YNAB You Need A Budget

[mozzie61]

No, we haven't fallen off the wagon and started using credit cards again.

The cards are still around, but they're bound together with a rubber band and living in a dark corner, alone and neglected. They haven't felt the tingle of a terminal or ATM swipe for over two months, and using YNAB is giving us the discipline to not fall back into old habits. I'm thinking it's time the cards were disposed of altogether as there is no way we're going to be using them in the near future. Who knows one day we may see a need for one or two of them again, but that day is not now, nor any time soon.

The usual advice when kicking the cc habit is to cut them up, or if you can't stand the thought of that at least put them in a container of water in the freezer to give yourself a chance to think about the purchase while the card thaws out. I thought it might be fun to see what other ways there are to destroy a credit card.

The first credit card that has to go is the hated Gold AMEX. High interest and inflexible customer support with a mightier than thou attitude means that this goose is cooked, and a mere scissor cut is not enough. Out into the garage to see what fate lies in store for this ugly beast.

Hmmm....this looks interesting

rsz_2img_5820.jpg (20.63 KiB) Viewed 2731 times

Wonder how a mere piece of plastic will fare against C3H6O?

5 minutes later.......not too well by the look of those gold flakes

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...barely recognisable and certainly no evidence that it ever belonged to....err owned me

30 minutes later....the deed is done

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Ahhh, I feel better now , even more so when AMEX is paid off and closed.

P.S. I was going to post this in my journal, but it appears images as attachments are not allowed in the journal section. I guess this is a kind of success story.

[medicechic]

I love it! LOL
Mine are frozen in a large container of water in the freezer.
I've spent my evening plugging in values and changing payments in various ways to determine what the best route of action is going to be for me. I hope to have everything paid off at the latest by April 2012. Wish me luck!
-E

[mozzie61]

I've played the same game on our debt snowball calculator and come up with "cc debt free by 1 January 2015" as a goal that we can hopefully stick with. It's a bit of a stretch, but not unachievable. I have another spreadsheet which is tracking the progress of the debt paydown, with charts to show the individual card paydowns and a comparison chart between the projected total cc debt paydown as at 1 May 2010, and the actual. At the end of June we're sitting just below the projected figure - the aim is to stay there. I've found that confronting our debt, writing down the total amount, working out a payment plan and now tracking it's demise is helping maintain our focus on the main game.

I wish you luck , but more than that I wish you all that you hope for from using YNAB. YNAB is just a piece of software but used with the methodology it can turn your financial life around (the stories on here attest to that). All the best and I hope to see more of your success stories.

[tallison]

Parked all mine in the drawer for a while. But with a proper cash-flow and budget adherence (key point here) I can safely use Credit Cards again.

Only problem is, I don't want to and I don't need to.

Buy online with a bank debit card works just as well.

Still need credit cards for travel but I can pay them off when I get home!!!

[mozzie61]

But with a proper cash-flow and budget adherence (key point here) I can safely use Credit Cards again.

I agree tallison. In our current situation it's a definite no no, but I'm not so against credit cards that I can't see us never using them again as long as we pay back the full balance each month. That's a while away, so for now the best thing is to put them out of reach, or have a bit of fun destroying a few

It's certainly been a far nicer feeling paying all our expenses in the past 2 months+ with either cash or our debit card knowing that the amounts have already been budgeted for.

[shandsh]

I've canceled all but just a few of mine this year. If there's a balance I don't cancel because of the ratio analysis. I kept open an old card for history and also it offers rewards and I've set up recurring bills to hit it and pay it off every month from the checking. Since I'm budgeting those expenses already when I pay the bill it feels okay because that money was already gone anyway even if it was still sitting in my checking account for a few more weeks. I'm also changing to an interest bearing checking next week. I kept open only department store charge because I buy my kids school uniforms from here and card holders get free shipping, again I will pay that bill off every month regardless because I will budget for the clothing expense. It's funny how the simple act of virtually spending/allocating that money in a budget can make a difference. I never lived on a budget before this year and I honestly don't know how I survived this long but it sure explains how I got into the mess I did.

[mozzie61]

I never lived on a budget before this year and I honestly don't know how I survived this long but it sure explains how I got into the mess I did.

I hear you on that one

[tallison]

But with a proper cash-flow and budget adherence (key point here) I can safely use Credit Cards again.

I agree tallison. In our current situation it's a definite no no, but I'm not so against credit cards that I can't see us never using them again as long as we pay back the full balance each month. That's a while away, so for now the best thing is to put them out of reach, or have a bit of fun destroying a few

When we first got credit cards we thought they were a cause for celebration.

The only advantage I can identify with a credit card is the ability to keep money in savings while you spend it on credit, paying it off without interest payments, and gaining points. Artfully crafted this could become income. Keep in mind that $1,000 at 1% APR earns less than $1 a month. This won't pay rent or even a coffee. You can still stick it to the man.

