 0:16:14.360 --> 0:16:17.080 the scholarship money out there because of how these tax 0:16:17.120 --> 0:16:20.680 dollars were regarded? Well, we don't think so. That that 0:16:20.760 --> 0:16:24.040 being said, you know, these are personal questions that you'll 0:16:24.080 --> 0:16:26.320 have to wrestle with. And for me, I think another 0:16:26.360 --> 0:16:29.480 way to maybe think about this is like supply and demand, right, 0:16:29.480 --> 0:16:32.280 And so, as an individual, if you want to no 0:16:32.320 --> 0:16:35.400 longer participate in using credit cards because you feel the 0:16:35.440 --> 0:16:38.880 rewards that you're getting are maybe unjust what you're doing, 0:16:38.960 --> 0:16:42.400 you're you're basically removing one small little bit of demand 0:16:42.880 --> 0:16:45.600 of those rewards from the banks. But the thing is 0:16:45.600 --> 0:16:49.360 is that demand doesn't then immediately translate into reduced need 0:16:49.480 --> 0:16:53.560 for supply because the bank's essentially act as like a MetalMan. 0:16:53.760 --> 0:16:57.000 And even though you're demanding less from the bank, does 0:16:57.000 --> 0:16:58.760 that mean that they're going to demand less from the 0:16:58.760 --> 0:17:02.080 people who are using credit cards and properly no. In fact, 0:17:02.200 --> 0:17:04.679 banks are better off because they're saying, Okay, there's a 0:17:04.680 --> 0:17:07.080 fewer rewards we need to we need to this smart 0:17:07.119 --> 0:17:10.120 you need to pay that guy who's feeling conflicted about 0:17:10.119 --> 0:17:12.919 about using our cards. And so if you want to 0:17:12.960 --> 0:17:15.119 do that, I think that's that's totally fine. But you know, 0:17:15.200 --> 0:17:19.479 the our approach is to instead don't address the demand 0:17:19.520 --> 0:17:23.280 side of the equation, instead look at the supply part 0:17:23.359 --> 0:17:25.679 of the equation. First of all, I think it's better because, 0:17:25.880 --> 0:17:29.640 like you are directly helping and hopefully educating and informing 0:17:29.680 --> 0:17:31.840 an individual as to how it is that they should 0:17:31.840 --> 0:17:34.640 be using a credit card, and so literally there's changed 0:17:34.680 --> 0:17:36.880 that's happening there for that person who who you're able 0:17:36.920 --> 0:17:40.520 to impact. But secondly, you are directly impacting the amount 0:17:40.560 --> 0:17:43.240 of money that these banks are making, and it forces change, 0:17:43.359 --> 0:17:46.040 right like they no longer have a choice. At some point, 0:17:46.080 --> 0:17:48.400 if enough people get educated and know enough people start 0:17:48.480 --> 0:17:51.720 changing habits and they're not paying interest to Visa and 0:17:51.760 --> 0:17:54.479 Master cards, they will have to then change the reward program. 0:17:54.560 --> 0:17:56.560 They're not gonna be able to offer the robust rewards. 0:17:56.600 --> 0:17:59.000 The massive sign up onuses is the great travel points 0:17:59.000 --> 0:18:01.159 and the great secondary works like all that kind of stuff. 0:18:01.160 --> 0:18:03.600 Like they just have to say we gotta tamp down 0:18:03.600 --> 0:18:05.159 on all this, and credit cards are going to be 0:18:05.160 --> 0:18:08.879 as lucrative anymore. But I don't know of another way 0:18:09.280 --> 0:18:12.000 to up end the system. And so just focusing on 0:18:12.040 --> 0:18:14.479 the demand side, in my opinion, just feels flawed. It's 0:18:14.520 --> 0:18:18.760 because thanks will continue to make bookoos of cash and 0:18:18.800 --> 0:18:21.080 then use that money to build nice buildings and all 0:18:21.080 --> 0:18:23.639 the cities of other quarters well, and it makes me 0:18:23.640 --> 0:18:26.560 think of credit scores. Just because the credits scoring system 0:18:26.600 --> 0:18:31.399 is flawed and the big credit heures suck majorly, that 0:18:31.440 --> 0:18:33.520 doesn't mean we opt out completely and we say credit 0:18:33.560 --> 0:18:35.760 scores don't matter. There's like a game we have to play. 0:18:35.840 --> 0:18:37.480 We have to be savvy about the game. We're playing, 0:18:37.800 --> 0:18:39.920 and it doesn't mean we have to buy into a 0:18:39.960 --> 0:18:43.040 hook line and sinker, but it does. But I think 0:18:43.359 --> 0:18:47.719 removing ourselves from the equation isn't necessarily helping broader society, 0:18:47.720 --> 0:18:49.879 and it's not the best move for us personally. But 0:18:50.320 --> 0:18:52.360 by the way, we are all on that notebat, we're 0:18:52.359 --> 0:18:55.359