We’re considering getting a Target card, and utilizing it in the similar ways that Trent talks about.

For us, there are many staples that are cheapest/best choice for our family at Target…specifically diapers and formula for our baby. If I’m buying these items anyway, I might as well earn rewards on them.

While I do admit there is temptation for a new shirt or an extra snack while I walk the aisles, just because I am carrying plastic does not mean I’m going to give in.

I focus on the fact that the sooner we pay off debt (and not buy extras) the sooner I can stay home with my children. Much more rewarding than a candy bar or new shirt. It merely boils down to personal responsibility and stick-to-it-ness.

I attribute this to the fact that with a credit card there is no physical, tangible or visible limit or indication of how much money you have available to spend, and anything up to your credit limit is fair game when purchasing
with a credit card.

In general, I find that people are much much more careful and less impulsive when spending their *cash* in the store than when they are using their credit cards. This may have to do with the fact that most people don’t carry $400 in cash with them at all times so there is a physical, visible limit to how much “money” they feel is available when spending cash.

All of that being said, I be;lieve that this only applies to people who don’t make their spending decisions based upon a predetermined budget. People who have a predetermined budget spend much more conservatively and strategically than people who are just out shopping “for fun” and without a preset spending target. The customers who come up and pay with a cash *from an envelope* are uncommon and they are not frequent customers, largely because I believe that what the business I work is sells is largely discretionary items and people who are on a cash envelope system often have their discretionary spending in tight control.

I believe the same is true of those who have tight budget controls but use their credit cards as a means of payment.

Let’s say hypothetically the match from your employer is a meager 20%. In my experience, if a match is provided, that’s the lowest match I’ve seen.

Let’s say the funds offered by your employer’s 401k stink to high heaven, and you literally get 0% return.

Where should the smart money go? Paying down a 7% student debt loan, or putting money into the 401k?

It’s STILL the 401k. Why? Simple: you’re getting a 20% tax-advantaged return vs. saving 6.8% interest minus a tax deduction if you itemize. That’s why Trent, rightfully, says you should never turn down a match. You could even make a reasonable argument to go further into credit card debt in order to get at least the match, if the match is higher than credit card interest rates, although I wouldn’t recommend it.

It’s one thing if you can’t pay your bills, it might make sense to cut back to just get the max match you can. If you’re gonna have to cut more than that, I’d recommend to cut back other expenses if at all possible before turning down that free money. Heck, even work another job if need be, because if working that extra job doesn’t seem worth it, would it be if whatever it would pay would be 20% higher in this case?

Food for thought….

When you have significant cash money accrued you can think about doing things like outright purchase of rental real estate, which can provide about a 7% annual cash inflow compared to your initial investment.

Do not rely on the stock market, which is essentially relying on the fortunes of businesses that you do not even partially control. Rely on your own savings and on business investments that you have direct operational control of.

I find it quite interesting that you rarely ever hear the two words “compound loss” uttered by the financial industry and it’s gurus like Ramsey. If more people had had safeguards in place to eliminate their exposure to the destabilizing and debilitating effects of compound loss, we would all be a lot better off.

Thank you for your continuing contributions to keeping people well informed.

VZ
TOT
PFE
MCD
DD

spread your money out evenly over the 5 above investments and you will get more than 12% on your money and your initial priciple will be safe, although it could move a little, but has down side protection with defensive stocks.

The portfolio above avoids volatile financials and tech stocks. It’s not sexy, but it’s solid and steady.

If you need to get out of debt and get your financial ass whipped into shape, Dave Ramsey is good for that. He’s a superb brow-beater.

If you’re out of debt and want to move on with your life, Dave Ramsey is not good for that. He lives in a black and white fantasy world where the same rules are applicable for everyone all the time.

You want to know why he keeps saying “mutual funds mutual funds mutual funds” on his show and (unlike Orman) *never* mentions index funds and never warns people away from high-cost funds with load fees? Because financial advisors pay him big, big bucks to be listed as an “Dave Ramsey Endorsed Local Provider”. He makes a lot of money funneling his audience through brokers with high-cost products.

If he cared about his audience he wouldn’t keep talking about “good” mutual funds that “return 12% annually” and then drop another commercial for his ELPs. I’ll give credit to Orman: she may have tons of products to her name, but she doesn’t council people away from index funds for kickbacks.

So, on the one hand you say “I can beat the odds” and on the other hand you say “No one can beat the odds.”