[TLBauer]

The only advantage I can identify with a credit card is the ability to keep money in savings while you spend it on credit, paying it off without interest payments, and gaining points. Artfully crafted this could become income. Keep in mind that $1,000 at 1% APR earns less than $1 a month. This won't pay rent or even a coffee. You can still stick it to the man.

Amen! I have already given my wife $400 worth of Home Depot gift cards for use in her spring and summer gardening. I'll be giving her another $100 next month. This is all from the points that we have earned from putting everything that we can on our American Express card and then paying it off when the statement comes in. Since everything is already budgeted, I just have to set up the payment when the statement comes in.

So, yes, I have turned my credit cards into money-making machines!

[fuzzyjelly]

I've finally done that too! It's sooooo much fun to spend my Amazon gift cards each month. Sometimes I even use them for practical things like groceries, or toiletries. Sometimes

[stefer]

I wish i could cut the damn cards but i can't. In this digital life, a lot of stuff needs a credit card. Gift cards are a great idea for replacement though, i really like the idea! But i already see a few problems for myself : iPhone apps, and my web-hosting fees. Both requiring a credit card

[Malisa]

I wish i could cut the damn cards but i can't. In this digital life, a lot of stuff needs a credit card. Gift cards are a great idea for replacement though, i really like the idea! But i already see a few problems for myself : iPhone apps, and my web-hosting fees. Both requiring a credit card

Depending on where you live, you can put most of these things on a debit card. That being said, I'm not anti-credit card if one uses them to one's advantage.

[stefer]

I wish i could cut the damn cards but i can't. In this digital life, a lot of stuff needs a credit card. Gift cards are a great idea for replacement though, i really like the idea! But i already see a few problems for myself : iPhone apps, and my web-hosting fees. Both requiring a credit card

Depending on where you live, you can put most of these things on a debit card. That being said, I'm not anti-credit card if one uses them to one's advantage.

Canada. Don't know about debit card, not all sites support going with debit cards...
I know for iPhone apps the gift cards usually work, but not in Canada. Itunes don't allow it, something about having to pay taxes etc. to the govt., too complicated for them, so only music and movies on gift cards...
Yeah i'm not anti-credit card either, unless you do like i did and get in debts over your head. I did pledge to pay more than the minimum each months, and if i put something on it (like my web-hosting for example), to repay it right away. If i can't afford it, i'm not buying it.
Which is... what most people should do anyway.

[bookman413]

I think that once you've kicked the irresponsible and unaware debt habit, there's no need to cancel your credit cards. After how far you've come, are you really going to fall for spending money that you don't have and won't have for the foreseeable future ever again, or let yourself pay interest for goods that you don't even need ever again? Probably not.

It sounds like you have a lot of pent up anger at the credit cards, but the credit cards were not really the problem, our unawareness combined with easy access to credit was the problem. Now that the unawareness is vanquished and you have a new and much better way of living your financial life, I don't think you need to take it out on the credit cards anymore. Over time your feelings will stabilize about them and you will eventually be able to use them as a tool to "pull the trigger" on a purchase for which the cash is already sitting in your bank account, and then just send the money to pay the bill when it becomes due. Which can be very useful.

My two cents worth.

[bookman413]

But with a proper cash-flow and budget adherence (key point here) I can safely use Credit Cards again.

I agree tallison. In our current situation it's a definite no no, but I'm not so against credit cards that I can't see us never using them again as long as we pay back the full balance each month. That's a while away, so for now the best thing is to put them out of reach, or have a bit of fun destroying a few

When we first got credit cards we thought they were a cause for celebration.

The only advantage I can identify with a credit card is the ability to keep money in savings while you spend it on credit, paying it off without interest payments, and gaining points. Artfully crafted this could become income. Keep in mind that $1,000 at 1% APR earns less than $1 a month. This won't pay rent or even a coffee. You can still stick it to the man.

The other benefits of use of a credit card *from within your budget* are: increased leverage in the event of a dispute with a merchant, qand cash back (because you really should get a cash back card if you are going to use credit cards anyways, it can add up to a couple hundred or more in money over the year for normal spending like gas and groceries).

the other advantage ( disadvantage for many people) of a card is allowing increased convenience of spending. There are ways to get around this but the best one in the end is breaking the habit of just grabbing for the card without checking your budget. A great way to break that habit is to do your spending from predetermined cash envelopes for a couple of months or three months-- or just always carry a notepad with a copy of your budget and available budget balances in it around with you , and record all your income and expenses in the notebook as you make them.

The "float" on one month's average expenses is not worth much of anything. $1000 (if you spend that much, I don't) at 1% is $10. Compared to 1% (or more) cash back on $1000 a month times twelve, which is $120.