Dec 18 2011

When you’re acting contrary to the financial experts

In my last post, we talked about vacations and how they can be beneficial to your overall quality of life. I talked about how the way I paid for it was not a good way to go, and others jumped in and shared some thoughts on taking a vacation even if you’re not totally out of debt, or using credit cards for points to help pay for a vacation.

A truth: Dave Ramsey advises against even owning credit cards, even if you pay the balance in full. He says to pay in cash, and use a debit card if you need to use plastic at all.

A reality: Dave Ramsey is not managing your own personal budget.

He is right in his principles and he has helped many people pay off debt. But unless you call into his radio show and tell him your story, he doesn’t know your exact situation. He doesn’t know your debt load, income, budget plan, financial motivations, life dreams…none of that.

His advice is good, but it’s not one-size-fits-all.¬†Personal finance is personal. It’s your money, do what you want with it.


If you’re going to break the rules, I think it’s reasonable to know what the “rules” are and why they exist. That way, you are still being purposeful with your money.

When I lament about my honeymoon purchased on credit, it’s not that I necessarily think no one else should ever pay for a vacation on a payment plan (do what you want with your own money, n’at). Rather, I think I was reckless in doing so because I had no real plan for paying it off. I figured, the 0% interest period is long enough that we probably won’t have to pay much in interest. Surely we can afford this. Surely we can pay it off quickly.

I did no number-crunching. I prepared no budget. In no way did I have any evidence that we could actually afford to pay off our Alaskan adventure in a quick way. I just looked at our future earning potential and it sounded like a lot to my college student brain. Pfft.

THAT’s my regret about it.

So, if you want to use a credit card, pay it off every month, and use cash-back or points earned for something, go ahead. Just know why the experts say you probably spend more money in the long run that way — and then take action to make sure that you don’t overspend. Use the card for fixed bills, for instance. Follow a strict budget, perhaps.

Or, if you want to go on a big trip to Europe while you still have student loans — I say bon voyage! Just make sure you weigh the financial ramifications against the intrinsic value of the purchase.

Maybe it’s true that if you held off on that big trip for a few more years, you’d have a higher net worth. But at what cost? It’s possible if you waited, you’d never actually take the trip. Who knows?

I guess what I’m trying to say is I think it’s important to be deliberate with your money. If you’re going to go against the wisdom of financial experts, have your own reasons for doing so (rather than acting entirely without a plan in mind). That way, you can have a full picture of your own situation and the consequences of your choices.

5 Responses to “When you’re acting contrary to the financial experts”

  1. AMEN!
    We did FPU about 2 years ago. It was incredible. We paid off 2 car loans and a home equity loan in about 18 months…over $28,000 in that short time! So I do know his plan is workable and it works!
    BUT…my hubs said basically what you did. He doesn’t know our personal situation and while cc can lead you down dangerous paths…sometimes in our life they are necessary. The way my hubs is paid makes it kind of hard to always have a positive cash flow in our pockets…but we always manage to pay everything in full every month.
    I have friends who say even holding a cc leads them in to debt! LOL…an exaggeration I know, but they honestly know…having bailed themselves out of over $30,000 of debt…twice…that cc are the path of destruction for them.
    My husband and I on the other hand have used 0% interest cc offers many times to purchase things that we needed/wanted an paid them off before the interest kicked in. I guess we budget…not officially on paper…but i do know how much income we have each month and pretty much how much goes out.
    We are working on our 6 months of living expenses and always have 1 if not 2 $1000 emergency funds in place. (Thankfully…as my dd just had 7 teeth pulled costing us $2000!!! Yikes, didn’t plan for that! Or did we, since we had two emergency funds in place??)
    But I agree…for some people cc can be a help…you just need to really know your own personal financial position. I think that is the real key. Really knowing what is going on with your money!!!

  2. We went against Dave Ramsey recommendations, and saved a down payment a few months before our student loans were paid off. I don’t regret it, but I do agree with your advice- know the official recommendations and make a conscious, educated choice to go against them, rather than leaving your finances to chance!

  3. Well said. The financial gurus usually have great overall plans, but nobody knows your situation like you do.

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Hey! I'm Kacie, wife to Shane and mother to Jonathan (7), Vivienne (5) and Amelia (2) . I write about my family's finance: how we save money, improve our spending, and plan for the future.

I hope I can inspire and encourage you to improve your situation. See disclosure.

I'm adopting a much slower-paced posting schedule, and treating this as a hobby blog now.

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