cash or credit

[virigarcia]

I pay by cash. I only pay with my debit card when i make a big purchase.

[dkanofsky]

I usually use my debit card, never use cash and very seldom, my credit card.

[alaric99x]

Taxes are higher all across Europe.  I only have direct knowledge of taxes in Germany.  Sales tax is 19% for every purchase.  Gasoline and diesel includes a number of taxes.  Many years ago the Green Party managed to get support of an ecological tax on gas and diesel in order to try to discourage people from driving so much.  That tax is then applied to social security funds.  That's kind of strange because taxes in one area are usually related, so fuel taxes would normally be applied to highway maintenance.  Anyway, after several other taxes on fuel, they apply the 19% sales tax, so you're effectively paying sales tax on other taxes that you've already paid.  As a result of all these taxes, gasoline costs about twice as much as it does here in the US.

There are economic and mathematical facts that govern the reality of taxation.  Obviously, governments need to tax in order to maintain infrastructure, government services and to pay off all the crooked politicians.  However, taxation is a very fine and complex science, if you tax too much, you'll drive too many people into cheating on taxes.  If a government raises taxes by 5%, they might find that they collect 3% more revenue, raise tax by 5% more and there might be only 1% more revenue collected, now raise tax by 5% more and suddenly there's 3% less revenue collected.  There's a mathematical curve that governs this phenomenon, and it's modified by the natural resource situation, social, cultural and political factors, etc. etc., but, basically, a government will suddenly end up collecting less tax revenue because so many people have been driven to cheat on taxes.  This is the situation in Germany where cheating on taxes is extremely common.

In my job in Germany my pay, car, cell phone bill, meals and travel would have amounted to about $6500 per month in pay and benefits.  We reported a monthly pay of about $1000 to the Finanzamt (tax authority).  That's an absolutely ridiculous salary for a general manager of a business, and I'm sure the Finanzamt knew that very well.  But my brother has been managing businesses in Germany for well over 30 years and he knew very well that the Finanzamt doesn't spend time and resources going after families and relatives, the success rate for prosecution is almost nonexistent.  My brother paid the majority of my salary "under the table."  Still, on that $1000 of reported salary, I paid 34% in taxes, so out of my gross pay of $1000 I was making $660.  If we had reported my actual salary, the tax on that would have been well over 50%.

I had to learn this the first week I was there.  We had people come around the business for maintenance and repair work, they would ask if the work would be paid with or without a receipt.  With a receipt meant that you paid the 19% tax, without receipt meant no tax and the workers and business both profited from the 19%.  It's a completely normal way of doing business in Germany, at least 75% of the work done in my brother's business was done without a receipt, you just pay directly with cash.  We did that with car repairs, work in our homes and apartments, actually everything possible.  I had a Russian guy install a dish and receiver in my apartment and got a few hundred channels of British, German and Russian (for my wife) TV and never had to pay any bills.  It might sound kind of criminal, and, of course, it was, but that's just the normal way of living in Germany, it's even more extreme in many other countries in Europe.

What was that saying?  "When in Rome, do as the Romans do."    

I don't think it is criminal. The high taxes are what's criminal! 50% of your income if you reported everything would be plain theft! And I heard that in Denmark, it's 95%!!!! Why would anyone bother working?
At least the Finanzamt isn't as aggressive as the IRS! I doubt many people'd  get away with that very long over here. (Although I'm sure some do. But it seems like it's harder to eveade taxes in this country, unless you're a rich politician!)

The Finanzamt is actually very agressive, just as aggressive as the IRS.  They have so many other targets that they don't waste time and resources going after families, the chance of proving anything is just too low.

Well, I guess it's good they can't prove anything then! I wonder if it would be the same with the IRS. But I don't want to test the system and find out!
By the way, thank you for the explanation about how you use credit cards. It must take a lot of figuring! But worth it in the long run. As long as you don't use credit cards as a blank check for stuff you don't actually have the money for, they can be profitable. But for a lot of people they become a temptation to overspend. And that would lead to disaster.

