cash or credit

[southernhorizons]

To southernhorizons:

I would never look down on a person like you, I don't know enough about you and I truly hope your financial circumstances become much better in the future.  I was talking about some of my neighbors where I live.  I mean the ones who leave all their outside lights on all night and, when we compare electrical bills, find that theirs is 3 times as high as mine.  No idea about what they do inside their homes but, considering their bills, it must be just as wasteful.  Some who have 2 cars and a pick-up truck, none of which are paid for, a cell phone for husband, wife and 2 of the kids.  Credit card debt with enormous interest payments, and then they cry about the fact that they don't make enough money to live from month to month, even though the husband and wife both work.

As for me, yes, I had to work pretty hard in the Army, and we put in some pretty long hours, but, like I said, I don't work anymore.  I'll give myself credit for that and for the fact that I've been very financially responsible my whole life.  As far as my present circumstances, I'm just a fortunate beneficiary of fortuitous circumstances.  My brother, in Germany, wanted to open a second business and he asked me to come over and manage his first business, a bowling center, and he paid me a generous salary.  I rented out the townhouse where I lived and I didn't need the rent money or my military retirement pay over in Germany.  Rent is cheaper over there and I was able to shop at a nearby US commissary and PX where prices were about 60% of what they are on the German economy, so I ended up with hundreds of dollars left over every month, in spite of the fact that I traveled all over Europe and was living pretty well over there.  Additionally, the business paid for my car, car repairs and my cell phone.  That all left me with a good amount of monthly cash that I didn't need for anything else so I was able to pay off the remainder of my first mortgage in just a little over 2 years.  Now I had that rent, retirement pay and extra from my job, so I was able to accumulate over $50,000 in about 2 years.  With that, I flew back to the US and used most of it as a down payment on a second townhouse, which I immediately rented out.  Of course, now I had 2 rents, retirement pay and extra money from my job in Germany, it wasn't any great challenge to pay off that second mortgage in less that 5 years.  Now, for my remaining (almost) 3 years in Germany, that income just accumulated.  I don't need to tell you how much money can pile up if you have several thousand dollars every month that you don't need to use.  Knowing that I was coming back to the US, I didn't buy a 3rd property, but it wasn't any problem to pay cash for 2 cars, put in about $30,000 for maintenance and improvements on my properties, buy some furniture, a desk top computer, 2 laptops and all electrical appliances and still have a comfortable amount of money left over.  (I had to leave all my electrical appliances in Germany, they're useless here, they have 220V over there and it's 110V here.)

So you see, there's no wizardry here, these are all things that fall into the category of those things that "any dam fool can accomplish."  I just got lucky with these circumstances, and I truly wish the same luck for you.    

Thank you very much for the very nice wishes. I'm sorry if my posts seemed harsh. I'm glad you had good circumstances and sense enough to use your resourses wisely. My attack on using credit cards wasn't meant to be absolute, I know there are exceptions to every rule. But many people, especially if they are living paycheck to paycheck, would be better off not using them. Even if they budget well, and keep up with the payments, one unexpected medical bill or other financial emergency can very easily start the downward spiral to unmanageable debt.
By the way, I don't think my assumptions were too presumptuous. Judging from the way I was brought up, and even my current situation, you are well-to-do, even though you aren't "rich." Everybody I guess has different ideas of wealth. You admitted yourself that your situation was unusual in the US. I certainly don't begrudge your situation, in fact I'm happy that you were able to do that well. But for the majority of people probably on this forum, trying to copy your credit card spending would only get them into trouble, so I was just trying to point out that you were the exception, not the rule. A lot of times it is people's own fault, but a lot of times it isn't. I know I'll never be able to retire early, or maybe not at all with the social security mess, but I do hope to be able to buy a house and pay it off early. I try to save as much as I can; right now I'm living in my parent's house; I pay rent, and some groceries, as well as insurance, and utilities, but at least I don't have a full grocery bill, and some other expenses. So I can't complain, I'm really not that bad off. I just don't have the income to save as much as I like. One thing that put me behind was being laid off for almost three years;  I used up all my savings and started borrowing money, so when i finally got a job, I had to pay off all that, plus get another vehicle since mine was on its last leg. So finally I'm able to start saving again. At least I avoided credit card debt, though. My vehicle is decent, but it's got 130,000 miles on it, so I know I'll have to start putting money into it. I always say you don't have any money when you have a vehicle, even though of course a vehicle is necessary to get to work! I just wish they weren't so expensive to maintain!

[southernhorizons]

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!)

[KellysFusion]

I use credit card for everything and pay it off every month, that way I get points to cash in to use for christmas money. 

[bobes915]

I pay with cash whenever possible.  I find that if I pay cash for things, I usually spend a little bit less.  For larger purchases, I have occasionally been able to get a discount for paying with cash as well.  I do have a credit card that I use so that I can keep my fico score high in case I need to borrow money for a home. 

