Dave Ramsey and Frequent Flier Programs

Discussion in 'General Discussion | Miles/Points' started by BartonW, Feb 28, 2011.  |  Print Topic

  1. After a few difficulties a while ago, I'm trying to be more financially prudent. One thing I'm following is Dave Ramsey's teachings, especially the "debt snowball." But one thing Dave does not like is using credit cards for purchases. But I don't fly as much any more for work, so I really need credit card spending to have a chance at award travel.

    Has anybody reconcilled these concepts? I think that the credit card points (I still have a Starwood AMEX as my only card besides a debit card) are worth the risk of temptation.
     
  2. mowogo
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    mowogo Gold Member

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    What you can do is put your bills onto the SPG AMEX, and then pay it off each month. You do not use the card for anything else, and it serves the function of only paying bills. Then you can get the benefits of helping your credit, getting the points, and still avoiding debt.
     
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  3. penumpang
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    penumpang Gold Member

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    Yes, I've used credit cards for everything (that takes credit cards) for years. The key is pay the bill in full every month. As long as you use your credit cards as you would cash, you'll be fine. In other words, you only use the card because you actually have the cash to pay your bill in full every month. I've never paid interest on any of my mile-earning credit cards.
     
  4. Westsox
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    Westsox Gold Member

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    I think Dave has some great ideas and I have followed his teachings and read most of his books. I think his stance on credit cards use is appropriate for people with financial issues. If you are having financial issues, travel should likely not be on your list of things to do until you get the spending under control.

    Credit cards can be like alcohol, if you can't handle it, you better stay as far away as possible. If it is not an issue for you, use that credit card to earn some miles and points. This is not a one size fits all game.
     
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  5. DrG
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    DrG Gold Member

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    While I believe what Dave Ramsey teaches can be tailored to fit the person and their spending patterns. If you currently have debt (or are prone to accumulate debt), it is best to stay away from credit cards for mileage earning. The credit card promotions are most valuable when you pay off your account each month in full. You certainly do not want to sacrifice your credit score for some miles or points.
     
  6. nomflyer
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    nomflyer Silver Member

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    Well said. I see Dave Ramsey's advice as just that. A plan that works for the majority of people.

    As with anything, his stance on credit cards may not be for you. But that's not to say you can't follow any of his other advice.
     
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  7. Wow, this is a busy forum!! Thanks for responding so quickly.

    Without boring you with the messy details... I am almost debt-free, but I earn a lot less than I used to make. I do use the AMEX card for a few things: some work expenses, Priceline for hotels, and when I need a rental car which is not very often. I do not fly that much right now but when I have I buy gift cards at the grocery store with cash and use them at the airline website. Everything else has been paid for with cash right now until I can get back to zero.

    My problem with the SPG card is that I have to either earn enough points in a year to get a free flight, or I have to stay at a Starwood to extend the points beyond a year. And $20,000 spend is a LOT for me right now (which is funny because I used to do that in a month with equipment and supplies back in the day) but I really don't want to apply for a better card for another year or so.
     
  8. mrpickles
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    mrpickles Silver Member

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    Not true. You don't have to stay at an SPG property to extend the life of the points. Just buy a pack of gum once a year with the SPG credit card and you will extend the life of the points. And, instead of buying a gift card for an airline with cash, just use your SPG card and do an online payment once you buy the airline ticket. This way you will have recourse if the airline goes bankrupt or looses your luggage.
     
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  9. DrG
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    DrG Gold Member

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    One of the big perks of Amex and other credit cards are purchase or travel protection. This is one reason I don't agree with Dave Ramsey when he says you should never use a credit cards. This philosophy seems to be geared toward those who can not use credit responsibly.

    Another way to extend the life of your SPG points is to enjoy a meal at a Starwood hotel. One of the unique features of the program is that you can receive points for dining on-property even if you are not staying at the hotel. You could simply have a beer a the hotel bar extend the life of the points.
     
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  10. nomflyer
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    nomflyer Silver Member

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    This is a good example of when a credit card comes in handy over cash or a debit card. I would use it for any purchases where you'd want the consumer protection.
     
  11. k2o
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    k2o Silver Member

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    Dave Ramsey has great advise and as everyone says, his advise is for those who find it difficult to use the cc as a tool. Paying it off monthly is key, if you can do so all purchases should go on the card. Also, if you're disciplined, use it to buy coins.That will pump it up a notch 2-3k a month making the 20k spend quite doable.
    Using the card for consumer protection is a big deal. I didn't realize this until I bought a new camera and a few days later dropped it on cement. I couldn't return it but Am Ex stood by with their protection and I soon had a replacement.
     
  12. Casey Friday
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    Casey Friday Silver Member

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    During the debt snowball portion of Dave's plan, I think it's really important to stick with cash only, so when you spend your money, it's gone instantly. Once you've built up your 3-6 month emergency fund, paying off the balance on a CC (while still keeping a budget, of course), is much more feasible.

    I'm a huge fan of Dave Ramsey - I've been to two of his live shows and met him once - he's a great guy. However, there are always going to be areas of finance where I have a slightly different opinion than he does, and that's okay! I want to invest more into my retirement accounts than he suggests, and that's my personal preference. Also, I want to use a CC for monthly purchases (for miles), and that's another personal preference.

    Once you do get debt free (and after you yell, of course!), I'd suggest using mint.com to track your CC spending. I set up my budget on there, and it keeps me in line VERY well.

    Good luck to you!
     
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  13. Andyandy
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    Andyandy Gold Member

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    I'll chime in as another (with qualifications) fan of Dave Ramsey. His advice is generally quite sound. However, it is definitely geared towards folks who are trying to become financially discipled. I was one of those folks back when.