No, I actually don't have to calculate anything at all.  I monitor my charges on the net.  There's always a comfortable cash balance on my checking and money market accounts, I simply transfer payments to the credit card in a timely enough manner so they can never charge me any interest payments.  No calculations necessary if you have enough reserve cash to be able to do that.

Incidentally, my cashback bonus from Discover for the month of August was $48.59.

[alaric99x]

Taxes are higher all across Europe.  I only have direct knowledge of taxes in Germany.  Sales tax is 19% for every purchase.  Gasoline and diesel includes a number of taxes.  Many years ago the Green Party managed to get support of an ecological tax on gas and diesel in order to try to discourage people from driving so much.  That tax is then applied to social security funds.  That's kind of strange because taxes in one area are usually related, so fuel taxes would normally be applied to highway maintenance.  Anyway, after several other taxes on fuel, they apply the 19% sales tax, so you're effectively paying sales tax on other taxes that you've already paid.  As a result of all these taxes, gasoline costs about twice as much as it does here in the US.

There are economic and mathematical facts that govern the reality of taxation.  Obviously, governments need to tax in order to maintain infrastructure, government services and to pay off all the crooked politicians.  However, taxation is a very fine and complex science, if you tax too much, you'll drive too many people into cheating on taxes.  If a government raises taxes by 5%, they might find that they collect 3% more revenue, raise tax by 5% more and there might be only 1% more revenue collected, now raise tax by 5% more and suddenly there's 3% less revenue collected.  There's a mathematical curve that governs this phenomenon, and it's modified by the natural resource situation, social, cultural and political factors, etc. etc., but, basically, a government will suddenly end up collecting less tax revenue because so many people have been driven to cheat on taxes.  This is the situation in Germany where cheating on taxes is extremely common.

In my job in Germany my pay, car, cell phone bill, meals and travel would have amounted to about $6500 per month in pay and benefits.  We reported a monthly pay of about $1000 to the Finanzamt (tax authority).  That's an absolutely ridiculous salary for a general manager of a business, and I'm sure the Finanzamt knew that very well.  But my brother has been managing businesses in Germany for well over 30 years and he knew very well that the Finanzamt doesn't spend time and resources going after families and relatives, the success rate for prosecution is almost nonexistent.  My brother paid the majority of my salary "under the table."  Still, on that $1000 of reported salary, I paid 34% in taxes, so out of my gross pay of $1000 I was making $660.  If we had reported my actual salary, the tax on that would have been well over 50%.

I had to learn this the first week I was there.  We had people come around the business for maintenance and repair work, they would ask if the work would be paid with or without a receipt.  With a receipt meant that you paid the 19% tax, without receipt meant no tax and the workers and business both profited from the 19%.  It's a completely normal way of doing business in Germany, at least 75% of the work done in my brother's business was done without a receipt, you just pay directly with cash.  We did that with car repairs, work in our homes and apartments, actually everything possible.  I had a Russian guy install a dish and receiver in my apartment and got a few hundred channels of British, German and Russian (for my wife) TV and never had to pay any bills.  It might sound kind of criminal, and, of course, it was, but that's just the normal way of living in Germany, it's even more extreme in many other countries in Europe.

What was that saying?  "When in Rome, do as the Romans do."    

I don't think it is criminal. The high taxes are what's criminal! 50% of your income if you reported everything would be plain theft! And I heard that in Denmark, it's 95%!!!! Why would anyone bother working?
At least the Finanzamt isn't as aggressive as the IRS! I doubt many people'd  get away with that very long over here. (Although I'm sure some do. But it seems like it's harder to eveade taxes in this country, unless you're a rich politician!)

The Finanzamt is actually very agressive, just as aggressive as the IRS.  They have so many other targets that they don't waste time and resources going after families, the chance of proving anything is just too low.