[nycgal85]

Well I always use cash whenever I buy something coz if u have a credit card than ur going to get da urge to spend more than wat u have.

[alaric99x]

To southernhorizons:

I would never look down on a person like you, I don't know enough about you and I truly hope your financial circumstances become much better in the future.  I was talking about some of my neighbors where I live.  I mean the ones who leave all their outside lights on all night and, when we compare electrical bills, find that theirs is 3 times as high as mine.  No idea about what they do inside their homes but, considering their bills, it must be just as wasteful.  Some who have 2 cars and a pick-up truck, none of which are paid for, a cell phone for husband, wife and 2 of the kids.  Credit card debt with enormous interest payments, and then they cry about the fact that they don't make enough money to live from month to month, even though the husband and wife both work.

As for me, yes, I had to work pretty hard in the Army, and we put in some pretty long hours, but, like I said, I don't work anymore.  I'll give myself credit for that and for the fact that I've been very financially responsible my whole life.  As far as my present circumstances, I'm just a fortunate beneficiary of fortuitous circumstances.  My brother, in Germany, wanted to open a second business and he asked me to come over and manage his first business, a bowling center, and he paid me a generous salary.  I rented out the townhouse where I lived and I didn't need the rent money or my military retirement pay over in Germany.  Rent is cheaper over there and I was able to shop at a nearby US commissary and PX where prices were about 60% of what they are on the German economy, so I ended up with hundreds of dollars left over every month, in spite of the fact that I traveled all over Europe and was living pretty well over there.  Additionally, the business paid for my car, car repairs and my cell phone.  That all left me with a good amount of monthly cash that I didn't need for anything else so I was able to pay off the remainder of my first mortgage in just a little over 2 years.  Now I had that rent, retirement pay and extra from my job, so I was able to accumulate over $50,000 in about 2 years.  With that, I flew back to the US and used most of it as a down payment on a second townhouse, which I immediately rented out.  Of course, now I had 2 rents, retirement pay and extra money from my job in Germany, it wasn't any great challenge to pay off that second mortgage in less that 5 years.  Now, for my remaining (almost) 3 years in Germany, that income just accumulated.  I don't need to tell you how much money can pile up if you have several thousand dollars every month that you don't need to use.  Knowing that I was coming back to the US, I didn't buy a 3rd property, but it wasn't any problem to pay cash for 2 cars, put in about $30,000 for maintenance and improvements on my properties, buy some furniture, a desk top computer, 2 laptops and all electrical appliances and still have a comfortable amount of money left over.  (I had to leave all my electrical appliances in Germany, they're useless here, they have 220V over there and it's 110V here.)

So you see, there's no wizardry here, these are all things that fall into the category of those things that "any dam fool can accomplish."  I just got lucky with these circumstances, and I truly wish the same luck for you.    

Thank you very much for the very nice wishes. I'm sorry if my posts seemed harsh. I'm glad you had good circumstances and sense enough to use your resourses wisely. My attack on using credit cards wasn't meant to be absolute, I know there are exceptions to every rule. But many people, especially if they are living paycheck to paycheck, would be better off not using them. Even if they budget well, and keep up with the payments, one unexpected medical bill or other financial emergency can very easily start the downward spiral to unmanageable debt.
By the way, I don't think my assumptions were too presumptuous. Judging from the way I was brought up, and even my current situation, you are well-to-do, even though you aren't "rich." Everybody I guess has different ideas of wealth. You admitted yourself that your situation was unusual in the US. I certainly don't begrudge your situation, in fact I'm happy that you were able to do that well. But for the majority of people probably on this forum, trying to copy your credit card spending would only get them into trouble, so I was just trying to point out that you were the exception, not the rule. A lot of times it is people's own fault, but a lot of times it isn't. I know I'll never be able to retire early, or maybe not at all with the social security mess, but I do hope to be able to buy a house and pay it off early. I try to save as much as I can; right now I'm living in my parent's house; I pay rent, and some groceries, as well as insurance, and utilities, but at least I don't have a full grocery bill, and some other expenses. So I can't complain, I'm really not that bad off. I just don't have the income to save as much as I like. One thing that put me behind was being laid off for almost three years;  I used up all my savings and started borrowing money, so when i finally got a job, I had to pay off all that, plus get another vehicle since mine was on its last leg. So finally I'm able to start saving again. At least I avoided credit card debt, though. My vehicle is decent, but it's got 130,000 miles on it, so I know I'll have to start putting money into it. I always say you don't have any money when you have a vehicle, even though of course a vehicle is necessary to get to work! I just wish they weren't so expensive to maintain!