    Credit cards and the opportunities they offer are definitely a double-edged sword. If you are careful and disciplined, you stand to profit from the T&Cs of the offers and cardmember agreements. If not, you can get into a world of hurt. Take the coins deal. For someone with financial problems, buying coins would be like being a drunk at an open bar. Big trouble. But practiced properly, its like getting a negative interest loan for thirty days or so.

    It's really a matter of knowing your limits. If you doubt that you'd be able to resist the temptation to overspend, stay the heck away from credit cards. Miles an points are great, but mental well-being and financial stability are a heck of a lot better.

    Andyandy
     
  14. k2o
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    k2o Silver Member

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    Amen!
     
  15. misman
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    misman Gold Member

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    For those not familiar with the plan, these are the baby-steps for the Total Money Makeover. We are personally on Step-4 and Step-6 (skipping Step-5 as we have no children.)

    Nancy and I were discussing this exact issue on Saturday. For the past 20+ years, we've used a credit card to collect points in one way or another, always paying it off every month. We have agreed to disagree with the program on this particular point (as well as some others.) However, as Dave says, you play with snakes long enough, you'll eventually get bit.

    If you are starting from Step-1, I would suggest that you adhere to the plan as written until you are on Step-6. I suggest this because I believe that anyone with a debt-snowball needs that extra ounce of prevention.
     
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  16. chemist562
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    chemist562 In Memorian

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    I generally agree with Dave Ramsey except about the CC's for people who are financially disciplined. We have accumulated quite a few miles from signup bonuses & general spend. Our rule is once we can't pay the CC bill in full, the cards gets "cut" up & never used again. We haven't had that problem yet. :) I would hate to get a credit inquiry every time I rent a car by using a debit card. :mad:

    Between my wife & I, we accumulated between 500-700K airline miles (alot of those with Citi AA cards) and our next goal is with hotel signup cards. My sister/brother-in-law got 300K AA miles by signing up for 2 AA cards each. Took 6K spend and they didn't pay any interest. :) Alot of people get alot more miles doing coins, etc.
     
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  17. mrredskin
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    mrredskin Gold Member

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    anyone with any sort of financial sense doesn't need to listen to a word Ramsey says. He is there for all of the idiots in the world. Most of us on this thread are smart enough not to carry CC debt. It's absolutely STUPID not to have a CC that can be used for rewards if you are CC debt free and have some financial sense.
     
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  18. misman
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    misman Gold Member

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    This is not the point of this discussion. The OP asked a direct answer about the program, and he is getting direct responses. Please don't try to derail the intent of the question.

    I'm 50/50 on this one. I think you really need to guage your own behaviors and answer this question for yourself. If the OP is really trying to straighten up some issues, this is a question they need to ask and answer for themselves.
     
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  19. Casey Friday
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    Casey Friday Silver Member

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    Gotta disagree with you here - even for smart people, Dave's advice is sound. It's not just about credit card debt, it's about all debt. A lot of people that rationalize credit card debt also rationalize car leases and jumbo mortgages. As misman said, if you play with snakes, you'll eventually get bitten.
    I think there are a lot of people in the financial advice world who can't be completely trusted, but Dave actually lived the advice he preaches, and it works.
     
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  20. 2soonold
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    2soonold Gold Member

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    Haha! First time I remember Dave getting any serious play on a ff travel board. [​IMG]
    Like Dave , I swore off American Express years and years ago. That was long before I ever heard about ff. It's tempting, but I have not yet gone back!
    The BIG word for me was b-u-d-g-e-t , long before I ever heard of Dave! I travel on my travel budget. I align my travel goals with certain ff programs. If I save enough money into my travel budget to accomplish my goal, I go ahead and complete that travel goal, check it off my list, and move forward. Right now, I am in my "sightseeing" goal days, but on down the years ahead I will move into my "travel to relax" days. And even if my ff programs are not as helpful as I would like at this moment, they should prove to be even more helpful on down my road.[​IMG][​IMG]
     
  21. misman
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    misman Gold Member

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    and it is just common sense.
     
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  22. misman
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    misman Gold Member

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    We've always done a budget, and stuck to it. This past weekend, we started working on the Total Money Makeover budget. Wow! Talk about detail. We always thought we were detailed, but there are things on there that we never budgeted for in advance... we just dealt with them when they arised.
     
  23. Lufthansa Flyer
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    Lufthansa Flyer Gold Member

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    Ramsey talks to the lowest common denominator. If you have $ issues, put the carry on
    away for a while.

    I use the Amex gold rewards card for everything, and last yr I only put about 65k of actual spending on the card, but with the 5x points booking travel with the card through amex travel, or 3x on no amex travel, plus other multipliers for gas and groceries, I'm sitting on 180k Membership rewards points after one year thats good for at least one, and almost 2 first class tickets, and I have no debt to show for it. Plus AMEX has offers with ff accounts. for ex. this month BA will give you 40% bonus for moving points from amex to the BA program at 1:1 conversion. Get a good travel friendly card and you'll love it!! PS....dont forget to buy coins from the US mint, but thats a chat for another thread. Pardon the errors in typing, I've been on an MR since 6am and have 2 hrs to go.
     
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  24. misman
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    misman Gold Member

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    I commend the OP for recognising the difficulties and working to get out them. After reading the books (because I hadn't really heard much about him or the TMM before,) I decided to give it a try... even starting in Step-4.

    The plan doesn't make any "guarantees" or have you take unnecessary risk. The only risk that I think you really have is that you'll come out of the program with all of your debt paid off and some $$ in a savings account. Oh, the horror!
     
  25. Westsox
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    Westsox Gold Member

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    That is so "Un-American". If we stop spending money we do not have on stuff we do not need the economy might collapse. Oh, wait. I think that is already happening.
     

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