Well, I guess it's good they can't prove anything then! I wonder if it would be the same with the IRS. But I don't want to test the system and find out!
By the way, thank you for the explanation about how you use credit cards. It must take a lot of figuring! But worth it in the long run. As long as you don't use credit cards as a blank check for stuff you don't actually have the money for, they can be profitable. But for a lot of people they become a temptation to overspend. And that would lead to disaster.

Another story, not the IRS, but having to do with Maryland state taxes.  When I returned to Maryland over two years ago I didn't have all my documentation in order, lots of things still unsorted in boxes.  I had to pay federal estimated taxes, the deadline was approaching.  Of course, without itemized deductions, that amounted to a tax of over $4500, so I sent a check for that amount to the IRS.  Once I had all my documentation collected, I had an accountant prepare my tax return, and it appeared that I would have no taxes for that most recent year and get that full $4500 returned to me from the federal government.  No such luck, the state of Maryland intercepted the full amount and claimed that I owed them much more, a total of over $16,000.  The reason for all this was that my tax consultant, (an incompetent idiot) while I was living in Germany, used the Maryland address of one of my rental properties for 3 years of my tax returns.  I went to the Maryland tax authorities, showed them the rental contracts of the one property that was given as my address for those three years, showed them proof of my residency in Germany during that time period, stamps in my passport from trips to various places in Europe during those years.  No luck with any of that, like a movie star, which I'm not, I could have had one residence in Maryland, another in Germany, and then travelled back and forth several times a month between the US and Europe.  Furthermore, they made it clear to me, that if I had a dispute about those 3 years of unpaid back taxes, which I never legally owed, that they could look into the other 9 years when I "claimed" not to be living in Maryland and my back taxes could be well over $100,000.  I asked them how this could be resolved and they offered to calculate my tax returns for me, I really had no choice but to let them do this.  Their calculations came up with taxes that I owed that state of a little more than $1500.  Of course, adding late fees, penalties and interest payments, that added another $1500.  After fighting this losing battle for almost a year, out of the $4500 that I sent to the IRS, I got a check back from the state of Maryland for less than $1500.

God bless America, anybody want to ask me why I'm moving back to Europe?  You're not really "free" in this country anymore, you just keep telling yourselves that you are.  

[StarlitNirvana]

I usually always use my debit card because I feel more comfortable using the card than carrying around cash. I've known someone that had been mugged and robbed loosing an entire paycheck once - real scary stuff.

[de3ik]

I have a credit card, but I never max it out and pay it off on time every month. I haven't found it difficult to stay within my budget as I know how much money I can spend and am deeply afraid of going into debt.

My mother uses a debit card most of the time and occasionally uses cash. I think it 's for convenience more than anything. I also use cash as well.

[csomma]

I use my debit card all the time. I got rid of the credit cards and I don't want them back. I learned my lesson with them.

[queenofnines]

Credit...dealing with cash is so annoying! Plus you can earn cash by using credit if you're wise about it.

[ejholt]

I finally got a credit card paid off a few months ago.  I am Debt FREE.  It fills so good.  I do not use it anymore.  I work and draw SS so I have enough money to get by with both of them .  I hope everyone has a good weekend and may God bless each of you and keep you safe.

[ljrjess69]

i dont like carrying to much cash around so i usually use credit/debit,,unless its a small purchase 

[sdecaro558]

I never use cash if I can avoid it.  I use credit cards at all times (pay them off in full every month) to get the cash back rewards.  I figure that if I don't get in trouble with them and control my spending, and I pay them off in full so there's no interest charges, it's like free money when I get cash back on stuff.

[constance312003]

I too have given off credit cards and just use my debit card- i rarely have more than $10 in my purse

[shepherdchik]

I think those are good words to live by. If you can't pay for it now then don't buy it. I have been struggling too over the past 10 years trying to get my life back together and I finally went back to school and will get a better job and start over. I need to budget myself better and save for things I really want or need

[mgint]

cash all the way never had a credit card

[wildcat73]

Cash or debit card that way i am not left owing.