I didn't detect any harshness from you, I wasn't offended by your comments.  "Well-to-do" is a relative term.  I would describe my situation, with all due modesty, as "comfortable."

I'll tell you how I play the credit card game, I'm convinced you're smart enough to understand.  In February of this year my brother came over from Germany,  He owns 3 properties in this area and one of them was unoccupied and needed maintenance.  I charged all supplies, a carpeting company and a clothes dryer on my Discover card and he paid me cash for those charges.  That month I had total charges of $3951.  They were also running some kind of 5% cashback bonus then, I don't remember what, so I got just under $50 cashback credit.  In March my brother, my wife and I all flew to Seattle from Baltimore, my brother and I used to live in Seattle.  I charged airline tickets, hotels, car rentals, restaurant meals and everything else possible on my card.  When we got back, my brother had additional purchases, clothing, toys for his kid, a little more maintenance costs on his property, all on my card which he paid me for in cash.  I had $6027 in charges that month, but with the 5% bonus, I got over $70 cashback from Discover.  Additionally, the credit union I've been banking with for many years allows me 2 balance transfers per year and pays me 1% for those balances.  Of course, they hope that I'll convert debts to their institution and start paying them interest, I've never paid any interest on any credit card.  So I transferred that "debt" of $6027 to my credit union and then paid off my bill a few days later by transferring that sum from my money market account.  That particular month I made over $130 cashback bonus from 2 credit/banking institutions.

This month I had to pay city taxes and water usage fees for one of my properties and one of my brother's properties, a total of $2199.80, that transaction alone will give me just under $22.00 cash back.  (That city accepts the Discover card with no fees or charges, very unusual.)  I'll get some of that money back from one of my brother's rent checks, made out in my name because I manage his properties.  Additionally, Discover is running a 5% bonus for gasoline until the end of September, I'll fill the tank on both cars before the month ends, that will bring my total up to about $32.00 and I'm sure I'll have at least another $1000 in routine charges, so that will bring the total cashback to about $42.00.  With the large tax charge and a total credit card bill of over $3500.00 for the month of September, it's a good time to use that second per annum balance transfer benefit from my credit union and get another $35.00 from the 1% cashback that they give me, that will get me almost $80.00 cashback from both institutions.  Next month (Oct, Nov, Dec) Discover is offering a 5% bonus for any department store and internet purchases, guess who you know who isn't making any of those kind of purchases until 1 October.  They have a limit of $1500 for a total cashback of $75 for those 3 months, but I can pretty well guarantee you that I'll find a way to get the full $75 benefit.

I estimate that I get at least $600, probably over $700 a year cashback from my credit cards.  All you have to do is make sure you never have any interest charges.  I understand this doesn't work for everyone, but it works very well for me.    

[sexychocolate47]

i use cash to pay for everything i have a prepaid credit card so i never go over the limit my ex put me in deep when we got divorsed thats why i won't have any regular credit cards plus i remember growing up mom and dad always told us if you can pay ofr it you don't get it

I don't do credit cards, the interest is too high and they don't always tell you the real deal about everything in their policy. I got a credit card one time in my young life and i am still dealing right now at 48 years old from the back lash. If i knew what i know now about how dangerous credit or credit cards was i would have spent my whole life paying cash for everything. I can't even get a house financed for me and my family because of past credit and being late on payments, and i have been down in out a lot financially in my life from the lifestyle i lived, so it caused me to default on a lot of things and now i wish in my older days, i would have made wiser choices about my finances and now it is all hunting me now.

[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 agressive 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.

[laine39]

I have no credit cards and use a debit card for everything. If I don't have the cash, then I don't need it.

[bungholiotgn]

I always pay with my credit card. I pay my credit card off on time and have never had to pay interest. I just like using the credit card because I get direct deposit from my job so I don't have to run to the bank or ATM for cash. Plus you get a few weeks to pay for the items. And also earn bonuses with your credit card company. What is not to love? As long as you are responsible with your money and spending I would suggest credit card.

[cneimsn]

I never carry cash.  I use one credit card to pay for everything and then at the end of every month, I pay the complete balance on the card.  That way I can start over each month with a clean slate..  it works for me 

[black1304]

I'd say I'm probably 40% cash, 40% debit card, 20% credit card.  Sometimes it's nice to have cash instead of a card when your total is small.  I usually carry less than $100 cash and when it's gone I hit up the ATM or just use my debit card.  My credit cards are my "oh crap I'm out of gas and don't get paid until the day after tomorrow" back up.

[devideddi]

I always just use cash.

[southernhorizons]

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.

[dyano]

Cash, my fault but those credit cards messed me up. When everyone was getting them from anyone really easy I guess I started overspending, then start relying on another card to cover this card and everything got out of hand. I think the cards now are more under control. I dont think i'll ever get out of debt now.